Mannat Hospitality (P) Ltd., Delhi V. ITO, Ward- 16(2), New Delhi

ITA 7348/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1458 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 20-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: REPUDAMAN THAKUR
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained investment; Search and seizure; Document seized; Share purchase agreement; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Validity of assessment; Accommodation entries; Tax effect; Onus to prove; Reason to believe; Documents seized; Reassessment proceedings; Set aside
• Section: 143(3); 153A; 234B; 147; 68; 148; 37; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND SH. KULDIP SINGH, JUDICIAL MEMBER ITA NO.7348/DEL/2018 ASSESSMENT YEAR: 2009-10 MANNAT HOSPITALITY (P) LTD. 325, JAGIRIT ENCLAVE, DELHI-110092 PAN NO.AAGCM0506Q VS INCOME TAX OFFICER WARD 16 (2) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. REPUDAMAN THAKUR, CA RESPONDENT BY MS. RINKU SINGH, SR DR DATE OF HEARING: 11/03/2019 DATE OF PRONOUNCEMENT: 07/06/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 10.09.2018 OF THE CIT(A)-6, DELHI RELAT ING TO A. Y. 2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY WHICH WAS INCORPORATED ON 05/01/2009 AND FO R THE A.Y. 2009-10, NO RETURN OF INCOME WAS FILED. THE RE ASONS TO BELIEVE THAT INCOME ESCAPED ASSESSMENT IN THE SAID CASE PAGE | 2 EMANATED FROM A SEARCH/SEIZURE OPERATION UNDER SECT ION 132 WHICH WAS CONDUCTED AT THE RESIDENTIAL AND BUSINESS PREMISES OF SHRI SURENDRA KUMAR JAIN AND SHRI VIRENDRA JAIN BY THE INVESTIGATION WING, NEW DELHI WHICH RESULTED IN SEI ZURE OF A LARGE NUMBER OF INCRIMINATING DOCUMENTS. DURING THE SEARC H AND POST SEARCH INVESTIGATION IT WAS ESTABLISHED THAT SHRI S .K. JAIN AND SHRI VIRENDRA JAIN WERE IN THE BUSINESS OF PROVIDIN G ACCOMMODATION ENTRIES THROUGH CHEQUE IN LIEU OF CAS H. ACCOMMODATION ENTRIES WERE PROVIDED TO VARIOUS BENE FICIARY COMPANIES/ ENTITIES THROUGH A NUMBER OF PAPERS/DUMM Y COMPANIES. CASH RECEIVED FROM THE BENEFICIARIES WAS ROUTED THROUGH PAPER COMPANIES AND THESE DUMMY COMPANIES W ERE MANAGED AND CONTROLLED BY SHRI S.K.JAIN AND SHRI VI RENDRA JAIN. THE ACCOMMODATION ENTRIES WERE PROVIDED BY WAY OF S HARE CAPITAL, SHARE APPLICATION MONEY AND COMMISSION CHA RGED WAS FROM BENEFICIARIES FOR PROVIDING SUCH ACCOMMODATION S ENTRIES. THE INVESTIGATION REPORT DETAILING THE MODUS OPERAN DI ADOPTED BY THE ENTRY OPERATORS HAS BEEN REPRODUCED BY THE AO I N THE ASSESSMENT ORDER WHICH GIVES COMPLETE DETAILS SHOWI NG RECEIPT OF ACCOMMODATION ENTRY BY THE ASSESSEE FROM ENTRY PROV IDING PAGE | 3 COMPANIES, AMOUNT OF ENTRIES, BANK ACCOUNT AND CHEQ UE DETAILS AND MONEY OF MIDDLE MEN INSTRUMENTAL IN MANAGING TH E ENTRIES FOR THE BENEFICIARIES, I.E., THE ASSESSEE. 3. AS PER INFORMATION PROVIDED BY INVESTIGATION WI NG, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS OBTAI NED ACCOMMODATION ENTRIES AMOUNTING TO RS.56,00,000/- F ROM S. K. JAIN GROUP OF COMPANIES AS BELOW :- MANNAT HOSPITALITY P. LTD. CHEQUE BOOK ENTRIES DATE FROM TO BANK MODE OF PAYMENT AMOUNT REMARKS 12.01.2009 MANIMALA DELHI PROPERTIES P. LTD. MANNAT HOSPITALITY AXIS BANK PLO NO.026127 16,00,000 A-27 PAGE 33 13.02.2009 VIRGIN CAPITAL SERVICES P. LTD MANNAT HOSPITALITY AXIS BANK PLO NO.026633 20,00,000 A-26 PAGE 61 13.02.2009 VIRGIN CAPITAL SERVICES P. LTD. MANNAT HOSPITALITY AXIS BANK PLO NO.026633 20,00,000 A-26 PAGE 61 TOTAL 56,00,000 PAGE | 4 HE FURTHER NOTED THAT ON THE BASIS OF SEIZED DOCUM ENTS SEIZED FROM JAIN BROTHERS, IT HAS BEEN NOTICED THAT JAIN BROTHERS HAD RECEIVED RS.56,00,000/- IN CASH FROM INTERMEDIA RY CHAWLA JI IN LIEU OF ACCOMMODATION ENTRY TO THE INSTANT ASSES SEE (AS WELL AS OTHER BENEFICIARIES). THIS CASH HAS BEEN RECEIVED DURING THE SAME PERIOD WHEN THE ACCOMMODATION ENTRY HAS BEEN GIVEN TO THE INSTANT ASSESSEE, THE DETAILS OF WHICH ARE AS UNDER :- MANNAT HOSPITALITY P. LTD. INTERMEDIARY (CHAWLA JI) CASH BOOK ENTRIES DATE AMOUNT INTERMEDIARY REMARKS 12.01.2009 16,00,000 CHAWLA JI A-27 PAGE 10 BACK 13.02.2009 40,00,000 CHAWLA JI A-26 PAGE 21 4. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSE E SUBMITTED THAT THE SHARE CAPITAL HAD BEEN RAISED FR OM TWO PARTIES NAMELY VIRGIN CAPITAL SERVICES PVT. LTD. AND MANIMA LA DELHI PROPERTIES PVT. LTD. CONFIRMATION LETTER ETC WERE F ILED ALONGWITH SHARE APPLICATION FORM, BOARD RESOLUTION AFFIDAVIT OF DIRECTOR OF COMPANY, BANK STATEMENT, COPY OF ACKNOWLEDGEMENT, E TC. 5. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE. RELYING ON VARI OUS PAGE | 5 DECISIONS THE ASSESSING OFFICER MADE ADDITION OF RS .56 LACS U/S. 68 OF THE IT ACT BY OBSERVING AS UNDER :- 11.1 TO SUM UP, A SUM OF RS. 56,00,000/- HAS BEEN F OUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. T HE IMMEDIATE SOURCE OF THIS AMOUNT HAS BEEN FOUND TO B E M/S. VIRGIN CAPITAL SERVICES PVT:. LTD., AND M/S. MANITNAIA DELHI PROPERTIES PVT. LTD. OUT OF THE ENT ITIES CONTROLLED BY JAIN BROTHERS AS DISCUSSED IN PARA 6 ABOVE. 11.2 IT IS INDEED SURPRISING TO NOTE THAT THE ASSES SEE HAS MADE UNSUCCESSFUL EFFORTS TO PROVE THAT THESE TRANS ACTIONS WERE GENUINE. IT IS QUITE POSSIBLE THAT THE ASSESSE E COULD HAVE SUCCEEDED IN ITS SCHEME BUT FOR THE: SEARCH IN THE CASE OF JAIN BROTHERS WHERE COMPLETE EVIDENCE OF SC HEME OF TAX: EVASION USED BY THE ASSESSEE WERE SEIZED. T HE INCRIMINATING SEIZED DOCUMENTS ARE SELFSPEAKING AND GIVE GRAPHIC PICTURE OF THE MODUS OPERANDI ADOPTED BY TH E PARTIES INVOLVED. IT IS QUITE DISTURBING TO NOTE TH E EASE WITH WHICH THE ASSESSEE HAS BEEN CONDUCTING ITS AFFAIR B Y LAUNDERING ITS UNACCOUNTED MONEY AT: INTO REGULAR TRANSACTIONS. THE LAW ALLOWS THE ASSESSING OFFICER TO LIFT THE CORPORATE VEIL TO UNMASK THE REAL FROM THE APPA RENT AND ALSO TO GO BEHIND THE TRANSACTION TO UNDERSTAND THEIR TRUE IMPORT. THE LAW ALSO ALLOWS THE AUTHORITIES TO TEST THE TRANSACTIONS ON A TOUCHES TONE OF HUMAN PROBABILITY TO ARRIVE AT A CONCLUSION WHICH THE RATIONALE MIND WOU LD ARRIVE AT. AFTER GOING BEHIND THE TRANSACTIONS ON P APER AND PAGE | 6 AFTER LIFTING THE CORPORATE VEIL, AS DISCUSSED IN E ARLIER PARAGRAPHS, IT HAS BEEN PROVED THAT THE APPARENT WA S NOT REAL. 11.3 I CONCLUDE THEREFORE, IN VIEW OF THE FOREGOING DISCUSSION THAT A SUM OF RS.56,00,000/- CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FAILS TO PASS THE TEST OF GENUINENESS WITHIN THE MEANING OF SECTION 68 OF THE ACT AND IS HELD TO BE THE INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT, 1961 AND IS ADDED TO ITS INCOME. (ADDITION OF RS. 56,00,000/-) 6. THE ASSESSING OFFICER FURTHER MADE ADDITION OF R S.1,00,800/- BEING THE EXPENSES INCURRED FOR ARRANGING THIS UNEX PLAINED INVESTMENT BEING 1.8% OF THE ACCOMMODATION ENTRY. T HUS THE ASSESSING OFFICER COMPLETED THE ASSESSMENT DETERMIN ING THE TOTAL INCOME OF RS.57,00,800/-. 7. BEFORE CIT(A) THE ASSESSEE APART FROM CHALLENGIN G THE ADDITION ON MERIT CHALLENGED THE VALIDITY OF THE RE ASSESSMENT PROCEEDINGS. IT WAS ARGUED THAT THE ASSESSING OFFI CER INSTEAD OF ISSUING THE NOTICE U/S. 153C OF THE ACT HAS INITIAT ED THE PROCEEDINGS U/S. 147 WHICH IS LEGALLY NOT CORRECT. 8. SO FAR AS THE MERIT OF THE CASE IS CONCERNED IT WAS SUBMITTED THAT FULL DETAILS WERE GIVEN REGARDING THE IDENTITY AND PAGE | 7 CREDITWORTHINESS OF THE SHARE APPLICANTS AND THE GE NUINENESS OF THE TRANSACTION. THEREFORE, THE ADDITION MADE BY T HE ASSESSING OFFICER IS NOT JUSTIFIED. 9. HOWEVER, THE LD. CIT(A) WAS NOT SATISFIED WITH T HE ARGUMENTS ADVANCED BY THE ASSESSEE. SO FAR AS THE VALIDITY OF THE REASSESSMENT PROCEEDINGS ARE CONCERNED THE LD. CIT( A) REJECTED THE ARGUMENTS ADVANCED BY THE ASSESSEE ON THE GROUN D THAT THE ASSESSING OFFICER RECEIVED INFORMATION REGARDING AC COMMODATION ENTRIES IN RESPECT OF SHARE CAPITAL FROM THE INVEST IGATION WING WHICH CONSTITUTED NEW INFORMATION. THE ASSESSING OF FICER EXAMINED THE INFORMATION RECEIVED AND VERIFIED IT F ROM RECORDS AND NOTED THAT NO RETURN OF INCOME HAD BEEN FILED F OR THE ASSESSMENT YEAR UNDER CONSIDERATION BY THE ASSESSEE . ONLY AFTER HE WAS SATISFIED THAT THE INFORMATION RECEIVED COUL D NOT BE VERIFIED FROM RECORDS IN HIS OFFICE, HE RECORDED HI S OWN SATISFACTION, TOOK NECESSARY APPROVAL FROM THE COMP ETENT AUTHORITIES AND REOPENED THE ASSESSMENT. HE FURTHER NOTED THAT THE ASSESSEE DID NOT CHALLENGE THE ASSUMPTION OF JU RISDICTION U/S. 148 EITHER AT THE BEGINNING OF THE ASSESSMENT OR RE ASSESSMENT PROCEEDINGS OR DURING THE COURSE OF ASSESSMENT / RE ASSESSMENT PAGE | 8 PROCEEDINGS. THEREFORE, IN VIEW OF THE PROVISIONS O F SECTION 292BB, THE ASSESSEE IS PRECLUDED FROM TAKING ANY OB JECTION TO THE SAID NOTICE U/S.148 . 10. SO FAR AS THE ARGUMENTS OF THE ASSESSEE THAT ON LY 153 C PROCEEDINGS COULD HAVE BEEN TAKEN AND NOT U/S. 147, THE LD. CIT (A) RELYING ON THE DECISIONS OF THE AHEMDABAD BENCH OF THE TRIBUNAL IN THE CASE OF SHAILESH S. PATEL VS. ITO V IDE ITA NO.3063/AHEM/2016 HELD THAT THE ASSESSING OFFICER I S JUSTIFIED IN INITIATING REASSESSMENT PROCEEDINGS U/S.147 OF T HE IT ACT, SINCE THE ASSESSING OFFICER OF THE ASSESSEE (PERSON OTHER THAN THE SEARCH PERSON) CANNOT BE COMPELLED TO PURSUE THE RE MEDY U/S. 153C OF THE IT ACT. 11. SO FAR AS THE ADDITION ON MERIT OF THE CASE IS CONCERNED, THE LD. CIT(A) ALSO UPHELD THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 5.2 THE REVISED GROUND OF APPEAL NO. 3 CHALLENGES THE ADDITION OF RS. 56,00,000/- UNDER SECTION 68. THE REVISED GROUND OF APPEAL NO. 4 CHALLENGES THE ADDITION OF RS. 1,08,000/- O ACCOUNT OF COMMISSION PAID. SINCE THESE GROUNDS OF APPEAL ARE INTERLINKED , THESE ARE BEING ADJUDICATED TOGETHER. PAGE | 9 5.2.1 ON THE ISSUE OF ADDITION UNDER SECTION 68 ON ACCOUNT OF UNEXPLAINED CREDIT OF RS 56,00,000/- AND COMMISSION AT THE RATE OF 1.8%, I HAVE CONSIDERED THE FACTS OF THE CASE, THE BASIS OF ADDITION MADE B Y THE AO AND THE SUBMISSIONS OF THE APPELLANT. AS NOTED ABOVE, THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IN THIS CASE EMANATES FROM A SEARCH/SEIZURE ACTION UNDER SECTION 132 WHICH WAS CONDUCTED AT THE RESIDENTIAL AND BUSINESS PREMISES OF SHRI S.K. JAIN AND SHRI VIRENDRA JAIN BY INVESTIGATION WING, NEW DELHI RESULTING INTO SEIZUR E OF A LARGE NUMBER OF INCRIMINATING DOCUMENTS DURING THE COURSE OF SEARCH OPERATION. DURING THE COURSE O F SEARCH AND POST SEARCH INVESTIGATION IT HAS BEEN EVIDENTLY ESTABLISHED THAT SHRI S.K. JAIN AND SHRI VIRENDRA JAIN WERE IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES THROUGH CHEQUE IN LIEU OF CASH. ACCOMMODATION ENTRIES WERE PROVIDED TO VARIOUS BENEFICIARY COMPANIES/ENTITIES THROUGH A NUMBER OF PAPER/DUMMY COMPANIES AND CASH RECEIVED FROM BENEFICIARIES WAS ROUTED THROUGH PAPER COMPANIES WHICH WERE MANAGED AND CONTROLLED BY SHRI S.K. JAIN AND SHRI VIRENDRA JAIN . THESE ACCOMMODATION ENTRIES ARE PROVIDED BY WAY OF SHARE CAPITAL, SHARE APPLICATION MONEY AND/OR UNSECURED LOANS ETC. AND COMMISSION WAS CHARGED PAGE | 10 FROM BENEFICIARIES FOR PROVIDING SUCH ACCOMMODATION ENTRIES. THE ESSENCE OF SUBMISSION OF THE APPELLANT IS THAT IT IS ONLY PRESUMPTION THAT THE SHARE APPLICATION MONEY IS AN ACCOMMODATION ENTRY AS ALL THE DETAILS WERE FILED DURING THE ASSESSMENT PROCEEDINGS WHICH HAVE NOT BEEN CONSIDERED BY THE AO. 5.2.2 IT IS NOTED THAT A VERY SPECIFIC INFORMATION, AS NOTED IN PARA 3.1 ABOVE, WAS RECEIVED REGARDING CREDIT IN THE ACCOUNT OF THE ASSESSEE. SINCE THE NAME OF THE APPELLANT APPEARED IN THE SEIZED DOCUMENTS AND IT WAS KNOWN TO THE APPELLANT THAT SHRI S.K. JAIN AND SHRI VIRENDRA JAI N PROVIDED ACCOMMODATION ENTRY, THE ONUS WAS ON THE APPELLANT TO PROVE BEYOND DOUBT THAT THE TRANSACTIO N WAS GENUINE IN WHICH THE APPELLANT HAS FAILED MISERABLY. IT HAS BEEN EMPHASIZED THAT THE SHARE APPLICATION MONEY WAS RECEIVED THROUGH BANKING CHANNEL AND IN SUPPORT OF THE CREDIT WORTHINESS IT HAS BEEN SUBMITTED THAT THE NET WORTH OF MANIMALA DELHI PROPERTIES PVT. LTD. AND VIRGIN CAPITAL SERVI CES PVT. LTD. WAS SUBSTANTIALLY HIGH IN VIEW OF SHARE CAPITAL AND RESERVE & SURPLUS. IT WAS STATED THAT T HE APPELLANT HAS DISCHARGED ITS ONUS UNDER SECTION 68 SO AS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SAID COMPANY, FOR WHICH COPY OF PAGE | 11 AUDITED BALANCE SHEET ALONGWITH ANNEXURES, COPY OF ITR FOR THAT YEAR AND COPY OF BANK STATEMENT EVIDENCING DEBIT IN FAVOUR OF THE APPELLANT HAVE BE EN FURNISHED. 5.2.3 ON EXAMINATION OF THE ISSUE IT IS SEEN THAT DURING THE APPELLATE PROCEEDINGS, NO FURTHER DOCUMENTARY EVIDENCE, WHATSOEVER, HAS BEEN PRODUCED TO PROVE THE GENUINENESS OF THE TRANSACTION. APART FROM WRITTEN SUBMISSION, THE APPELLANT HAS PRODUCED COPIES OF DOCUMENTS PRODUCED, WHICH AS PER THE APPELLANT, WERE BEFORE THE AO. THESE DOCUMENTS HAS BEEN EXAMINED AND IT IS SEEN THAT INSTEAD OF SUPPORTING THE CASE OF APPELLANT, THESE DOCUMENTS ONLY REINFORCE THE FINDINGS OF THE AO WHICH ARE BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE ALONGWITH DEEP AND WIDE INVESTIGATION CARRIED OUT BY THE DEPARTMENT IN THE CASE OF SHRI S.K. JAIN AND SHRI VIRENDRA JAIN GROUP OF CASES AS THESE DOCUMENTS ARE IN TUNE WITH MODUS-OPERANDI THROUGH WHICH ACCOMMODATION ENTRIES HAVE BEEN PROVIDED BY THE SAID GROUP. 5.2.4 FROM THE ANALYSIS OF THEIR FINANCIAL STATEMENTS IT IS APPARENT THAT THE COMPANIES WHICH HAVE GIVEN SHARE CAPITAL TO THE APPELLANT COMPANY ARE DUMMY COMPANIES HAVING SUBSTANTIAL SHARE CAPITAL & RESERVE CREATED BY MANIPULATIONS WITH THE PAGE | 12 SOLE MOTIVE OF PROVIDING ACCOMMODATION ENTRIES, BANK STATEMENTS OF THE COMPANIES CLEARLY SHOW THAT HUGE AMOUNT OF MONEY IS TRANSFERRED TO THE COMPANY ONLY TO BE IMMEDIATELY TRANSFERRED TO THE BANK ACCOUNTS OF THE BENEFICIARIES. FOR INSTANCE, FROM T HE BANK STATEMENT OF MANIMALA DELHI PROPERTIES PVT. LTD. (PAGE 28 OF THE PAPER BOOK) IT IS SEEN THAT AN AMOUNT OF RS. 16,03,000/- WAS RECEIVED FROM TULIKA ON 12/01/2009 AND ON THE SAME DAY, I.E., ON 12/01/2009, AN AMOUNT OF RS. 16,00,000/- IS SHOWN TO HAVE BEEN TRANSFERRED FOR PO ISSUE. PRIOR TO RECEIVING THE SAID CREDIT, THE BALANCE IN THE ACCOU NT WAS RS. 1,52,914.57 AS ON 12/01/2009 AND AFTER GIVING THE SAID CREDIT, THE BALANCE IN THE ACCOUNT WAS AGAIN RS. 1,53,914.57. SIMILARLY, FROM THE BANK STATEMENT OF VIRGIN CAPITAL SERVICES PVT. LTD. (PAG E 54 OF THE PAPER BOOK) IT IS SEEN THAT TWO CREDIT ENTRIES OF RS. 72,00,000/- AND RS. 40,02,000/-WERE RECEIVED FROM TULIKA SECURITIES AND TULIKAS RESPECTIVELY ON 13/02/2009 AND ON THE SAME DAY, I.E., ON 13/02/2009, AN AMOUNT OF RS. 40,00,000/- IS SHOWN TO HAVE BEEN TRANSFERRED FOR PO ISSUE. PRI OR TO RECEIVING THE SAID CREDITS, THE BALANCE IN THE ACCOUNT WAS RS. 37, 373.97 AS ON 13/02/2009. IT IS ALSO TO BE NOTED THAT IN BOTH THE CASES CREDIT ENTR IES WERE RECEIVED FROM TULIKA SECURITIES, WHICH IS PAGE | 13 CONCERN KNOWN TO BE MANAGED AND CONTROLLED BY SHRI S.K. JAIN AND SHRI VIRENDRA JAIN. THIS IN ITSE LF DEMONSTRATES THAT THE TRANSACTIONS THROUGH BANKS WERE THE DELIBERATE STEPS TAKEN BY THE ENTRY PROVIDERS WITH THE SOLE MOTIVE OF IMPARTING A COLOU R OF GENUINENESS AND TO CAMOUFLAGE THE REAL NATURE OF TRANSACTION AND HENCE A HEAVIER ONUS IS CAST ON THE APPELLANT TO PROVE THE GENUINENESS OF SUCH TRANSACTIONS BY ADDUCING EVIDENCES AND GIVING EXPLANATIONS, WHICH ARE CAPABLE OF PROVING BEYOND ANY DOUBT THAT ITS TRANSACTIONS OF SHARE MONEY ARE DISTINCTLY GENUINE AND DIFFERENT FROM THOSE WHO HAV E BEEN FOUND TO BE INVOLVED IN AFORESAID MODUS- OPERANDI OF TAX EVASION, PARTICULARLY, WHEN THE DETAILS OF TRANSACTIONS OF THE APPELLANT FOUND DURI NG SEARCH OPERATION APPEAR PROMINENTLY IN SEIZED DOCUMENTS. THE INSISTENCE OF THE APPELLANT ON THE GENUINENESS OF TRANSACTIONS BASED ON SUCH DOCUMENTS FAILS TO MITIGATE THE SEVERITIES OF STRON G INCRIMINATING EVIDENCES FOUND IN THE FORM OF SEIZED DOCUMENTS IN WHICH ITS NAME APPEARS AS A BENEFICIARY AND THE COMPANY GIVING THE LOAN IS FOUN D TO BE AN ENTRY PROVIDER. 5.2.5 IN A RECENT DECISION, ON SIMILAR FACTS AND ON ANALYSIS OF BANK STATEMENTS OF THE ENTITIES GIVING SHARE APPLICATION MONEY, THE HON'BLE IT AT, DELHI I N PAGE | 14 THE CASE OF PEE AAR SECURITIES LTD. VS. DCIT, CIRCL E- 14(L), NEW DELHI[(2018) 96 TAXMANN.COM 602 (DELHI - TRIB.)] HAVE HELD AS UNDER: 20.0. 28. WE ARE UNABLE TO LAY HANDS ON ANY OF THE DECISI ONS OF HONBLE JURISDICTIONAL HIGH COURT WHICH IS CONTR ARY TO THE APPROACH SO ADOPTED IN THIS JUDICIAL PRECEDENT. LE T US, IN THIS LIGHT, REVERT TO THE FACTS OF THE CASE BEFORE US. THE ASSESSEE BEFORE US IS A PRIVATE LIMITED COMPANY WHICH IS, BY LAW, PROHIBITED FROM OFFERING ITS SECURITIES FOR SUBSCRI PTION BY GENERAL PUBLIC. IT CANNOT, THEREFORE, BE REALLY OPE N TO THE ASSESSEE TO SAY THAT WE HAVE NO CLUE ABOUT WHO THE SUBSCRIBERS TO THE SHARE CAPITAL ARE; THESE CANNOT BE RANK OUTSIDERS OR WALK IN SUBSCRIBERS- AS PERHAPS IN THE CASES OF PUBLIC LIMITED COMPANIES. YET, ALL THAT THE COMPANY HAS TO OFFER, TO ESTABLISH GENUINENESS OF TRANSACTIONS OF SUBSCRIBING TO THE SHARES, ARE THE BANK STATEMENTS. THE ASSESSE E IS NOT ABLE TO PRODUCE THE BRAINS BEHIND THESE COMPANIES A ND THE DOCUMENTS WITH RESPECT TO THE THEIR FINANCIALS EITH ER. AS FOR THE OTHER DOCUMENTS, THESE DOCUMENTS HAVE TO BE THE RE FOR ISSUANCE OF SHARE CAPITAL ANYWAY- GENUINE SUBSCRIPT ION OR NOT SO GENUINE SUBSCRIPTION. GENUINENESS OF A TRANS ACTION CANNOT BE DEMONSTRATED ON THE BASIS OF THESE DOCUME NTS. THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE PRINCIPAL OFFICERS OF THESE ENTITIES, BUT THEN, GIVEN THE WAY THE FACT S ABOUT PAGE | 15 THESE ENTITIES HAVE UNFOLDED, THE REASONS FOR THE L IMITATIONS OF THE ASSESSEE ARE NOT DIFFICULT TO SEEK. AS PER DECI SIONS OF THIS TRIBUNAL FILED BY THE ASSESSEE ON HIS OWN, THESE EN TITIES, AS INDEED OTHER ENTITIES IN TARUN GOYAL GROUP, WERE NE VER INVOLVED IN ANY GENUINE BUSINESS ANYWAY AND WERE ON LY IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. TH E SHELL ENTITIES, LIKE THESE TWO ENTITIES BEFORE US, HAVE E VERY SEMBLANCE OF A GENUINE BUSINESS- ITS LEGAL OWNERSHI P BY PERSONS IN EXISTENCE, STATUTORY DOCUMENTATION AS NE CESSARY FOR A LEGITIMATE BUSINESS AND A DOCUMENTATION TRAIL AS A LEGITIMATE TRANSACTION WOULD NORMALLY FOLLOW. THE O NLY THING WHICH SETS IT APART FROM A GENUINE BUSINESS ENTITY IS LACK OF GENUINENESS IN ITS ACTUAL OPERATIONS. THE OPERATION S CARRIED OUT BY THESE ENTITIES, ARE ONLY TO FACILITATE FINAN CIAL MANOEUVRING FOR THE BENEFIT OF ITS CLIENTS, OR, WIT H THAT PREDOMINANT UNDERLYING OBJECTIVE, TO GIVE THE COLOU R OF GENUINENESS TO THESE ENTITIES. THESE SHELL ENTITIES , WHICH ARE ROUTINELY USED TO LAUNDER UNACCOUNTED MONIES, ARE A FACT OF LIFE, AND AS MUCH A PART OF THE UNDERBELLY OF THE F INANCIAL WORLD, AS MANY OTHER EVILS. EVEN A LAYMAN, MUCH A M EMBER OF THIS SPECIALIZED TRIBUNAL, CANNOT BE OBLIVIOUS O F THESE GROUND REALITIES. IT WOULD, THEREFORE, NOT REALLY B E APPROPRIATE FOR US TO BE SWAYED BY THE DOCUMENTS LIKE PAN CARDS , BOARD RESOLUTIONS PASSED BY THESE ENTITIES, COPIES OF DIS TINCTIVE SHARE CERTIFICATES, COPIES OF LETTER FROM THESE TWO ENTITIES CONFIRMING THE FACT OF SHARE SUBSCRIPTIONS AND EXTR ACTS FROM PAGE | 16 THE MINUTES OF MEETING OF THE DIRECTORS. AS FOR THE BANK STATEMENTS OF THESE COMPANIES, AS RIGHTLY POINTED O UT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THESE STATEMEN TS SHOW THE LACK OF GENUINENESS. SO FAR AS MAHANIVESH'S BAN K STATEMENT WITH IDBI BATIK IS CONCERNED, WHAT IS FIL ED BEFORE US IS THE PAGE CONTAINING ENTRIES FROM 1ST TUNE 200 4 TO 30TH JUNE 2004. ON 1ST JUNE, THIS BANK STATEMENT SHOWS A CREDIT BALANCE OF RS 46,681. ON 1ST JUNE, THERE IS A CREDI T OF RS 60,000 AND THE IMMEDIATELY FOLLOWING DAY, THERE IS A WITHDRAWAL OF RS 50,000. ON 8TH JUNE, THERE IS A CR EDIT OF RS. 10,00,000 AND ON THE SAME DAY A DEBIT OF THE SAME A MOUNT IS ALSO MADE. ON 11TH JUNE, THERE ARE DEPOSITS OF R S CREDIT OF RS.20,00,000 AND ON THE SAME DAY, A DEBIT OF RS.20, 00,000 IS GIVEN SHOWING PAYMENT TO THE ASSESSEE. ON 22 ND JUNE, THERE ARE CREDITS THERE CREDITS OF RS.19,97,995/- A ND, ON THE SAME DAY A DEBIT OF RS.20,00,000 AND ON THE SAME DA Y A DEBIT OF RS.20,00,000 IS GIVEN SHOWING PAYMENT TO S OME OTHER COMPANY. ON 25 TH JUNE AND 28 TH JUNE , IT IS THE SAME STORY AGAIN THOUGH THE AMOUNTS OR DEBITS AND CREDIT S ARE RS 15,00,0000 AND RS 10,00,000 RESPECTIVELY. AS REGARD S THE OTHER BANK ACCOUNT OF GEEFCEE IN ABN AMRO BANK IS CONCERNED, THE SITUATION IS NO BETTER. ON 3RD JUNE, I.E. OPENING DAY OF THIS BANK STATEMENT, THERE IS A CRED IT BALANCE OF RS 5,742.32. ON JUNE 9, THERE ARE DEPOSITS OF RS 20,10,000 AND, ON THE SAME DAY, A PAYMENT OF RS 20,15,000 IS MADE LEAVING A BALANCE OF LESS THAN RS 1,000. PAGE | 17 ON 11TH JUNE, THERE ARE DEPOSITS OF RS. 10,00,000 A ND ON THE SAME DAY, THERE IS A PAYMENT OF RS 10,00,000. ON 16TH JUNE AGAIN, IT IS THE SAME STORY BUT THE AMOUNT IS NOW RS 20,00,000. ON OTHER DATES IN THE ABN AMRO BANK STAT EMENT, AS GIVEN TO US, IS THE SAME STORY. WHAT DO WE CONCL UDE FROM THESE STATEMENTS? THE OVERNIGHT BALANCE IN THE BANK ACCOUNTS ARE OF SMALL AMOUNTS AND THE PAYMENTS MADE FROM THESE ACCOUNTS ARE ALMOST AT THE TIME OF MAKING PAY MENT ARE TRANSFERRED FRONT OTHER SOURCES, FOR WHICH NO EXPLA NATION IS AVAILABLE. THIS IS TYPICAL OF A SITUATION IN WHICH THE BANK ACCOUNTS ARE USED AS A CONDUIT TO LAUNDER THE ILL G OTTEN MONEY. IT IS IMPOSSIBLE FOR EVEN A LAYMAN, LEAVE AS IDE MEMBERS OF THIS SPECIALIZED TRIBUNAL, TO COME TO TH E CONCLUSION THAT THESE TRANSACTIONS REPRESENT BONAFI DE INVESTMENT TRANSACTIONS.LT IS ALSO IMPORTANT TO NOT E THAT THERE IS NOTHING ELSE ABOUT THE GENUINE BUSINESS ACTIVITI ES, EVEN IF ANY, OF THE INVESTOR COMPANIES, ABOUT THE BACKDROP OF THE PROMOTORS ABOUT THE RELATIONSHIP THESE PEOPLE HAD W ITH THE COMPANIES, AND WE ARE TO TAKE THE CALL ON GENUINENE SS ONLY ON THE BASIS OF THESE TWO BANK STATEMENTS FOR A LIM ITED PERIOD. WE ARE UNABLE TO COME TO A POSITIVE CONCLUS ION ABOUT THE BONAFIDES OF THE INVESTORS ON THE BASIS OF THES E BANK STATEMENT, AND QUITE TO THE CONTRARY TO THE CLAIM M ADE BY THE ASSESSEE, THESE STATEMENTS SHOW LACK OF BONAFIDES. HON'BLE SUPREME COURT HAS, IN THE CASE OF DURGA PRASAD MORE (SUPRA), OBSERVED THAT 'HUMAN MINDS MAY DIFFER AS T O THE PAGE | 18 RELIABILITY OF A PIECE OF EVIDENCE BUT IN THAT SPHE RE THE DECISION OF THE FINAL FACT FINDING AUTHORITY IS MAD E CONCLUSIVE BY LAW. THIS FAITH IN THE TRIBUNAL BY HON'BLE COUR TS ABOVE MAKES THE JOB OF THE TRIBUNAL EVEN MORE ONEROUS AND DEMANDING AND, IN OUR CONSIDERED VIEW, IT DOES REQU IRE THE TRIBUNAL TO TAKE A HOLISTIC VIEW OF THE MATTER, IN THE LIGHT OF SURROUNDING CIRCUMSTANCES, PREPONDERANCE OF PROBABI LITIES AND GROUND REALITIES, RATHER THAN BEING SWAYED BY T HE NOT SO CONVINCING, BUT APPARENTLY IN ORDER, DOCUMENTS AND EXAMINING THEM, IN A PEDANTIC MANNER, WITH THE BLIN KERS ON. WE MAY ALSO ADD THAT THE PHENOMENON OF SHELL ENTITI ES BEING SUBJECTED TO DEEP SCRUTINY BY TAX AND ENFORCEMENT O FFICIALS IS RATHER RECENT, AND THAT, TILL RECENTLY, LITTLE WAS KNOWN, OUTSIDE THE UNDERBELLY OF FINANCIAL WORLD, ABOUT MODUS OPER ENDI OF SHELL ENTITIES. THERE WERE, THEREFORE, NOT MANY QUE STIONS RAISED ABOUT GENUINENESS OF TRANSACTIONS IN RESPECT OF SHELL ENTITIES. THAT IS NOT THE CASE ANY LONGER. JUST BEC AUSE THESE ISSUES WERE NOT RAISED IN THE PAST DOES NOT MEAN TH AT THESE ISSUES CANNOT BE RAISED NOW AS WELL, AND, TO THAT E XTENT, THE EARLIER JUDICIAL PRECEDENTS CANNOT HAVE BLANKET APP LICATION IN THE CURRENT SITUATION AS WELL. AS HON'BLE SUPREME C OURT HAS OBSERVED IN THE CASE IN MUMBAI KAMGAR SABHA V. ABDU LBAHI FAIZULLABHAI AIR 1976 SC 1455 'IT IS TRITE, GOING B Y ANGLOPHONIC PRINCIPLES THAT A RULING OF A SUPERIOR COURT IS BINDING LAW. IT IS NOT OF SCRIPTURAL SANCTITY BUT O F RATIO-WISE LUMINOSITY WITHIN THE EDIFICE OF FACTS WHERE THE JU DICIAL LAMP PAGE | 19 PLAYS THE LEGAL FLAME. BEYOND THOSE WALLS AND DE HO RS THE MILIEU WE CANNOT IMPART ETERNAL VERNAL VALUE TO THE DECISIONS, EXALTING THE PRECEDENTS INTO A PRISON HOUSE OF BIGO TRY, REGARDLESS OF THE VARYING CIRCUMSTANCES AND MYRIAD DEVELOPMENTS. REALISM DICTATES THAT A JUDGMENT HAS TO BE READ, SUBJECT TO THE FACTS DIRECTLY PRESENTED FOR C ONSIDERATION AND NOT AFFECTING THE MATTERS WHICH MAY LURK IN THE DARK'. GENUINENESS OF TRANSACTIONS THUS CANNOT BE DECIDED ON THE BASIS OF INFERENCES DRAWN FROM THE JUDICIAL PRECEDE NTS IN THE CASES IN WHICH GENUINENESS DID COME UP FOR EXAMINAT ION IN A VERY LIMITED PERSPECTIVE AND IN THE TIMES WHEN SHEL L ENTITIES WERE VIRTUALLY NON-EXISTENT. AS THE THINGS STAND NO W, GENUINENESS OF TRANSACTIONS IS TO BE EXAMINED IN TH E LIGHT OF THE PREVAILING GROUND REALITIES, AND THAT IS PRECIS ELY WHAT WE HAVE DONE. WE ARE OF THE CONSIDERED VIEW THAT THERE IS NOTHING TO ESTABLISH GENUINENESS OF THE SHARE SUBSC RIPTION TRANSACTIONS ON THE FACTS OF THIS CASE. THE ASSESSE E DOES NOT KNOW ANYTHING ABOUT THESE COMPANIES OR THESE PERSON S. THE ASSESSEE HAS NO DOCUMENTS ABOUT THEIR FINANCIAL ACT IVITIES OR THEIR BALANCE SHEETS. THE ASSESSEE IS A PRIVATE LIM ITED COMPANY AND THESE ENTITIES COULD NOT HAVE THEREFORE BEEN RANK OUTSIDERS LIKE WALK IN INVESTORS AND YET THE A SSESSEE DOES NOT THROW ENOUGH LIGHT ON THESE ENTITIES. A LO T OF EMPHASIS IS PLACED ON BANK TRANSACTIONS, ON PAN CAR DS AND ON BOARD RESOLUTIONS BUT ALL THESE FACTORS HAVE TO BE PRESENT IN THE CASES OF SHELL COMPANIES INVOLVED IN MONEY L AUNDERING PAGE | 20 AS WELL. NOTHING, THEREFORE, TURNED ON THESE DOCUME NTS SO FAR AS GENUINENESS ASPECT IS CONCERNED. IT IS ALSO A SE TTLED LEGAL POSITION THAT THE ONUS OF THE ASSESSEE, OF EXPLAINI NG NATURE AND SOURCE OF CREDIT, DOES NOT GET DISCHARGED MEREL Y BY FILING CONFIRMATORY LETTERS, OR DEMONSTRATING THAT THE TRA NSACTIONS ARE DONE THROUGH THE BANKING CHANNELS OR EVEN BY FI LING THE INCOME TAX ASSESSMENT PARTICULARS. IN THE CASE OF C IT V. UNITED COMMERCIAL AND INDUSTRIAL CO (P.) LTD [1991] 187ITR 596/56 TAXMAN 304 (CAL) , HON'BLE CALCUTTA HIGH COU RT HAS HELD THAT 'IT WAS NECESSARY FOR THE ASSESSEE TO PRO VE PRIMA FACIE THE IDENTITY OF CREDITORS, THE CAPACITY OF SU CH CREDITORS AND LASTLY THE GENUINENESS OF TRANSACTIONS'. SIMILA RLY, IN THE CASE OF CIT V. PRECISION FINANCE (P.) LTD [1994] 20 8 ITR 465/[1995] 82 TAXMAN 31 (CAL), IT WAS OBSERVED THAT 'IT IS FOR THE ASSESSEE TO PROVE THE IDENTITY OF CREDITORS, TH EIR CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS'. THERE IS THUS NO ESCAPE FROM PROVING GENUINENESS OF A TRANSA CTION. THE ASSESSEE HAS FAILED TO DO SO. WE, THEREFORE, CO NFIRM THE ADDITION IN RESPECT OF ALLEGED SHARE SUBSCRIPTIONS RECEIVED FROM THESE TWO COMPANIES- NAMELY MAHANIVESH AND GEE FCEE. AS. REGARDS THE ADDITION IN RESPECT OF COMMISSION, WE HAVE SEEN THAT THERE IS A CATEGORICAL FINDING THAT THESE ENTITIES WERE ARRANGING THE ACCOMMODATION ENTRIES ON THE BAS IS OF 2.5% COMMISSION. WE, THEREFORE, CONFIRM THIS ADDITI ON AS WELL. (EMPHASIS SUPPLIED BY ME) PAGE | 21 5.2.6 SINCE THE APPELLANT CLAIMED THAT THE SHARE APPLICATION MONEY WAS GENUINE, THE ONUS WAS ON THE APPELLANT UNDER SECTION 101 OF THE EVIDENCE ACT , 1972 TO PRODUCE THE DIRECTORS/PRINCIPAL OFFICERS OF SHARE APPLICANT COMPANIES AS ITS OWN WITNESS FOR CROSS EXAMINATION BY THE REVENUE. THE APPELLANT SHOULD HAVE DISCHARGED ITS DUTY AS A TAXPAYER BY PRODUCING THE DIRECTORS OF THESE COMPANIES PARTICULARLY IN A SCENARIO IN WHICH THE COMPANY HAS GIVEN SHARE APPLICATION MONEY TO THE APPELLANT. IN THIS CONNECTION, THE FOLLOWING OBSERVATION OF HON'B LE ITAT OF AHMAT BENCH IN THE CASE OF NAKODA FASHION PVT. LTD. IN ITA NO. 1716/ AHD./2012 DATED 18.08.2I RELEVANT, WHEREIN IT HAS BEEN HELD AS UNDER:- '19. FROM GOING THROUGH ALL THE ABOVE JUDGMENTS AND DECISION, WE FIND THAT ALONG WITH EVIDENCE SURROUND ING CIRCUMSTANCES, HUMAN PROBABILITY AND INTENTIONAL AC TS ARE ALSO TO BE TAKEN NOTE OFF ACCEPTING THE IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF THE CASH CREDIT ORS WHICH IN THIS CASE IS THE APPLICANTS. IN THE CASE B EFORE US WE OBSERVE THAT ASSESSEE IS TRYING TO ASSERT AGA IN AND AGAIN UPON THE PAN, IT RETURNS, BANK STATEMENT AND CONFIRMATIONS OF THE IMPUGNED 5 PARTIES BUT HAS NOWHERE TRIED TO CLARIFY DISCLOSE THE FACT WHICH HA S EMBEDDED IN THE FINANCIAL STATEMENT OF THESE 5 PART IES WHICH SPEAKS IN ITSELF THEY ARE PAPER COMPANIES. FURTHER IF IT HAS BEEN GENUINE TRANSACTION AND ASSE SSEE COMPANY IS ASKED TO PRODUCE THE NEW SHARE HOLDERS WHO HAVE BEEN ALLOTTED A SUBSTANTIAL PORTION OF EQU ITY SHARES, HE WOULD HAVE EASILY CA UPON THE INVESTORS. THE INVESTORS COULD HAVE COME ALONG WITH ALL THE FINANC IAL DOCUMENTS AND COULD H CLARIFIED ABOUT HIS INTENTION TO MAKE INVESTMENT IN THE EQUITY SHARES OF THE COMPANY BECAUSE EVERY INVESTOR WANTS TO EARN INCOME FROM INVESTMENT IN THE FORM OF DIVIDEND AS WELL AS EXPEC TS APPRECIATION IN THE VALUATION, OF SHARES WITH THE G ROWTH OF BUSINESS. IF THIS HAS BEEN THE SITUATION, THEN T HERE WOULD HAVE BEEN NO DOUBT ON, GENUINENESS OF THE TRANSACTIONS. ON THE CONTRARY IN THE INSTANT CASE ASSESSEE COMPLETELY FAILS TO PROVE THE SAME PAGE | 22 20. IT IS WELL SETTLED THAT IN ORDER TO DISCHARGE THE ONUS THE ASSESSEE MUST PROVE THE FOLLOWING I. THE IDENTITY OF THE CASH CREDITOR; II. CAPACITY OF THE CASH CREDITOR TO ADVANCE MONEY TOWARDS CAPITAL. III. GENUINENESS OF THE TRANSACTION. IF THE ASSESSEE HAS ADDUCED EVIDENCES TO ESTABLISH THE PRIMA FACIE, THE AFORESAID ONUS SHIFTS TO THE DEPAR TMENT HOWEVER, MERE FURNISHING OF PARTICULARS OR THE MERE FACT OF PAYMENT BY ACCOUNT PAYEE CHEQUE OR THE MEN SUBMISSION OF CONFIRMATION LETTER BY THE SHARE APPL ICANT IS BY ITSELF, NOT ENOUGH TO SHIFT THE ONUS TO THE DEPARTMENT ALTHOUGH THESE FACTS MAY, ALONG WITH OTH ER FACTS BE RELEVANT IN ESTABLISHING THE GENUINENESS O F THE TRANSACTION. AS HELD BY HON. SUPREME COURT IN THE C ASE OF CIT VS. N. TARIKA PROPERTIES INVESTMENT (2014) 5 1 TAXMANN.COM 387(SC) THAT 'PAN CANNOT BE TREATED AS SUFFICIENT DISCLOSURE OF IDENTITY OF THE PERSON. PA NS ARE ALLOWED ON THE BASIS OF APPLICATION WITHOUT ACTUAL DE FACTO CLARIFICATION OF IDENTITY OR ASCERTAINMENT OF ACTIVITIES, NATURE OF BUSINESS ACTIVITY AND ARE JUS T AS TO FACILITATE THE REVENUE TO KEEP TRACK OF TRANSACTION S AND THUS PAN CANNOT BE BLINDLY AND WITHOUT CONSIDERATIO N OF SURROUNDING CIRCUMSTANCES TREATED AS SUFFICIENT DISCLOSING THE IDENTITY OF INDIVIDUAL'. 21. WE FURTHER OBSERVE THAT HON. DELHI HIGH COURT IN T HE CASE OF CIT V EMPIRE BIOTECH P LTD 361 ITR 258 (DEL ), HAS HELD THAT WHEN ASST. YEAR 2009-10 ASSESSEE DOES NOT PRODUCE EVIDENCE OR TRIES TO AVOID THE APPEARANCE B EFORE THE ASSESSING AUTHORITY IT NECESSARILY CREATES DIFF ICULTIES AND PREVENTS ASCERTAINMENT OF THE TRUTH AND CORRECT FACTS AS THE ASSESSING OFFICER IS DENIED THE ADVANTAGE OF THE ATTENDANCE OR FACTUAL ASSERTION BY THE ASSESSEE BEF ORE HIM. IF AN ASSESSEE DELIBERATELY AND INTENTIONALLY FAILS TO PRODUCE EVIDENCE BEFORE THE ASSESSING OFFICER WITH THE DESIRE TO PREVENT ENQUIRY OR INVESTIGATION AN ADVER SE OPINION SHOULD BE DRAWN. THE ASSESSEE HAD NOT DISCH ARGED THE INITIAL ONUS TO ESTABLISH THE IDENTITY, CREDITW ORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS. THE ADDITIONS MADE BY THE ASSESSING O FFICER WERE JUSTIFIED AND SUSTAINABLE. 22. WE ARE, THEREFORE, OF THE VIEW THAT IN THE GIVE N FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULL Y FOLLOWING THE JUDGMENTS OF HON. SUPREME COURT, PAGE | 23 HIGH COURT AND THE DECISION OF CO-ORDINATE BENCH AS DISCUSSED ABOVE, WE ARE OF THE CONFIRMED VIEW THAT ASSESSEE HAS BEEN ABLE TO JUST PROVE THE IDENTITY O F THE COMPANY BUT UNABLE TO PROVE THE GENUINENESS & CREDITWORTHINESS OF THE IMPUGNED 5 PARTIES. IN THE RESULT, THE SUM OF RS.3.5 CRORES HAS RIGHTLY BEEN TREATED AS UNEXPLAINED MONEY U/S 68 OF THE ACT BY THE ID. ASSESSING OFFICER. WE SET ASIDE THE ORDER O F ID. CIT (A) AND RESTORE THAT OF THE ASSESSING OFFIC ER. WE SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE TH AT OF THE ASSESSING OFFICER. IN THE RESULT GROUND NO. (I) OF REVENUE IS ALLOWED. 5.2.7 RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAVODAYA CASTLES PVT. LTD. DATED 25/08/2014 IN [(2014) 367 ITR 306 (DELHI)], IN WHICH SLP FILED BY THE ASSESSEE WAS DISMISSED[(2015) 230 TAXMAN 268 (SC)],WHERE IT HAS BEEN HELD THAT: '14. CERTIFICATE OF INCORPORATION, PAN ETC. ARE REL EVANT FOR PURCHASE OF IDENTIFICATION, BUT HAVE THEIR LIMITATI ON WHEN THERE IS EVIDENCE AND MATERIAL TO SHOW THAT THE SUBSCRIBER WAS A PAPER COMPANY AND NOT A GENUINE INVESTOR. IT IS IN THIS CONTEXT, THE SUPREME COURT IN CIT V. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) HAD OBSERVED: - 'NOW WE SHALL PROCEED TO EXAMINE THE VALIDITY OF TH OSE GROUNDS THAT APPEALED TO THE LEARNED JUDGES. IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTA BLISH THE TRUTH OF THOSE RECITALS, OTHERWISE IT WILL BE V ERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECI TALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS T O PAGE | 24 HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUT ED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFIC IENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO P UT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BE FORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDI NG CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITA LS MADE IN THOSE DOCUMENTS.'' 5.2.6 IN THIS ORDER, RELEVANT PARA OF THE DECISION OF DELHI HIGH COURT IN THE CASE OF N. R. PORTFOLIO PVT . LTD. [(2014) 264 CTR 258 (DELHI)] HAS ALSO BEEN REPRODUCED AS UNDER:- '19. IN N. R. PORTFOLIO PVT. LTD. (SUPRA), IT HAS B EEN HELD AS UNDER:- 18. IN THE REMAND REPORT, THE ASSESSING OFFICER REFERR ED TO THE PROVISIONS OF SECTION 68 OF THE ACT AND THEIR APPLI CABILITY. THE WORD 'IDENTITY' AS DEFINED, IT WAS OBSERVED MEA NT THE CONDITION OR FACT OF A PERSON OR THING BEING THAT S PECIFIED UNIQUE PERSON OR THING. THE IDENTIFICATION OF THE P ERSON WOULD INCLUDE THE PLACE OF WORK, THE STAFF, THE FAC T THAT IT WAS ACTUALLY CARRYING ON BUSINESS AND RECOGNITION O F THE SAID COMPANY IN THE EYES OF PUBLIC. MERELY PRODUCIN G PAN NUMBER OR ASSESSMENT PARTICULARS DID NOT ESTABLISH THE IDENTITY OF THE PERSON. THE ACTUAL AND TRUE IDENTIT Y OF THE PERSON OR A COMPANY WAS THE BUSINESS UNDERTAKEN BY THEM. THIS ACCORDING TO US IS THE CORRECT AND TRUE LEGAL POSITION, AS IDENTITY, CREDITWORTHINESS AND GENUINE NESS HAVE TO BE ESTABLISHED. PAN NUMBERS ARE ALLOTTED ON THE BASIS OF APPLICATIONS WITHOUT ACTUAL DE FACTO VERIF ICATION OF THE IDENTITY OR ASCERTAINING ACTIVE NATURE OF BUSIN ESS ACTIVITY. PAN IS A NUMBER WHICH IS ALLOTTED AND HEL PS THE REVENUE KEEP TRACK OF THE TRANSACTIONS. PAN NUMBER IS RELEVANT BUT CANNOT BE BLINDLY AND WITHOUT CONSIDER ING SURROUNDING CIRCUMSTANCES TREATED AS SUFFICIENT TO DISCHARGE THE ONUS, EVEN WHEN PAYMENT IS THROUGH BA NK ACCOUNT. 19. ON THE QUESTION OF CREDITWORTHINESS AND GENUINENES S, IT WAS HIGHLIGHTED THAT THE MONEY NO DOUBT WAS RECEIVE D THROUGH BANKING CHANNELS, BUT DID NOT REFLECT ACTUA L GENUINE BUSINESS ACTIVITY. THE SHARE SUBSCRIBERS DI D NOT HAVE THEIR OWN PROFIT MAKING APPARATUS AND WERE NOT INVOLVED IN BUSINESS ACTIVITY. THEY MERELY ROTATED MONEY, WHICH WAS COMING THROUGH THE BANK ACCOUNTS, WHICH MEANS DEPOSITS BY WAY OF CASH AND ISSUE OF CHEQUES. THE BANK ACCOUNTS, THEREFORE, DID NOT REFLECT THEIR CREDITWORTHINESS OR EVEN GENUINENESS OF THE TRANSAC TION. PAGE | 25 THE BENEFICIARIES, INCLUDING THE RESPONDENT-ASSESSE E, DID NOT GIVE ANY SHARE- DIVIDEND OR INTEREST TO THE SAI D ENTRY OPERATORS/SUBSCRIBERS. THE PROFIT MOTIVE NORMAL IN CASE OF INVESTMENT, WAS ENTIRELY ABSENT. IN THE PRESENT CAS E, NO PROFIT OR DIVIDEND WAS DECLARED ON THE SHARES. ANY PERSON, WHO WOULD INVEST MONEY OR GIVE LOAN WOULD CERTAINLY SEEK RETURN OR INCOME AS CONSIDERATION. THESE FACTS ARE NOT ADVERTED TO AND AS NOTICED BELOW ARE TRUE AND CORRE CT. THEY ARE UNDOUBTEDLY RELEVANT AND MATERIAL FACTS FO R ASCERTAINING CREDITWORTHINESS AND GENUINENESS OF TH E TRANSACTIONS. 30. WHAT WE PERCEIVE AND REGARD AS CORRECT POSITIO N OF LAW IS THAT THE COURT OR TRIBUNAL SHOULD BE CONVINC ED ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENES S OF THE TRANSACTION. THE ONUS TO PROVE THE THREE FACTUM THE ASSESSEE AS THE FACTS ARE WITHIN THE ASSESSEE'S KNOWLEDGE. MERE PRODUCTION OF INCORPORATION DETAILS , PAN NOS. OR THE FACT THAT THIRD PERSONS OR COMPANY HAD FILED INCOME TAX DETAILS IN CASE OF A PRIVATE LIMIT ED COMPANY MAY NOT BE SUFFICIENT WHEN SURROUNDING AND ATTENDING FACTS PREDICATE A COVER UP. THESE FACTS INDICATE AND REFLECT PROPER PAPER WORK OR DOCUMENTA TION BUT GENUINENESS, CREDITWORTHINESS, IDENTITY ARE DEE PER AND OBTRUSIVE. COMPANIES NO DOUBT ARE ARTIFICIAL OR JURISTIC PERSONS BUT THEY ARE SOULLESS AND ARE DEPE NDENT UPON THE INDIVIDUALS BEHIND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS THE PERSONS BEHIND THE COMPANY WHO TAKE THE DECISIONS, CONTROLS AND MANAGE THEM.' 5.2.9 IN CIT V. NOVA PROMOTERS AND FIRILEASE (P.) LTD. [(2012) 342 ITR 169 (DELHI)] IT WAS OBSERVED A S UNDER- 'THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPL ETE PARTICULARS OF THE SHARE APPLICANT$ SUCH AS THEIR N AMES AND ADDRESSES, INCOME-TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHAREHOLDERS' REGISTER, SHARE TRANSFER REGISTER, ET C., ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSIN G OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOS E PAGE | 26 PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THE N NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SECTION 68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A C ASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICE R IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEA CHES THE PARTICULARS FURNISHED BY THE ASSES SEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF-CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT TH EIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE . . . THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PREMEDITA TED PLAN-A SMOKE SCREEN - CONCEIVED AND EXECUTED WITH T HE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO.' 5.2.10 SECTION 102 OF INDIAN EVIDENCE ACT MAKES IT CLEAR THAT INITIAL ONUS IS ON PERSON WHO SUBSTANTIALLY ASSERTS A CLAIM. IF THE ONUS IS DISCHARGED BY HIM AND A CASE IS MADE OUT, THE ONUS SHIFTS ON TO DEPONENT. IT IS PERTINENT TO MENTION H ERE THAT THE PHRASE 'BURDEN OF PROOF' IS USED IN TWO DISTINCT MEANINGS IN THE LAW OF EVIDENCE VIZ, 'THE BURDEN OF ESTABLISHING A CASE', AND 'THE BURDEN OF INTRODUCING EVIDENCE'. THE BURDEN OF ESTABLISHING A CASE REMAINS THROUGHOUT TRIAL WHERE IT WAS ORIGINALLY PLACED, IT NEVER SHIFTS. THE BURDEN OF EVIDENCE MAY SHIFT CONSTANTLY AS EVIDENCE IS INTRODUCED BY ONE SIDE OR THE OTHERS. IN THIS CASE, ONCE THE EVIDENCE THAT ASSESSEE HAS OBTAINED ACCOMMODATION ENTRY WAS INTRODUCED BY THE AO, THE BURDEN OF EVIDENCE SHIFTED TO THE ASSESSEE. DURING THE ASSESSMENT PROCEEDING AND EVEN DURING THE APPELLATE PROCEEDING, THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE TO PROVE THAT THE MONEY INTRODUCED IN ITS BOOKS AS SHARE MONEY WAS GENUINE TRANSACTION IN THE FACTS AND CIRCUMSTANCES OF THE CASE. PAGE | 27 5.2.11 THE LEGAL PRINCIPLES LAID DOWN IN A NUMBER OF CASES, A FEW OF WHICH HAVE BEEN QUOTED ABOVE, ARE SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IT IS OBVIOUS FR OM THESE JUDICIAL DECISIONS THAT - MERE DOCUMENTARY EVIDENCES ARE NOT SUFFICIENT TO ESTABLISH THE GENUINENESS OF TRANSACTIONS IN ALL SITUATIONS. CREDITWORTHINESS WAS NOT PROVED BY MERE ISSUE OF A CHEQUE OR BY FURNISHING A COPY OF STATEM ENT OF BANK ACCOUNTS. CIRCUMSTANCES MIGHT REQUIRE THAT THE RE SHOULD BE SOME EVIDENCE OF POSITIVE NATURE TO SHOW THAT THE SHARE APPLICATION MONEY GIVEN WAS GENUINE, GIVE N AFTER DUE DILIGENCE OR FOR PERSONAL REASONS. WHERE THERE IS ADMISSION BEFORE THE INVESTIGATION W ING OF THE DEPARTMENT THAT THE LOAN WAS FROM BOGUS ENTR Y OPERATORS, CREDITWORTHINESS MUST BE PROVED AND THES E FACTUAL ASPECTS AND CIRCUMSTANCES AS PROVED BEFORE INVESTIGATION WING CANNOT BE SIMPLE TO IGNORE. DOCUMENTS MUST ALSO STAND THE TESTS OF HUMAN CONDUCT, SURROUNDING CIRCUMSTANCES AND PREPONDERANC E OF PROBABILITY. WHEN SURROUNDING CIRCUMSTANCES AND ATTENDING FACTS PREDICATE A COVER-UP, THE TAXING AUTHORITIES CANNOT PUT ON BLINKERS WHILE LOOKING AT DOCUMENTS BUT ARE REQU IRED TO GO BEYOND DOCUMENTS TO LOOK INTO SURROUNDING CIRCUMSTANCES TO SEGREGATE THE REAL FROM APPARENT. 5.2.12 ONCE THE APPELLANT WAS MADE AWARE OF THE RESULT OF INVESTIGATION WHICH PROVED THAT SHARE APPLICATION MONEY TRANSACTION WAS NOT GENUINE, THE ONUS WAS ON THE ASSESSEE TO PROVE THE GENUINENESS OF TRANSACTION UNDER SECTION 101 OF THE INDIAN EVIDENCE ACT, 1972 AS IT IS THE ASSESSEE WHO IS ASSERTING A CLAIM THAT IT HAS RECEIVED GENUINE SHAR E MONEY. IT IS RELEVANT TO NOTE HERE THAT HON'BLE SUPREME COURT IN THE CASE OF SHRI CHARAN SINGH VERSUS CHANDRA BHAN SINGH AIR 1988 SC 637 HAS CLARIFIED THAT THE BURDEN OF PROOF LIES ON THE PART Y WHO SUBSTANTIALLY ASSERTS THE AFFIRMATIVE OF THE ISSUE AND NOT UPON THE PARTY WHO DENIES IT. IT HAS BEEN FURTHER HELD THAT THE PARTY CANNOT, ON FAILURE TO ESTABLISH A PRIMA FACIE CASE, TAKE ADVANTAGE OF THE WEAKNESS OF HIS ADVERSARY'S CASE. THE PARTY MUST SUCCEED BY THE STRENGTH OF HIS OWN RIGHT AND THE PAGE | 28 CLEARNESS OF HIS OWN PROOF. HE CANNOT BE HEARD TO SAY THAT IT WAS TOO DIFFICULT OR VIRTUALLY IMPOSSIB LE TO PROVE THE MATTER IN QUESTION. SINCE IN THIS CASE TH E APPELLANT HAD MADE THE CLAIM THAT IT HAD RECEIVED GENUINE SHARE APPLICATION MONEY, ALL THE FACTS WERE ESPECIALLY WITHIN ITS KNOWLEDGE. 5.2.12 IN THE PRESENT CASE, AS DISCUSSED ABOVE, THERE IS OVERWHELMING EVIDENCE THAT THE TRANSACTION ON WHICH ADVERSE VIEW HAS BEEN TAKEN WAS A PRE- ARRANGED TRANSACTION UNDER TAKEN WITH THE SOLE MOTIVE TO EVADE TAX. ALL THESE ABOVE-MENTIONED CASES ARE ALSO APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IN WHICH THE VARIOUS JUDICIAL AUTHORITIES HAVE DECIDED THE CASES IN FAVOUR OF REVENUE AFTER GOING THROUGH THE ENTIRE TY OF THE FACTS AND CIRCUMSTANCES. HENCE, IN VIEW OF T HE FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL PRECEDENTS AS DISCUSSED ABOVE, I AM OF THE VIEW THAT DOCUMENTS SUBMITTED AS EVIDENCES TO PROVE THE GENUINENESS OF THE TRANSACTIONS ARE THEMSELVES FOUND TO SERVE AS SMOKE SCREEN TO COVER UP THE TRUE NATURE OF THE TRANSACTIONS. ACCORDINGLY, IN VIEW OF THE ABOVE DISCUSSION AND JUDICIAL PRECEDENTS, IT IS HELD THAT AO WAS JUSTIFIED IN MAKING ADDITION OF RS.56,00,000/- AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES UNDER SECTION 68. SINCE ARRANGING SUCH ACCOMMODATION ENTRY NECESSARILY ENTAILS PAYMENT OF COMMISSION TO ENTRY PROVIDERS, THE ACTION OF THE AO IN QUANTIFYING AND ADDING SUCH UNEXPLAINED INVESTMENT TOWARDS TAKING OF SUCH ACCOMMODATION ENTRY AT RS. 1,00,800/-IS ALSO UPHELD. ACCORDINGLY, ENTIRE ADDITION AMOUNTING TO RS. 57,00,800/- IS CONFIRMED. GROUNDS OF APPEAL NOS. 3 AND 4 ARE DISMISSED. 12. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- PAGE | 29 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE ACTION OF THE CIT(A) -- 6, DELHI, IS ARBITRARY, FALLACIOUS AND ILLEGAL ON THE FOLLOWING GROUNDS AND, THEREFORE, MERITS TO BE QUASHED WITH DIRECTIONS FOR APPROPRIATE RELIEF TO THE ASSESSEE- I THAT CIT(A) FAILED TO APPRECIATE THAT: II THE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S. 147 AND FORMED THE OPINION BASED ON THE FINDINGS OF THE SEARCH AND SEIZURE OPERATION, RESULT OF POST SEARCH ENQUIRY, CAREFUL SCRUTINY OF THE INCRIMINATING DOCUMENT SEIZED DURING THE COURSE OF SEARCH IN CASE OF S.K. JAIN GROUP; III REASSESSMENT PURSUANT TO MATERIAL FOUND IN SEARCH CAN BE DONE THROUGH RECOURSE TO SECTION 153C ONLY AND NOT BY INVOKING PROVISIONS OF SECTION 147/148. THE PROVISIONS OF SECTION 153C ARE OVER-RIDING IN NATURE AND CONTAIN NON- OBSTANTE CLAUSE FOR SECTIONS 139, 147, 148, 149, 151 AND 153; IV SECTION 147 AND 153C ARE NOT INTERCHANGEABLE BUT ARE MUTUALLY EXCLUSIVE SECTIONS. IT IS NOT THE CHOICE OF THE REVENUE TO INVOKE EITHER OF THE TWO SECTIONS AT ITS WHIMS. THE SCOPE OF THE TWO SECTIONS HAVE BEEN LEGISLATED DIFFERENTLY WITH A DEFINITE PURPOSE; V ASSESSING OFFICER HAS NO JURISDICTION TO MAKE ASSESSMENTS U/S. 143(3) R.W.S. 148 OF THE ACT IN RE SPECT OF THOSE 6 ASSESSMENT YEARS IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THE PERIOD UNDER CONSIDERATION FALLS WITHIN THE EXCLUSIVE DOMAIN OF SECTION 153C R .W.S 153A(1)(B) AND 1 ST PROVISO TO SEC. 153A(1) OF THE ACT; THE IMPUGNED ASSESSMENT ORDER PASSED U/S 143(3), R. W.S. 148 OF THE INCOME TAX ACT, 1961 IS ILLEGAL, ARBITRA RY AND WITHOUT ANY JURISDICTION. 1 THAT CIT(A) FAILED TO APPRECIATE THAT THE ADDITION WAS MADE U/S. 68 OF THE INCOME-TAX ACT ON ACCOUNT OF SHARE APPLICATI ON MONEY OF RS.56,00,000/- DESPITE : I THE SAME IS FULLY EXPLAINED WITH REFERENCE TO THE A LL INGREDIENTS AS TO THE IDENTITY, CREDIT WORTHINESS A ND GENUINENESS OF THE SAME AS REQUIRED BY LAW BY PRODUCING CREDIBLE AND VERIFIABLE EVIDENCES; II PROVISO TO SEC. 68 IS APPLICABLE FROM A.Y. 20113-14 & ONWARDS ONLY, I.E. NO RETROSPECTIVE EFFECT; PAGE | 30 AND AS SUCH THE ADDITION MADE BY THE ASSESSING OFFI CER IS PURELY ON SURMISES AND CONJECTURES. THAT THE CIT(A) ERRED IN CONFIRMING AN ADDITION OF RS.1,08,000/- AS UNEXPLAINED INVESTMENT DESPITE THE FACT THAT ASSESSING OFFICER HAS COMPLETELY FAILED IN BRINGING OUT ANY SPECIFIC MATERIAL IN REC ORD FOR THE JUSTIFICATION OF HIS ASSUMPTION FOR EXPENDITURE; THAT THE CIT(A) FAILED TO APPRECIATE THAT ASSESSING OFFI CER ERRED IN CHARGING INTEREST U/S 234A / 234B / 234C AND 234D OF THE ACT. THAT CIT(A) ERRED IN NOT DISMISSING THE GROUND OF I NITIATING PENALTY PROCEEDINGS U/S 271 (1 )(C) OF THE ACT. THAT THE APPELLANT CRAVE LEAVE TO TAKE ADDITIONAL G ROUND OR GROUNDS OF APPEAL OR TO ALTER OR VARY ANY OR ALL THE GROUNDS OF APPEA L BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. TOTAL TAX EFFECT 13. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO T HE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF RAJAT SUBHRA CHATERJEE VIDE ITA NO.2430/DEL/2015 ORDER DATED 20.05.2016 FOR A. Y. 2007-08 AND VARIOUS OTHER DECISION SUBMITTED THAT THE PROVISIONS OF SECTION 153 C OF THE IT ACT WERE APPL ICABLE IN THE PRESENT CASE FOR FRAMING THE ASSESSMENT, IF ANY, WH ICH EXCLUDES THE APPLICATION OF SECTION 147 OF THE ACT. THEREFOR E, THE NOTICE ISSUED U/S. 148 OF THE ACT AND ASSESSMENT FRAMED IN FURTHERANCE THERE TO U/S. 147 R/W 143 (3) OF THE ACT ARE VOID A B INITIO. 14. SO FAR AS THE ADDITION ON MERIT IS CONCERNED, H E SUBMITTED THAT THE PRINCIPLE OF NATURAL JUSTICE WAS VIOLATED AS CROSS EXAMINATION WAS NOT ALLOWED BY THE ASSESSING OFFICE R. THERE WAS NOTHING ON RECORD TO SHOW THAT MONEY BELONGED TO AS SESSEE ITSELF. REFERRING TO THE VARIOUS PAGES OF THE PAPER BOOK HE SUBMITTED THAT IN THE INSTANT CASE THE ASSESSEE DURING THE CO URSE OF PAGE | 31 ASSESSMENT PROCEEDINGS HAD FURNISHED THE FOLLOWING DOCUMENTS REGARDING THE TWO SHARE APPLICANTS NAMELY :- 1. CONFIRMATION LETTER 2. SHARE APPLICATION FORM 3. LIST OF DIRECTORS 4. AFFIDAVIT OF DIRECTOR OF THE COMPANY 5. BANK STATEMENT 6. COPY OF ITR AND ACKNOWLEDGEMENT 7. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET 15. REFERRING TO VARIOUS DECISIONS HE SUBMITTED THA T THE ASSESSEE IN THE INSTANT CASE HAS FILED SUFFICIENT E VIDENCE TO SHOW THAT THE SHARE HOLDERS DO EXIST AND IDENTITY OF THE SHARE HOLDERS WAS PROVED BY FILING DOCUMENTS SUCH AS NAME, ADDRES S AND PAN ETC. THEREFORE, THE ASSESSEE HAS DISCHARGED THE INI TIAL ONUS CAST ON IT AND THE ONUS HAS SHIFTED TO THE REVENUE. THE REFORE, THE ADDITION ON MERIT IS ALSO NOT SUSTAINABLE. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED ON A SERIES OF DECISIONS AND F ILED COPIES OF THE SAME. 16. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A) IN CONFIRMING THE VALIDITY OF THE REASSE SSMENT PROCEEDINGS AS WELL AS THE ADDITION ON MERIT. 17. SO FAR AS THE ADDITION ON MERIT IS CONCERNED, T HE LD. DR REFERRING TO VARIOUS DECISIONS SUBMITTED THAT THE A SSESSEE HAS PAGE | 32 FAILED TO SUBSTANTIATE THE IDENTITY AND CREDITWORTH INESS OF SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION. THEREFORE, THE ORDER OF THE CIT(A) SHOULD BE UPHELD. 18. REFERRING TO THE LATEST DECISION OF HONBLE SUP REME COURT IN THE CASE OF PCIT VS. NRA IRON & STEEL PRIVATE LIMIT ED, REPORTED IN 103 TAXMANN.COM 48, HE SUBMITTED THAT THE HONBLE A PEX COURT IN THE SAID DECISION HAS HELD THAT THE PRACTICE OF CONVERSION OF UN-ACCOUNTED MONEY THROUGH CLOAK OF SHARE CAPITAL/ PREMIUM MUST BE SUBJECTED TO CAREFUL SCRUTINY ESPECIALLY IN PRIVATE PLACEMENT OF SHARES. FILLING PRIMARY EVIDENCE IS NO T SUFFICIENT. THE ONUS TO ESTABLISH CREDIT WORTHINESS OF THE INVE STOR COMPANIES IS ON THE ASSESSEE. THE ASSESSEE IS UNDER LEGAL OB LIGATION TO PROVE THE RECEIPT OF SHARE CAPITAL/ PREMIUM TO THE SATISFACTION OF THE AO, FAILURE OF WHICH, WOULD JUSTIFY ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. 19. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. NDR PROMOTERS PRIVATE LIMITED REPO RTED IN 410 ITR 379, HE SUBMITTED THAT THE HONBLE DELHI HIGH C OURT IN THE SAID DECISION HAS HELD THAT WHERE THE TRANSACTION I N QUESTION IS SHAM AND MAKE BELIEVE WITH PAPER WORK TO CAMOUFLAGE THE BOGUS NATURE, THE TRANSACTION IS TO BE TREATED AS UNEXPLA INED CREDIT U/S. 68 OF THE IT ACT. HE ACCORDINGLY SUBMITTED THAT TH E ORDER OF THE CIT(A) BE UPHELD BOTH LEGALLY AND FACTUALLY. SO FAR AS THE ARGUMENTS OF THE ASSESSEE THAT OPPORTUNITY OF CROSS -EXAMINATION PAGE | 33 WAS NOT GIVEN HE SUBMITTED THAT NO SUCH GROUND HAS BEEN TAKEN BY THE ASSESSEE. FURTHER IT IS NOT FATAL TO THE ASS ESSMENT ORDER WHERE NO OPPORTUNITY IS GIVEN. THE ADDITION IN THE INSTANT CASE HAS BEEN MADE ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING AND THE ASSESSEE HAD NOT FILED R ETURN OF INCOME. THEREFORE, AT BEST THE MATTER MAY BE SET AS IDE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSMENT ORDER CANN OT BE QUASHED FOR NON GRANTING OF OPPORTUNITY OF CROSS-EX AMINATION. 20. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. IT IS AN ADMITTED FACT THAT IN THE INSTANT CASE THE INFORMAT ION WAS PASSED ON BY THE DDIT (INVESTIGATION) AND NOT BY THE ASSES SING OFFICER OF THE S. K. JAIN GROUP I.E. THE ASSESSING OFFICER OF THE SEARCHED PERSON. NO DOCUMENTS BELONGING TO THE ASESSSEE WAS FOUND AND S. K. JAIN GROUP HAD NEVER STATED THAT THE DOCUMENT S SO SEIZED FROM THEIR PREMISES DO NOT BELONG TO THEM. WE FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SURYA FINANCIA L SERVICES LIMITED VS. PCIT IN ITA NO.28915/DEL/2017 ORDER DAT ED 08.01.2018 WHILE DECIDING AN IDENTICAL ISSUE ON THE VALIDITY OF REASSESSMENT PROCEEDINGS U/S. 147 AS AGAINST 153C O N THE BASIS OF THE SAME S. K. JAIN DAIRIES ENTRIES HAS OBSERVED AS UNDER :- 6.2 NOW COMING TO THE ONE OF THE MAIN CONTENTION R AISED BY THE ID. COUNSEL OF THE ASSESSEE THAT THE PROCEEDINGS UNDER SECTION 147 OF THE ACT WAS ITSELF BAD IN PAGE | 34 LAW AND THEREFORE, PROCEEDINGS U/S 263 OF THE ACT C OULD NOT HAVE BEEN INVOKED. THE REASONS GIVEN FOR THIS PROPOSITION IS THAT, HER E IN THIS CASE, MATERIAL ON THE BASIS OF WHICH PROCEEDINGS FOR REOPENING THE ASSESS MENT HAS BEEN SOUGHT TO BE INITIATED U/S 147 OF THE ACT HAS BEEN FOUND FROM TH E SEARCH CONDUCTED AT THE PREMISES CF THIRD PARTY AND IF MATERIAL FOUND FROM THE PREMISES OF THE SEARCHED PERSON IS BEING UTILIZED, THEN IN SUCH A SITUATION THE LAW PROVIDES THAT PROCEEDINGS SHOULD HAVE BEEN INITIATED UNDER SECTIO N 153C OF THE ACT, WHICH HAS NOT BEEN DONE AND, THEREFORE, THE ENTIRE PROCEE DINGS UNDER SECTION 147 OF THE ACT GETS VITIATED AND IS BAD IN LAW. IN SUPPORT OF THIS PROPOSITION LD. COUNSEL, HAS RELIED UPON CERTAIN DECISIONS, FIRSTLY ON THE POINT THAT VALIDITY OF REASSESSMENT OR ASSESSMENT ORDER CAN BE CHALLENGED IN THE REVISIONARY PROCEEDING UNDER SECTION 263; AND SECONDLY, IF ANY MATERIAL HAS BEEN FOUND PERTAINING TO THE ASSESSEE IN THE CASE OF PERSON SE ARCHED OR COVERED U/S 153A OF THE ACT, THEN ONLY RECOURSE WAS TO INITIATE PROC EEDINGS UNDER SECTION 153C OF THE ACT AND NOT UNDER SECTION 147 OF THE ACT. AT THE OUTSET, WE DO NOT. FIND ANY QUARREL TO THE PROPOSITION THAT THE VALIDITY OF ASSESSMENT OR REASSESSMENT CANNOT BE CHALLENGED IN THE REVISIONARY PROCEEDINGS U/S 263, HOWEVER, ON THE FACTS OF THE PRESENT CASE, THE RATIO LAID DOWN IN S UCH JUDGMENTS WOULD NOT BE APPLICABLE AT ALL, BECAUSE HERE IN THIS CASE NO DOC UMENT OR MATERIAL BELONGING TO THE ASSESSEE WAS FOUND IN THE COURSE OF SEARCH P ROCEEDINGS IN THE CASE OF S.K. JAIN GROUP, ALBEIT ASSESSEES NAME APPEARS AS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES IN THE BOOKS OF ACCOUNT MAINT AINED BY ONE OF THE CONCERN OF S.K. JAIN GROUP. THE ENTRIES IN THE BOOK S OF ACCOUNT OF S.K. JAIN GROUP CANNOT BE RECKONED AS ANY MATERIAL OR DOCUMEN T BELONGING TO THE ASSESSEE SO AS TO CONSTITUTE DOCUMENT OR ASSET SEIZ ED OR REQUISITIONED IN THE CASE OF PERSON SEARCHED IN TERMS OF SCOPE OF SECTIO N 153C OF THE ACT. IF CERTAIN DOCUMENTS OR ASSET: OR BOOKS OF ACCOUNT BELONGING T O THE ASSESSEE WOULD HAVE BEEN FOUND DURING THE COURSE OF SEARCH PROCEEDINGS OF S.K. JAIN AND HIS GROUP CONCERNS, THEN PERHAPS IT WOULD HAVE BEEN HELD THAT THE PROVISIONS OF SECTION PAGE | 35 153C OF THE ACT WOULD HAVE BEEN INVOKED. BUT HERE I N THIS CASE WHAT HAS BEEN FOUND, IS THE REGULAR ENTRIES IN THE BOOKS OF ACCOU NT OF THE CONCERNS OF S.K. JAIN GROUP, IN WHICH NAME OF THE ASSESSEE IS APPEAR ING. SUCH ENTRIES IN THE CASH BOOKS DEPICTING THE DETAILS OF CHEQUES ISSUED IN FAVOUR OF THE ASSESSEE AS WELL AS CASH DEPOSIT THROUGH INTERMEDIATES ON VARIO US DATES CANNOT BE RECKONED AS DOCUMENT OR BOOKS OF ACCOUNT OF THE ASS ESSEE. THIS FACT HAS BEEN NOTED BY THE PR. CIT IN THE IMPUGNED ORDER, WHEREIN THE ENTRIES PERTAINS TO THE ASSESSEE FOR A SUM. OF RS.25 LACS. THUS, THE CONTEN TION RAISED BY THE ID, COUNSEL ON THIS POINT IS OUT RIGHTLY REJECTED THAT THE PROC EEDINGS UNDER SECTION 153C OF THE ACT: SHOULD HAVE BEEN INITIATED INSTEAD C F UND ER SECTION 147 OF THE ACT. 21. FURTHER IN THE INSTANT CASE IT CAN BE SEEN THAT NO MATERIAL BELONGING TO THE ASSESSEE WAS FOUND FROM THE RESIDE NCE OF SHRI S. K. JAIN AND ONLY EVIDENCE OF ACCOMMODATION ENTRIES GIVEN BY SH. S. K. JAIN GROUP OF CASES, THROUGH THEIR VARIOUS SH ELL COMPANIES WAS FOUND DURING THE COURSE OF SEARCH AND POST SEAR CH ENQUIRIES. THE INFORMATION WAS PASSED ON TO THE ASSESSING OFFI CER OF THE ASSESSEE BY THE INVESTIGATION WING AND NO MATERIAL BELONGING TO THE ASSESSEE WAS EITHER FOUND FROM THE RESIDENCE OF THIS S. K. JAIN OR HANDED OVER TO THE ASSESSING OFFICER OF THE ASSESSEE BY THE ASSESSING OFFICER OF THE SEARCHED PERSON. THERE FORE, THE ASSESSING OFFICER IN THE INSTANT CASE HAS RIGHTLY I NVOKED JURISDICTION U/S. 147 AND NOT U/S 153C OF THE IT AC T,1961. THE GROUND APPEAL NO. 1 BY THE ASSESEE IS ACCORDINGLY D ISMISSED. 22. SO FAR AS THE GROUND NO.2 RELATING TO THE ADDI TION ON MERIT IS CONCERNED, WE FIND SUBSEQUENT TO ORDER OF THE CI T(A) DECISIONS PAGE | 36 ON THE ISSUE OF BOGUS SHARE CAPITAL AND SHARE PREMI UM WERE DECIDED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NDR PROMOTERS AND BY HONBLE SUPREME COURT IN THE C ASE OF CIT VS. NRA IRON & STEEL (P) LIMITED. NEITHER THE ASSE SSEE NOR THE ASSESSING OFFICER OR THE CIT(A) HAD THE BENEFIT OF THE VARIOUS OBSERVATIONS MADE BY THE HONBLE APEX COURT AND HON BLE DELHI HIGH COURT IN THE ABOVE MENTIONED CASES REGARDING T HE TAXABILITY OF SUCH SHARE CAPITAL AND SHARE PREMIUM RECEIVED IN THE HANDS OF THE ASSESSEE. FURTHER IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE WAS NOT PROVIDED WITH THE COPY OF THE STATEMENT GIV EN BY SH. S. K. JAIN / VIRENDER K. JAIN WHICH HAS BEEN UTILIZED AGAINST THE ASSESSEE. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE WE DEEM IT PROPER TO RESTOR E THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GRANT ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EV IDENCE TO HIS SATISFACTION REGARDING THE IDENTITY AND CREDITWORTH INESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSAC TIONS. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AS PER FAC T AND LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. FURTHER WHILE DOING SO THE ASSESSING OFFICER SHALL KEEP IN MIND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/ S. NRA IRON & STEEL (P) LIMITED (SUPRA) AND THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF NDR PROMOTERS LIMITED (SUPRA). THE GROUND OF APPEAL NO.2 IS ACCORDINGLY ALLOWED FOR STATISTIC AL PURPOSE. PAGE | 37 23. SO FAR AS THE GROUND OF APPEAL NO.3 IS CONCERNE D IN VIEW OF OUR DECISION IN GROUND OF APPEAL NO.2 RESTORING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATIO N, THE ABOVE GROUND IS ALSO RESTORED TO THE FILE OF THE ASSESSIN G OFFICER FOR FRESH ADJUDICATION. ACCORDINGLY THIS GROUND IS ALLOWED FO R STATISTICAL PURPOSE. 24. SO FAR AS GROUND OF APPEAL NO.4 IS CONCERNED TH E SAME RELATES TO LEVY OF INTEREST U/S. 234 A, 234B AND 23 4 C OF THE IT ACT, 1961. LEVY OF INTEREST UNDER THE ABOVE PROVIS IONS IS MANDATORY AND CONSEQUENTIAL IN NATURE. ACCORDINGLY THIS GROUND IS DISMISSED. 25. GROUND OF APPEAL NO.5 BEING GENERAL IN NATURE I S DISMISSED. 26. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07.06.2019. SD/- SD/- (KULDIP SINGH) (R.K PAND A) JUDICIAL MEMBER ACCOUNTANT MEMB ER *NEHA* DATE:- 07.06.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI PAGE | 38 DATE OF DICTATION 03.06.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 07.06.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 10.06.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER