JADAU JEWELLERS & MANUFACTURERS PVT. LTD., Jaipur V. ACIT, Jaipur

ITA 686/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99576 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 01-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALIKA SINGHCIT DHK
• Keywords: Depreciation; Search and seizure; Source of fund; Fair market value; Accommodation entries; Unabsorbed depreciation
• Section: 143(3); 142(1); 133A; 153A; 147; 131; 68; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 686/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09. M/S JADAU JEWELLERS & MANUFACTURERS PVT. LTD., B-1, TRIMUTRI CIRCLE, GOVIND MARG, JAIPUR. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABCJ 6114 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA)& SHRI GULSHAN AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KALIKA SINGH (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27/11/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 14/12/2015. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 05/08/2014 OF THE LEARNED CIT(A), CENTRAL, JAIPUR F OR A.Y. 2008-09. THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT(A) CENTRAL, ERRED IN CONFIRMING THE A DDITION OF RS. 60,00,000/- ON ACCOUNT OF ALLEGED UNEXPLAINE D 2 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT SHARE CAPITAL RECEIVED BY THE ASSESSEE COMPANY FROM FOLLOWING PERSONS MORE SO WHEN THE ASSESSEE HAS DISCHARGED ITS ONUS LAID DOWN UNDER SECTION 68 OF TH E INCOME TAX ACT AND NO EVIDENCE AS THE RESULT OF INTENSIVE SEARCH OVER THE ASSESSEE WAS FOUND SHOWING THAT THE ASSESSEE HAD INTRODUCED ITS OWN UNDISCLOSED INCOME IN THE BOOKS UNDER THE GARB OF SHARE CAPITAL RECEIVED FROM OTHERS. NAME OF THE PARTY NO OF SHARES ALLOTTED AMOUNT AGAINST SHARES AMOUNT AGAINST PREMIUM TOTAL VINDYA AGENCIES PVT. LTD. 25,000 2,50,000 7,50,000 10,00,000 SHIVARPAN MERCANTILES PVT. LTD. 25,000 2,50,000 7,50,000 10,00,000 MIDDLETON GOOD PVT. LTD. 75,000 7,50,000 22,50,000 30,00,000 LACTRODRYER MARKETING PVT. LTD. 25,000 2,50,000 7,50,000 10,00,000 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADIN G AND MANUFACTURING OF JEWELLERY. RETURN FOR A.Y. 2008-09 WAS FILED U/S 139(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 30 /09/2008 -. THERE WAS A SEARCH AND SEIZURE OPERATION CARRIED BY THE DE PARTMENT U/S 132 AND SURVEY U/S 133A OF THE ACT ON THE MEMBERS OF KG K GROUP ON 06/5/2010 OF WHICH THE ASSESSEE IS ONE OF THE MEMBE RS. THE LD ASSESSING OFFICER ISSUED NOTICE U/S 153A ON 16/09/2011 AND T HE ASSESSEE WAS ASKED TO FILE A TRUE AND CORRECT RETURN OF INCOME A S PRESCRIBED UNDER RULE 12 OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULE S) WITHIN 30 DAYS 3 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT FROM THE SERVICE OF SAID NOTICE. THE ASSESSEE IN RES PONSE TO SAID NOTICE FILED RETURN DECLARING A LOSS OF RS. 8,07,200/- WITH UNABSORBED DEPRECIATION OF RS. 2,64,348/- AND CARRY FORWARD BUS INESS LOSS AND UNABSORBED DEPRECATION OF PREVIOUS YEARS AT RS. 2,7 9,178/- WAS FILED BY THE ASSESSEE ON 31/3/2012 AS DECLARED IN THE ORIGIN AL RETURN FILED BY THE ASSESSEE. HOWEVER, IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT NO DISCLOSED INCOME PERTAINING TO R ELEVANT YEAR HAD BEEN DECLARED BY THE ASSESSEE. THE LD ASSESSING OFFICER O BSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN TOTAL TURNOVER OF RS. 2.05 CRORES ON WHICH THE ASSESSEE HAS RETURNED A NET LOSS OF RS. 13,29,220/- HAS BEEN DISCLOSED. DURING THE YEAR, TH E ASSESSEE HAD ALSO STARTED A BRANCH AT INDORE FOR WHICH SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED. THEREAFTER THE LD ASSESSING OFFICER ISSU ED A DETAILED QUESTIONNAIRE U/S 142(1) VIDE LETTER DATED 29/11/20 12. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD OBTAINED SHA RE CAPITAL AND SHARE APPLICATION MONEY FROM UNDER MENTIONED COMPANIES, WH ICH IS AS UNDER:- A.Y. NAME AMOUNTS (RS.) 2006-07 M/S HARIOM VANIJYA PVT. LTD. 10,00,000/- 2006-07 M/S BROTHERS TRADING PVT. LTD. 9,00,000/- 2006-07 M/S NUPUR FINVEST PVT. LTD. (OLD NAME M/S NUPUR COMPUTERS PVT. LTD.) 6,00,000/- 4 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT 2008-09 M/S VIINDYA AGENCIES PVT. LTD. 10,00,000/- 2008-09 M/S SHIVARPAN MERCANTILES PVT. LTD. 10,00,0 00/- 2008-09 M/S MIDDLETON GOODS PVT. LTD. 30,00,000/- 2008-09 M/S LACTRODRYER MARKETING PVT. LTD. 10,00,0 00/- 2010-11 M/S BAWA HIRE PURCHASE PVT. LTD. 25,00,000/- 2010-11 M/S OMEGA SUPPLIERS PVT. LTD. 20,00,000/- 2010-11 M/S SABHYATA SUPPLIERS PVT. LTD. 25,00,000/ - THE LD ASSESSING OFFICER ASKED THE ASSESSEE TO PRODU CE THESE SHARE HOLDERS FOR EXAMINATION ALONGWITH DOCUMENTS IN SUPPO RT OF THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS . THE ASSESSEE VIDE LETTER DATED 25/2/2013 SUBMITTED THAT THE ASSESSEE IS UNABLE TO PRODUCE THE SHARE HOLDERS. HOWEVER, DOCUMENTS RELATING TO TH E SHARE HOLDERS WERE SUBMITTED VIDE LETTER DATED 22/02/2013. THE LD ASSES SING OFFICER MADE A REFERENCE TO INVESTIGATION WING, KOLKATA FOR CONDUC TING ENQUIRIES IN RESPECT OF THESE SO CLAIMED SHARE HOLDERS. THE ITO, INVESTIGATION WING- III, KOLKATA VIDE LETTER DATED 26/03/2013 HAD REPOR TED THAT SUMMONS WERE ISSUED TO THE 10 PARTIES AND IN RESPECT OF THRE E PARTIES THE SUMMONS WERE RECEIVED BACK AND REST OF PARTIES DID NOT COMPL Y TO NOTICE ISSUED U/S 131 OF THE ACT. THE FACT WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE VIDE OFFICE LETTER DATED 28/03/2013 AND THE ASSESSE E WAS ASKED TO PROVE THE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF SH ARE HOLDERS. THE ASSESSEE VIDE ITS REPLY DATED 28/03/2013 FILED HIS JUSTIFICATION EMPHASIZING THAT THE ASSESSEE HAS SUBMITTED SUFFICI ENT DOCUMENTS WHICH 5 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT WELL PROVED THE GENUINENESS, CREDITWORTHINESS AND IDE NTITY OF THE SHARE HOLDERS. THERE WAS NO REASON WITH THE DEPARTMENT TO PR ESUME THAT THE AMOUNT RECEIVED FROM THE ABOVE COMPANIES WAS ACCOMMO DATION ENTRIES. AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSE SSING OFFICER OBSERVED AS UNDER:- (A) THE ASSESSEE WAS FIRST ASKED TO PRODUCE THE SHARE HOLDERS BUT HE REFUSED TO PRODUCE THE SHARE HOLDERS. NOW, TH E ASSESSEE IS SUBMITTING CERTAIN DOCUMENTS TO PROVE T HAT SHARE HOLDERS COMPLIED WITH THE NOTICES ISSUED TO TH EM. THIS SHOWS THAT THE ASSESSEE IS IN CONTACT WITH THE SHARE HOLDERS AND INTENTIONALLY HAS NOT PRODUCED THE SHARE HOLDER S FOR EXAMINATION. (B) MERELY, BY FILING THE CERTAIN DOCUMENTS DO NOT PROVE THE CREDITWORTHINESS OF THE PARTIES AS WITHOUT EXAMINING THE SOURCE OF FUNDS WITH THESE COMPANIES, THE CREDITWORTH INESS AND GENUINENESS OF THE TRANSACTION CANNOT BE EXAMIN ED. (C) FROM THE DOCUMENTS SUBMITTED BY THE ASSESSEE IT S APPEARS THAT ALL THE COMPANIES ARE SIMPLY ENTRY PROVIDERS WH O ARE PURCHASING THE SHARES OF OTHER COMPANIES AT VERY HI GH PREMIUM AND LATER ON THE SHARES ARE SOLD AT VERY NO MINAL VALUE TO THE PERSONS CLOSELY CONNECTED WITH THE SHAR E ISSUING COMPANY. IT IS FURTHER, RELEVANT TO MENTION HERE THAT THE SHARES ARE PURCHASED BY THESE COMPANIES AT VERY HIGH 6 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT PREMIUM WITHOUT CONSIDERING THE FAIR MARKET VALUE OF SHARES OF ISSUING COMPANY. (D) ON PERUSAL OF THE SHARE HOLDER REGISTER OF THE ASSESSEE COMPANY IT IS SEEN THAT THE SHARE ISSUED TO ABOVE N AMED COMPANY WERE LATER ON IN F.Y. 2011-12 AND 2012-13 WER E PURCHASED BY THE DIRECTORS OF ASSESSEE COMPANY SH. PRATEEK KOTHARI AND SH. PIYUSH KOTHARI AT VERY NOMINAL RATE S WHILE AS ON THE DATE OF TRANSFER THE FAIR MARKET VALUE OF T HE ASSESSEE COMPANY WAS MUCH HIGHER IN COMPARISON TO VALUE OF SH ARES AS ON THE DATE OF ISSUE. THEREFORE, THERE IS NO REA SON TO BELIEVE THAT HOW A PRUDENT PERSON WOULD PURCHASE TH E SHARES OF A NASCENT COMPANY AT VERY HIGH VALUE AND LATER ON TRANSFER THE SAME SHARES AT BELOW FAIR MARKET VALUE. FROM THE ABOVE DISCUSSION AND FACTS, IT IS VERY CLE AR THAT AMOUNT RECEIVED FROM ABOVE MENTIONED COMPANIES IN T HE FORM OF SHARE CAPITAL IS ONLY ACCOMMODATION ENTRIES AND THE GENUINENESS OF THE SHARE CAPITAL RECEIVED BY THE AS SESSEE COMPANY CANNOT BE ACCEPTED. THEREFORE, THE SHARE CAP ITAL RECEIVED FROM ABOVE COMPANIES IS ADDED BACK TO THE TOTAL INCOME OF ASSESSEE AND AN ADDITION OF RS. 60,00,000 /- RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION IS HEREBY MADE TO THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE LD ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD CONFIRMED THE 7 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT ADDITION BY CONSIDERING THE ASSESSEES SUBMISSION A ND HELD THAT THE ASSESSING OFFICER SPECIFICALLY ASKED THE ASSESSEE T O PRODUCE THESE SHARE HOLDERS INSTEAD OF WHICH THE ASSESSEE MERELY FILED C OPY OF THEIR BANK STATEMENTS, BALANCE SHEETS, P&L ACCOUNTS ETC. WHEN THE ASSESSEE HAD EXPRESSED ITS INABILITY TO PRODUCE THESE SHARE HOLD ERS THEN THE ASSESSING OFFICER WAS FORCED TO SEND A REFERENCE TO THE INVEST IGATION WING OF THE DEPARTMENT IN KOLKATA TO CONDUCT NECESSARY INQUIRY IN THE MATTER. THE REPORT OF THE INQUIRY CONDUCTED BY THE INVESTIGATIO N WING OF KOLKATA WAS GIVEN TO THE ASSESSEE DURING THE ASSESSMENT PROCEED INGS TO GIVE IT AN OPPORTUNITY TO REBUT THE EVIDENCE COLLECTED BY THE DEPARTMENT. THE ASSESSEE WAS REQUIRED TO DISCHARGE ITS ONUS WHICH COU LD HAVE BEEN DONE ONLY BY PRODUCING THE PRINCIPAL OFFICERS OF THE SHA REHOLDING COMPANIES BEFORE THE ASSESSING OFFICER. THE ASSESSEE FAILED T O DO SO. THE LD CIT(A) FOUND THAT THE ASSESSEE WAS IN CONSTANT COMMUNICATI ON WITH THESE PRINCIPAL OFFICERS BECAUSE IN ITS WRITTEN SUBMISSION S DURING THE COURSE OF APPELLATE PROCEEDINGS IT WAS MENTIONED THAT TWO PARTI ES HAD INFORMED IT THAT COMPLIANCE HAD BEEN MADE BY THEM BUT ON THE DA TE OF HEARING THE OFFICE IN KOLKATA WAS ON LEAVE. THIS HAS BEEN SUBMIT TED IN THE CASES OF VINDYA AGENCIES PVT. LTD. AND SHIVARPAN MERCANTILE PVT. LTD. FOR THE OTHER TWO COMPANIES, IT HAS BEEN SUBMITTED THAT AS THEY HA D FILED A COPY OF ALL 8 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT THE RELEVANT DOCUMENTS IN RESPONSE TO THESE SUMMONS COMPLIANCE TO NOTICE U/S 131 OF THE ACT. THE LD CIT(A) HAS FURTHER HELD THAT THIS WAS NOT SUFFICIENT COMPLIANCE BECAUSE THE DOCUMENTS FILED I N KOLKATA WERE ALREADY WITH THE DEPARTMENT AND FILING OF A COPY OF THESE BE FORE THE INVESTIGATION WING, KOLKATA SERVED NO PURPOSE. THE SUMMONS HAD BEE N ISSUED FOR PERSONAL ATTENDANCE OF PRINCIPAL OFFICES OF THE SHA RE HOLDING COMPANIES TO PERSONALLY EXAMINE THEM REGARDING THE NATURE OF BUS INESS AND TRANSACTIONS BEING CONDUCTED BY THESE COMPANIES, BE CAUSE IT WAS APPARENT FROM THE EVIDENCE SUBMITTED THAT THESE COM PANIES WERE INDULGING IN PROVIDING ACCOMMODATION ENTRIES THROUG H THE ROUTE OF SHARE APPLICATION MONEY. ON ASSESSEES SUBMISSION THAT TH E ASSESSEE HAD FURNISHED THE COPY OF BANK STATEMENTS, IT RETURNS AN D BALANCE SHEETS OF THESE PARTIES SHOWED THAT THESE PARTIES HAD SUFFICIE NT FUND TO MAKE INVESTMENT IN THE SHARE APPLICATIONS OF THE APPLICA NT COMPANY PARTICULARLY AS THERE WAS NO CASH DEPOSIT IN THEIR BANK ACCOUNTS, SHE HELD THAT THESE SUBMISSIONS OF THE APPELLANT, PARTICULARLY WITH REFE RENCE TO THE OBSERVATIONS OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ONASSIS AXLEX P. LTD. VS. CIT (2014) 364 ITR 53 (DELHI) WHEREIN THE ASSESSEE RECEIVED A SUM OF RS. 1.8 CRORES AS SHARE APPLICATION MONEY OU T OF WHICH THE AMOUNT IN DISPUTE WAS RS. 80 LACS. THE ASSESSEE FILED CONFIRMATIONS IN 9 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT CASE OF THREE SHARE APPLICANT COMPANIES WITH COPY OF BANK ACCOUNT. IT IS FOUND BY THE ASSESSING OFFICER IN THE BANK ACCOUNTS OF SHARE APPLICANT COMPANY THAT CASH WAS DEPOSITED AND THE SAME WAS UTIL IZED IN FORM OF PURCHASING SHARES. SHE APPLIED HON'BLE DELHI HIGH C OURT DECISION IN THE CASE OF APPELLANT. SHE FURTHER EXAMINED PARTY WISE C ASES AND FOUND THAT DURING THE YEAR, THE APPELLANT HAD RECEIVED RS. 10 LACS FROM M/S VINDYA AGENCIES PVT. LTD. AS SHARE CAPITAL. ON PERUSAL OF THE DIRECTORS REPORT IT WAS SEEN THAT DURING THE YEAR THE COMPANY HAD MADE P ROFIT OF ONLY RS. 1517/- AND LAST YEAR CARRY FORWARD LOSSES WERE RS. 1, 59,325/-. AS PER THE BALANCE SHEET IT IS SEEN THAT AUTHORIZATION SHARE CAPITAL WAS RS. 120 CR. AGAINST WHICH THE SUBSCRIBED SHARE CAPITAL WAS RS. 1 ,14,02,000/-. HOWEVER, THE RESERVES AND SURPLUS WAS SIX TIMES OVER I.E. RS. 6,25,50,000/-. SHE FURTHER FOUND THAT THE ENTIRE AM OUNT WAS INVESTED IN UNQUOTED SHARES TO THE EXTENT OF RS. 6,76,95,000/-. THE OTHER SUBSCRIBING COMPANIES ALSO HAVE THE SAME PATTERN OF EXCESS SURP LUS AND RESERVES AS COMPARED TO SHARE CAPITAL COUPLED WITH VERY LOW YEARL Y PROFITS. THE LD CIT(A) HAS FURTHER HELD AS UNDER:- ON PERUSAL OF THE BANK STATEMENT OF THIS COMPANY FU RNISHED BY THE ASSESSEE FOR THE PERIOD BETWEEN 1/7/2007 TO 31/1/200 7 IT IS SEEN THAT THE OPENING BALANCE AS ON 01/7/2007 WAS ONLY RS . 7293/-. AN 10 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT AMOUNT OF RS. 10 LAKH WAS TRANSFERRED FROM AN ACCOUN T NO. 1077630 ON 03/7/2007 WHICH WAS THEN TRANSFERRED VIDE CHEQUE TO THE APPELLANT COMPANY ON 04/7/2007. THIS PATTERN WAS REPEATED CONTINUOUSLY 11 TIMES FOR DIFFERENT COMPANIES DURIN G THE SPAN OF A MONTH. FOR EXAMPLE AN AMOUNT OF RS. 10 LACS WAS TRAN SFERRED FROM ACCOUNT NO. 80308 ON 06/7/2007 WHICH WAS TRANSFERRED IN FAVOUR OF GOLDWAY ENTERPRISES PVT. LTD. ON THE SAME DATE, A NOTHER AMOUNT OF RS. 7,50,000/- WAS TRANSFERRED IN FROM ACC OUNT NO. 7506071 ON 12/7/2007 AND IT WAS TRANSFERRED VIDE CHE QUE TO VINAYAK INDUSTRIES. NO OTHER TRANSACTIONS APART FRO M THESE SUBSTANTIAL INFLOWS AND OUTFLOWS WERE UNDERTAKEN. IT I S ALSO INTERESTING TO NOTE THAT ALL THE CHEQUES WERE COMING FROM DIFFERENT ACCOUNTS. WHILE THERE ARE NOTINGS REGARDING THE CON CERNS TO WHOM THE AMOUNTS WERE GIVEN THERE ARE NO NOTINGS FROM WHOM THERE ADVANCES WERE BEING RECEIVED. THIS WAS REQUIRED TO BE CLARIFIED FROM THE PRINCIPAL OFFICERS OF THESE COMPANIES TO W HOM SUMMONS WERE ISSUED FOR PERSONAL ATTENDANCE. ANOTHER INTERESTING OBSERVATION MADE IS THAT ALL T HESE FOUR COMPANIES WERE BUYING SHARES OF THE SAME COMPANIES F OR EXAMPLE M/S VINAYAK AGENCY PVT. LTD. PURCHASED THE SHARES O F THE APPELLANT AND OF VINAYAK INDUSTRIES, SIMILARLY SHIV ARPAN MERCANTILE PVT. LTD, HAD ALSO PURCHASED SHARES OF VINAYAK INDU STRIES ALONGWITH THAT OF M/S JADAU JEWELLERS & MANUFACTURING PVT. LTD. ON 06/07/2007 SHIVARPAN MERCANTILE PVT. LTD. RECEIV ED RS. 1 LAKH AND RS. 9 LAKH ON 07/6/2009 AND TRANSFERRED THESE F UNDS TO M/S RADHA CASATING AND METALIC PVT. LTD.. ON EXAMINATIO N OF THE 11 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT PORTFOLIO STATEMENT OF MIDDLETON GOODS PVT. LTD. IT WAS SEEN THAT APART FROM THE APPELLANT THE COMPANY HAD ALSO GIVEN AN ENTRY TO M/S RADHA CASTING AND METALLIC PVT. LTD. LIKE SHVAR PAN MERCANTILE PVT. LTD. FURTHERMORE, THE SAME PATTERN OF CASH, IN FLOW AND OUTFLOW WAS DISCERNIBLE, HUGE AMOUNTS OF MONIES WERE B EING TRANSFERRED IN FROM DIFFERENT ACCOUNTS AND THEN TRA NSFERRED OUT ON THE SAME DATE OR PROXIMATE DATES AS SHARE APPLICATI ON MONEY TO DIFFERENT COMPANIES. FROM THE ABOVE DISCUSSION, IT IS APPARENT THAT ALL THE FOUR COMPANIES HAD BEEN CREATED WITH THE EXP RESS PURPOSE OF GIVING ACCOMMODATION ENTRIES THROUGH BOGUS SALE AND PURCHASE OF SHARES AND THE FINANCIAL TRANSACTIONS HAD BEEN R OUTED THROUGH THEIR BANKS. THE ANALYSIS OF THE BANK STATEMENTS AND BALANCE SHEETS CLEARLY INDICATE THAT THESE TRANSACTIONS WERE DUBIOUS. THE ABOVE OBSERVATIONS ARE ALSO SUPPORTED BY THE FI NDING OF THE A.O. THAT NOT ONLY HAD THESE SHARES BEEN SOLD A T A PREMIUM BUT THESE WERE RESOLD IN SUBSEQUENT YEAR AT A LOSS B Y THE SHAREHOLDING COMPANY TO THE DIRECTORS OF THE APPELL ANT COMPANY. THE AR OF THE APPELLANT HAS SUBMITTED THAT RATES OF SHARES WERE DECIDED AFTER DISCUSSION BY THE ASSESSEE COMPANY WIT H THE INTERESTED COMPANY. IN THE CASE OF THE UNLISTED SHA RES THIS MAY BE TRUE BUT IT IS STILL NOT CLEAR WHY ANY PRUDENT BUSIN ESS MAN WOULD GIVEN A HANDSOME PREMIUM OR PURCHASE OF SHARES AND SELL THESE SHARES AT A LOSS. ON PERUSAL OF THE BALANCE SHEET OF THE COMPANY DUR ING THIS A.Y. IT IS SEEN THAT THE APPELLANT COMPANY HAD SUBS CRIBED AND PAID 12 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT UP SHARES OF RS. 46 LAKH AND THE SHARE PREMIUM ACCO UNT WAS OF RS. 45 LAKH. OUT OF THIS RS. 91 LAKHS IF THE LOSSES OF INDORE BRANCH OF RS. 55.90 LAKHS AND LOSSES OF RS. 13.30 LAKH OF JAIPUR BRANCH ARE DEDUCTED THE BALANCE AMOUNT IS RS. 11.80 LAKH WHICH GIVES THE VALUE OF ONE SHARE AT 11.80/- BEING THE PREMIUM VAL UE OF THE SHARE. IT IS NOT CLEAR WHY FOUR DIFFERENT COMPANIES CHOSE TO PAY A PREMIUM OF RS. 30/- ON THESE SHARES WHICH WAS VALUED AT RS. 1.80/-. IN FACT THIS ASSESSMENT YEAR WAS A BAD FINAN CIAL YEAR FOR JEWELLERS IN VIEW OF THE INTERNATIONAL FINANCIAL CRIS IS WHERE MOST JEWELLERS HAD SHOWN DECREASE IN PROFITS. THE APPELLANT COMPANY HAS SHOWN LOSSES AT BOTH ITS BRANCHES, SO IT COULD N OT POSSIBLY HAVE BEEN A CASE OF STRONG SENTIMENT TO JUSTIFY THE PREMIUM OF RS. 30/- ON ITS SHARE WHICH FURTHER AFFIRMS THE DOUBTS A BOUT THE AUTHENTICITY OF THE TRANSACTION. THE FACT THAT THESE COMPANIES WERE REGISTERED UNDER THE COMPANY ACT AND HAD A PAN ALSO DOES NOT SIGNIFY MUC H IN VIEW OF THESE ENQUIRIES BECAUSE AT THE POINT OF ALLOTTING P AN OR REGISTRATION OF THE COMPANIES THE CONCERNED DEPARTMENTS DO NOT C ONDUCT ANY ENQUIRY REGARDING THE LEGITIMACY OF THE BUSINESS AC TIVITIES OF THE COMPANIES. THE SUBSEQUENT ENQUIRIES HAVE REVEALED TH AT THOUGH THESE CONCERNS OBTAINED PAN THEIR FINANCIAL CAPACIT Y TO HAVE MADE THE INVESTMENTS IN THE APPELLANT COMPANY ARE DUBIOU S. REGARDING THE VARIOUS CASE LAWS REGARDING PROHIBITI ON OF INVESTIGATION OF SOURCE OF SOURCE IN THE CASE OF SH ARE APPLICATION MONEY IT IS OBSERVED THAT IT SHOULD NOT BE CONSTRUE D THAT THE 13 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT VARIOUS JUDICIAL PRONOUNCEMENTS HAVE GIVEN A CARTE BALANCE TO THE ASSESSEE TO INTRODUCE THEIR UNACCOUNTED MONEY VIA S HARE APPLICATION FROM ENTRY PROVIDERS. THE LAW HAS BEEN EN UNCIATED VERY CLEARLY IN THE CASE OF CIT VS HOSPITALITY AND C IT VS VIJAY POWER GENERATORS LTD. ITA NO. 514 OF 2007 BY THE HON 'BLE DELHI HIGH COURT. THE HONBLE DIVISION BENCH OF DELHI HIGH COURT IN T HE CASE OF CIT VS DIVINE LEASING & FINANCE LTD. (299 ITR 268) HA S HIGHLIGHTED THE MENACE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE MASQUERADE OR SUCH CHANNELS OF INVESTME NT IN THE SHARE CAPITAL OF COMPANY AND THUS STRESSED UPON THE DUTY OF THE REVENUE TO FIRMLY CURB THE SAME. A DISTINCTION WAS A LSO MADE IN THE CASE OF A PUBLIC ISSUE, WHERE IT WAS OBSERVED TH AT THE COMPANY CONCERNED COULD NOT BE EXPECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDENTITY AS WELL AS THE FINANCIAL WORTH OF EAC H OF ITS SUBSCRIBERS. HOWEVER, IN THE CASE OF A PRIVATE LIMIT ED COMPANY THE LEGAL REGIME WOULD NOT BE THE SAME. IN THE CASE OF T HE LATTER THAT IS IN THE CASE OF A PRIVATE LIMITED COMPANY THE ASS ESSEE WOULD BE REQUIRED TO EXPLAIN THE NATURE AND SOURCE OF SHARE APPLICATION MONEY RECEIVED BY IT BY PROVING. A) IDENTITY OF SHAREHOLDER; B) GENUINENESS OF TRANSACTION; AND C) CREDIT WORTHINESS OF SHAREHOLDERS. IT WAS FURTHER OBSERVED THAT THE A.O. WAS REQUIRED T O SCRUTINIZE THE EVIDENCE FURNISHED BY THE ASSESSEE. IN CASE HE 14 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT NURTURES ANY DOUBT ABOUT THE VERACITY OF THESE DOCU MENTS HE SHOULD HAVE COGENT REASONS TO DISCREDIT THE SAME. FINALLY THE HONBLE DELHI HIGH COURT HAS DISCUSSED THE FACTS OF THE CASE IN THE CASE OF VIJAY POWER GENERATOR LTD . VS CIT ITA NO. 514 OF 2007 WHEREIN THE FACTS OF THE CASE ARE A LMOST IDENTICAL TO THAT OF THE APPELLANT. IN THE ABOVE MENTIONED CA SE FOR A.Y. 1997-98 THE ASSESSEE HAD SHOWN RECEIPTS IN THE FORM OF SHARE APPLICATION MONEY TO WHOM SHARES WERE LATER ALLOTTED. SUMMONS WERE ISSUED BY THE A.O. TO THESE SHARE APPLICANTS, T HESE RETURN UNSERVED. THE HON'BLE HIGH COURT UPHELD THE DECISION OF THE A.O. TO ADD THE SHARE APPLICATION MONEY TO THE INCOME OF THE ASSESSEE. THE ABOVE FINDINGS HAVE FURTHER BEEN AFFIRMED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF NIPUN BUILDERS AND DEVELOPERS PVT. LTD. VS. CIT (2013) 350 ITR 407. WHEREIN THE A.O. D ID NOT MERELY STOP WITH ISSUING SUMMONS; HE FOLLOWED IT UP WITH A VI SIT BY THE INSPECTOR WHO CONFIRMED THAT NO SUCH COMPANIES FUNC TIONED FROM THE ADDRESSES FURNISHED BY THE ASSESSEE. IT WAS NOT OPEN TO THE ASSESSEE TO DIRECT THE AO TO GO TO THE WEBSITE OF TH E COMPANY LAW DEPARTMENT/REGISTRAR OF COMPANIES AND SEARCH FOR THE ADDRESSES OF THE SHARE APPLICANTS AND THEN COMMUNIC ATE WITH THEM FOR PROOF OF THE GENUINENESS OF THE SHARE SUBS CRIPTION. THAT WAS THE ONUS OF THE ASSESSEE, NOT OF THE A.O. THE LD CIT(A) FURTHER HELD THAT THE OBSERVATIONS MAD E BY THE HONBLE DELHI HIGH COURT IN THE CASE OF NIPUN BUILDERS & DE VELOPERS PVT. LTD. VS. 15 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT CIT (SUPRA) ARE PARTICULARLY APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT. THE ASSESSEE FAILED TO PRODUCE THE PRINCI PAL OFFICERS OF THESE COMPANIES IN SPITE OF REPEATED OPPORTUNITIES. THE AO HAS OBSERVED THAT DURING THE ASSESSMENT PROCEEDINGS IT WAS ADMITTED BY THE ASSESSEE THAT IT WAS UNABLE TO DO SO EVEN THOUGH IT WAS IN CONSTAN T TOUCH WITH THEM. THE AR OF THE APPELLANT RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SHRI BARKHA SYNTH ETIC (2004) 270 ITR 477 HAS HELD DISTINGUISHABLE BY THE LD CIT(A) WHEREIN THE HONBLE COURT HELD THAT TRANSACTIONS WERE MADE THROUGH BANKING CHA NNEL, CONFIRMATION OF THE SHARE APPLICANT HAS BEEN FILED, BUT THE CASE REFERRED BY THE ASSESSING OFFICER, NO INVESTIGATION WAS MADE BY THE ASSESSING OFFICER, THEREFORE, IS NOT APPLICABLE ON THE FACTS OF THE CA SE. THE LD ARS ARGUMENT IS ALSO REJECTED BY THE LD CIT(A) ON THE GROUND THAT NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH REG ARDING ACCOMMODATION ENTRIES. THEREFORE, ASSESSMENT MADE U/ S 153(A) READ WITH SECTION 143(3) IS VOID AB INITIO. SHE FURTHER H ELD THAT IN THIS CASE NO SCRUTINY ASSESSMENT ON THE BASIS OF ORIGINAL RETURN U/S 143(3) HAS BEEN MADE BY THE ASSESSING OFFICER. ONLY RETURN HAD BEEN PROCESSED U/S 143(1) OF THE ACT. SHE DISTINGUISHED THE DECISION O F HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) VS. ACI T (2013) 259 CTR 281 16 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT (RAJ) ON ABATED PROCEEDINGS AND COMPLETED THE ASSES SMENT PROCEEDINGS. SHE FURTHER HELD THAT THE HONBLE COURT HAS OBSERVE D THAT WHEN NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE O F SEARCH AND SEIZURE AND ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED THEN THIS WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIA L OF SEARCH. IT HAS SPECIFICALLY OBSERVED THAT THE PROVISIONS OF SECTIO N 153A TO 153C CANNOT GO BEYOND THE PROVISION OF SECTION 147 OF THE ACT. SHE FURTHER RELIED ON THE DECISION IN THE CASE OF ACIT VS RAJESH JHAVERI S TOCK BROKERS (P) LTD. (2007) 210 CTR (SC) 30, THE HON'BLE SUPREME COURT HA S DISTINGUISHED BETWEEN CASES PROCESSED U/S 143(1) AND THE CASES ASSESSED U/S 143(3) FOR THE PURPOSE OF INITIATION OF PROCEEDINGS U/S 14 7. THE HONBLE APEX COURT OBSERVED THAT U/S 143(1)(A) WHAT WAS PERMISSIBL E WAS CORRECTION OF ERRORS APPARENT ON THE BASIS OF THE DOCUMENTS ACCOM PANYING THE RETURN AND THE A.O. HAD NO AUTHORITY TO MAKE ADJUSTMENT OR ADJUDICATE UPON ANY DEBATABLE ISSUE NOR COULD HE GO BEHIND THE DOCUMENT S AND RETURNS FOR DISALLOWING DEDUCTIONS. THEREFORE, THE ASSESSING OFFI CER IS EMPOWERED TO REOPEN THE CASE AND ISSUE NOTICE U/S 147 OF THE ACT . IN CASE OF APPELLANT, IT CANNOT BE SAID THAT THE ASSESSMENT PROCEEDINGS H AD BEEN COMPLETED SINCE THERE WAS ONLY AN INTIMATION U/S 143(1)(A), WHI CH IS NOT THE SAME AS AN ASSESSMENT U/S 143(3) OF THE ACT. THEREFORE, I N ABSENCE OF 17 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT COMPLETED ASSESSMENT PROCEEDINGS, THE PROCEEDINGS M ADE AS PER PROVISIONS OF SECTION 153A WERE VALID IN THE CASE OF APPELLANT. MOREOVER, EVEN ON THE FACTS THE SUBMISSIONS OF THE APPELLANT IS NOT FOUND TO BE CORRECT BECAUSE EVIDENCE WAS FOUND DURING SEARCH REG ARDING INVESTMENT IN PROPERTY BY THE APPELLANT FOR WHICH THE SOURCE WAS NOT APPARENT. SO EVEN ON FACTS, INITIATION OF ASSESSMENT PROCEEDINGS U/S 153A AND DETERMINING THE TOTAL INCOME IN THE CASE BY THE A.O . WAS NOT BEYOND THE PROVISIONS OF INCOME TAX LAW AS ENUNCIATED BY THE HO NBLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) VS. ACI T. ACCORDINGLY, SHE CONFIRMED THE ADDITION. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE FILED RETURN U/S 13 9(1) OF THE ACT ON 30/09/2008 DECLARING LOSS OF RS.10,71,546/-. HE HAS DRAWN OUR ATTENTION ON PAGE NO. 3 TO 5 OF PAPER BOOK. THERE WAS SEARCH & SEIZURE OPERATIONS ON ASSESSEE ON 06/05/2010. THE LD ASSESSI NG OFFICER ISSUED NOTICE U/S 153A AND IN RESPONSE TO THIS NOTICE, THE ASSESSEE FILED ITS RETURN ON 31/03/2012 DECLARING THE SAME INCOME WHICH HAD BEEN DECLARED IN ORIGINAL RETURN I.E. LOSS OF RS. 10,71, 546/-. THE LD ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 31/03/2013 BY A DDING RS. 60 LACS. 18 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT THE ASSESSEE BEFORE THE LD PROVED THE IDENTITY, GENU INENESS AND CREDITWORTHINESS OF THE SHARE HOLDERS BY SUBMITTING THE FOLLOWING EVIDENCE: NAME PARTY DETAILS ENCLOSED HEREWITH VINDYA AGENCIES PVT. LTD 1. COPY OF SHARE APPLICATION IN LIEU OF CONFIRMATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. 2. COPY OF BOARD RESOLUTION. 3. COPY OF DIRECTORS REPORT, AUDITORS REPORT, BALANCE SHEET, PROFIT & LOSS A/C AND SUPPORTING ANNEXURE FOR 31.03.2008 4. COPY OF BANK STATEMENT. THE COPIES OF DOCUMENTS ARE ENCLOSED AT PB PAGE 39-54. SHIVARPAN MERCANTILES PVT. LTD 1. COPY OF SHARE APPLICATION IN LIEU OF CONFIRMATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. 2. COPY OF BOARD RESOLUTION. 3. COPY OF BANK A/C OF PARTY SHOWING THE PAYMENT TO ASSESSEE AGAINST SHARE APPLICATION MONEY. 4. COPY OF ACK. OF INCOME TAX RETURN OF AY 2008-09 & AY 2007-08 5. COPY OF DIRECTORS REPORT, AUDITORS REPORT, BALANCE SHEET, PROFIT & LOSS A/C AND SUPPORTING ANNEXURE FOR 31.03.2008. THE COPIES OF DOCUMENTS ARE ENCLOSED AT PB PAGE 55-71. MIDDLETON GOODS PVT. LTD 1. COPY OF SHARE APPLICATION IN LIEU OF CONFIRMATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. 19 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT 2. COPY OF BOARD RESOLUTION. 3. COPY OF BANK A/C OF PARTY SHOWING THE PAYMENT TO ASSESSEE AGAINST SHARE APPLICATION MONEY. 4. COPY OF ACK. OF INCOME TAX RETURN OF AY 08-09 5. COPY OF BALANCE SHEET, PROFIT & LOSS A/C AND SUPPORTING ANNEXURE FOR 31.03.2008. THE COPIES OF DOCUMENTS ARE ENCLOSED AT PB PAGE 72-87. LACTRODRYER MARKETING PVT. LTD 1. COPY OF SHARE APPLICATION IN LIEU OF CONFIRMATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. 2. COPY OF BOARD RESOLUTION. 3. COPY OF ACK. OF INCOME TAX RETURN OF AY 2008-09 4. COPY OF DIRECTORS REPORT, AUDITORS REPORT, BALANCE SHEET, PROFIT & LOSS A/C AND SUPPORTING ANNEXURE FOR 31.03.2008 AND 31.03.2009. 5. COPY OF BANK A/C OF PARTY SHOWING THE PAYMENT TO ASSESSEE AGAINST SHARE APPLICATION MONEY. THE COPIES OF DOCUMENTS ARE ENCLOSED AT PB PAGE 88-117. THE LD A.O. MADE A REFERENCE TO THE INVESTIGATION WI NG KOLKATA, FOR CONDUCTING ENQUIRIES, WHICH WAS RECEIVED ON 28/03/20 13. IT WAS INFORMED BY THE ASSESSING OFFICER TO THE APPELLANT THAT THE DEPARTMENT HAD CONDUCTED INQUIRY BUT THE AR ARGUED THAT WHAT KIND O F INQUIRES CONDUCTED BY THE AO HAD NOT BEEN INTIMATED TO THE APPELLANT. FURTHER NO SUCH 20 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT INQUIRY REPORT HAD BEEN PROVIDED TO THE ASSESSEE. H E HAS PARTICULARLY DRAWN OUR ATTENTION ON PAGE NO. 29 AND 30 OF THE PAP ER BOOK. THE ASSESSEE FURTHER ENQUIRED FROM THE SHARE HOLDERS AN D SUBMITTED AFTER COLLECTING INFORMATION FROM THE SHARE HOLDERS AS UN DER:- NAME OF COMPANIES RESULT OF ENQUIRIES OF AS GIVEN IN LETTER OF AO COMMENTS OF THE ASSESSEE VINDYA AGENCIES PVT. LTD SUMMONS U/S 131 WAS ISSUED BUT THERE WAS NO COMPLIANCE TO THE SUMMONS BY THE ABOVE REFERRED PARTIES. THE NOTICE DULY SERVED TO PARTY BUT THE COMPLIANCE COULD NOT BE MADE AS THE OFFICER WHO ISSUED THE NOTICE WAS ON LEAVE. SHIVPRAN MERCANTILES PVT. LTD. THE NOTICE DULY SERVED TO PARTY BUT THE COMPLIANCE COULD NOT BE MADE AS THE OFFICER WHO ISSUED THE NOTICE WAS ON LEAVE. MIDDLETON GOODS PVT. LTD THE NOTICE DULY SERVED TO PARTY AND IN COMPLIANCE TO THE NOTICE THE PARTY SUBMITTED ALL THE DOCUMENTS IN INCOME TAX OFFICE. THE COPY OF LETTER SUBMITTED BY THE PARTY IS ENCLOSED HEREWITH. (THE COPY OF LETTER FILED IS AT PB PAGE 118.) LACTRODRYER MARKETING PVT. LTD THE NOTICE DULY SERVED TO PARTY AND IN COMPLIANCE TO THE NOTICE THE PARTY SUBMITTED ALL THE DOCUMENTS IN INCOME TAX OFFICE. 21 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT IT IS ARGUED THAT THE SUMMONS ISSUED BY THE DEPARTM ENT HAS BEEN SERVED ON ALL THE COMPANIES. THE SUMMONS SERVED WERE COMPLIE D BY TWO COMPANIES AND OTHER TWO COMPANIES COULD NOT COMPLY T HE SUMMONS BECAUSE OF THE REASONS MENTIONED IN THE ABOVE PARAS . FURTHER IT IS RELEVANT TO MENTION THAT ALL THE COMPANIES ARE PVT. LTD COMPANIES DULY REGISTERED WITH REGISTRAR OF COMPANIES AND DULY EXIS TENCE AND REGULARLY FILING THEIR BALANCE SHEETS ETC. IN ROC AND THE CUR RENT STATUS OF THE COMPANIES CAN BE VERIFIED FROM WEBSITE OF ROC. THE AS SESSEE SUBMITTED A PRINT OUTS OF MASTER DATA OF ABOVE COMPANIES TAKE N FROM THE WEBSITE OF THE ROC TO SHOW THE CURRENT STATUS OF THE COMPANIES. HE FURTHER RELIED UPON THE DECISION IN THE CASE OF CIT V/S. WINSTRAL PETROCHEMICALS (P) LTD. (2010) 41 DTR (DEL) 139 WHEREIN THE HONBLE COURT HAS HELD THAT SHARE APPLICATION MONEY RECEIVED THROUGH BANKING CHANNEL FURNISHED CONFIRMATIONS FROM THE APPLICANT COMPANIES, COPIES OF CERTIFICATES OF INCORPORATION, PAN CARDS, PAN DETAILS AND COMPANY D ETAILS ETC. OF THE APPLICANTS. HAD IDENTITY OF THE SUBSCRIBERS STOOD D ULY ESTABLISHED? MERELY BECAUSE THE APPLICANTS DID NOT RESPOND TO THE NOTIC ES SENT TO THEM, AO WAS NOT JUSTIFIED IN ADDING THE AMOUNT OF SHARE APPL ICATION MONEY TO THE INCOME OF THE ASSESSEE. HE FURTHER RELIED ON THE DE CISION IN THE CASE OF CIT V/S. SAMIR BIO-TECH (P) LTD. (2009) 17 DTR (DEL) 224 WHEREIN SHARE 22 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT APPLICATION APPLIED THROUGH BANKING CHANNEL AMOUNT SHOWN IN THEIR AUDITED BALANCE SHEET AND GIVEN COMPLETE DETAILS. N O ADDITION U/S 68 CAN BE MADE. HE FURTHER ARGUED THAT THERE WAS NO REASON WITH THE DEPARTMENT TO PRESUME THAT THE AMOUNT RECEIVED FROM THE ABOVE MENTIONED COMPANIES IS ACCOMMODATION ENTRIES. FURTH ER DURING THE COURSE OF SEARCH THE DEPARTMENT HAS NOT FOUND ANY U NDISCLOSED SOURCE OF INCOME OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION BY WHICH THIS MUCH OF INCOME COULD BE EARNED WHICH ALSO PROVES THAT TH E SHARE CAPITAL RECEIVED BY THE ASSESSEE IS GENUINE. HE FURTHER REL IED ON THE FOLLOWING DECISIONS ON ADDITION MADE U/S 68 OF THE ACT: (I) SREELEKHA BANERJEE VS CIT [1963] 49 ITR 112 (SC ). (II) UMA CHARAN SHAW & BROS CO VS CIT 37 ITR 271 . (III) CIT VS ANUPAM KAPOOR (2008) 299 ITR 179 (P & H) . 4.1 THE LD AR FURTHER ARGUED THAT THERE WAS A SEARCH AND DURING THE COURSE OF SEARCH, NO INCRIMINATING DOCUMENTS WER E FOUND. THE LD ASSESSING OFFICER MADE ASSESSMENT FOR THE YEAR UNDE R CONSIDERATION U/S 153A READ WITH SECTION 143(3) OF THE ACT. THE RETURN FOR THE YEAR UNDER CONSIDERATION WAS FILED U/S 139(1) ON 30/09/2008, WH ICH CAN BE SELECTED FOR SCRUTINY BY 30/09/2009 AS SUCH NO SCRUTINY NOTI CE U/S 143(2) WAS ISSUED FOR THE YEAR UNDER CONSIDERATION. THEREFORE, PROCEEDING WERE 23 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT COMPLETED AND WERE NOT ABATED AS PER LAW, THEREFORE, ASSESSMENT MADE BY THE ASSESSING OFFICER U/S 153A READ WITH SECTION 143(3) IS VOID AB INITIO. THE LD AR RELIED ON THE DECISION OF THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) VS. ACIT (SUP RA) AND HONBLE MUMBAI ITAT SPECIAL BENCH DECISION IN THE CASE OF AL L CARGO GLOBAL LOGISTICS LTD. VS DCIT 2012-TIOL-391-ITAT-MUM-SPECIAL BENCH AND ARGUED THAT ASSESSMENT MADE BY THE A.O. U/S 153A IS NOT VALID AS PER LAW. HE FURTHER RELIED ON THE FOLLOWING DECISIONS ON THIS ISSUE:- (I) CIT V/S SMT. SHAILA AGARWAL, 204 TAXMAN 276 (ALLAHABAD HIGH COURT) (II) VISHAL DEMBLA VS DEPUTY COMMISSIONER OF INCOM E TAX ITAT, JODHPUR BENCH ITA NOS. 304 TO 308/JD/2013; 22ND JULY, 2013 (2013) 93 DTR (JD)(TRIB) 1 (2013) 36 CCH 484 JODH TRIB (2014) 61 SOT 10 (JODHPUR)(URO). (III) MARIGOLD MERCHANDISE (P) LTD VS DEPUTY COMMI SSIONER OF INCOME TAX ITAT DELHI ITA NOS. 2666 & 2667/DEL/2013 27TH DECEMBER, 2013 (2013) 38 CCH 050 DEL TRIB. (IV) GURINDER SINGH BAWA V. DCIT (2012) 28 TAXMANN.CO M 328 (MUM TRIB). (V) KUSUM GUPTA V. DCIT, ITA NOS. 4873/DEL/2009, (2 005- 06) 2510 (A.Y. 2003-04), 3312(A.Y. 2004-05) 2833/DEL/2011 (A.Y. 2006-07). (VI) MGF AUTOMOBILES LTD. V. ACIT, ITA NOS 4212 & 4213/DEL/2011 (ITAT DELHI). 24 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT (VII) TARANNUM ZAFAR KHAN VS. ACIT, ITA NOS. 5888 TO 5890/MUM/2009. (VIII) VEE GEE INDUSTRIAL ENTERPRISES VS. ACIT, ITA NO. 1/DEL/2011 & ITA NO.2/DEL/2011 (ITAT DELHI). (IX) ITA NOS. 1153 TO 1159/HYD/2012 MIR MAZHARUDDI N, 24.1.2013 (ITAT HYDERABAD). (X) ASHA KATARIA, I.T.A. NOS. 3105, 3106 & 3107/DEL /2011 20.5.2013. (XI) NATVAR PARIKH & CO PVT LTD VS DEPUTY COMMISSI ONER OF INCOME TAX (ITAT MUMBAI) ITA NO. 2143/MUM./2009, 2144/MUM./2009 & 2145/MUM./2009 22ND JANUARY, 2014 (2014) 39 CCH 031. THE LD AR FURTHER CONTENDED THAT SINCE NO ANY INCRIM INATING DOCUMENT WAS FOUND AS THE RESULT OF SEARCH TO VISUALIZE THE N ON-GENUINE SHARE CAPITAL , THEREFORE, THE ADDITION IS BEYOND THE SCOPE OF SECT ION 153A OF THE ACT. THE ASSESSEE HAS PROVED THE IDENTITY, GENUINENE SS AND CREDITWORTHINESS OF THE TRANSACTION. THE DEPARTMENT H AD ISSUED NOTICES TO THE COMPANIES AND ALL THE NOTICES SERVED ON THE COM PANIES, IN ONE CASE, WHICH ALSO PROVED THE IDENTITY OF THE PARTY. THE SHA RE APPLICANT COMPANIES ARE FILING INCOME TAX RETURN, BALANCE SHE ETS IN WHICH SUFFICIENT FUND HAS BEEN DISCLOSED IN FORM OF SHARE CAPITAL, R ESERVE AND SURPLUS INDIVIDUALLY. THE COPY OF RETURN, BALANCE SHEET, COP Y OF PAN, COPY OF BANK STATEMENTS HAD BEEN FILED BEFORE THE LOWER AUTHORITI ES. THE ASSESSEE 25 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT RECEIVED THESE SHARE APPLICATION MONEY FROM THE BAN KING CHANNEL, THEREFORE, THE TRANSACTION CANNOT BE DOUBTED. THE AS SESSEE COMPANY ALLOTTED THE SHARE AGAINST THE SHARE APPLICATION MO NEY, THESE SHARES WERE NOT FOUND IN POSSESSION OF THE ASSESSEE DURING THE COURSE OF SEARCH. THERE WAS NO EVIDENCE FOUND DURING THE COURSE OF SEAR CH THAT ASSESSEES OWN UNACCOUNTED MONEY HAS ROUTED THROUGH THESE SHARE HOLDERS COMPANIES. THE LD ASSESSING OFFICER RECEIVED THE ENQ UIRY REPORT ON 26/3/2013 AND WHICH FACTS BROUGHT TO THE NOTICE OF T HE ASSESSEE ON 28/3/2013, ASSESSMENT WAS COMPLETED ON 31/3/2013 AND WITHOUT PROVIDING COPY OF ENQUIRY REPORT TO THE APPELLANT, THE LD ASSESSING OFFICER ASKED TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE SHARE HOLDERS BEFORE THREE DAYS OF COMPLETION OF AS SESSMENT ORDER. THE ASSESSEE REPLIED ON 28/3/2013 ITSELF AND SUBMITTED ALL THE EVIDENCES TO THE ASSESSING OFFICER IN SUPPORT OF SHARE APPLICATI ON MONEY RECEIVED FROM THE RESPECTIVE PARTIES. THE ASSESSEE NEVER REFUSED T O PRODUCE THE PARTIES, THERE SHOULD BE SOME TIME AVAILABLE WITH THE ASSESSI NG OFFICER AS WELL AS PARTY TO PRODUCE THE CASH CREDITORS. AS THE PARTIES BELONGED TO KOLKATA, IT IS DIFFICULT TO APPROACH THEM IN A SHORT NOTICE. THE LD CIT(A) ALSO HAS NOT DIRECTED TO PRODUCE THE SHARE HOLDERS FOR CROSS EXA MINATION VERIFICATION. THE CASE LAWS REFERRED BY THE LD CIT(A) AND ASSESSING OFFICER ARE NOT 26 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT SQUARELY APPLICABLE ON THE FACTS OF THE CASE. THEREF ORE, HE PRAYED TO HOLD THE PROCEEDING INVALID AND ALSO ON MERIT, THIS APPE AL IS DESERVED TO BE ALLOWED IN FAVOUR OF THE ASSESSEE. 5. AT THE OUTSET, THE LD CIT DR HAS VEHEMENTLY SUPPO RTED THE ORDER OF THE LD CIT(A) AND HAS DRAWN OUR ATTENTION ON FINDINGS GIVEN BY THE LD CIT(A) AND CASE LAWS REFERRED BY HER AND ARGUED THAT THE ASSESSEE HAS NOT DISCHARGED ITS ONUS CAST U/S 68 OF THE ACT I.E. IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE HOLDERS. THE LD DR RELIED ON THE DECISION IN THE CASE OF CIT VS. NAVODAYA CASTLES PVT . LTD. WHEREIN THE HON'BLE HIGH COURT SET ASIDE THE ORDER OF THE ITAT O N THE GROUND THAT THE TRIBUNAL MERELY REPRODUCED EARLIER ORDER OF THE CIT( A) ON ADDITION MADE U/S 68 OF THE ACT AS SHARE APPLICATION MONEY. THE LD CIT DR FURTHER ARGUED THAT THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 HAS DISTING UISHED IN WHICH SLP HAS BEEN FILED BY THE ASSESSEE AND DECIDED IN FAVOU R OF THE REVENUE. THEREFORE, HE PRAYED TO UPHOLD THE ORDER OF THE LD C IT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN T HIS CASE THE RETURN U/S 139(1) WAS FILED ON 30/09/2008 AS PER LAW FOR THE YEA R UNDER 27 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT CONSIDERATION. THE ASSESSING OFFICER COULD ISSUE NOT ICE BY 30/09/2009 U/S 143(2). IN THIS CASE, SEARCH WAS CONDUCTED ON 06/5/2 010. THEREAFTER THE ASSESSING OFFICER ISSUED NOTICE ON 16/09/2011 U/S 1 53A READ WITH SECTION 143(2) OF THE ACT. DURING THE COURSE OF SEARCH, NO INCRIMINATING DOCUMENTS WERE FOUND. THEREFORE, NO NOTICE CAN BE ISS UED U/S 153A READ WITH SECTION 143(3) OF THE ACT BECAUSE NO PROCEEDING WAS PENDING BEFORE THE ASSESSING OFFICER, WHICH HAS ABATED FOR ISSUE OF NOTICE ON THE DATE OF INITIATION OF SEARCH. VARIOUS CASE LAWS REFERRED BY THE ASSESSEE INCLUDING HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE C ASE OF JAI STEEL (INDIA) VS. ACIT (SUPRA) ARE SQUARELY APPLICABLE ON THE CASE OF THE ASSESSEE. THUS, ON TECHNICAL GROUND, THE ASSESSEES APPEAL SUC CEEDS AND ORDER PASSED U/S 153A READ WITH SECTION 143(3) OF THE ACT IS HELD VOID AB INITIO. 6.1 ON FACTS ALSO, THE ASSESSEE HAS PRODUCED BEFORE THE ASSESSING OFFICER COPY OF SHARE APPLICATION, CONFIRMATION OF THE CASH CREDITORS, COPY OF PAN, COPY OF BOARD RESOLUTION, COPY OF DIRECTOR S REPORT, AUDITORS REPORT, COPY OF BALANCE SHEET, COPY OF P&L ACCOUNT, COPY OF BANK ACCOUNT IN ALL THE CASES TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CASH CREDITORS. THE LD ASSESSING OFFICER MADE A DDITION ON THE BASIS OF INVESTIGATION CONDUCTED BY THE ITO, INVESTIGATION WI NG, KOLKATA BUT THE LD 28 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT ASSESSING OFFICER OF THE ASSESSEE HAS NOT CLARIFIED WHAT INQUIRY HAD BEEN CONDUCTED AND WHAT EVIDENCES COLLECTED WHICH GOES AGA INST THE ASSESSEE. THE NOTICE U/S 131 ISSUED BY THE ITO, INVESTIGATION WING, KOLKATA WERE SERVED IN CASE OF VIDYA AGENCIES PVT. LTD. AND SHIV ARPAN MERCANTILES PVT. LTD., BUT COMPLIANCE COULD NOT BE MADE ON THE GIVEN DATE BECAUSE CONCERNED OFFICER WAS ON LEAVE. IN CASE OF MIDDLETON GOODS PVT. LTD. AND LACTRODRYER MARKETING PVT. LTD., NOTICES WERE SERVED ON THE ASSESSEE AND IN COMPLIANCE TO THE NOTICE, THE PARTY SUBMITTED AL L THE DOCUMENTS IN THE IT OFFICE. THE CASE LAW REFERRED BY THE LD CIT(A) I.E. DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NIPUN BUILDERS AND DEVELOPERS PVT. LTD. VS. CIT AND VIJAY POWER GENERATOR LTD. VS CIT (SUPRA) ARE NOT SQUARELY APPLICABLE ON THE FACTS OF THE CASE AS THERE WAS SHO RT TIME AVAILABLE WITH THE ASSESSING OFFICER AS WELL AS INVESTIGATION WING OF KOLKATA. THE COPY OF INQUIRY HAS NOT BEEN PROVIDED BY THE ASSESSING O FFICER TO THE ASSESSEE. AS PER FINDINGS OF THE HON'BLE DELHI HIGH COURT IN THE CASE NIPUN BUILDERS AND DEVELOPERS PVT. LTD. VS. CIT (SUPRA), THE INVEST IGATION OFFICER AT KOLKATA HAD NOT DEPUTED INSPECTOR TO ENQUIRE THE WHE REABOUTS OF THE COMPANY. THE CASE LAWS REFERRED BY THE ASSESSEE ARE S QUARELY APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS C ASE, THEREFORE, WE 29 ITA NO.686/JP/2014 M/S JADAU JEWELLERS VS. ACIT REVERSE THE ORDER OF THE LD CIT(A) ON TECHNICAL GROU ND AS WELL AS ON MERIT ALSO. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/12/2015. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14 TH DECEMBER, 2015 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S JADAU JEWELLERS & MANUFACTURERS PV T. LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CENTRAL CIRCLE-2, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 686/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR