ACIT, Ludhiana V. M/s Radhe Sham Jain Diamond Jewellers (P) Ltd., Ludhiana

ITA 846/CHANDI/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8414 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 09-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMARCIT
• Keywords: Gross profit estimation; Unexplained cash credit; Gift; Business income; Income from undisclosed sources; Principle of natural justice; Rule of consistency; Additional evidence; Question of law; Reasonable cause; Corroborative evidences; Accommodation entries; Assessment record; Block assessment; Onus to prove
• Section: 153A; 133(6); 131; 68; 69; 145; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 846 & 847/CHD/2014 A.Y: 2008-09 & 2009-10 THE ACIT, VS M/S RADHE SHAM JAIN DIAMOND CIRCLE-III, JEWELLERS (P) LTD., LUDHIANA. B-XIX, 549/1, COLLEGE ROAD, FOUNTAIN CHOWK, CIVIL LINES, LUDHIANA. PAN: AADCR8437J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KUMAR,CIT -DR RESPONDENT BY : SHRI RAJIV GUPTA DATE OF HEARING : 07.12.2016 DATE OF PRONOUNCEMENT : 13.01.2017 O R D E R PER BHAVNESH SAINI,JM BOTH THE DEPARTMENTAL APPEALS ARE DIRECTED AGAINST DIFFERENT ORDERS OF LD. CIT(APPEALS)-I, LUDHIANA DA TED 30.07.2014 FOR ASSESSMENT YEARS 2008-09 AND 2009-10 . 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. BOTH THE APPEALS ARE DECIDED ISSUE-WISE AS UNDER. 2 ISSUE NO. 1 3. ON GROUND NO. 1 IN ASSESSMENT YEAR 2008-09, REVENUE CHALLENGED THE DELETION OF ADDITION OF RS. 17,68,793/-. THE ASSESSING OFFICER HAS MADE THIS ADDITION ON ACCOUNT OF DISALLOWANCE OF JEWELLERY MA KING CHARGES OF THE EQUAL AMOUNT. THE SAID DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER ON THE GROUND TH AT NO SUCH MAKING CHARGES ARE INCORPORATED DISTINCTLY AND SEPARATELY ON THE SALES BILLS. THE ASSESSING OFFICE R ON THIS BASIS, CONCLUDED THAT NO PRUDENT BUSINESSMAN SHALL OMIT TO RECEIVE CHARGES FROM HIS CUSTOMERS WH ICH HAVE BEEN INCURRED BY HIM. THE ASSESSEE CHALLENGED THIS ADDITION BEFORE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT ASSESSEE COMPANY HAS CLAIMED JEWELLE RY MAKING CHARGES OF RS. 17,68,793/- IN HIS TRADING ACCOUNT ON THE BASIS THAT SAME HAS NOT BEEN CHARGED IN THE SALE BILLS. THE ASSESSING OFFICER IN THE ASSES SMENT ORDER NOTED THAT ASSESSEE HAS CONVERTED GOLD BARS I NTO JEWELLERY. THUS, IT IS BUT EVIDENT THAT THIS CONVE RSION COULD NOT TAKE PLACE WITHOUT INCURRENCE OF MAKING CHARGES. FURTHER, THE ASSESSEE COMPANY HAS MAINTAIN ED ISSUE & RECEIPT REGISTER ON WHICH THE MOVEMENT OF STOCK INWARDS OR OUTWARDS HAS BEEN CORRECTLY RECORD ED. TDS HAS BEEN DEDUCTED ON THE JEWELLERY MAKING CHARG ES WHEREVER APPLICABLE. THUS, THERE COULD BE NO DOUBT ON GENUINENESS OF THE EXPENSES INCURRED. FURTHER, THE ASSESSING OFFICER HAS ESTIMATED INCOME BY APPLYING GP 3 RATE BY REJECTING THE BOOKS OF ACCOUNT, HOWEVER, IN THE PRESENT CASE, ASSESSEE'S GROSS PROFIT RATE WAS ACCE PTED BECAUSE ASSESSEE HAS SHOWN MORE GP AS AGAINST COMPUTED BY THE ASSESSING OFFICER. IT WAS SUBMITTE D THAT ONCE GP IS APPLIED, NO FURTHER ADDITION MAY BE MADE. THE ASSESSEE RELIED UPON CERTAIN DECISIONS I N SUPPORT OF HIS CONTENTION. 4. THE LD. CIT(APPEALS) OBSERVED IN HIS FINDINGS TH AT JEWELLERY MAKING CHARGES FORM PART OF THE TRADING ACCOUNT IN THE CASE OF THE ASSESSEE AND THE SAID TR ADING ACCOUNT AND THE RESULTS THEREOF HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER WHILE MAKING NO ADDITION ON ACCOUNT OF GROSS PROFIT RATE @ 4.32%. THIS BEING S O, AN INDIVIDUAL ITEM OF THE TRADING ACCOUNT CANNOT BE TA KEN OUT OF THE SAME AND DISALLOWED ACCORDINGLY MERELY O N THE PRETEXT THAT THE SAID EXPENDITURE DOES NOT FIND MENTION IN THE SALE BILL. THE CONTENTION OF THE AS SESSEE THAT JEWELLERY MAKING CHARGES WHICH HAVE BEEN INCUR RED ARE PART OF THE AMOUNT CHARGED FROM THE ASSESSEE FO R SALE OF JEWELLERY THOUGH NOT SPECIFICALLY MENTIONED SEPARATELY. THE LD. CIT(APPEALS) THUS, WAS OF THE VIEW THAT THERE IS NO SEPARATE REQUIREMENT TO MENTION JEWELLERY MAKING CHARGES IN THE SALE BILL SO AS TO ENSURE THAT SAME ARE CONSIDERED ALLOWABLE OR CONSIDERED AS GENUINE EXPENSES. THE GENUINENESS OF THE EXPENSES SHALL BE LOOKED INTO BY EXAMINING THE RELEVANT VOUC HERS AND DETAILS OF THE EXPENDITURE BUT ASSESSING OFFICE R HAS 4 NOT BROUGHT ANY ADVERSE MATERIAL AGAINST THE ASSESS EE TO MAKE THIS ADDITION. THE LD. CIT(APPEALS), ACCORDINGLY, DELETED THE ADDITION. 5. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PB-18 WHICH IS TRADING ACCOUNT. PB-32 IS REPLY FILED BEFORE ASSESSING OFFICER IN WHICH IT WAS EXPLAINED THAT JEWELLERY IS GOT MANUFACTURED FROM OUTSIDE JOB WORK . PB-69 IS SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER IN WHICH NO EXPLANATION OF THE ASSESSEE ON THIS ISSUE HAVE BEEN CALLED FOR. IT, THEREFORE, APPEARS THAT THIS ADDITION IS MADE BY THE ASSESSING OFFICER WITH OUT CALLING FOR THE EXPLANATION OF THE ASSESSEE. THE L D. CIT(APPEALS) ON PROPER APPRECIATION OF THE FACTS AN D MATERIAL ON RECORD, CORRECTLY OBSERVED THAT THERE I S NO SPECIFIC REQUIREMENT TO MENTION THE JEWELLERY MAKIN G CHARGES IN THE SALE BILLS SO AS TO ENSURE THAT SAME ARE CONSIDERED ALLOWABLE OR CONSIDERED AS GENUINE EXPENSES. THE ASSESSEE MAINTAINED PROPER RECORDS A ND SATISFIED THE LD. CIT(APPEALS) THAT THIS ADDITION I S WHOLLY UNWARRANTED. THE LD. CIT(APPEALS) ALSO DID NOT APPROVE REJECTION OF THE BOOKS OF ACCOUNT UNDER SEC TION 145(3) OF THE ACT. THE ASSESSEE HAS MAINTAINED PRO PER RECORDS AND MOVEMENT OF THE STOCK AND TDS HAS BEEN DEDUCTED ON JEWELLERY MAKING CHARGES WHEREVER APPLICABLE. THEREFORE, IN SUCH CIRCUMSTANCES, THE 5 DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS HIGH LY UNJUSTIFIED WHICH HAVE BEEN CORRECTLY DELETED BY TH E LD. CIT(APPEALS). THIS GROUND OF APPEAL OF THE REVENUE HAS NO MERIT, SAME IS ACCORDINGLY DISMISSED. 5(I) IN ASSESSMENT YEAR 2009-10, REVENUE HAS RAISE D SIMILAR GROUND NO. 1 CHALLENGING THE DELETION OF ADDITION OF RS. 58,09,670/-. IT IS NOTED IN THE IMPUGNED ORDER THAT ASSESSING OFFICER HAS APPLIED G ROSS PROFIT RATE @ 6% OF THE TOTAL SALES OF JEWELLERY IT EMS AND GROSS PROFIT RATE OF 3% ON PURE GOLD SALES WITHOUT RECORDING ANY BASIS TO ADOPT THE SAME AND WITHOUT CONFRONTING ASSESSEE WITH THE PROPOSED ADDITION OF COMPARATIVE GROSS PROFIT RATE. THE ASSESSING OFFIC ER MADE THIS ADDITION ON ACCOUNT OF LOW GROSS PROFIT R ATE. THE LD. CIT(APPEALS) NOTED THAT IT IS A FACT THAT S AME ASSESSING OFFICER HAS ACCEPTED THE GROSS PROFIT RAT E SHOWN BY THE ASSESSEE ON THE BASIS OF THE BOOKS OF ACCOUNT MAINTAINED BY HIM FOR ASSESSMENT YEAR 2008- 09. THE FALL IN GROSS PROFIT RATE TO 1.58% DURING THE YEAR UNDER CONSIDERATION IS ATTRIBUTABLE TO THE FAC T OF INCREASING GOLD PRICE BECAUSE OF WHICH WEIGHTED AVE RAGE COST OF PURCHASES ADOPTED BY THE ASSESSEE LEADS TO LOWER GP RATE. HOWEVER, THE METHOD OF ACCOUNTING I N THE EVENT OF FALL IN GOLD PRICE, IN ANY PARTICULAR YEAR WOULD LEAD TO NORMALLY HIGH GROSS PROFIT RATE AS WE LL. THE LD. CIT(APPEALS), THEREFORE, FOUND THAT IN THES E CIRCUMSTANCES, FAULT CANNOT BE FOUND WITH THE METHO D OF 6 ACCOUNTING ADOPTED BY THE ASSESSEE AS FOR THE IMMEDIATE PRECEDING YEAR, THE GROSS PROFIT RATE HAS BEEN FOUND TO BE SATISFACTORILY WORKED OUT BY THE ASSESSING OFFICER. IN ASSESSMENT YEAR 2008-09, ASSESSING OFFICER MADE ADDITION OF RS. 17,68,793/- ON ACCOUNT OF JEWELLERY MAKING CHARGES AND THIS ADDITI ON FOR THE YEAR UNDER CONSIDERATION HAS NOT BEEN MADE FOR NO REASONS SPECIFIED IN THE ASSESSMENT ORDER. THE O RDER OF THE ASSESSING OFFICER WAS, THEREFORE, ARBITRARY TO HOLD DIFFERENT VIEW IN TWO ASSESSMENT YEARS. ASSESS ING OFFICER DISALLOWED THE AMOUNT BUT IN THIS YEAR ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF LOW G ROSS PROFIT RATE. THE REJECTION OF THE BOOKS OF ACCOUNT HAS NOT BEEN FOUND JUSTIFIED. THE LD. CIT(APPEALS), THEREFORE, FOUND THAT SINCE THIS ADDITION IS MADE WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE, THEREFO RE, SUCH ADDITION IS NOT WARRANTED AND ACCORDINGLY, DEL ETED THE ADDITION. 6. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FIND MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THIS ADDITION IS MADE MERELY ON ACCOUNT OF LOW GP RATE. HOWEVER, THE LD. CIT(APPEALS) DID NOT JUSTIFY THE REJECTION OF THE BOOKS OF ACCOUNT UNDER SECTION 145 (3) OF THE INCOME TAX ACT ON WHICH NO SPECIFIC GROUND H AVE BEEN RAISED BY THE REVENUE. IN PRECEDING ASSESSMEN T YEAR 2008-09, ON THE BASIS OF SAME METHOD OF ACCOUNTING, THE ASSESSING OFFICER ACCEPTED THE GP R ATE 7 DISCLOSED BY THE ASSESSEE, THEREFORE, ASSESSING OFF ICER SHOULD FOLLOW RULE OF CONSISTENCY AND ON THE SAME METHOD OF ACCOUNTING, MERELY ON LOW GP RATE, SUCH ADDITION SHOULD NOT BE MADE. SINCE THE ASSESSEE MAINTAINED THE BOOKS OF ACCOUNT ON THE SAME ACCOUNTING METHOD AS OF THE PRECEDING ASSESSMENT YE AR AS WELL AS IN ASSESSMENT YEAR UNDER APPEAL, THEREFO RE, THERE WAS NO BASIS FOR MAKING THE ADDITION AGAINST THE ADDITION PARTICULARLY WHEN NO SPECIFIC DEFECTS HAVE BEEN POINTED OUT IN MAINTENANCE OF THE BOOKS OF ACCOUNT AND THAT LD. CIT(APPEALS) DID NOT APPROVE REJECTION OF THE BOOKS OF ACCOUNT. IN THESE CIRCUMSTANCES, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(APPE ALS) IN DELETING THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE IS ALSO DISMISSED. 6(I) IN THE RESULT, ISSUE NO. 1 IS DECIDED AGAINST THE REVENUE IN BOTH THE ASSESSMENT YEARS UNDER APPEAL. ISSUE NO. 2 7. IN ASSESSMENT YEAR 2008-09, REVENUE ON GROUND NO. 2 CHALLENGED THE DELETION OF ADDITION OF RS. 14,790/- THIS ADDITION PERTAINS TO DISALLOWANCE OF REPAIR CHARGES ON OLD JEWELLERY WHICH HAVE BEEN DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT THEY DO NOT FOUND MENTION IN THE SALES BILLS. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT REP AIR CHARGES ARE IN-FACT THE NET AMOUNT OF REPAIR CHARGE S 8 PAID BY THE ASSESSEE COMPANY ON OLD JEWELLERY GOT REPAIRED FROM THE JOB WORKERS AND REPAIR CHARGES CLAIMED FROM CUSTOMERS AGAINST REPAIR OF JEWELLERY BELONGING TO THE CUSTOMERS. THESE REPAIR CHARGES H AVE BEEN PAID ON ASSESSEE'S OWN JEWELLERY AND ALSO ON JEWELLERY RECEIVED FROM CUSTOMERS FOR REPAIR PURPOS ES. ON RECEIPT OF JEWELLERY FROM CUSTOMERS, A REPAIR SL IP IS PREPARED. REPAIR CHARGES PAID TO JOB WORKERS ON IT S REPAIR IS WRITTEN ON THE BACK OF REPAIR SLIP. REPA IR CHARGES RECEIVED FROM CUSTOMERS ARE ALSO WRITTEN ON THE BACK. IN THE BOOKS, ENTRIES MADE FOR THE NET AMOUN T. HOWEVER, IN MANY CASES, NO REPAIR CHARGES ARE CHARG ED FROM THE CUSTOMERS SO AS TO GIVE AFTER SALE SERVICE S TO PROMOTE SALES. THUS, THERE IS NO SUCH CASE THAT REP AIR CHARGES ARE NOT RECEIVED FROM THE CUSTOMERS. HOWEV ER, IN THE PROFIT & LOSS ACCOUNT, EXCESS OF EXPENDITURE OVER INCOME HAS BEEN TAKEN. 7(I) THE LD. CIT(APPEALS) FOUND THAT THIS DISALLOWA NCE IS EXACTLY ON THE SAME GROUND AS REGARDS TO JEWELLE RY MAKING CHARGES ON WHICH ADDITION OF RS. 17,68,793/- HAS BEEN DELETED. THE LD. CIT(APPEALS) FOLLOWING T HE REASONS FOR THE SAME, DELETED THIS ADDITION AS WELL . 8. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. THE ASSESSEE SPECIFICALLY EXPLAINED THIS ISSUE BEFO RE LD. CIT(APPEALS). THE ASSESSEE EXPLAINED THAT NET AMOU NT 9 OF REPAIR CHARGES ON BOTH COUNTS HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT IN WHICH NO DEFECTS HAVE BEEN POINTED OUT BY THE LD. DR DURING THE COURSE OF ARGUMENTS. IT IS STATED THAT THIS ISSUE IS SAME AS HAVE BEEN CONSIDERED ON GROUND NO. 1. THEREFORE, WE DO N OT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. THE LD. CIT(APPEALS) CORRECTLY DELETED THE ADDITION . 8(I) THIS GROUND OF APPEAL OF THE REVENUE IS DISMIS SED. 8(II) IN ASSESSMENT YEAR 2009-10, REVENUE CHALLENGE D THE DELETION OF ADDITION OF RS. 98,436/-. THIS ADD ITION PERTAINS TO DISALLOWANCE OF REPAIR CHARGES ON OLD JEWELLERY, WHICH HAVE BEEN DISALLOWED BY THE ASSESS ING OFFICER ON THE GROUND THAT THEY DO NOT FIND MENTION IN THE SALE BILLS. THE LD. CIT(APPEALS) FOUND THAT TH E CHARGES SO RECEIVED HAVE BEEN ACCOUNTED FOR AND ONL Y CHARGES IN EXCESS PAID ON JEWELLERY SOLD BY THE ASS ESSEE HAVE BEEN CLAIMED AS EXPENSES. THE LD. CIT(APPEALS ) FOUND THAT ON THE SAME, HE HAS DELETED THE ADDITION IN ASSESSMENT YEAR 2008-09 AND ACCORDINGLY DELETED THE ADDITION. 9. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF REVENUE. THE ASSESSING OFFICER DID NOT POINT OUT ANY SPECIFIC DE FECT IN MAINTENANCE OF THE BOOKS OF ACCOUNT BY THE ASSES SEE ON THIS ITEM. THE ASSESSEE HAS PROPERLY RECORDED T HE NET AMOUNT OF REPAIR CHARGES OF BOTH THE COUNTS IN 10 BOOKS OF ACCOUNT. THE LD. CIT(APPEALS) DELETED TH E SIMILAR ADDITION IN ASSESSMENT YEAR 2008-09 AND WE HAVE CONFIRMED HIS FINDINGS. THIS GROUND OF APPEAL OF THE REVENUE IS, THEREFORE, IDENTICAL AS HAVE BEEN CONSIDERED IN ASSESSMENT YEAR 2008-09. THIS GROUND OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 9(I) ISSUE NO. 2 IS, THEREFORE, DECIDED AGAINST THE REVENUE. ISSUE NO. 3 10. ON GROUND NO. 3 IN ASSESSMENT YEAR 2008-09, REVENUE CHALLENGED THE DELETION OF ADDITION OF RS. 11,17,80,000/-. ON GROUND NO. 4 IN ASSESSMENT YEAR 2008-09, REVENUE CHALLENGED THE DELETION OF ADDITIO N OF RS. 1 LAC. 11. IN ASSESSMENT YEAR 2009-10, REVENUE ON GROUND NO. 3 CHALLENGED THE DELETION OF ADDITION OF RS. 6,37,20,000/- AND ON GROUND NO. 4 REVENUE CHALLENGE D THE DELETION OF ADDITION OF RS. 4,50,000/-. LD. REPRESENTATIVES OF BOTH THE PARTIES SUBMITTED THAT ISSUE IS SAME IN BOTH THE APPEALS OF THE REVENUE. BOTH T HE PARTIES MAINLY ARGUED ON THE BASIS OF FACTS CONSIDE RED IN ASSESSMENT YEAR 2008-09. THEREFORE, FOR THE PUR POSE OF DISPOSAL OF THIS ISSUE, THE FACTS ARE TAKEN AND CONSIDERED FROM ASSESSMENT YEAR 2008-09. 11 11(I) THE ASSESSING OFFICER MADE ADDITIONS OF RS. 11,17,80,000/- AND RS. 1 LAC ON ACCOUNT OF UNEXPLAI NED SHARE PREMIUM. THE ASSESSING OFFICER IN THIS REGAR D HAS OBSERVED IN PARA 5 OF THE ASSESSMENT ORDER THAT ASSESSEE HAD ISSUED 12,42,000 SHARES OF RS. 10/- EA CH ON PREMIUM OF RS. 90/- PER SHARE, THEREBY HAD RAISE D CAPITAL OF RS. 1,24,20,000/- ALONGWITH SHARE PREMIU M OF RS. 11,70,80,000/-. THE ASSESSING OFFICER REQUI RED THE ASSESSEE TO JUSTIFY THE ISSUANCE OF SHARES ON PREMIUM AND IN RESPONSE TO THE SAME, IT WAS SUBMITT ED THAT ASSESSEE HAD TAKEN OVER RUNNING BUSINESS OF M/ S DIAMOND JEWELLERS, A PROPRIETORSHIP FIRM ESTABLISHE D IN THE YEAR 1995 WHICH OCCUPIED AN ESTABLISHED SHOWROO M AT PRIME LOCATION OF THE JEWELLERS MARKET HAVING LA RGE NUMBER OF PREMIUM CUSTOMERS. IT WAS SUBMITTED THAT STOCK OF THE GOLD WAS TAKEN AT FACE VALUE RATHER TH AN MARKET VALUE. THE ASSESSING OFFICER CONSIDERING RE PLY OF THE ASSESSEE DID NOT ACCEPT CONTENTION OF THE ASSESSEE ON THE FOLLOWING REASONS : I) FIRSTLY THE COMPANY HAS BEEN INCORPORATED ON 22.01.2008 WITH INITIAL CONTRIBUTION OF SHARE CAPIT AL BY ITS THREE PROMOTERS. LARGE NUMBER OF PRIVATE LIMITED COMPANIES BASED AT KOLKATA HAVING NO PAST BUSINESS ASSOCIATION WITH THE ASSESSEE HAVE INVESTE D FOR PURCHASE OF SHARES AT A PREMIUM OF RS. 90/- PER SHARE. FEW COMPANIES INVESTED IN PURCHASE OF SHARES EVEN AT THE VERY FIRST WEEK OF INCORPORATION 12 I.E. M/S BENGAL CREDIT CORPORATION INVESTED FOR 15000 SHARES ON 28.01.2008, 25000 SHARES ON 29.01.2008 AND M/S RAM ROOP CREDIT & LEASING PVT. LTD. INVESTED IN 25000 SHARES ON 31.01.2008. II) THERE WAS HARDLY ANY INVESTOR IN SHARES OF NEWLY INCORPORATED COMPANY EXCEPT FROM KOLKATA. III) ALL THESE INVESTORS FROM KOLKATA PURCHASED TH E SHARES OF THE ASSESSEE COMPANY AT A HIGH PREMIUM OF RS. 90/- PER SHARE AND FURTHER WITHOUT RECEIVING ANY DIVIDEND OR ANY BONUS SHARES, CHOSE TO SELL THEIR SHARES HOLDING DIRECTLY OR INDIRECTLY TO THE DIRECTORS/PROMOTERS AT THE FACE VALUE OF RS. 10/- PER SHARE, THUS, INCURRING HEAVY LOSS OF RS. 90/- PER SHARE WITHOUT ANY REASONABLE CAUSE OR LOGIC. IV) THE COMPANY HAD NOT CONDUCTED ANY SUBSTANTIAL BUSINESS AT THE TIME OF ISSUING OF SHARES. 11(II) THE ASSESSING OFFICER, THEREFORE, HELD THAT THE WHOLE TRANSACTION OF RAISING CAPITAL THROUGH SHARE PREMIUM FROM UNKNOWN AND UNRELATED COMPANIES OF A DISTINCT PLACE WAS NOTHING BUT A COLORABLE DEVICE T O INTRODUCE UNACCOUNTED INCOME OF THE ASSESSEE. THE ASSESSING OFFICER RELIED UPON DECISIONS OF THE HON' BLE SUPREME COURT IN THE CASES OF DURGA PRASHAD MORE 82 ITR 640 AND SUMATI DAYAL 214 ITR 801 AND TREATED TH E 13 SHARE PREMIUM AMOUNTING TO RS. 11,78,80,000/- AS UNEXPLAINED UNDER SECTION 68 OF THE INCOME TAX ACT. THE ASSESSING OFFICER ALSO OBSERVED THAT M/S PUNEET FASHION PVT. LTD. HAS SUBSCRIBED 10000 SHARES @ RS. 100/- PER SHARE INCLUDING PREMIUM OF RS. 90/- PER SHARE. SINCE GENUINENESS AND CREDIT WORTHINESS OF M/S PUNEET FASHION PVT. LTD. COULD NOT BE EXPLAINED, THEREFORE, IT WAS ALSO TREATED AS UNEXPLAINED AND FURTHER ADDITION OF RS. 1 LAC WAS MADE UNDER SECTIO N 68 OF THE ACT. 12. THE ASSESSEE CHALLENGED BOTH THE ADDITIONS BEFO RE LD. CIT(APPEALS) AND SUBMITTED HIS ARGUMENTS ON THE SE ISSUES WHICH ARE INCORPORATED IN THE IMPUGNED ORDER AND READ AS UNDER : 'THE LD. A.O. HAS ADDED RS. 11,17,80,000/- RECEIVED ON ACCOUNT OF SHARE PREMIUM, CREDITED IN THE BOOKS, 'A RBITRARILY ON THE BASIS OF SURMISES AND CONJECTURES, WHICH IS AGAINST JUSTICE AND NATURAL LAW OF JUSTICE. 5.1 BEFORE GOING THROUGH FURTHER WE WANT TO REITERA TE THE FACTS AND CIRCUMSTANCES OF THE CASE IN SUMMARY MANN ER, REGARDING THIS ISSUE BEFORE YOUR HONOUR, WHICH ARE AS UNDER:- ASSESSEE IS ENGAGED IN THE RETAIL AS WELL AS WHOLE SALE BUSINESS OF JEWELLERY. A SEARCH WAS CONDUCTED AT TH E PREMISES OF THE ASSESSEE ON 14.03.2012. ASSESSMENT WAS MADE ON 30.03.2014 UNDER SECTION 153A R.W.S. 143 (3 ) OF THE ACT, AGAINST WHICH THIS APPEAL LIES. 5.1(B) DURING THE YEAR UNDER CONSIDERATION SH. RADH E SHAM JAIN WITH HIS SONS SH. CHETAN JAIN AND SH. MUNISH J AIN HAD 14 INCORPORATED A COMPANY NAMED M/S RADHE SHAM JAIN DIAMOND JEWELLERS PVT. LTD. ON DT. 22.01.2008 WITH THE MAIN OBJECT OF, TO TAKE OVER THE RUNNING BUSINESS OF M/S JAIN DIAMOND JEWELLERS A PROPRIETORSHIP FIRM AS A GOING C ONCERN (COPY OF MOA & AOA ENCLOSED AT PAGE NO.33) AND ACCO RDINGLY COMPANY HAD TAKEN OVER THE RUNNING BUSINESS OF M/S JAIN DIAMOND JEWELLERS AT BOOK VALUES INSPITE OF THE FAC T THAT THE MARKET VALUE OF STOCKS TAKEN OVER BY THE COMPANY AT BOOK VALUE IS SUBSTANTIALLY HIGH APPROX. RS. FIVE CRORE (RS.500,00,000). IN THIS RESPECT WHOLE DETAILS/CA LCULATION HAVE BEEN ELABORATED STEP WISE, IN OUR REPLY DATED 30.03 .2014. 5.1(C) IN REFERENCE TO REPLY TO QUESTIONNAIRE ISSUED BY THE; LD. A.O. DURING ASSESSMENT PROCEEDING, ASSESSEE SUB MITTED THE COMPLETE LIST OF SHARES ALLOTTED DURING THE YEA R SHOWING NAME, ADDRESS, PAN NO'S, AMOUNT RECEIVED ALONG WITH RELEVANT CH. NO'S & DATE, COPY OF THE SAME ENCLOSED FOR YOUR READY REFERENCES AT PAGE NO. 38 TO 43. 5.1(D) THERE AFTER THE INFORMATION WAS CALLED FOR, BY ISSUING NOTICES U/S 133' (6) OF THE ACT. BY THE RES PECTIVE LD. A.O. IN RESPECT OF WHICH SUBSTANTIAL CONFIRMATI ON HAD GOT RECEIVED. 5.1(E) HOWEVER TO MAKE FURTHER ENQUIRY THE LD. A.O. ISSUED AN COMMISSION TO KOLKATA U/S 131 (1) (D) OF THE ACT TO ENQUIRE FURTHER THE IDENTITY, CREDIT WORTHINESS OF THE COMPANIES AS WELL AS GENUINENESS OF THE TRANSACTION S IN RESPECT OF SHARE APPLICATION MONEY TAKEN BY THE RAD HE SHAM JAIN DIAMOND JEWELERS GROUP FROM THE KOLKATA BASED COMPANIES. IN RESPONSE TO WHICH DDIT (INV.) UNIT IV (1), KOLKATA HAVE SUBMITTED ITS REPORT DATED 19,03.2014 STATING THAT THE SUMMONS U/S 131 OF THE ACT WERE ISSUED TO THE DIRECTORS, IN RESPONSE TO WHICH THE DIRECTORS OF THE COMPANIES SUBMITTED THEIR BOOKS OF ACCOUNTS AND OTHER DOCUMEN TS, WHICH WERE VERIFIED REGARDING THE INVESTMENT AND TH EIR 15 SOURCE OF INVESTMENT IN M/S RADHE SHAM JAIN DIAMOND JEWELLERS GROUP. IT IS PERTINENT TO MENTION HERE THAT THE LD. DDIT H AD NOT DRAWN ANY ADVERSE OPINION REGARDING THE INVESTMENT AS WELL AS THE SOURCE OF INVESTMENT BY KOLKATA BASED COM PANIES IN M/S RADHE SHAM JAIN DIAMOND JEWELERS GROUP, LUDHIANA, EXCEPT FEW DISCREPANCIES REGARDIN G DIFFERENCE OF AMOUNT OR DIFFERENCE OF YEAR OF INVESTMENT. 5.1(F) THE LD. A.O. ON RECEIVING THE REPORT OF LD. DDIT, KOLKATA ISSUED A LETTER DT. 20.03.2014 TO ASSESSEE TO EXPLAIN THE DISCREPANCIES AS POINTED OUT IN THE COMMISSION REPORT RECEIVED FROM KOLKATA. IN RESPONSE TO WHICH ASSESSEE EXPLAINED THE EACH AND EVERY DISCREPANCY VIDE HIS REP LY DT. 21.03.2014. 5.1(G] THEREAFTER IN RESPONSE TO A LETTER DT. 27.03.2014 I SSUED TO JOINT DIRECTOR OF INCOME TAX (INV.) LUDHIANA FOR THEIR COMMENTS ON THE REPORT OF DDIT KOLKATA, THERE REPLY RECEIVED ON 28.03.2014 ALSO WITHOUT ANY ADVERSE INTERFERENCE, CE RTIFIED COPY ENCLOSED AT PAGE NO.62. 5.1(H) IN OUR CASE ON THIS ISSUE NOT ONLY PROPER EXPLANATIONS ARE ON THE RECORD BUT ALSO ASSESSEE HAVE FULLY DISC HARGED HIS ONUS REGARDING IDENTITY OF THE SUBSCRIBERS, THEI R CREDIT WORTHINESS' AND GENUINENESS OF THE TRANSACTIONS AND FURTHER ENQUIRIES MADE BY LD. A.O. ALSO STRENGTHEN THE ISSU ES REGARDING IDENTITY OF THE SUBSCRIBERS, THEIR CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS, DIRECTORS PROD UCED BEFORE THE AUTHORITY, SUBMITTED THEIR BOOKS OF ACCO UNTS, DULY VERIFIED BY THE DEPARTMENT OFFICIALS REGARDING INVEST MENT AS WELL AS THE SOURCE OF INVESTMENT AND NO ADVERSE INF ERENCE ARE ON RECORD AS WELL AS ON THE ORDER ITSELF. 5.1(I) THERE IS NO ADDITIONAL MATERIAL/EVIDENCES FO UND OUT BY THE LD. A.O. ON RECORD ON THE BASIS OF WHICH LD. A. O. HAVE DECIDED TO INVOKE THE PROVISION OF SECTION 68 OF TH E ACT. MORE EVER THERE IS NO DISSATISFACTION ABOUT THE 16 EVIDENCES/EXPLANATIONS OFFERED BY THE ASSESSEE POIN TED OUT DURING THE WHOLE ASSESSMENT PROCEEDING. 5.1(J) ON 29.03.2014 THE LD. A.O. ISSUED NOTICE U/S 142 (1) TO FURNISH THE INFORMATION/DETAILS CALLED FOR AN D ALSO MENTIONED THAT IN CASE OF YOUR FAILURE TO FURNIS H THE ABOVE INFORMATION OR JUSTIFY THE REASONABLENESS OF SHARE PREMIUM, YOU ARE REQUESTED TO PLEASE SHOW CAUSE WHY THE AMOUNT OF SHARE PREMIUM RECEIVED SHOULD NOT BE TA XED IN YOUR HAND AS UNEXPLAINED CREDIT IN YOUR BOOKS OF ACCOUNTS. IN RESPONSE TO WHICH ASSESSEE FILED HIS SUBMISSIONS VIDE REPLY DT. 30.03.2014. WHICH WAS FU LLY INFORMATICE ALONG WITH FIGURES, LOGIC'S, CALCULATIO NS AND FULLY JUSTIFICATIONS REGARDING THE REASONABLENESS OF SHARE PREMIUM RECEIVED 5.1(K) THEIR AFTER ON THE LAST DAY OF TIME BAR CASE LD. A.O. FRAMED HIS OPINION TO INVOKE THE PROVISION OF SECTI ON 68 OF THE ACT ARBITRARILY ON THE BASIS OF SURMISES AND CO NJECTURES AND WITHOUT ANY REASONABLE GROUND AND MATERIAL ON RECORD, WHICH IS AGAINST LAW AND NATURAL JUSTICE. 5.2 CASH CREDITS SECTION 68 HAS BEEN REPRODUCED AS UNDER;- WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND ASSE SSES OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINI ON OF THE [ASSESSING OFFICER], SATISFACTORY, THE SUM SO CREDI TED MAY, BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSES SEE OF THAT PREVIOUS YEAR. HAVING REGARD TO THE PHRASEOLOGY USED IN SECTION 68 DEARLY INDICATES THAT BEFORE INVOKING THE PROVISION OF SEC TION 68 THERE MUST BE EITHER NO EXPLANATIONS OR AN EXPLANAT ION OFFERED BY THE ASSESSEE IS NOT SATISFACTORY, 5.3 FROM THE ABOVE MENTIONED FACTS, CIRCUMSTANCES T HERE EMERGED NUMBER OF ISSUES ON WHICH OUR WRITTEN SUBMI SSIONS ARE AS UNDER:- 17 5.3(A) ASSESSEE HAVE DULY DISCHARGED HIS ONUS TO PROV E THE TRANSACTIONS. IT IS WELL ESTABLISHED PRINCIPAL IN THE EYES OF LAW THAT IF ASSESSEE PROVE THE IDENTITY, CREDIT WORTHINESS OF T HE SUBSCRIBERS AND GENUINENESS OF THE TRANSACTION THEN SECTION 68 CANNOT BE INVOKED. IN THE PRESENT CASE ASSESSEE HAD PROVIDED THE NAMES, ADDRESSES, PAN NO'S, AMOUNT RECEIVED ALONG WITH REL EVANT DETAILS. FURTHER INFORMATION RECEIVED IN RESPONSE T O NOTICES ISSUED U/S 133 (6) OF THE ACT. LD. A.O. HAS NOT OBJ ECTED ON THE CONFIRMATIONS, DOCUMENTS ATTACHED WITH THE CONFIRMAT IONS, CREDIT WORTHINESS OF THE SUBSCRIBERS, GENUINENESS O F THE TRANSACTIONS AND SOURCE OF INVESTMENTS EXPLAINED BY THE SUBSCRIBERS IN THEIR RESPECTIVE REPLY. IN RESPONSE TO FURTHER ENQUIRIES MADE BY LD. A.O. THE REPORT OF DDIT KOLKAT A IS SELF EXPLANATORY ABOUT THE IDENTITY, CREDIT WORTHINESS, AND GENUINENESS OF TRANSACTIONS AND ALSO IN THIS REPORT NO ADVERSE INFERENCE DRAWN EXCEPT FEW DISCREPANCIES, W HICH ALSO HAVE FULLY EXPLAINED BY THE ASSESSEE AND ON RE CORD. NO ADVERSE INFERENCE DRAWN BY THE JOINT DIRECTOR OF IN COME TAX (INV.)., LUDHIANA IN THEIR COMMENTS ON THE REPORT O F DDIT, KOLKATA DATED 28.03.2014 RELIANCE IS BEING PLACED ON I) ACRON FINANCE (P) LTD. V CIT (2011) 238 CTR (P&H) 344 II) CIT VS KULWANT SINGH & CO. (2008) 299 ITR 53 (P&H) III) CIT VS HA MANAGEMENT CONSULTANTS P.LTD. (2012) 82 CCH 138 DEL HIGH COURT. (HELD, ASSESSEE HAS BEEN ABLE TO PROVE IDENTITY AND CREDIT WORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRA NSACTION ADDITION COULD NOT BE MADE) IV. CIT VS EMPIRE BUILTECH PVT. LTD. (2014) 88 CCH 033 DELHC 18 (CASH CREDITSSHARE APPLICATION MONEYADDITIONBURDE N OF PROOF DISCHARGE OFASSESSEE RECEIVED SHARE CAPITA! AND SOLD SHARES AT 1000% PREMIUMAO IN ASSESSMENT PROCE EDINGS ASKED ASSESSEE TO FURNISH VARIOUS PARTICULARSNOTIC ES U/S 133 (6) WERE ALSO ISSUED TO INDIVIDUALS AND ENTITIES WHO HAD APPLIED AS SHAREHOLDERS DIRECTLYOUT OF 39 INVESTORS, 28 RES PONDED TO QUERIES, 2 INVESTORS DID NOT RECEIVE NOTICE AND 9 DID NOT RESPONDEDAO ADDED ENTIRE AMOUNT U/S 68 CIT(A) CONFIRMED DELETION OF ADDITION HOLDING THAT ONCE IDENT ITY OF THE INVESTORS HAD BEEN DISCLOSED, ASSESSEE HAD DISCHARGE D BURDEN IMPOSED UPON IT BY LAW AND THAT AMOUNT COULD NOT BE ADDED BACK UNDER S. 68TRIBUNAL AFFIRMED FINDINGS OF CIT(A)IN REVENUE'S APPEAL ISSUE WAS CONFINED TO DELE TION OF ADDITION PERTAINING TO 11 INVESTORS WHOSE PARTICULARS C OULD NOT BE VERIFIED) V. CIT VS PEOPLES GENERAL HOSPITAL LTD. (2013) 356 ITR 65'(MP) (INCOMECASH CREDITSHARE APPLICATION MONEYGENUINEN ESS OF TRANSACTION AND CREDITWORTHINESS OF CREDITORDISCHA RGE OF BURDEN OF PROOF BY ASSESSEE, EFFECT OFAO OBSERVED THAT COMPANY A HAD MADE SHARE SUBSCRIPTION TO CAPITAL OF ASSESSEE AO DOUBTED CREDITWORTHINESS OF A AND DIRECTED ADDITIO N OF AMOUNT OF SHARE SUBSCRIPTION PROVIDED BY A TO ASSESSE E CIT(A) AND TRIBUNAL DELETED ADDITION MADE BY AO HELD, IF IDENTITY OF PERSON PROVIDING SHARE .APPLIC ATION MONEY IS ESTABLISHED THEN BURDEN WAS NOT ON ASSESSE E TO PROVE CREDITWORTHINESS OF SAID PERSONCOMPANY A WAS NOT B OGUS OR FICTITIOUS COMPANYIN INSTANT CASE ASSESSEE HAD ESTABL ISHED IDENTITY OF INVESTOR WHO HAD PROVIDED SHARE SUBSCRIP TION AND IT WAS ESTABLISHED THAT TRANSACTION WAS GENUINENO ADDITION COULD BE MADE U/S 68) HAVING REGARD TO THE SAME, IT CANNOT BE DEDUCED THA T THE ASSESSEE HAVE FAILS TO PROVE THE IDENTITY, CREDITWO RTHINESS 19 AS WELL AS GENUINENESS OF TRANSACTION. HENCE THERE IS NO DOUBT THAT ASSESSEE COMPANY HAVE FULLY DISCHARGED HIS ONUS TO PROVE THE TRANSACTIONS, 5.3(B) EXPLANATIONS OF THE ASSESSEE HAD NOT REJECTE D OR REBUTTED BY THE REVENUE AT ANY STAGE DURING THE WHOL E ASSESSMENT PROCEEDINGS. AT EACH AND EVERY STAGE OF ASSESSMENT PROCEEDINGS S S AND WHEN LD. A.O. ASKED FOR, ASSESSEE FILED THE EXPLANA TIONS AS WELL AS EVIDENCES IN SUPPORT OF THEIR EXPLANATIO NS. NEITHER ANY EXPLANATION NOR ANY EVIDENCES IN SUPPORT OF EXP LANATIONS FILED REJECTED BY THE REVENUE OR RECORD THEIR DISSAT ISFACTION OR REBUTTAL OF THE SAME. LD. A.O. HAD NOT POINTED OUT ANY I NHERENT WEAKNESSES OR SHORT COMING' IN THE INFORMATION ON R ECORD, WHETHER PROVIDED BY THE ASSESSEE OR COLLECTED BY AT HI S OWN. ALL THE EXPLANATIONS AS WELL AS EVIDENCES ON RECORD ARE FACTUAL. THERE IS NO EVIDENCE TO SHOW THAT THE TRANSA CTIONS WERE SHAM. HENCE ADDITION MADE UNDER SECTION 68 IS UNJUSTIFIABLE AS WELL AS AGAINST LAW OF NATURAL JUS TICE. RELIANCE IS BEING PLACED ON (I) SREE LEKHA BANERJEE VS CIT (1963) 49 ITR 1 12 (SC) (HELD: BEFORE THE DEPARTMENT REJECTS SUCH EVIDENCE IT MUST EITHER SHOW AN INHERENT WEAKNESS IN THE EXPLANATION OR REBUT IT BY PUTTING TO THE ASSESSES SOME INFORMATION OR EVIDE NCE WHICH IT HAS IN ITS POSSESSION. THE DEPARTMENT CANNO T BY MERELY REJECTING UNREASONABLY A GOOD EXPLANATION, CO NVERT GOOD PROOF INTO NO PROOF. IT IS WITHIN THE RANGE OF THESE PRINCIPLES THAT SUCH CASES HAVE TO BE DECIDED.) II) EXOIMP RESOURCES (INDIA) LTD. VS CIT (2005) 195 CTR (CAT) 226 (INCOMECASH CREDIT BURDEN OF PROOF VIS-A-VIS EXPL ANATION OF ASSESSEEWHEN S. 68 IS INVOKED AND, THE ASSESSEE 20 FURNISHES AN EXPLANATION, IT IS INCUMBENT UPON THE AO TO EXAMINE THE EXPLANATION AND ARRIVE AT A CONCLUSION AS TO WHETHER THE EXPLANATION IS SATISFACTORY IF THE EXPLANATION IS NOT FOUND TO BE SATISFACTORY, THE CO NCLUSION ARRIVED AT BY THE AO IS TO BE COMMUNICATED TO THE ASSESSEE IF, THEREUPON, THE ASSESSEE SUBMITS ANY COMMENTS OR FURNISHES FURTHER INFORMATION THE AO HA S TO EXAMINE THE SAMEAO MADE ADDITION OF THE SHARE CAPI TAL AS UNDISCLOSED INCOME WHICH WAS UPHELD BY CIT(A) AS WEL L AS THE TRIBUNAL IT WAS INCUMBENT ON THE APPELLATE AUT HORITIES TO EXAMINE THE RECORD ITSELF AND FIND OUT AS TO WHE THER ANY EXPLANATION IS ON RECORD OR NOT SAME NOT DONEMATT ER IS REMITTED BACK TO THE TRIBUNAL TO ASCERTAIN AS TO WH ETHER ANY EXPLANATION WAS FURNISHED TO THE AO BEFORE THE ASSESSMENT WAS MADE IF NO EXPLANATION IS FOUND, TH E ORDER PASSED BY THE CIT(A) AND THE TRIBUNAL UPHOLDIN G THE ADDITION SHALL STAND AFFIRMED IF SUCH EXPLANATION IS FOUND, THE CASE IS TO BE REMANDED TO THE AO FOR EXA MINING THE SAID EXPLANATION AND THEN TO ARRIVE AT A CONCLU SION) III) SUNAM RICE & DAL MILLS VS CIT (2008) 304 ITR 189 (P&H) CREDITVARIATION IN DATES VIS-A-VIS WITHDRAWAL IN COME - CASH FROM BANK ASSESSEE EXPLAINED THAT THE MONEY IN QUESTION WAS IN FACT RECEIVED ON 9TH NOV., 1973, AG AINST A CHEQUE BUT THE ENTRY IN RESPECT OF THE SAME WAS MAD E ON 12TH NOV., 1973, SINCE 10TH AND LLTH NOV.,1973, WER E BANK HOLIDAYSMANAGER OF THE BANK HAS CONFIRMED THAT HE HAD MADE THE PAYMENT AFTER THE BANKING HOURS ON 9TH NOV ., 1973 BY EXERCISING HIS DISCRETIONARY POWER AND HAD BUT THE DATE AS 12TH ON THE CHEQUE IN HIS OWN HANDWRITING, AND THE SAME WAS ENTERED IN THE BOOKS OF THE BANK AS FIRST ENTRY ON 12TH NOV., 1973SAME HAS BEEN CORROBORATED BY THE CASHIER ASSESSEE HAD ENTERED THE TRANSACTION IN ITS BOOKS OF ACCOUNT ON THE DATE OF TRANSACTION OF ITS OWNTHEREFORE, 21 THE IMPUGNED AMOUNT CANNOT BE TREATED AS UNEXPLAINE D MONEY AND ADDITIONS CANNOT HE SUSTAINED) IV) CIT VS A. K. DAGA & SONS (2008) 298 ITR 623 (MAD) (INCOME-CASH CREDITS-SALE PROCEEDS OF JEWELLERY-GOL D AND SILVER JEWELLERY SOLD BY ASSESSEE TO FAMILY MEMBERS SAID JEWELLERY WAS DISCLOSED UNDER VDIS AND THE CIT HAD ISSUED A CERTIFICATE THEREFORE ASSESSEE HAD FILED DETAILE D DESCRIPTION OF PURCHASES OF JEWELLERY AND ITS VALUATION AT THE TI ME OF DECLARATION UNDER VDIS DECLARATION IS NOT DISPUTED B Y THE REVENUE ASSESSEE HAS EXPLAINED THE NATURE AND SOURC E OF CREDITS WITH SUPPORTING EVIDENCE FIRST APPELLATE AUT HORITY AS WELL AS THE TRIBUNAL HAVE GIVEN A FINDING THAT THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE TRANSACTION WAS SHAM CONCURRENT FINDINGS ARE BASED ON VALID MATERIAL AND EVIDENCE THEREFORE, THE SUM RECEIVED ON 'AMOUNT OF SALE OF J EWELLERY CANNOT BE CHARGED TO TAX UNDER S. 68 NO SUBSTANTIA L QUESTION OF LAW ARISES) 5.3(C) REVENUE HAD NOT DISPUTED ANY OF THE FACTS OF THE CASE AT ANY STAGE OF ASSESSMENT PROCEEDINGS. LD. A.O. HAD NOT CONFRONTED ANY DISPUTED FACT TO STAGE OF ASSESSMENT PROCEEDINGS ON WHICH DIFFERENCE OF OPINIO N EXISTS. IN THE ABSENCE OF THE SAME THIS IMPUGNED ADDITION IS AGA INST FACTS OF THE CASE AS WELL AS AGAINST LAW. RELIANCE IS BEING PLACED ON : I) MURLIDHAR LAHORIMAL VS CIT (2006) 280 ITR 512 (G UJ) (INCOMECASH CREDITGENUINENESS OF GIFTADDITION MAD E BY THE AO BY DISBELIEVING THE EXPLANATION OF THE ASSESS EE THAT THE CREDIT ENTRY IN THE CAPITAL ACCOUNT REPRESENTED GIFT FR OM RNOT JUSTIFIEDR APPEARED BEFORE THE AO AND CONFIRMED THE FACT OF 22 HAVING MADE .THE GIFT BY WAY OF BANK DRAFTHE PRODU CED EVIDENCE IN SUPPORT OF THE SOURCE FROM WHICH THE FUND S FOR MAKING THE GIFT WERE AVAILABLE WITH HIMREVENUE HAS N OT DISPUTED ANY OF THESE FACTSPRIMARY ONUS WHICH RESTE D WITH THE ASSESSEE THUS STOOD DISCHARGEDASSESSEE CAN BE A SKED TO PROVE THE SOURCE OF CREDIT IN BOOKS, BUT CANNOT BE A SKED TO PROVE THE SOURCE OF THE SOURCETRIBUNAL HAS SUSTAINE D THE ADDITION WITHOUT ADDRESSING ITSELF TO THE REQUIREMENT OF S. 68 FINDING OF THE TRIBUNAL THAT THE MOTIVE FOR MAKING T HE GIFT IS NOT ESTABLISHED HAS NO RELEVANCE FOR DISBELIEVING TH E GIFT ALSO, THE TRIBUNAL TOTALLY FAILED TO CONSIDER THE F ACT THAT THE DONOR HAS FILED GIFT-TAX RETURN AND ASSESSMENT HAS BEEN FRAMED ON THE DONORNOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE EXPLANATION OF THE ASSESSEE IS NOT SATISFA CTORY IMPUGNED ORDER OF THE TRIBUNAL CANNOT BE SUSTAINED). 5.3(D) FURTHER ENQUIRIES MADE BY THE REVENUE BUT THERE IS NO ADVERSE 'INFERENCE DRAWN FROM THESE ENQUIRIES ON RECORD. AS UNDISPUTEDLY, A.O. HAVE ALL THE RIGHTS TO MAKE FURT HER ENQUIRES IN RESPECT OF ANY ISSUE AS HE SEEMS FIT. IN THE PRE SENT CASE ALSO WHILE EXERCISING HIS POWER TO ENQUIRE, LD. A.O. ISSU ED NOTICES U/S 133 (6) OF THE ACT. IN RESPECT OF WHICH SUBSTANTIAL C ONFIRMATION ALONG WITH RELEVANT DOCUMENTS AS MENTIONED IN THE N OTICE ITSELF HAD GOT RECEIVED. NO ADVERSE INFERENCE DRAWN FROM TH E SAME ON RECORD. THERE AFTER LD. A.O. ISSUED AN COMMISSION TO KOLKATA U/ S 131 (1) (D) OF THE ACT TO ENQUIRE FURTHER THE IDENTITY, CREDIT WORTHINESS OF THE COMPANIES AS WELL AS GENUINENESS OF THE TRANSAC TIONS IN RESPECT OF SHARE APPLICATION MONEY TAKEN BY THE RAD HE SHAM JAIN DIAMOND JEWELERS GROUP FROM THE KOLKATA BASED COMPANIES. IN RESPONSE TO WHICH DDIT (INV.) UNIT IV (1 ), KOLKATA HAVE SUBMIT ITS REPORT DATED 19.03.2014 STATING THA T THE SUMMONS U/S 131 OF THE ACT WERE ISSUED TO THE DIREC TORS, IN RESPONSE TO WHICH THE DIRECTORS OF THE COMPANIES SU BMITTED THEIR 23 BOOKS OF ACCOUNTS AND OTHER DOCUMENTS, WHICH WERE V ERIFIED REGARDING THE INVESTMENT AND THEIR SOURCE OF INVESTMENT IN M/S/RADHE SHAM JAIN DIAMOND JEWELLERS GROUP. IT IS PERT INENT TO MENTION HERE THAT THE LD. DDIT HAS NOT DRAWN ANY ADVERSE OPINION REGARDING THE INVESTMENT AS WELL AS THE SOU RCE OF INVESTMENT BY KOLKATA BASED COMPANIES IN M/S RADHE SHAM JAIN DIAMOND JEWELERS GROUP, LUDHIANA, EXCEPT FEW DISCREPA NCIES REGARDING DIFFERENCE OF AMOUNT OR DIFFERENCE OF YEAR OF INVESTMENT. THE LD. A.O. ON RECEIVING THE REPORT OF LD. DDIT, K OLKATA ISSUED AN LETTER DT. 20.03.2014 TO ASSESSEE TO EXPL AIN THE DISCREPANCIES AS POINTED OUT IN THE COMMISSION REPO RT RECEIVED FROM KOLKATA. IN RESPONSE TO WHICH ASSESSE E EXPLAINED THE EACH AND EVERY DISCREPANCY VIDE HIS R EPLY DT. 21.03.2014. NO ADVERSE INFERENCE DRAWN FROM THE SAME ON RECORD. THEREAFTER IN RESPONSE TO A LETTER DT. 27.03.2014 I SSUED TO JOINT DIRECTOR OF INCOME TAX (INV.) LUDHIANA FOR TH EIR COMMENTS ON THE REPORT OF DDIT KOLKATA, THERE REPLY RECEIVED ON 28.03.2014. NO ADVERSE INFERENCE DRAWN FROM THE SAME ON RECORD. WHEN THERE IS NEITHER ANY ADVER SE INFERENCE ON RECORD IN RESPECT OF WHOLE ENQUIRIES N OR ANY ADVERSE MATERIEL OR EVIDENCES ON RECORD, THEN THE A DDITION MADE IS FULLY UNJUSTIFIABLE AND WITHOUT ANY REASONA BLE GROUND. 5.3(E) REVENUE HAD NOT PUT ANY ADVERSE MATERIAL ON RECORD TO JUSTIFY THE ADDITION U/S 6E OF THE ACT. THERE IS NO ADVERSE MATERIAL OR EVIDENCES EN RECORD ON THE BASIS OF WHICH LD. A.O. DECIDED TO MADE THIS ADDITI ON. HENCE IT IS CLEAR THAT SAID ADDITION U/S 68 IS TOTAL LY UNREALISTIC AND ON THE BASIS OF SUSPICIOUS, SURMISES AND CONJECTURES IN SPITE OF THE FACT THAT LD. A.O. HAVE ALSO FRAMED THE ASSESSMENT OF THIS COMPANY AS WELL AS OF THE DIR ECTORS AND OTHER FAMILY MEMBER OF THE GROUP FOR SEVEN YEAR S I.E. 24 A.Y. 2006-07 TO A.Y. 2012-13 AND HAVE NOT DRAWN ANY ADVERSE OPINION NOR FOUND ANY ADVERSE MATERIAL, WHIC H PROVIDES STRENGTH TO HIS SUSPICION, SURMISES . HENC E THIS ADDITION IS AGAINST THE FACTS OF THE CASE, AS WELL AS LAW. R ELIALICE IS BEING PLACED ON (I) CIT VS P.K. NOORJAHAN (1999) 237 ITR570 (SG ) (INCOME FROM UNDISCLOSED SOURCES ADDITION UNDER S. 69 DISCRETION OF AO INTENTION OF PARLIAMENT IN ENACTI NG S. 69 WAS TO CONFER A DISCRETION ON THE ITO IN THE MATTER OF TREATING -THE UNEXPLAINED SOURCE OF INVESTMENT AS I NCOME OF ASSESSEE ITO IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVESTMENT AS INCOME IN EVERY CASEWHETHER IT HAS TO BE TREATED AS INCOME OR NOT HAS TO BE CONSIDERED IN THE LIGHT OF FACTS OF EACH CASEASSESSEE, A YOUNG LADY, COULD NOT E XPLAIN SATISFACTORILY HER SOURCE OF INVESTMENT IN LANDSTRIBU NAL HELD THAT IT -WAS NOT POSSIBLE FOR HER TO EARN THE AMOUNT EVEN DURING A DECADE AND THAT THE SOURCE OF INVESTMENTS C OULD NOT BE TREATED AS INCOME OF ASSESSEENO ERROR IN THE FIN DING OF THE TRIBUNAL) (II) CIT VS VALUE CAPITAL SERVICES -(P) LTD.(20 08)307 ITR 334 (DEL) (INCOMECASH CREDITSHARE APPLICATION MONEY'CIT(A) A CCEPTED THE EXISTENCE OF THE APPLICANTSIT IS VERY DIFFICULT FOR THE ASSESSEE TO SHOW THE CREDITWORTHINESS OF STRANGERSR EVENUE HAS NOT SHOWN THAT THE APPLICANTS DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT AND THAT SUCH INVESTMENT ACTUAL LY EMANATED FROM THE COFFERS OF THE ASSESSEE COMPANYA DDITION RIGHTLY DELETED BY THE TRIBUNALNO SUBSTANTIAL QUESTI ON OF LAW ARISES). 5.3(F) SHARE APPLICATION MONEY CANNOT BE REGARDED A S INCOME OF THE ASSESSEE COMPANY. 25 FURTHER THE HONORABLE SUPREME COURT WAS HELD THAT SH ARE APPLICATION MONEY RECEIVED BY THE ASSESSEE COMPANY CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY, WHICH THE' LD. A.O. HAS TOTALLY IGNORED WHILE MAKING THIS ADDITI ON. HENCE THIS ADDITION IS AGAINST THE FACTS OF THE CAS E, AS WELL AS LAW. RELIANCE IS BEING PLACED ON (I) CIT VS LOVELY EXPORTS (P) LTD. (2008) '216 CT R (SC) 195 (INCOMECASH CREDITSHARE APPLICATION MONEYIF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO RE OPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPAN Y) 5.3(G) ADDITION MADE ON THE BASIS OF DOUBTS, SUSPI CION, SURMISES, CONJECTURES, AND ACTING UNREASONABLY IS N ET MAINTAINABLE. HAVING REGARD ALL AS ABOVE, THIS ADDITION HAS BEEN MAD E PURELY ON THE BASIS OF DOUBTS, SUSPICION, SURMISES, CON JECTURES AND ACTING UNREASONABLY RELIANCE IS BEING PLACED ON (I) ROSHAN DI HATTI VS CIT (1977) 107 ITR 938 (SC) CONCLUSION ARRIVED AT THAT TRIBUNAL HAVING ACTED WITHOU T MATERIAL OR IN ANY EVENT THE FINDING OF FACT REACHED B Y THE TRIBUNAL BEING UNREASONABLE OR SUCH THAT NO PERSON AC TING JUDICIALLY AND PROPERLY INSTRUCTED AS TO THE RELEVAN T LAW WOULD COME TO SUCH A FINDING, SUCH FINDINGS OF FACT WERE LIA BLE TO BE INTERFERED WITH. (II) CIT VS DIVINE LEASING & FINANCE LTD. (2008) 2 99 ITR 268(DEL) 26 (INCOMECASH CREDIT SHARE APPLICATION MONEY BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASS ESSEEIF THE AO HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUB SCRIPTION HE IS EMPOWERED, NAY DUTYBOUND, TO CARRYOUT THOROUGH INVESTIGATIONS BUT IF THE AO FAILS TO UNEARTH] ANY WR ONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY ADHERE TO HIS S USPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED IN COME OF THE COMPANY) (III) CIT VS UJALA DYEING & PRINTING (P). LTD. (2 010) 328 ITR 437 (GUJ) (INCOME CASH CREDIT SHARE APPLICATION MONEY AO HAD INQUIRED ABOUT THE RECEIPT OF SHARE APPLICATION MONEY AND ASSESSEE SUBMITTED CONFIRMATION OF SHARE APPLICANT-COM PANIES WITH THEIR PERMANENT ACCOUNT NUMBERS, RESOLUTION PASS ED BY THE APPLICANT COMPANIES AND DULY AUDITED BALANCE SHEE T WITH ACKNOWLEDGEMENT OF RETURNS FILED AO HAS NOT FOUND T HE CREDITWORTHINESS OF THE FIVE COMPANIES AND ON THAT CO UNT, ADDITIONS WERE MADETRIBUNAL RECORDED A FINDING THA T THE ASSESSEE HAS DEARLY DISCHARGED ITS ONUS OF PROVING I DENTITY OF PARTIES, GENUINENESS OF TRANSACTION AND CREDITWORTHINES S OF SHARE APPLICATIONS IN AS MUCH AS EVIDENTLY THEIR RETUR NS OF INCOME, ASSESSMENT ORDERS, BALANCE-SHEETS SHOWING INVESTMENT, EXPLANATION REGARDING HOW- THEY RAISED F UNDS HAVE BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES AND THER EFORE THE ADVERSE INFERENCE DRAWN BY THE AO WAS MISPLACED AS T HEIR EXPECTATIONS FROM THE ASSESSEE TRAVELLED BEYOND THE INGREDIENTS OF ONUS AS PRESCRIBED BY S. 68). (IV) CIT V DAULAT RAM RAWAT MULL (1973) 87 ITR 349 (S.C) (FINDINGS ON QUESTIONS OF PURE FACT ARRIVED AT BY T HE TRIBUNAL ARE NOT TO BE DISTURBED BY THE HIGH COURT ON A REFER ENCE UNLESS IT APPEARS THAT THERE WAS NO EVIDENCE BEFORE THE TR IBUNAL UPON WHICH THEY, AS REASONABLE MEN, COULD COME TO T HE CONCLUSION TO WHICH THEY HAVE COME; AND THIS IS SO, EVEN 27 THOUGH THE 'HIGH COURT WOULD ON THE EVIDENCE HAVE CO ME TO A CONCLUSION ENTIRELY DIFFERENT FROM THAT OF THE TRIBU NAL. IN OTHER WORDS, SUCH A FINDING CAN BE REVIEWED ONLY EN T HE GROUND THAT THERE IS NO EVIDENCE TO SUPPORT IT OR TH AT IT IS PERVERSE. FURTHER, WHEN A CONCLUSION HAS BEEN REACH ED ON AN APPRECIATION OF A NUMBER OF FACTS, WHETHER THAT IS SOUND OR NOT MUST BE DETERMINED, NOT BY CONSIDERING THE WEIGHT T O BE ATTACHED TO EACH SINGLE FACT IN ISOLATION, BUT BY A SSESSING THE CUMULATIVE EFFECT OF ALL THE FACTS IN THEIR SETTIN G AS A WHOLE. WHEN A COURT OF FACT ACTS ON MATERIAL PARTLY AND PARTLY IRRELEVANT, IT IS IMPOSSIBLE TO SAY TO WHAT EXTENT THE MIND OF THE COURT WAS AFFECTED BY THE IRRELEVANT MAT ERIAL USED BY IT IN ARRIVING AT ITS FINDING. SUCH A FINDING IS VIT IATED BECAUSE OF THE USE OF INADMISSIBLE MATERIAL AND THEREBY AN IS SUE OF LAW ARISES. LIKEWISE, IF THE COURT OF FACT BASES ITS DECISI ON PARTLY ON CONJECTURES, SURMISES AND SUSPICIONS AND PARTLY ON E VIDENCE, IN SUCH A SITUATION AN ISSUE OF LAW ARISES). (V) RAJENDRAN & ORS VS ACIT (2007) 291 ITR 178 (MAD ) (INCOMECASH CREDITGIFT FROM NRIDONOR IS A WELL- SETTLED INDUSTRIALIST IN UKHE HAS CONFIRMED THAT HE HAD MADE THE GIFTS AS A GRATITUDE FOR THE HELP RENDERED BY ONE OF THE ASSESSEES TO HIS FATHER WHICH ENABLED HIM TO COM E UP IN LIFEALL THE GIFTS CAME THROUGH PROPER BANKING CHANN EL DONOR APPEARED BEFORE THE DEPARTMENT AND HAS GIVEN ALL THE DETAILSTHUS, ASSESSEES HAVE ESTABLISHED THE IDENTITY OF THE DONOR AND HIS SOLVENCYREASONS TO REJECT THE EXPLAN ATION OF THE ASSESSEES IN EACH CASE IN THE REALM OF SURMISES, CONJECTURES AND SUSPICIONSTHUS, REJECTIO N OF THE EXPLANATION WAS AN ARBITRARY AND UNREASONABL E EXERCISE OF POWER-ADDITION UNDER S. 68 WAS NOT THEREFORE SUSTAINABLE) 5.3(H) PRINCIPLES OF NATURAL JUSTICE HAVE VIOLATED. 28 THE LD. A.O. IN WHOLE YEAR AND IN WHOLE ASSESSMENT P ROCEEDINGS HAVE NOT SHOWN ANY DISSATISFACTION ON THIS ISSUE. WHILE O N 29.03.2014 LD. A.O. ISSUED NOTICE U/S 142 (1) TO FUR NISH THE INFORMATION/DETAILS CALLED FOR AND ALSO MENTIONED TH AT INCASE OF YOUR FAILURE TO FURNISH THE ABOVE INFORMATION OR JU STIFY THE REASONABLENESS OF SHARE PREMIUM, YOU ARE REQUESTED T O PLEASE SHOW CAUSE, WHY THE AMOUNT OF SHARE PREMIUM RECEIVED SHOULD NOT BE TAXED IN YOUR HAND AS UNEXPLAINED CREDIT IN YOUR BOOKS OF ACCOUNTS. IN RESPONSE TO WHICH ASSESSEE FILED HI S SUBMISSIONS VIDE REPLY DT. 30.03.2014. WHICH WAS FU LLY INFORMATIVE ALONG WITH FIGURES, LOGIC'S, CALCULATIONS AND FULLY JUSTIFICATIONS REGARDING THE REASONABLENESS OF SHARE P REMIUM RECEIVED. HOWEVER WHILE PASSING THE ASSESSMENT ORDER LD. A.O. BY PASSES ALL THE FACTS/ FIGURES, ENQUIRIES, CONFIRMATIONS U/S 133(6) OF THE ACT, REPORTS OF DDI T, KOLKATA, COMMENTS OF JOINT DIRECTOR OF INCOME TAX (INV. ) AND MOST IMPORTANTLY EXPLANATIONS OF THE ASSESSEE AND M AKE THE IMPUGNED ADDITION U/S 68 OF THE ACT. HENCE LD. A.O. VIOLATED THE PRINCIPLES OF NATURAL JUSTICE. RELIANCE IS BEING PLACED (I) C1T VS. ASHWANI GUPTA (2010) 322 ITR 396 (DEL) (INCOMEADDITIONSUNEXPLAINED CASH CREDITS UNDER S, 6 8 PRINCIPLES OF NATURAL JUSTICEAO HAD PASSED THE ASSE SSMENT ORDER IN VIOLATION OF THE PRINCIPLES OF NATURAL JUST ICE IN AS MUCH AS HE HAD NEITHER PROVIDED COPIES OF THE SEIZED MATE RIAL TO THE, ASSESSEE NOR HAD HE ALLOWED THE ASSESSES TO CROSS-EXAMINE CONCERNED PARTY TRIBUNAL CONFIRMING THE ORDER PASSE D BY THE CIT(A) WHICH HELD THE ENTIRE ADDITION MADE BY THE AO T O BE INVALID AND HAD DELETED THE SAME ONCE THERE IS A VIO LATION OF THE PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS SEIZ ED MATERIAL IS NOT PROVIDED TO AN ASSESSEE NOR IS CROSS-EXAMINATION OF THE PERSON ON WHOSE STATEMENT THE AO RELIES UPON, GRANT ED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO A DENIAL OF OPPOR TUNITY AND,, CONSEQUENTLY, WOULD BE FATAL TO THE PROCEEDINGS DELE TION OF ADDITION UPHELD. REVENUE'S PLEA WAS THAT THE VIOLATIO N OF 29 PRINCIPLES OF NATURAL JUSTICE WAS NOT FATAL SO AS TO JEOPARDIZE THE ENTIRE PROCEEDINGS) 5.4 ( CONCLUSION) LD. A.O. WHILE MAKING THIS ADDITION U/S 68 OF THE A CT., IGNORED THE ASSESSEE EXPLANATIONS, FACTS & CIRCUMST ANCES OF THE CASE, CONFIRMATIONS RECEIVED U/S 133(6) OF THE ACT., ENQUIRY REPORT OF LD, DDIT, KOLKATA, COMMENTS OF TH E JOINT DIRECTOR OF INCOME TAX -(INV.), LUDHIANA AND ACTED UNREASONABLY, ARBITRARILY, WITHOUT ANY SUFFICIENT G ROUND OR ADVERSE MATERIAL ON RECORD OR WITHOUT POINTING OUT ANY INHERENT WEAKNESSES OR WITHOUT REJECTING, DISPUTING OR REBUTTING ANY EXPLANATION, EVIDENCE, REPORTS ETC. ASSESSMENT ORDER ITSELF STATES THAT THIS NEWLY INCO RPORATED COMPANY TAKES OVER THE RUNNING BUSINESS OF M/S JAIN DIAMOND JEWELLERS, A PROPRIETORSHIP FIRM AS A GOING CONCERN, WHICH ESTABLISHED IN 1995 T OCCUPIED AN ESTABLISHED SHOWROOM AT PRIME LOCATION OF THE JEWELERS MARKET, HAVING A LARGE NUMBERS OF PREMIUM CUSTOMERS, BOOK VALUE OF S HARES COMES TO RS.410.90 ON THE BASIS OF MARKET VALUE OF THE STOCKS. THERE IS NOTHING IN THE ASSESSMENT ORDER AS WELL AS O N THE RECORD, THAT THESE FACTS AND FIGURES ARE WRONG OR N OT SATISFACTORY. SINCE THERE IS NO END OR LIMITS- IN R ESPECT OF SUSPICION, SURMISES OR CONJECTURE, SO THE GLARING I SSUES AS NOTED DOWN IN THE ORDER ARE BASELESS AND EMERGED FR OM SUSPICION ONLY. MORE EVER THE JUDGEMENTS RELIED UPO N BY THE REVENUE, IS NOT APPLIED IN OUR CASE HAVING REGARD T O THE FACTS AND CIRCUMSTANCES OF THE CASE. THE DECISION OF THE HON 'BLE SUPREME COURT IN CASE OF SUMATI DAYAL (214 ITR 801) CONVEYS THAT IF THERE IS A PRIMA FACIE EVIDENCE AGA INST ASSESSEE AND IF ASSESSES FAILS TO REBUT THE SAME, S UCH UNREBUTTED EVIDENCE CAN BE USED AGAINST HIM. IN OUR CASE NO SUCH CIRCUMSTANCES EXIST, FURTHER IN CASE OF DURGA PRASAD MORE (182 ITR 540) CONVEYS THAT UNLESS TRIBUNAL'S C ONCLUSION IS HELD TO BE PERVERSE OR IS NOT SUPPORTED BY ANY E VIDENCE OR IS BASED ON IRRELEVANT EVIDENCE, THE HIGH COURT HAD NO JURISDICTION TO INTERFERE WITH ITS FINDINGS, HENCE T HIS CASE IS ALSO NOT APPLICABLE IN OUR CASE. HENCE HAVING REGARD TO ALL AS STATED ABOVE, THIS AD DITION OF RS.11,17,80,000/- U/S 68 OF THE ACT IS PURELY O N THE BASIS OF SUSPICION, SURMISES AND CONJECTURES, WHICH IS 30 AGAINST FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW AND PRINCIPLES OF NATURAL JUSTICE.' 13. THE LD. CIT(APPEALS) ON PERUSAL OF THE ABOVE SUBMISSIONS OF THE ASSESSEE FOUND THAT CERTAIN INQUIRIES HAD BEEN CONDUCTED IN ORDER TO FIND OUT T HE CREDIT WORTHINESS AND GENUINENESS OF SHARE APPLICAT IONS BUT THERE IS NO MENTION OF THE SAME IN THE ASSESSME NT ORDER. THE SAID DETAILS OF THE INQUIRIES HIGHLIGHT ED BY THE ASSESSEE BEFORE LD. CIT(APPEALS) WAS TAKEN INTO CONSIDERATION AND ASSESSING OFFICER WAS REQUESTED T O CONFIRM THE CLAIM OF THE ASSESSEE IN THIS REGARD AN D WAS DIRECTED TO SPECIFY AS TO HOW SUCH INQUIRIES AND RE SULT THEREOF WERE NOT PART OF THE ASSESSMENT RECORD POSITIVELY OR NEGATIVELY. THE ASSESSING OFFICER SUBMITTED HIS COMMENTS AS CALLED FOR BY THE LD. CIT(APPEALS) AND THE REMAND REPORT OF THE ASSESSING OFFICER IS REPRODUCED IN THE IMPUGNED ORDER WHICH READS AS UNDER : IN THIS REGARD, IT IS SUBMITTED THAT IN THIS CAS E THE ENQUIRY LETTER WAS WRITTEN ON 22.01.2014 VIDE LETTE R NO.1011 TO THE COMMISSIONER OF INCOME TAX, CENTRAL, LUDHIANA FOR VERIFICATION OF IDENTITY OF T HE COMPANIES, GENUINENESS AND SOURCE OF INVESTMENT OF TRANSACTION OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE THROUGH DIRECTOR OF INVESTIGATION, LUDHIAN A. A REPORT REGARDING THE SAME WAS RECEIVED FROM DDIT(INV.)/ UNIT IV(1), KOLKATA VIDE HIS OFFICE LET TER NO.9725 DATED 19.03.2014 IN WHICH HE HAS MENTIONED THAT HE HAS VERIFIED IDENTITY OF THE COMPANIES, THE 31 GENUINENESS AND SOURCE OF INVESTMENT. AFTER RECEIVI NG THE REPORT OF DDIT(INV.), UNIT IV(1), KOLKATA THE M ATTER WAS TAKEN UP WITH THE ADDL. DIT(INV.), LUDHIANA FOR GIVING HIS COMMENT ON THE REPORT OF THE DDIT(INV.), KOLKATA, THE ADDL. DIT(INV.), LUDHIANA VIDE LETTER NO.J OINT DIT(INV.)/LDH/2013-144/2085 DATED 28.03.2014 HAD COMMUNICATED CERTAIN DISCREPANCIES. THE UNDERSIGNED H AS VERIFIED SUCH DISCREPANCIES AS POINTED OUT BY THE D DIT (LNV.) UNIT-IV(L), KOLKATA AND ADDL. DIT(INV.), LUDHIANA AND N O ADVERSE INFERENCE WAS DRAWN ON THIS ACCOUNT EXCEPT AS DISCUSSED IN THE BODY OF THE ORDER AND THIS VIEW HA S BEEN BROUGHT ON RECORD. DURING ASSESSMENT I HAVE GONE THO UGH THE REPORT SUBMITTED BY THE DDIT(INV.) UNIT IV(L), KOLKATA AND DOCUMENTS ENCLOSED WITH THAT REPORT AND REPLY O F THE ASSESSEE AND HENCE NO ADVERSE INFERENCE WAS DRAWN O N ACCOUNT OF INVESTMENT IN SHARES. THE COPY OF THE REPORT RECEIVED FROM DDIT(INY.) UNIT -IV(L), KOLKATA SENT VIDE HIS OFFICE LETTER NO.9725 DATED 19.03.2014 IS ENCLOSED. IT IS FURTHER SUBMITTED THA T THE DISCUSSION REGARDING THE REPORT OF DDIT(INV.) UNIT-IV(L ), KOLKATA HAD BEEN MADE IN THE OFFICE NOTE OF THE ASSE SSMENT ORDER IN THE CASE OF THE ABOVE STATED ASSESSEE FOR THE A.Y.S 2008-09 & 2009-10. THE ISSUES HAVE BEEN FULLY DISCU SSED IN THE ASSESSMENT ORDERS AS WELL AS IN THE OFFICE NOTE . COPIES OF LETTER NO.F.NO.DCIT/CC-III/LDH/13-14/10114 DATED 22.01.2014 WRITTEN TO CIT, CENTRAL, LUDHIANA, REPORTS OF DDIT(INV.), UNIT IV-I, KOLKATA, ADDL. DIT(INV.), LUDHIAN A AND OFFICE NOTE IN THE ASSESSMENT YEARS 2008-09 AND 2009 -10 ARE ENCLOSED FOR READY REFERENCE.' 14. COPY OF THE REMAND REPORT OF THE ASSESSING OFFI CER WAS SUBMITTED TO THE ASSESSEE AND THE ASSESSEE IN R EPLY THEREOF IN REJOINDER SUBMITTED THAT ALL THE INQUIRI ES CONDUCTED BY THE ASSESSING OFFICER ARE PART OF HIS 32 SUBMISSIONS ON WHICH NO ADVERSE INFERENCE WAS DRAWN BY THE REVENUE. IT SEEMS THAT SEARCH HAS BEEN CONDUCTED ON THE BASIS OF SUSPICION ARISEN OF THE REVENUE ON THIS INVESTMENT. HOWEVER, DURING THE COURSE OF SEARCH, NO MATERIAL OR EVIDENCE WAS FOUND WHICH STRENGTHENED THE SUSPICION OF THE REVENUE REGARDING INVESTMENT IN SHARES. SINCE NO ADVERSE INFERENCE HAS BEEN DRAWN ON THE BASIS OF THE INQUIR IES CONDUCTED BY THE ASSESSING OFFICER, THEREFORE, NO ADDITION UNDER SECTION 68 OF THE ACT BE MADE ONLY O N THE BASIS OF SUSPICION, SURMISES AND CONJECTURES. 15. THE LD. CIT(APPEALS) CONSIDERING THE MATERIAL O N RECORD AND SUBMISSIONS OF BOTH PARTIES, DELETED BOT H THE ADDITIONS AND ALLOWED THE APPEAL OF THE ASSESSE E ON THIS ISSUE. THE LD. CIT(APPEALS) IN HIS FINDINGS N OTED THAT DURING THE COURSE OF SEARCH, NO INCRIMINATING DOCUMENT/EVIDENCE PERTAINING TO NATURE OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE HAD BEEN FOUND AND SEIZED. THE POST SEARCH INVESTIGATION REVEALED THAT NUMBER OF COMPANIES WHO HAD TAKEN THE SHARES AT PREMIUM WERE NOT AVAILABLE AT THE GIVEN ADDRESS. THE INQUIRY REPORT WAS CONFRONTED TO THE ASSESSEE AND THE ASSESSEE REQUESTED THAT SAME REPOR T MAY BE CONFRONTED SO AS TO ALLOW HIM TO CROSS-EXAMI NE THE RELEVANT PERSONS. HOWEVER, NO FURTHER ACTION O N THIS ISSUE HAD BEEN TAKEN AT THE LEVEL OF DDIT (INVESTIGATION) TO TAKE THE MATTER FURTHER TO ITS L OGICAL 33 END. THEREAFTER, MATTER WAS TAKEN UP BY ASSESSING OFFICER AND NUMBER OF LETTERS WERE ISSUED UNDER SEC TION 133(6) OF THE ACT IN ORDER TO VERIFY THE GENUINENES S OF THE SHARE APPLICATION MONEY AND MOST OF THESE LETTE RS WERE RECEIVED BACK WITH REPLY CONFIRMING THE CLAIM OF THE ASSESSEE, MEANING THEREBY NO ADVERSE EVIDENCE COULD BE BROUGHT ON RECORD. FURTHER, ASSESSING OFF ICER HAS ISSUED COMMISSION UNDER SECTION 131(1)(D) OF TH E INCOME TAX ACT TO DDIT (INVESTIGATION) AT KOLKATA A FTER DUE DELIBERATION WITH THE CIT CENTRAL, LUDHIANA AND DIT (INVESTIGATION) LUDHIANA IN ORDER TO CONDUCT DETAILED INQUIRY INTO IDENTITY/CREDIT WORTHINESS AN D GENUINENESS OF TRANSFER OF SHARE APPLICATION MONEY RECEIVED BY HE ASSESSEE. THE DETAILED INQUIRY CONDU CTED BY INVESTIGATION WING AT KOLKATA WERE INTIMATED TO THE ASSESSING OFFICER WHICH IS REPRODUCED IN THE IMPUGN ED ORDER. 16. THE LD. CIT(APPEALS) ON GOING THROUGH THE REPOR T OF DDIT (INVESTIGATION) KOLKATA NOTED THAT FACTS HA VE BEEN VERIFIED BY THE ASSESSING OFFICER AND NO ADVER SE INFERENCE WAS DRAWN IN CONSULTATION WITH DIT (INVESTIGATION) LUDHIANA. THE REPORT OF THE ASSESSI NG OFFICER AS HIGHLIGHTED IN THE APPELLATE ORDER SHOWS THAT AFTER ELABORATE INQUIRIES CONDUCTED BY INVESTIGATIO N WING AT KOLKATA, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF VARIOUS SHARE APPLICATION COMPANIES COULD NOT BE SAID TO BE DOUBTFUL SO MUCH SO THAT NO 34 ADVERSE INFERENCE FROM THE SAME COULD BE DRAWN. TH E LD. CIT(APPEALS), THEREFORE, NOTED THAT UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER HAD NOT MENTIO NED THE DETAILED PROCEEDINGS IN THE ASSESSMENT ORDER THEREFORE, NOTHING WAS FOUND ADVERSE AGAINST THE ASSESSEE TO SHOW WHETHER IT WAS ACCOMMODATION ENTRY . THE LD. CIT(APPEALS), THEREFORE, NOTED THAT THERE I S NO ADVERSE MATERIAL AVAILABLE AGAINST THE ASSESSEE ON RECORD SO AS TO MAKE THE ADDITION. THE LD. CIT(APPE ALS) RELIED UPON SEVERAL DECISIONS IN HIS FINDINGS IN OR DER TO COME TO THE FINDING THAT ADDITION IS WHOLLY UNJUSTI FIED. THE LD. CIT(APPEALS), CONSIDERING THE TOTALITY OF T HE FACTS AND CIRCUMSTANCES AND REPORT OF DDIT (INVESTIGATION) KOLKATA, DELETED THE ENTIRE ADDITIO N. 17. THE REVENUE IS IN APPEAL ON GROUND NO. 3 AND 4 OF THE APPEALS. THE LD. PR.CIT(C),LUDHIANA MADE A REQ UEST FOR ADMISSION OF THE ADDITIONAL EVIDENCES WHICH ARE FILED IN THE PAPER BOOK BY THE REVENUE ON 22.09.201 6. THESE ADDITIONAL EVIDENCES ARE IN THE NATURE OF STATEMENTS OF S/SHRI BHAGWAN DASS AGGARWAL, GOVIND PRASAD AGGARWAL, JAGDISH PRASAD PUROHIT, NARINDER KUMAR JAIN, PAWAN AGGARWAL, RAKESH AGGARWAL, SHIV SHANKAR BANKA, SUBHASH AGGARWAL AND DEEPAK PATWARI RECORDED BY THE OFFICE OF DIT (INVESTIGATION) KOLKA TA. THE PAPER BOOK FILED BY THE REVENUE CONTAINING THES E ADDITIONAL EVIDENCES HAS BEEN FILED FROM PAGES 1 TO 196. THE LD. DR SUBMITTED THAT THESE ADDITIONAL EVIDENC ES 35 MAY BE ADMITTED. HOWEVER, LD. DR WAS NOT ABLE TO ANSWER AS TO HOW THE PR.CIT(C), LUDHIANA COULD FILE AN APPLICATION FOR ADMISSION OF THESE ADDITIONAL EVIDE NCES BECAUSE HE WAS NOT PARTY TO THE APPELLATE PROCEEDIN GS. IN THE ABSENCE OF ANY SPECIFIC AND SATISFACTORY EXPLANATION, WE ARE OF THE VIEW THAT APPLICATION FI LED BY THE PR.CIT(C) LUDHIANA FOR ADMISSION OF ADDITIONAL EVIDENCE IS NOT MAINTAINABLE ON THE REASON THAT HE WAS NOT PARTY TO THE APPELLATE PROCEEDINGS. THEREFORE, APPLICATION FILED BY THE PR. CIT IS REJECTED. THE LD. DR FURTHER SUBMITTED THAT DCIT, CC-III, LUDHIANA HAS N OW MOVED PROPER APPLICATION FOR ADMISSION OF THE ADDITIONAL EVIDENCE. THE SAME IS TAKEN ON RECORD. THERE IS NO OBJECTION TO FILING OF THIS APPLICATION BY DCIT, CC-III LUDHIANA FOR ADMISSION OF THE SAME ADDITIONAL EVIDENCES FILED IN THE PAPER BOOK FROM P AGES 1 TO 196. 17(I) THE LD. DR SUBMITTED THAT ALL THE ADDITIONAL EVIDENCES ARE FORWARDED BY DDIT (INVESTIGATION) KOL KATA IN JULY/AUGUST,2016. PRIOR TO IT, NOBODY MADE A REQUEST TO OBTAIN THESE ADDITIONAL EVIDENCES. THES E ADDITIONAL EVIDENCES WERE NOT THERE AT THE TIME OF PASSING OF THE ASSESSMENT ORDER. THE LD. DR SUBMIT TED THAT ALL THESE ADDITIONAL EVIDENCES ARE RELEVANT TO PROVE NON GENUINE ENTRIES PROVIDED BY SHARE APPLICANTS TO THE ASSESSEE. THE LD. DR SUBMITTED THAT THE DEPARTMENT HAS NOW GATHERED CERTAIN DETAILS ESTABLISHING THAT MOST 36 OF THE ENTITIES WHICH HAVE INVESTED MONEY IN THE ASSESSEE COMPANIES BY WAY OF SHARE APPLICATION/SHAR E PREMIUM ARE MERELY ENTRY PROVIDERS BASED ON THIS INFORMATION, THE DEPARTMENT HAS FILED THE PAPER BOO K AS ADDITIONAL EVIDENCE BEFORE THE TRIBUNAL. THE LD. D R RELIED UPON ORDER OF ITAT CHANDIGARH BENCH IN THE C ASE OF M/S LOTUS INTEGRATED TAXPARK LTD. VS DCIT DATED 01.10.2015 IN WHICH THE TRIBUNAL ADMITTED THE ADDITIONAL EVIDENCES BEING RELEVANT DOCUMENTS BY RELYING UPON DECISION OF HON'BLE SUPREME COURT IN T HE CASE OF SHRI TEK RAM 262 CTR 118 AND DECISION OF TH E HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MUKTA METAL WORKS 336 ITR 555. THE LD. DR ALSO REL IED UPON JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTALA THUKRAL VS CIT 52 TAXMAN.COM 86 IN WHICH HON'BLE HIGH COURT DEEMED FI T TO ADMIT ADDITIONAL EVIDENCE WITH A VIEW TO ADVANCE CAUSE OF JUSTICE. THE LD. DR ALSO RELIED UPON DECI SION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF HARYANA STATE ROAD & BRIDGES DEVELOPMENT CORPORATION LTD. VS CIT 75 TAXMAN.COM 104 IN WHICH THE ASSESSEE DISCOVERED LATER ON THAT IT HAD IN-FAC T DEDUCTED THE TAX AT SOURCE AND PAID THE SAME TO THE GOVERNMENT TREASURY. THE ASSESSEE SOUGHT TO RELY UPON THE CHALLANS IN THIS REGARD BEFORE THE TRIBUNA L BUT THE TRIBUNAL DID NOT ADMIT THE SAME. IN THESE CIRCUMSTANCES, ADDITIONAL EVIDENCE WAS ADMITTED AND MATTER WAS REMANDED TO THE ASSESSING OFFICER FOR 37 EXAMINING THE CHALLANS AND DETERMINING WHETHER REQUISITE TAX HAS BEEN DEPOSITED BY ASSESSEE OR NOT . 17(II) THE LD. DR ALSO RELIED UPON DECISION OF HON' BLE MADRAS HIGH COURT IN THE CASE OF CARBURETORS LTD. V S ACIT 69 TAXMAN.COM 386 IN WHICH IT WAS HELD THAT , ADDITIONAL EVIDENCE CAN ALSO BE PRODUCED BEFORE TH E TRIBUNAL. THE LD. DR ALSO RELIED UPON DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS TEXT HUNDRED PVT. LTD. DATED 14.01.2011 ON THE PROPOSITION THAT THE TRIBUNAL HAS DISCRETION TO ADMIT ADDITIONAL EVIDENC E IN THE INTEREST OF JUSTICE. THE LD. DR, THEREFORE, SU BMITTED THAT THESE ADDITIONAL EVIDENCES FILED BY THE DEPART MENT MAY BE ADMITTED FOR HEARING. 17(III) ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL THE INVESTEES WHO HAVE INVESTED IN ASSESSEE COMPANY WERE DULY EXAMINED BY THE DDIT (INVESTIGATION) KOLKATA ON THE BASIS OF DI RECT EVIDENCES DURING ASSESSMENT PROCEEDINGS. FURTHER, THE SAID EVIDENCE IS IN THE CASE OF ASSESSMENT OF THIRD PARTY WHICH ARE YET TO BE COMPLETED AND IS NOT CONNECTED WITH THE PROCEEDINGS IN THE CASE OF THE ASSESSEE. MOREO VER, THE ADMISSION OF SAID ADDITIONAL EVIDENCE WILL BE AGAINST THE DOCTRINE OF FINALITY OF ASSESSMENT AND WILL GIVE RISE TO PROLIFERATION OF LITIGATION. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS SHARAT 38 CHANDER BOSE 18 ITR 669 IN WHICH IT WAS HELD THAT, THE TRIBUNAL RIGHTLY REFUSED TO ADMIT ENTIRELY FRE SH EVIDENCE TO ESTABLISH AN ENTIRELY NEW POINT WHICH W AS NOT TAKEN BEFORE ITO OR AAC HE HAS ALSO RELIED UPON ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF SHRI R.K. SAYAL VS ACIT 66 TTJ 641 IN WHICH IT WAS HELD THAT ADDITIONAL EVIDENCE COLLECTED BY THE DEPARTMENT AFT ER COMPLETION OF BLOCK ASSESSMENT OF THE ASSESSEE PERTAINING TO ASSESSMENT OF THIRD PARTY YET TO BE COMPLETED, CANNOT BE ADMITTED. THE LD. COUNSEL FO R THE ASSESSEE FURTHER SUBMITTED THAT AT THE STAGE OF ASSESSMENT, THE ASSESSING OFFICER OBTAINED INFORMAT ION UNDER SECTION 133(6) OF THE ACT FROM ALL THE INVEST ORS WHO HAVE CONFIRMED MAKING INVESTMENT IN SHARE APPLICATION/SHARE PREMIUM. THE ASSESSING OFFICER A LSO ISSUED COMMISSION TO DIT (INVESTIGATION) KOLKATA FO R EXAMINING THESE INVESTORS AND IN HIS REPORT, THE DI T (INVESTIGATION) KOLKATA HAS CONFIRMED THE GENUINENE SS OF THE INVESTMENTS MADE BY KOLKATA PARTIES. THEREF ORE, THESE ADDITIONAL EVIDENCES ARE NOT RELEVANT AND SHO ULD NOT BE ADMITTED AS ADDITIONAL EVIDENCES. THE LD. COUNSEL FOR THE ASSESSEE ALSO PREPARED A CHART ON T HE BASIS OF ADDITIONAL EVIDENCES FILED BY THE LD. DR T O SHOW THAT THE STATEMENTS OF ABOVE PERSONS RECORDED BY OF FICE OF DIT (INVESTIGATION) KOLKATA SOUGHT TO BE ADMITTE D AS ADDITIONAL EVIDENCE, DID NOT RELATE TO THE ASSESSEE COMPANY AND CONFESSIONAL STATEMENTS ARE MADE AGAINS T THIRD PARTY. HE HAS ALSO SUBMITTED THAT SOME OF TH E 39 STATEMENTS WERE RECORDED BY DDIT (INVESTIGATION) KOLKATA PRIOR TO PASSING OF THE ASSESSMENT ORDER AN D SOME OF THE STATEMENTS SOUGHT TO BE ADMITTED AS ADDITIONAL EVIDENCES, HAVE BEEN RECORDED AFTER PASS ING OF THE ASSESSMENT ORDER. THEREFORE, NONE ARE RELEV ANT TO THE MATTER IN ISSUE AND SHOULD NOT BE ADMITTED A S ADDITIONAL EVIDENCE. 18. WE HAVE GIVEN ARE THOUGHTFUL CONSIDERATION TO T HE RIVAL CONTENTIONS. THE ADDITIONAL EVIDENCE CAN BE ADMITTED BY THE TRIBUNAL IN ORDER TO ENABLE IT TO P ASS ORDER AND FOR SUBSTANTIAL CAUSE. THE ADDITIONAL EVIDENCES SHOULD BE RELEVANT AND SHOULD GO TO THE R OOT OF THE MATTER IN ORDER TO DO JUSTICE BETWEEN THE PA RTIES. THE LD. DR RELIED UPON ORDER OF ITAT CHANDIGARH BEN CH IN THE CASE OF M/S LOTUS INTEGRATED TAXPARK LTD. VS DCIT (SUPRA) IN WHICH THE TRIBUNAL ADMITTED THE ADDITIONAL EVIDENCE BEING RELEVANT DOCUMENT TO PROV E CREDIT WORTHINESS OF THE SUBSCRIBER COMPANY AS THE SAME WOULD GO TO THE ROOT OF THE MATTER. THE TRIBU NAL RELIED UPON DECISION IN THE CASES OF SHRI TEK RAM A ND M/S MUKTA METAL WORKS (SUPRA) IN WHICH ADDITIONAL EVIDENCES WERE ADMITTED BEING RELEVANT AND REQUIRED TO BE LOOKED INTO. THE LD. DR ALSO RELIED UPON OTHER DECISIONS REFERRED TO ABOVE IN WHICH ADDITIONAL EVIDENCES WERE ADMITTED TO ADVANCE THE CAUSE OF JUS TICE AND THAT IT WAS HELD THAT DISCRETION LIES WITH THE TRIBUNAL TO ADMIT ADDITIONAL EVIDENCE. 40 19. IN THE LIGHT OF THIS BACKGROUND, WE HAVE GONE THROUGH THE STATEMENTS SOUGHT TO BE ADMITTED AS ADDITIONAL EVIDENCE BY THE REVENUE DEPARTMENT, COPI ES OF WHICH ARE FILED FROM PAGES 1 TO 196 OF THE PAPER BOOK WHICH ARE STATEMENTS OF S/SHRI BHAGWAN DASS AGGARWAL, GOVIND PRASAD AGGARWAL, JAGDISH PRASAD PUROHIT, NARINDER KUMAR JAIN, PAWAN AGGARWAL, RAKES H AGGARWAL, SHIV SHANKAR BANKA, SUBHASH AGGARWAL AND DEEPAK PATWARI. THE ASSESSMENT ORDER IN THE PRESEN T CASE FOR ASSESSMENT YEAR 2008-09 HAVE BEEN PASSED O N 30.03.2014, HOWEVER, SOME OF THESE STATEMENTS RECORDED BY THE OFFICE OF DIT (INVESTIGATION) KOLKA TA WERE EITHER RECORDED PRIOR TO PASSING OF THE ASSESS MENT ORDER AND SOME OF THE STATEMENTS HAVE BEEN RECORDED AFTER PASSING OF THE ASSESSMENT ORDERS. IT IS NOT CLARIFIED THAT AS TO WHEN THE OFFICE OF DIT (INVEST IGATION) KOLKATA RECORDED THEIR STATEMENTS PRIOR TO PASSING OF THE ASSESSMENT ORDERS UNDER APPEAL OR AFTER PASSING OF THE ASSESSMENT ORDER UNDER APPEAL, WHETHER THE ASSESSMENTS IN THE CASES OF THESE PERSONS ARE COMPLETED OR NOT AND WHAT ULTIMATE CONCLUSION HAVE BEEN DRAWN FROM THESE STATEMENTS IN THEIR CASES. T HESE STATEMENTS PRODUCED NOW ON RECORD DID NOT INDICATE ANYTHING AGAINST THE ASSESSEE, WHETHER ANY OF THE INVESTOR WHO HAVE INVESTED IN THE ASSESSEE'S COMPAN Y HAVE PROVIDED MERE ENTRY. IT IS ALSO NOT CLARIFIED WHETHER THESE PERSONS HAVE MADE ANY STATEMENT DIRECTLY AGAINST THE INTEREST OF THE ASSESSEE. THE LD. 41 COUNSEL FOR THE ASSESSEE DEMONSTRATED BEFORE US THA T IN THESE STATEMENTS, THEY DID NOT MAKE ANY ALLEGATION AGAINST THE ASSESSEE AND THEIR STATEMENTS FOR PROVI DING ENTRY TO OTHER PARTIES HAVE NO CONNECTION OR RELEVA NCE TO THE ASSESSEE COMPANY. NO DIRECT ALLEGATIONS HAV E BEEN MADE IN THESE STATEMENTS AGAINST THE ASSESSEE COMPANY WHETHER ANY BOGUS ENTRIES HAVE BEEN PROVIDE D TO THE ASSESSEE. THEREFORE, IN THE ABSENCE OF ANY STATEMENT MADE AGAINST THE ASSESSEE COMPANY, HOW THESE STATEMENTS RECORDED BY THE OFFICE OF DIT (INVESTIGATION) KOLKATA ARE RELEVANT TO THE MATTER IN ISSUE, IS NOT EXPLAINED. THE CONTENTION OF LD. DR IS THAT IN KOLKATA, HAWALA OPERATORS ARE OPERATING TO PROVIDE BOGUS ENTRIES IN THE NAME OF SHARE APPLICATION/SHARE PREMIUM. IT MAY BE A GENERAL ALLEGATION, BUT HOW IT IS CONNECTED WITH THE ASSESS EE COMPANY IS NOT ESTABLISHED THROUGH THESE ADDITIONAL EVIDENCES. THE DEPARTMENT IS TRYING TO MAKE OUT A NEW CASE ALTOGETHER AT THIS STAGE BY PRODUCING THESE FR ESH ADDITIONAL EVIDENCES. SINCE SOME OF THE STATEMENTS WERE RECORDED PRIOR TO PASSING OF THE ASSESSMENT OR DER, IT IS NOT EXPLAINED WHY THE REVENUE DEPARTMENT REMAINED SILENT ON THESE STATEMENTS AND WHY THESE STATEMENTS WERE NOT FORWARDED TO THE ASSESSING OFFI CER FOR COMPLETION OF THE ASSESSMENT. SOME OF THE SUBSEQUENT STATEMENTS RECORDED BY DIT (INVESTIGATIO N) KOLKATA AFTER PASSING OF THE ASSESSMENT ORDERS ARE NOT RELEVANT TO THE CASE OF THE ASSESSEE. SINCE THE 42 DEPARTMENT IS TRYING TO MAKE OUT A NEW CASE WHICH W AS NOT CONSIDERED BY THE AUTHORITIES BELOW PARTICULARL Y WHEN NONE OF THE STATEMENTS INDICATE ANYTHING AGAIN ST THE ASSESSEE OF RECEIVING ANY BOGUS ENTRY FROM THE INVESTORS, THESE STATEMENTS WOULD NOT BE RELEVANT T O THE MATTER IN ISSUE BEFORE THE TRIBUNAL. IT MAY ALSO B E NOTED HERE THAT IN THE CASE OF THE ASSESSEE, AO ISS UED LETTERS UNDER SECTION 133(6) OF THE ACT TO ALL THE INVESTORS WHO HAVE MOSTLY CONFIRMED MAKING GENUINE INVESTMENTS IN THE ASSESSEE COMPANY. WHEN COMMISSION WAS ALSO ISSUED TO DIT (INVESTIGATION) KOLKATA, WHO HAVE DULY EXAMINED ALL THE INVESTORS A ND SUBMITTED A REPORT CONFIRMING THAT ALL THE INVESTOR S HAVE MADE GENUINE INVESTMENTS IN THE ASSESSEE COMPANY IN THE FORM OF SHARE APPLICATION MONEY/SHAR E PREMIUM, THERE IS NO PURPOSE TO CONSIDER THESE ADDITIONAL EVIDENCES WHICH ARE NOT RELEVANT TO THE MATTER IN ISSUE. THEREFORE, THESE ADDITIONAL EVIDE NCES ARE NOT RELEVANT TO THE MATTER IN ISSUE AND NEED NO T TO BE GONE INTO AT THE STAGE. NO CAUSE, WHAT TO SAY O F SUBSTANTIAL CAUSE WOULD SERVE BY ADMITTING THESE ADDITIONAL EVIDENCES AT THIS STAGE. THE LD. CIT(AP PEALS) HAS REFERRED TO SUFFICIENT MATERIAL COLLECTED AT ASSESSMENT STAGE BY THE ASSESSING OFFICER WHICH WAS DELIBERATELY NOT REFERRED TO IN THE ASSESSMENT ORDE R, OTHERWISE ASSESSING OFFICER WOULD NOT BE ABLE TO MA KE ANY ADDITION AGAINST THE ASSESSEE. THEREFORE, WHEN THE REVENUE HAS COLLECTED SUBSTANTIAL MATERIAL AT 43 ASSESSMENT STAGE ON THE BASIS OF WHICH, LD. CIT(APPEALS) DELETED THE ADDITION, THERE IS NO RELE VANCE OF THESE ADDITIONAL EVIDENCES WHICH ARE THE STATEME NTS OF SEVERAL PERSONS WHOSE STATEMENT HAVE BEEN RECORD ED BY DIT (INVESTIGATION), KOLKATA PRIOR TO PASSING OF THE ASSESSMENT ORDER OR AFTER PASSING OF THE ASSESSMENT ORDER. IN THE ABSENCE OF ANY RELEVANCE OF THESE ADDITIONAL EVIDENCES TO THE MATTER IN ISSUE, WE ARE NOT INCLINED TO ADMIT THESE ADDITIONAL EVIDENCES. THE APPLICATION FOR ADMISSION OF THE ADDITIONAL EVIDENC E IS ACCORDINGLY, REJECTED. IT MAY ALSO BE NOTED HERE T HAT REVENUE THROUGH DCIT, CENTRAL CIRCLE-3 LUDHIANA MAD E A JOINT REQUEST FOR ADMISSION OF ADDITIONAL EVIDENC E IN BOTH THE APPEALS AS MATTER IN ISSUE IS SAME IN BOTH THE APPEALS. THEREFORE, THERE IS NO NEED TO DISCUSS TH E SAME SEPARATELY. 20. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW SINCE ADDITIONAL EVIDENCES ARE NOT RELEVANT TO THE MATTER IN ISSUE AND NO CAUSE WOULD SERVE IN ADMITTI NG THE SAME, THEREFORE, WE REJECT THE APPLICATION FILE D BY DCIT, CENTRAL CIRCLE-3, LUDHIANA FOR ADMISSION OF T HESE ADDITIONAL EVIDENCES. THE APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE IN BOTH THE YEARS IS ACCORDINGL Y, DISMISSED. 21. NOW WE PROCEED TO DECIDE THE ISSUE ON MERIT. 44 22. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT ASSESSEE COMPANY WAS INCORPORATED ON 22.01.2008 AND LARGE NUMBER OF PRIV ATE COMPANIES BASED AT CALCUTTA HAVE MADE INVESTMENTS I N THE SHARES OF THE ASSESSEE COMPANY. IT IS NOT EXPL AINED WHY THE DISTANT PARTIES WERE INTERESTED IN MAKING INVESTMENT IN SHARES OF THE ASSESSEE COMPANY. THE L D. DR SUBMITTED THAT ADDITION WAS MADE ON ACCOUNT OF SHARE PREMIUM CONSIDERING IT TO BE BOGUS. HOWEVER, INVESTMENTS IN SHARES HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER. REPORT BY DDIT (INVESTIGATION) KOLKATA WAS RECEIVED ON 26.03.2014, THEREFORE, ASSESSING OFFICER DID NOT HAVE ADEQUATE TIME TO CONSIDER THE ISSUE IN DETAIL BECAUSE ASSESSMENT ORD ER WAS PASSED ON 30.03.2014. THE INVESTIGATION WAS NO T CONDUCTED TO LOGICAL END. THEREFORE, IT WAS THE DU TY OF THE LD. CIT(APPEALS) TO CORRECT ALL ERRORS IN THE ASSESSMENT ORDER BECAUSE LD. CIT(APPEALS) HAS COTERMINOUS POWER TO THAT OF THE ASSESSING OFFICER. HE HAS ALSO RELIEVED UPON DECISIONS REPORTED IN CIT VS NIRBHERAM DALURAM 224 ITR 610 AND JUTE CORPORATION OF INDIA VS CIT 187 ITR 688. THE LD. DR IN HIS WRI TTEN SUBMISSION ALSO REITERATED THE SAME FACTS AND ALSO SUBMITTED THAT MERELY BECAUSE TRANSACTIONS HAVE BEE N ROUTED THROUGH BANKING CHANNEL, WOULD NOT SATISFY T HE CRITERIA OF GENUINENESS AND CREDIT WORTHINESS OF TH E LENDER. THE LD. DR RELIED UPON DECISION OF HON'BL E SUPREME COURT IN THE CASE OF DURGA PRASHAD MORE 82 45 ITR 540, DECISION OF DELHI HIGH COURT IN THE CASE O F N.R. PORTFOLIO PVT. LTD. 222 TAXMAN 157. THE LD. D R ALSO RELIED UPON DECISION OF DELHI HIGH COURT IN TH E CASE OF CIT VS NAVODAYA CASTLES PVT. LTD. 50 TAXMAN.COM 110 IN WHICH THE MATTER WAS REMANDED TO THE TRIBUNAL TO DECIDE THE ISSUE AFRESH. THE LD. D R ALSO FILED ORDER OF ITAT KOLKATA BENCH IN THE CASE OF M/ S BISHAKHA SALES PVT.LTD. VS CIT-2 CALCUTTA IN WHICH 263 PROCEEDINGS WERE INITIATED BECAUSE THERE WERE LARGE RACKETS OF PROVIDING ACCOMMODATION ENTRIES AND THE ORDER UNDER SECTION 263 OF THE ACT HAVE BEEN CONFIR MED BY THE TRIBUNAL. THE LD. DR, THEREFORE, SUBMITTED THAT LD. CIT(APPEALS) WAS NOT JUSTIFIED IN DELETING THE ENTIRE ADDITION AND THE MATTER SHOULD BE RE-CONSIDERED BY HIM. 23. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSE E REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE FILED COMPLETE DETAILS OF SHARE APPLICANTS BEFORE THE ASSESSING OF FICER ON WHICH INVESTIGATION WAS CARRIED OUT BY THE ASSES SING OFFICER THROUGH THE INSPECTORS AS WELL AS THROUGH D DIT (INVESTIGATION) KOLKATA UNDER SECTIONS 133(6) AS WE LL AS BY ISSUING COMMISSION UNDER SECTION 131 OF THE INCO ME TAX ACT. HE HAS REFERRED TO VARIOUS CORRESPONDENCE OF THE DEPARTMENT, PARTICULARLY THE LETTER DATED 29.03.2014 (PB-200) IN WHICH OFFICE NOTE IS PROVIDE D IN WHICH ALSO IT WAS MENTIONED THAT THE IDENTITY OF TH E 46 COMPANIES, GENUINENESS AND SOURCE OF INVESTMENTS HA VE BEEN VERIFIED BY THE DDIT (INVESTIGATION) KOLKATA V IDE THEIR REPORT DATED 19.03.2014 AND NO ADVERSE INFERE NCE HAVE BEEN DRAWN AGAINST THE ASSESSEE. HE HAS SUBMITTED THAT INFORMATION UNDER SECTION 133(6) OF THE ACT WAS ALSO CALLED FOR FROM ALL THE SHARE APPLICAN TS AND THEY HAVE CONFIRMED THEIR TRANSACTIONS WITH THE ASSESSEE. HE HAS SUBMITTED THAT WHATEVER DISCREPANCIES WERE NOTED IN THE REPORT OF DDIT (INVESTIGATION), ASSESSEE HAS DULY REPLIED THE SAME , COPIES OF THE SAME ARE FILED IN THE PAPER BOOK ON W HICH NO ADVERSE INFERENCE HAVE BEEN DRAWN BY THE ASSESSI NG OFFICER. HE HAS SUBMITTED THAT OBJECT OF THE FORMA TION OF THE ASSESSEE COMPANY WAS TO TAKE OVER RUNNING BUSINESS OF JAIN DIAMONDS. THERE WAS DIFFERENCE IN MARKET VALUE AND BOOK VALUE OF ABOUT RS. 4.94 CR AN D THIS WAS THE REASON THAT PREMIUM WAS CHARGED ON SHA RE INVESTMENTS. ALL QUERIES BY THE ASSESSING OFFICER HAVE BEEN REPLIED. ASSESSEE GAVE PAN NUMBER OF THE SHAREHOLDERS AND TRANSACTIONS WERE ROUTED THROUGH BANKING CHANNEL ON WHICH NO ADVERSE INFERENCE HAVE BEEN DRAWN BY THE ASSESSING OFFICER. SINCE THE ASSESSING OFFICER ACCEPTED SHARE CAPITAL AS GENUINE LY INVESTED BY THE SAME PARTIES, THEREFORE, ASSESSING OFFICER ACCEPTED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION OF THE SHARE APPLICA NTS. THE INVESTIGATION WAS CONDUCTED BY MANY INVESTIGATI NG AGENCIES AND NO ADVERSE INFERENCE HAVE BEEN DRAWN 47 AGAINST THE ASSESSEE. SINCE ASSESSEE WAS AT THE BEGINNING OF THE BUSINESS ITSELF AS ASSESSEE COMPAN Y WAS INCORPORATED ON 22.01.2008 THEREFORE, ASSESSEE COULD NOT HAVE EARNED THIS HUGE UNDISCLOSED INCOME. THEREFORE, NO ADDITION SHOULD BE MADE AGAINST NEWLY ESTABLISHED COMPANY. NO EVIDENCE WAS FOUND AGAINST THE ASSESSEE DURING THE COURSE OF SEARCH SO AS TO M AKE OUT A CASE OF EARNING ANY UNDISCLOSED INCOME. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON SEVERAL DECISI ONS, COPIES OF THE SAME ARE FILED IN THE PAPER BOOK IN SUPPORT OF THE CONTENTION THAT LD. CIT(APPEALS) COR RECTLY DELETED THE ADDITION ON MERIT. 24. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS ADMITTED FACT THAT ASSESSEE COMPANY AND ITS DIRECTORS/SHAREHOLDERS HAD BEEN SUBJECT TO SEARCH PROCEEDINGS UNDER SECTION 132 OF THE INCOME TAX ACT . DURING SEARCH PROCEEDINGS, NO DOCUMENT OR EVIDENCE PERTAINING TO ANY BOGUS NATURE OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE HAD BEEN FOUND/SEIZE D. THE REVENUE DEPARTMENT IN POST SEARCH INVESTIGATION CARRIED OUT INQUIRIES BUT NOTHING WAS FOUND AGAINST THE ASSESSEE. NO FURTHER INQUIRIES HAVE BEEN CONDUCTED BY DDIT(INVESTIGATION) TO TAKE THE MATTER FURTHER TO I TS LOGICAL END. THEREAFTER, THE MATTER WAS TAKEN UP B Y THE ASSESSING OFFICER AND NUMBER OF LETTERS TO VERIFY T HE GENUINENESS OF THE SHARE APPLICANTS WAS ISSUED UNDE R SECTION 133(6) AND MOST OF THESE LETTERS WERE RECEI VED 48 BACK WITH THE REPLY CONFIRMING THE CLAIM OF THE ASSESSEE, MEANING THEREBY NO ADVERSE EVIDENCE COULD BE PRODUCED AGAINST THE ASSESSEE, FURTHER, THE ASSESS ING OFFICER ISSUED COMMISSION UNDER SECTION 131(1)(D) O F THE INCOME TAX ACT TO THE DDIT (INVESTIGATION) AT KOLKATA WHO HAVE SUBMITTED REPORT TO THE ASSESSING OFFICER VIDE LETTER DATED 19.03.2014 (PB-50) WHICH IS ALSO REPRODUCED BY THE LD. CIT(APPEALS) IN HIS FIND INGS WHICH SHOWS THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION HAVE BEEN PROVED BY MOST OF THE SHARE APPLICANTS BY PRODUCING SUFFICIEN T EVIDENCES BEFORE DDIT (INVESTIGATION) KOLKATA AND A LL THE FACTS STATED BY THE ASSESSEE HAVE BEEN VERIFIED . THERE WERE CERTAIN DISCREPANCIES POINTED OUT WHICH HAVE BEEN DULY REPLIED BY THE ASSESSEE AND VERIFIED BY A.O. AND NO ADVERSE INFERENCE WAS DRAWN ON THE SAME . THESE REPORTS AND MATERIAL ON RECORD CLEARLY PROVED THAT INQUIRIES CONDUCTED BY INVESTIGATION WING AT KOLKATA PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF VARIOUS SHARE APPLICANT COMPANIES. THEREFORE, NO DOUBT COULD BE RAISED IN THIS REGARD. IT IS NOT CLARIFIED WHY THESE DETAILED INVESTIGATIONS CONDUCTED BY THE ASSESSING OFFICER HIMSELF, THROUGH DDIT (INVESTIGATION) KOLKATA IN FAVOUR OF THE ASSES SEE HAVE NOT BEEN NARRATED IN THE ASSESSMENT ORDER. MA Y BE, SOME INVESTIGATION REPORTS WERE IN FAVOUR OF TH E ASSESSEE, THE ASSESSING OFFICER DELIBERATELY DID NO T 49 MENTION THESE FACTS IN THE ASSESSMENT ORDER AS WAS BENT UPON TO MAKE THE ADDITION AGAINST THE ASSESSEE . 24(I) THE ASSESSING OFFICER ACCEPTED THE SHARE CAPI TAL INTRODUCED BY THE SAME PARTIES IN ASSESSEE COMPANY WHICH WOULD PROVE THAT THE ASSESSEE ESTABLISHED IDENTITY OF THE SHARE APPLICANTS, THEIR CREDITWORTH INESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. WHY FOR SHARE PREMIUM, THE SAME INGREDIENTS HAVE BEEN DOUBTED BY THE ASSESSING OFFICER, HAVE NOT BEEN EXPLAINED. THE ASSESSEE EXPLAINED BEFORE THE AUTHORITIES BELOW THAT ASSESSEE COMPANY HAS TAKEN O VER RUNNING BUSINESS OF PROPRIETORSHIP, WHICH HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER. THE ASSESSE E FURTHER EXPLAINED THAT STOCK OF THE GOLD WAS TAKEN AT FACE VALUE RATHER THAN MARKET VALUE. THEREFORE, TH IS WAS THE REASON TO EXPLAIN THAT PREMIUM WAS CHARGED FROM THE SHARE APPLICANTS. THE ASSESSEE PROVIDED COMPLETE DETAILS OF THE SHARE APPLICANTS ON WHICH T HE REPORTS, AS NOTED ABOVE UNDER SECTION 133(6) AND COMMISSION REPORT UNDER SECTION 131(1) OF THE ACT H AVE BEEN BROUGHT ON RECORD VERIFYING THE IDENTITY OF TH E SHARE APPLICANTS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER BE FORE LD. CIT(APPEALS) ADMITTING CLAIM OF ASSESSEE ALSO SUPPORT EXPLANATION OF THE ASSESSEE THAT REVENUE DEPARTMENT HAVE VERIFIED THE IDENTITY, CREDITWORTHI NESS 50 AND GENUINENESS OF THE SHARE APPLICANTS. IT IS ALS O ADMITTED FACT THAT DURING SEARCH, NO MATERIAL WAS F OUND AGAINST THE ASSESSEE TO SHOW THAT ASSESSEE RECEIVED ANY ACCOMMODATION ENTRY. THE LD. DR WAS DIRECTED TO EXPLAIN AS TO WHAT INVESTIGATION WAS CONDUCTED BY T HE INVESTIGATION PARTY IN THE CASE OF THE ASSESSEE AFT ER SEARCH. HOWEVER, NO SATISFACTORY EXPLANATION HAVE BEEN GIVEN AS TO WHAT INVESTIGATION HAVE BEEN CONDUCTED IN THE CASE OF THE ASSESSEE AFTER SEARCH. IT WOULD, THEREFORE, PROVE THAT THERE WAS NO MATERIAL FOUND AGAINST THE ASSESSEE DURING THE COURSE OF SEARCH TO INFER IF ASSESSEE RECEIVED ANY ACCOMMODATION ENTRY FROM ANY PARTY. THE ASSESSING OFFICER DELIBERATELY DID NOT DISCUSS THE DETAILS OF INQUIRIES CONDUCTED AT KOLKA TA IN THE ASSESSMENT ORDER. THEREFORE, THE INITIAL BURDE N ON THE ASSESSEE HAS BEEN DISCHARGED TO PROVE IDENTITY OF THE SHARE APPLICANTS, THEIR CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION. NO FURTHER PROBE W AS MADE BY THE ASSESSING OFFICER. IN THIS CASE, NO LIN K OF PARTIES INVOLVED IN PROVIDING ACCOMMODATION ENTRIES HAS BEEN ESTABLISHED. SINCE THE INITIAL BURDEN OF PROV ING GENUINE SHARE APPLICATION MONEY AND SHARE PREMIUM RECEIVED BY ASSESSEE, HAVE BEEN DISCHARGED BY THE ASSESSEE, THEREFORE, ADDITIONAL BURDEN WAS ON THE REVENUE TO SHOW THAT EVEN IF THE SHARE APPLICANTS D ID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENTS MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE COMPANY SO AS TO ENABLE IT TO BE 51 TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. A.O . HOWEVER, DID NOTHING 25. HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS KURELE PAPER MILLS PVT. LTD. 380 ITR 571 HELD AS UNDER : HELD, DISMISSING THE APPEAL, THAT THE ORDER OF THE COMMISSIONER (APPEALS) (APPEALS) REVEALED THAT THERE WAS A FACTUAL FINDING THAT NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISS UED WAS FOUND DURING THE COURSE OF SEARCH AS WAS MANIFEST FROM THE ORDER OF THE ASSESSING OFFICER. CONSEQUENTLY, IT WAS HELD THAT THE ASSESSI NG OFFICER WAS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE INCOME-TAX ACT, 1961, FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CA PITAL. THERE WAS NOTHING TO SHOW THAT THE FACTUAL DETERMINATION WAS PERVERSE. THE SUPREME COURT HAS DISMISSED THE SPECIAL LEAVE P ETITION FILED BY THE DEPARTMENT AGAINST THIS JUDGMENT: SEE [2016] 380 IT R (ST.) 64ED.] 25(I) HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V S KAMDHENU STEEL & ALLOYS LTD. 361 ITR 220 HELD AS UNDER : A DELICATE BALANCE HAS TO BE MAINTAINED WHILE APPLY ING SECTIONS 68 AND 69 OF THE INCOME-TAX ACT, 1961. ON THE ONE HAND, NO DOUBT, SUCH KINDS OF DUBIOUS PRACTICES ARE RAMPANT ; ON THE OTHER HAN D, MERELY BECAUSE THERE IS AN ACKNOWLEDGMENT OF SUCH PRACTICES THAT W OULD NOT MEAN THAT IN ANY OF SUCH CASES, THE COURT HAS TO PRESUME THAT TH E ASSESSEE IN QUESTION HAS INDULGED IN THAT PRACTICE. TO MAKE THE ASSESSEE RESPONSIBLE, THERE HAS TO BE PROPER EVIDENCE. IT IS EQUALLY IMPORTANT THAT AN INNOCENT PERSON IS NOT FASTENED WITH LIABILITY WITHOUT COGENT EVIDENCE . THE DEPARTMENT IS NOT REMEDILESS AND IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENT OF SUCH ALLEGED BOGUS SHAREHOLDERS IN ACCORDANCE WI TH LAW. 52 THE INITIAL BURDEN LIES ON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSE E. THE ASSESSEE HAS TO SATISFACTORILY ESTABLISH THE IDENTITY OF THE SHAREH OLDERS, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE SHA REHOLDERS. ONCE ADEQUATE EVIDENCE/MATERIAL IS GIVEN, WHICH WOULD PR IMA FACIE DISCHARGE THE BURDEN OF THE ASSESSEE IN PROVING THE IDENTITY OF SHAREHOLDERS, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SHAREHOLDERS, THEREAFTER IN CASE SUCH EVIDENCE 'IS TO BE DISCARDE D OR IT IS PROVED THAT IT HAS 'CREATED' EVIDENCE, THE REVENUE HAS TO MAKE A T HOROUGH PROBE BEFORE IT CAN FASTEN THE LIABILITY ON THE ASSESSEE UNDER S ECTIONS 68 AND 69. HELD, THAT IN ALL APPEALS BUT ONE, SECTION 68 WAS N OT APPLICABLE. IN ONE APPEAL, THE MATTER WAS RIGHTLY REMANDED. 25(II) HON'BLE DELHI HIGH COURT IN THE CASE OF C IT VS VALUE CAPITAL SERVICES P.LTD. 307 ITR 334 HELD AS UNDER: IN RESPECT OF AMOUNTS SHOWN AS RECEIVED BY THE ASSE SSEE TOWARDS SHARE APPLICATION MONEY FROM 33 PERSONS, THE ASSESS ING OFFICER REQUIRED THE ASSESSEE TO PRODUCE ALL THESE PERSONS. WHILE AC CEPTING THE EXPLANATION AND THE STATEMENTS GIVEN BY THREE PERSO NS THE ASSESSING OFFICER FOUND THAT THE RESPONSE FROM THE OTHERS WAS EITHER NOT AVAILABLE OR WAS INADEQUATE AND ADDED AN AMOUNT OF RS. 46 L AKHS PERTAINING TO 30 PERSONS TO THE INCOME OF THE ASSESSEE. THE COMMISSI ONER (APPEALS) UPHELD THE DECISION OF THE ASSESSING OFFICER. ON AP PEAL, THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONER (APPEALS) A ND DELETED THE ADDITIONS. ON FURTHER APPEAL: HELD, DISMISSING THE APPEAL, THAT THE ADDITIONAL BURDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPL ICANTS DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENT MA DE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. NO SUBSTANTIAL QUESTION OF LAW AROSE. 53 25(III) HON'BLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) LTD. 216 CTR 195 HELD AS UNDER : INCOME CASH CREDIT SHARE APPLICATION MONEY IF TH E SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPA NY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO , THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT B E REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. 25(IV) HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS DIVINE LEASING & FINANCE LTD. 299 ITR 268 HELD AS UNDER : ASSESSEE-COMPANY HAVING RECEIVED SUBSCRIPTIONS TO T HE PUBLIC/RIGHTS ISSUE THROUGH BANKING CHANNELS AND FURNISHED COMPLE TE DETAILS OF THE SHAREHOLDERS, NO ADDITION COULD BE MADE UNDER S. 68 IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR' THAT ANY PART OF THE SHARE CAPITAL REPRESENTED COMPANY'S OWN INCOME FROM UNDISCLOSED S OURCES. 25(V) HON'BLE MADHYA PRADESH HIGH COURT IN THE CAS E OF CIT VS PEOPLES GENERAL HOSPITAL LTD. 356 ITR 65 HELD AS UNDER : IF IDENTITY OF PERSON PROVIDING SHARE APPLICATION M ONEY IS ESTABLISHED THEN BURDEN WAS NOT ON ASSESSEE TO PROVE CREDITWORT HINESS OF SAID PERSON AND NO ADDITION CAN BE MADE UNDER SECTION 68 . 26. IT MAY BE NOTED HERE THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 22.01.2008 AND THE FINANCIAL YE AR 54 CLOSES ON 31.03.2008 FOR ASSESSMENT YEAR 2008-09. THEREFORE, IT IS NOT EXPLAINED AS TO HOW WITHIN A S HORT SPAN OF PERIOD, THE ASSESSEE WOULD EARN SUCH A HUGE UNDISCLOSED INCOME. WE ARE FORTIFIED IN OUR VIEW B Y JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF C IT VS BHARAT ENGINEERING & CONSTRUCTION CO. 83 ITR 187 IN WHICH IT WAS HELD AS UNDER : UNEXPLAINED CASH CREDIT ENTRIES IN THE FIRST YEAR OF BUSINESS OF ENGINEERING CONSTRUCTION COMPANY COULD NOT BE ITS I NCOME. 26(I) ON THIS GROUND ITSELF, NO ADDITION COULD BE M ADE AGAINST THE ASSESSEE ON ACCOUNT OF SHARE PREMIUM. 27. CONSIDERING TOTALITY OF THE FACTS AND CIRCUMSTANCES, IT IS CLEAR THAT LD. CIT(APPEALS) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD , RIGHTLY DELETED THE ADDITION. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER DID NOT HAVE TIME TO CONSIDER THE ISSUE IN DETAIL AND INVESTIGATION WAS NOT CONDUCTED TO LOGICAL END, THEREFORE, LD. CIT(APPEALS) HAVING CO- TERMINUS POWER SHOULD HAVE CORRECTED THE ASSESSMENT ORDER. THE LD. CIT(APPEALS) HAS CONSIDERED EACH MATERIAL ON RECORD OF THE DEPARTMENT AND CONSIDERED THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF VAR IOUS LETTERS ISSUED BY THE ASSESSING OFFICER SEEKING EXPLANATION OF THE ASSESSEE AS WELL AS CONDUCTING INVESTIGATION THROUGH INVESTIGATION WING OF KOLKATA . THE REMAND REPORT FROM THE ASSESSING OFFICER WAS AL SO 55 SOUGHT IN WHICH ASSESSING OFFICER HAS ALSO CONFIRME D THAT FACTS OF GENUINENESS OF THE INVESTMENT IN CAPI TAL OF ASSESSEE COMPANY HAVE BEEN VERIFIED BY INVESTIGATIO N WING, KOLKATA. IT IS ALSO NOTED THAT DURING THE CO URSE OF SEARCH, NO ADVERSE MATERIAL WAS FOUND AGAINST TH E ASSESSEE OF RECEIVING ANY ACCOMMODATION ENTRY. THEREFORE, WHEN NO ADVERSE MATERIAL WAS FOUND AGAIN ST THE ASSESSEE, WHERE IS THE QUESTION FOR LD. CIT(APP EALS) TO CORRECT THE ERROR IN THE ASSESSMENT ORDER. THE LD. CIT(APPEALS) HAS CORRECTED THE ERROR IN THE ASSESSM ENT ORDER BY DELETING THE ADDITION BECAUSE ASSESSING OF FICER HAS NOT MENTIONED THE DETAILS OF INVESTIGATION CONDUCTED BY HIM THROUGH INVESTIGATION WING AT KOLK ATA IN ASSESSMENT ORDER WITHOUT ANY JUSTIFICATION. THE LD. CIT(APPEALS) RIGHTLY CONSIDERED THE ENTIRE MATERIAL FOR THE PURPOSE OF DELETING THE ADDITION. WHY THE KOLK ATA PARTIES HAVE MADE INVESTMENT IN THE ASSESSEE COMPAN Y IS NOT RELEVANT BECAUSE THESE PARTIES HAVE CONFIRME D IN MAKING INVESTMENT IN ASSESSEE COMPANY BY PRODUCING SUFFICIENT EVIDENCE BEFORE INVESTIGATION WING, KOLK ATA. DECISIONS RELIED UPON BY LD. DR ARE, THEREFORE, NOT APPLICABLE TO THE FACTS OF THE CASE. IN THIS VIEW OF THE MATTER, WE DO NOT SUBSCRIBE TO THE VIEW OF LD. DR T HAT MATTER MAY BE REMANDED TO THE LD. CIT(APPEALS) FOR FURTHER INVESTIGATION AND DETERMINATION OF THE ISSU E. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE DEPARTM ENTAL APPEAL ON THIS ISSUE. GROUND NOS. 3 AND 4 OF THE 56 APPEAL OF THE REVENUE ARE, ACCORDINGLY, DISMISSED I N ASSESSMENT YEAR 2008-2009. 28. THE LD. REPRESENTATIVES OF BOTH THE PARTIES ADMITTED THAT ON GROUND NOS. 3 AND 4 IN ASSESSMENT YEAR 2009-10, ISSUE IS SAME, THEREFORE, FOLLOWING T HE REASONS FOR DECISION FOR ASSESSMENT YEAR 2008-09, W E DISMISS THIS GROUND OF APPEAL OF THE REVENUE IN ASSESSMENT YEAR 2009-10 AS WELL. IN THE RESULT, TH IS ISSUE IS DECIDED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 29. IN THE RESULT, GROUND NOS. 3 AND 4 IN BOTH THE APPEALS ARE DISMISSED. 30. NO OTHER POINT IS ARGUED OR PRESSED IN BOTH THE APPEALS. 31. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SA INI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH JANUARY,2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD