Giri Roadlines & Commercial Trading P. Ltd., Hyd, Secunderabad V. ITO, Ward-2(2),Hyd, Hyderabad

ITA 893/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6245 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 15-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Keywords: Unexplained cash credit; Bogus Share capital; Income from undisclosed sources; Share purchase agreement; Onus to prove
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA.NO.893/HYD/2016 ASSESSMENT YEARS 2011-2012 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD. PANAABCT3148C VS. THE INCOME TAX OFFICER, WARD-2(2), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI Y. RATNAKAR FOR REVENUE : SMT. U. MINICHANDRAN DATE OF HEARING : 09.11.2016 DATE OF PRONOUNCEMENT : 18.01.2017 ORDER PER J. SUDHAKAR REDDY, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-2, HYDERABAD DATED 31.03.2016 ON THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IN ITA NO.0209/2014-15, DATED 31-03-2016 IS CONTRARY TO LA W AND FACTS. THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER (APPEALS) ERRED IN DISMISSING THE APPE AL WITHOUT CONSIDERING THE SUBMISSIONS AND EVIDENCE PRODUCED BEFORE HIM BY THE APPELLANT. 2. THE APPELLANT HAS ADEQUATELY PROVED THE IDENTITY OF INVESTORS, GENUINENESS OF INVESTMENTS AND THE CREDI T WORTHINESS OF THE INVESTORS. ACCORDINGLY THE APPELL ANT HAS, PRIMA FACIE, DISCHARGED THE ONUS CAST ON HIM UNDER SECTION 68 OF THE ACT. 2 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD 3. IT IS CONTENDED THAT ORDER OF THE LEARNED COMMISSIO NER (APPEALS) IS ONLY ON EXTRACT OF THE ASSESSMENT ORDE R. HE HAS NOT APPRECIATED THE SUBMISSIONS OF THE APPELLAN T AND THE RELEVANT DOCUMENTARY EVIDENCE PRODUCED BEFORE H IM THAT THE SHARE CAPITAL OF RS.3.20 CRORES WAS RECEIV ED FROM DIFFERENT PERSONS, AND GENUINE. THE APPELLANT HAS F ULLY DISCHARGED THE ONUS CAST UPON HIM IN EXPLAINING THE SHARE CAPITAL RECEIVED BY HIM. 4. IT IS CONTENDED THAT THE PREFERENTIAL SHARE CAPITAL OF RS.3.20 CRORES IS CONTRIBUTED BY TEN DIFFERENT INVE STING COMPANIES AS SHOWN BELOW AND THE SAME CANNOT BE TREATED AS THE INCOME OF THE COMPANY. SL.NO. NAME OF THE INVESTOR AMOUNT OF INVESTMENT IN RUPEES. 1. BASUKI CREDIT & FINVESTMENT P. LTD., 10,00,000 2. MIDEAST VYAPAAR P. LTD., 10,00,000 3. PATHICK TRADING & FISCAL P. LTD., 10,00,000 4. PEE DEE VINIYOG P. LTD., 10,00,000 5. RAMESWARAM FISCAL P. LTD., 10,00,000 6. SESUN MARKETING P. LTD., 15,00,000 7. SUNDRM CONSULTANT P. LTD., 2,10,00,000 8. SUNFLAG VINIYOG P. LTD., 10,00,000 9. VAIKUNTH VINTRADE P. LTD., 25,00,000 10. WAITZ MERCANTILES P. LTD., 10,00,000 TOTAL 3,20,00,000 5. FOR THESE AND OTHER GROUNDS THAT WILL BE SUBMITTED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE ADDITION OF RS.3,20,00,000 BE DELETED. 6. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR AMEN D ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY AND HAD FILED ITS RETURN OF INCOME FOR THE A.Y . 2011-12 ON 23.09.2011 ADMITTING INCOME OF RS.3,14,740. THE AS SESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) BY MAKING 3 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD AN ADDITION OF RS.3,20,00,000 AS UNEXPLAINED CREDITS, UNDER SECTION 68 OF THE ACT. THE ASSESSEE FILED LETTERS OF CO NFIRMATIONS FROM THE INVESTORS GIVING THEIR FULL ADDRESS, INCOME TAX PAN DETAILS AS WELL AS COPIES OF INVESTORS, A) BANK STATEME NTS, B) ACKNOWLEDGMENTS OF FILING OF RETURNS OF INCOME, AND ( C) BALANCE SHEETS AND P & L A/C, IN PROOF OF THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE INVESTMENTS. CERTIFICATES OF RBI IN THE CASE OF FIVE INVESTORS, WHICH WERE NBFCS WERE ALSO F ILED. THE ASSESSING OFFICER DEPUTED HIS INSPECTOR FOR VERIFICA TION AND INVESTIGATION. THEREAFTER, ON THE GROUND THAT THE INVE STORS ARE HAVING MEAGRE INCOMES AND IN SOME CASES MINUS NET WO RTH, HE MADE ADDITION OF THE ENTIRE INVESTMENT BY WAY OF SHARE CAPITAL OF RS.3,20,00,000 U/S. 68 OF THE INCOME TAX ACT, 1961 (TH E ACT). ON APPEAL, THE FIRST APPELLATE AUTHORITY UPHELD THE FINDING S OF THE ASSESSING OFFICER. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE SR. ADVOCATE SHRI Y. RATNAKAR APPEARING FOR TH E ASSESSEE SUBMITTED THAT (A) THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF THAT L AY ON IT BY FURNISHING OF SUCH DOCUMENTS WHICH WERE UNDE R HIS POWER AND CONTROL THE DETAILS OF WHICH ARE AT PAGE -61 ONWARDS OF THE PAPER BOOK FILED BEFORE US. (B) THAT NEITHER THE ASSESSING OFFICER OR THE CIT(A) HAS VERIFIED OR ANALYSED EACH AND EVERY CREDIT INDEPENDE NTLY AND ON THE BASIS OF HUMAN PROPERTIES REJECTED ALL THE EVIDENCES AND MADE THE ADDITION. 4 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD (C) IN THE INVESTIGATION REPORT BY THE INCOME TAX INSPECTOR, NO ADVERSE FINDINGS BEING RECORDED AGAINST ANY OF THE COMPANIES AND IN FACT, THE CONTENTIONS OF THE ASSESSEE ARE SUBSTANTIATED BY THIS REPORT. (D) THE INVESTMENT COMPANIES WHICH MADE THE INVESTMENTS HAD HUGE AGGREGATE FUNDS AND THE ALLEGATION THAT THEY D O NOT HAVE CREDITWORTHINESS IS FACTUALLY INCORRECT. ANNEXURE-A WAS PRODUCED TO DEMONSTRATE THE QUANTUM OF FUNDS HELD BY THE INVESTMENT COMPANIES WERE SUBSTANTIAL. (E) THAT THE JURISDICTIONAL HIGH COURT HAS HELD THAT, TO MAKE AN ADDITION, UNDER SUCH CIRCUMSTANCES U/S. 68 OF THE ACT, IT HAS TO BE PROVED BY THE REVENUE THAT THE SHARE HOLDERS, WERE MERE NAME LENDERS AND THE MONEY ALLEGEDLY INVESTED BY THEM REALLY BELONG TO THE DIRECTO RS OF THE ASSESSEE COMPANY. HE RELIED ON CIT VS. LANCO INDUSTRIES LTD., 242 ITR 357 (A.P.). 4. THE LD. D.R. ON THE OTHER HAND CONTROVERTED THE SUBMISSIONS OF THE ASSESSEE AND ARGUED THAT (A) THE INCOMES OF ALL THESE COMPANIES ARE MEAGRE AND IN CERTAIN CASES THE NET WORTH OF SOME COMPANIES IS MINUS . THUS HE SUBMITTED THAT THE CREDITWORTHINESS HAS NOT BEEN PROVED. (B) THE FUNDS BY WAY OF SHARE CAPITAL WERE RECEIVED BY T HE ASSESSEE COMPANY BY WAY OF PRIVATE PLACEMENT AND HENCE THE ASSESSEE SHOULD BE IN A POSITION TO COLLECT ALL 5 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD THE EVIDENCES REQUIRED TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS AND THAT ONUS IS WRONGLY BEING SHIFTED ON TO THE REVENU E BY THE LD. COUNSEL FOR THE ASSESSEE. (C) SHE RELIED ON THE ORDER OF THE ASSESSING OFFICER AS W ELL AS THE LD. CIT(A). SHE FURTHER RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF TARAK PROPERTI ES INVESTMENT P. LTD., 264 CTR 072 AND THAT S.L.P. ON THIS JUDGMENT WAS DISMISSED BY THE HONBLE SUPREME COURT. 5. IN REPLY, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DISMISSAL OF SLP BY THE HONBLE SUPREME COURT DOES NOT TANTAMOUNT TO APPROVAL OF THE ORDER OF THE HONB LE HIGH COURT BY THE HONBLE SUPREME COURT. 6. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATIO N OF THE ARGUMENTS OF BOTH SIDES, PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW, CASE LAW CITED, WE HOLD AS FOLLOW S. 7. THE ASSESSING OFFICER HAS MADE THIS ADDITI ON ON THE GROUND THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION, AS SOME OF THE COMPANIES WHICH INVESTED H AD ADMITTED EITHER NIL INCOME OR HAD DECLARED MEAGRE IN COME. HE RECORDS THAT THE HIGHEST INCOME THAT WAS DECLARED WAS OF VAIKUNTH VINTRADE P. LTD., OF RS.34,445/-. 8. ON THE OTHER HAND, LEARNED COUNSEL FOR THE A SSESSEE, DEMONSTRATES THAT HIGHER INCOMES THAN RS.34,445/- WERE REPORTED BY OTHER COMPANIES AND THAT THE A.O. WAS FACTUA LLY WRONG IN HIS OBSERVATIONS. THE ASSESSEE FURTHER FILED A STATEMENT 6 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD TO DEMONSTRATE THE CREDITWORTHINESS OF THE INVESTING COMPA NIES. THE FACTUAL POSITION DEPICTED IN THIS STATEMENT WAS NOT CONTROVERTED BY THE LD. D.R. WE EXTRACT THE STATEMENT FOR READY REFERENCE. DETAILS OF FUNDS AVAILABLE WITH THE INVESTOR COMPAN IES AS ON 31 ST MARCH, 2011 AMOUNT IN RUPEES NAME OF THE INVESTOR COMPANY OWN FUNDS TOTAL OWNED FUNDS BORROWED FUNDS AGGREGATE FUNDS AMOUNT OF SHARE CAPITAL SUBSCRIBED IN THE ASSESSEE SHARE CAPITAL RESERVE & SURPLUS (1) (2) (1+2) BASUKI CREDIT & FINVESTMENT P LTD. 25,00,000 1,80,00,000 2,05,00,000 0 2,05,00,000 10, 00,000 MIDEAST VYAPPAR PVT LTD. 1,41,45,000 6,72,96,942 8,14,41,942 0 8,14,41,942 1 0,00,000 PATHIK TRADING & FISCAL PVT LTD. 59,08,133 6,731 59,14,864 25,74,115 84,88,979 10,00 ,000 PEE DEE VINIYOG PVT. LTD. 1,59,30,000 5,36,65,388 6,95,95,388 94,77,048 7,90, 72,436 10,00,000 RAMESWARAM FISCAL PVT LTD 27,27,000 2,01,18,875 2,28,45,875 0 2,28,45,875 10, 00,000 SESUN MARKETING PVT. LTD 2,09,00,000 12,64,31,489 14,73,31,489 4,27,74,866 1 9,01,06,355 15,00,000 SUNDRM CONSULTANTS PVT LTD 1,30,88,800 7,18,09,404 8,48,98,204 5,30,75,000 13, 79,73,204 2,10,00,000 SUNFLAG VINIYOG PVT LTD. 1,12,66,000 6,41,25,000 7,53,91,000 0 7,53,91,000 1 0,00,000 VAIKUNTH VINTRADE PVT LTD. 1,63,95,000 11,96,83,873 13,60,78,873 1,45,10,166 1 5,05,89,039 25,00,000 WALTZ MERCANTILES PVT LTD. 1,44,62,000 6,40,57,451 7,85,19,451 0 7,85,19,451 1 0,00,000 8.1. A PERUSAL OF THIS CHART SHOWS THAT THESE COMPANIES DO HAVE CREDITWORTHINESS. THEY DO HAVE SUBSTANTIAL FUNDS AND SOME ARE NBFCS. HAVING NIL INCOME OR MEAGRE INCOME CANNO T BY ITSELF LEAD TO A CONCLUSION THAT THE ASSESSEE HAS NO CREDITWO RTHINESS. THUS THIS FINDING OF THE LD. CIT(A) IN OUR OPINION IS NOT CORRECT. 9. WE ALSO FIND THAT SOME OF THESE INVESTING CO MPANIES ARE NBFCS AND REGISTERED WITH THE RBI. SUCH COMPANIES CAN NOT BE TREATED AS PAPER COMPANIES WITHOUT THE A.O. GATHERING A NY EVIDENCE IN SUPPORT OF SUCH A FINDING. 7 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD 10. THE ASSESSEE HAS FURNISHED LETTERS OF CON FIRMATIONS FROM THE INVESTORS, THEIR FULL ADDRESS, INCOME TAX PERM ANENT ACCOUNT NUMBERS, COPIES OF INVESTORS BANK STATEMENTS, ACKNOWLEDGMENTS OF THESE COMPANIES OF FILING RETURNS O F INCOME, BALANCE SHEETS, P & L A/C ETC., WHICH DOES DEMONSTRATE THE IDENTITY OF THE INVESTING COMPANIES. THE CREDITWORTHINE SS IS PROVED BY THE SUBSTANTIAL FUNDS THAT THESE COMPANIES HAV E. 11. A PERUSAL OF THE REPORT OF THE INSPECTOR OF INCOME TAX SHOWS THAT, NOTHING ADVERSE HAS BEEN RECORDED CONSEQ UENT TO INSPECTION AND INVESTIGATION. EACH OF THE INVESTMENT HAS NOT BEEN INDIVIDUALLY EXAMINED BY THE A.O. IT IS WELL SETTL ED THAT FOR MAKING AN ADDITION U/S 68 OF THE ACT EACH CREDIT HAS TO BE SEPARATELY INVESTIGATED AND CONCLUSIONS ARRIVED AT. I N THIS CASE A GENERAL VIEW HAS BEEN TAKEN BY THE REVENUE AUTHORITIES. EACH INVESTMENT HAS NOT BEEN EXAMINED SEPARATELY. NO MATERIA L HAS BEEN GATHERED BY THE A.O. TO CONTRADICT THE EVIDENCE FILE D BY THE ASSESSEE. THE A.O. MERELY REJECTED THE EVIDENCES WITH OUT PROPER REASON. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSI DERED OPINION THAT THE ADDITION MADE UNDER SECTION 68 OF THE I. T. ACT CANNOT BE SUSTAINED. 12. WE NOW EXAMINE SOME OF THE CASE LAWS ON THIS ISSUE. 12.1. IN THE CASE OF CIT VS. KAMDHENU STEEL & ALLOY S LTD., (2012) 248 ITR 33, THE HONBLE DELHI HIGH COURT HAS H ELD THAT ONCE THE ASSESSEE HAS PROVED THE IDENTITY OF CREDITOR/S HARE APPLICANT, BY EITHER FURNISHING PAN OR COPY OF THEIR BANK ACCOUNT, THE ADDITION UNDER SECTION 68 OF THE ACT CANNOT BE MADE WITHOUT ANY MATERIAL TO SUPPORT THE SAME. 8 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD 12.2. IN THE CASE OF CIT VS. GANGESHWARI METAL P. LTD ., IN ITA.NO.597/2012 JUDGMENT DATED 21.1.2013 REPORTED IN 361 ITR 10 (DEL), THE HONBLE HIGH COURT AFTER CONSIDERING THE DECISIONS IN THE CASE OF NOVA PROMOTERS AND FINLEASE PVT. LTD. 342 I TR 169 AND JUDGMENT IN THE CASE OF CIT VS. LOVELY EXPORTS 319 ITR (SAT.5) (S.C.) THE HONBLE HIGH COURT HELD AS FOLLOWS : 'AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES O F CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSI NG OFFICER CARRIES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER (SITS BACK WITH FOLDED HANDS' TILL THE ASSESSEE EXHAUSTS ALL T HE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COM ES FORWARD TO MERELY REJECT THE SAME ON THE PRESUMPTIO NS. THE PRESENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER AFTER NOTING THE FACTS, MERELY RE JECTED THE SAME. THIS WOULD BE APPARENT FROM THE OBSERVATI ONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TO THE FOLLOWING EFFECT - 'INVESTIGATION MADE BY THE INVESTIGATION WING OF TH E DEPARTMENT CLEARLY SHOWED THAT THIS WAS NOTHING BUT A SHAM TRANSACTION OF ACCOMMODATION ENTRY. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAID AMOUNT OF RS.1,11,50,000 MAY NOT BE ADDED TO ITS INCOME. IN RESPONSE, THE ASSESSEE HAS SUBMITTED THA T THERE IS NO SUCH CREDIT IN THE BOOKS OF THE ASSESSE E. RATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARE. IT WA S STATED THAT THE ACTUAL AMOUNT RECEIVED WAS RS.55,50,000 AND NOT RS.1,11,50,000 AS MENTIONED IN THE NOTICE. THE ASSESSEE HAS FURNISHED DETAILS OF S UCH RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN RESP ECT OF THE AMOUNT IS FOUND CORRECT. AS SUCH THE UNEXPLAINE D AMOUNT IS TO BE TAKEN AT RS.55,50,000. THE ASSESSEE HAS FURTHER TRIES TO EXPLAIN THE SOURCE OF THIS AMO UNT OF RS.55,50,000 BY FURNISHING COPIES OF SHARE APPLICAT ION MONEY, BALANCE SHEET, ETC. OF THE PARTIES MENTIONED ABOVE AND ASSERTED THAT THE QUESTION OF ADDITION IN THE INCOME OF THE ASSESSEE DOES NOT ARISE. THIS EXPLANA TION OF THE ASSESSEE HAS BEEN DULY CONSIDERED AND FOUND 9 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD NOT ACCEPTABLE. THIS ENTRY REMAINS UNEXPLAINED IN T HE HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATION WING OF THE DEPARTMENT. AS SUCH ENTRI ES OF RS.55,50,000 RECEIVED BY THE ASSESSEE ARE TREATED A S AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO ITS INCOME. SINCE I AM SATISF IED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF ITS INCOME, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C ) ARE BEING INITIATED SEPARATELY. ' THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LTD. ( SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT D ECIDED IN FAVOUR OF THE REVENUE IN THAT CASE. HOWEVER, THE FA CTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE AND FALL I N THE SECOND CATEGORY AND ARE MORE IN LINE WITH FACTS OF LOVELY EXPORTS (P) LTD. (SUPRA). THERE WAS A CLEAR LACK OF INQUIRY ON THE PART OF THE ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED ALL THE MATERIAL WHICH WE HAVE ALREADY RE FERRED TO ABOVE. IN SUCH AN EVENTUALITY NO ADDITION CAN BE MA DE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. CONSEQUENTLY, THE QUESTION IS ANSWERED IN THE NEGAT IVE. THE DECISION OF THE TRIBUNAL IS CORRECT IN LAW. ' THE CASE ON HAND CLEARLY FALLS IN THE CATEGORY WHER E THERE IS LACK OF ENQUIRY ON THE PART OF THE A.O. AS IN THE C ASE OF GANGESHWARI METALS (SUPRA).' 12.3. IN THE CASE OF CIT VS. FAIR FINVEST LTD. (2013) 357 ITR 146 (DEL.) IN ITA NO.232/2012 JUDGMENT DT. 22.11.2012 AT PARA 6 TO 8, IT IS HELD AS FOLLOWS. 6. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF TH E PARTIES. IN THIS CASE THE DISCUSSION BY THE CIT(APPEALS) WOULD REVEAL THAT THE ASSESSEE HAS FILED DOCUMENTS INCLUDING CERTIFIED CO PIES ISSUED BY THE REGISTRAR OF COMPANIES IN RELATION TO THE SHARE APPLICATION, AFFIDAVITS OF THE DIRECTORS, FORM 2 FILED WITH THE ROC BY SUCH APPLICANTS CONFIRMATIONS BY THE APPLICANT FOR COMPA NYS SHARES, CERTIFICATES BY AUDITORS ETC. UNFORTUNATELY, THE AS SESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFEREN CE TO BE DRAWN FROM THE READING OF THE INVESTIGATION REPORT AND TH E STATEMENT OF MR. MAHESH GARG. TO ELEVATE THE INFERENCE WHICH CAN BE DRAWN ON THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CONCLUSIONS 10 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD WOULD BE IMPROPER, MORE SO WHEN THE ASSESSEE PRODUC ED MATERIAL. THE LEAST THAT THE ASSESSING OFFICER OUGH T TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY, IF NECESSARY, IN VOKING HIS POWERS UNDER SECTION 131 SUMMONING THE SHARE APPLIC ANTS OR DIRECTORS. NO EFFORT WAS MADE IN THAT REGARD. IN TH E ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUS TWORTHY OR LACKED CREDIBILITY THE ASSESSING OFFICER MERELY CON CLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COLLECTED CERTAIN FA CTS AND THE STATEMENTS OF MR. MAHESH GARG THAT THE INCOME SOUGH T TO BE ADDED FELL WITHIN THE DESCRIPTION OF SECTION 68. 7. HAVING REGARD TO THE ENTIRETY OF FACTS AND CIRCU MSTANCES, THE COURT IS SATISFIED THAT THE FINDING OF THE TRIBUNAL IN THIS CASE ACCORDS WITH THE RATIO OF THE DECISION OF THE SUPRE ME COURT IN LOVELY EXPORTS (SUPRA). 8. THE DECISION IN THIS CASE IS BASED ON THE PECULI AR FACTS WHICH ATTRACT THE RATIO OF LOVELY EXPORTS (SUPRA). WHERE THE ASSESSEE ADDUCES EVIDENCE IN SUPPORT OF THE SHARE APPLICATIO N MONIES, IT IS OPEN TO THE ASSESSING OFFICER TO EXAMINE IT AND REJ ECT IT ON TENABLE GROUNDS. IN CASE HE WISHES TO RELY ON THE REPORT OF THE INVESTIGATION AUTHORITIES, SOME MEANINGFUL ENQUIRY OUGHT TO BE CONDUCTED BY HIM TO ESTABLISH A LINK BETWEEN THE AS SESSEE AND THE ALLEGED HAWALA OPERATORS; SUCH A LINK WAS SHOWN TO BE PRESENT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P ) LTD. (SUPRA) RELIED UPON BY THE REVENUE. WE ARE THEREFORE NOT TO BE UNDERSTOOD TO CONVEY THAT IN ALL CASES OF SHARE CAPITAL ADDED UNDER SECTION 68, THE RATIO OF LOVELY EXPORTS (SUPRA) IS ATTRACTE D, IRRESPECTIVE OF THE FACTS, EVIDENCE AND MATERIAL. 12.4. THUS A CLEAR DISTINCTION HAS BEEN MADE OUT IN CASES WHERE THE AO HAS CONDUCTED CERTAIN INVESTIGATIONS AND I N CASES WHERE THE AO MERELY REJECTED THE EVIDENCES FILED BY TH E ASSESSEE AND MADE AN ADDITION BASED ON PRESUMPTIONS. APPLY THE PROPOSITIONS LAID DOWN IN THESE CASES, WE HAVE TO DE LETE THE ADDITION MADE UNDER SECTION 68 OF THE ACT. 11 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD 12.5. IN THE CASE OF CIT VS. LANCO INDUSTRIES LTD. 24 2 ITR 357 THE HONBLE ANDHRA PRADESH HIGH COURT HELD AS FOL LOWS. HELD, DISMISSING THE APPEAL THAT NO SUBSTANTIAL QU ESTION OF LAW AROSE IN THE CASE. AS REGARDS THE FIRST ITEM, VIZ., THE COMMISSION PAID TO MR. KONERU, A NON-RESIDENT, FOR THE PURPOSE OF RAISING SHARE CAPITAL FROM NRIS, ALTHOUGH THE AGREEMENT TO PAY THE COMMISSION CAME TO LIGHT FROM THE MATERIAL GATHERED IN THE COURSE OF SEARCH AND THE COMMISSION WORTH RS. 10 LAKHS WAS IN FACT SENT TO MR. KONERU, THE TRIBUNAL FOUND THAT THE CHEQUE F OR RS. 10 LAKHS ACKNOWLEDGED BY MR. KONERU WAS RETURNED ALONG WITH HIS LETTER DT. 3RD APRIL, 1994, I.E., LONG PRIOR TO THE SEARCH OPERATIONS, AS HIS COMPANY IN WHOSE NAME THE CHEQUE WAS ISSUED HAD NO BANK ACCOUNT IN INDIA. LATER ON, MR. KONERU ADDRESSED A LETTER DT. 23RD MAY,1994, REQUESTING FOR PAYMENT OF THE AMOUNT COVE RED BY THE CHEQUE AS WELL AS THE BALANCE AMOUNT OF RS. 6.82 LA KHS. IT WAS THE CASE OF THE APPELLANT THAT THE COMPANY DID NOT ACCEPT THE REQUEST OF MR. KONERU AND NO PAYMENT WAS MADE TO HI M AT ALL BY THE DATE OF SEARCH OR LATER. MR. KONERU DENIED HAVI NG RECEIVED ANY COMMISSION. ON THESE FACTS, THE CONCLUSION REACHED BY THE TRIBUNAL CANNOT BE SAID TO BE WITHOUT EVIDENCE. THE QUESTION OF PLACING THE BURDEN OF PROOF TO PROVE A NEGATIVE FAC T DID NOT ARISE. IN FACT THE REVENUE WANTED THE ASSESSEE TO PROVE A NEGATIVE FACT THAT NO PAYMENT WAS MADE AFTER THE CHEQUE WAS RETUR NED. THE SECOND ITEM WAS THE UNEXPLAINED SHARE CAPITAL INVES TMENTS. IF THE OSTENSIBLE SHAREHOLDERS FAILED TO EXPLAIN THE MEANS OF INVESTMENT, THAT SHOULD HAVE BEEN TREATED AS UNEXPLAINED INCOME IN THEIR HANDS. IN ORDER TO ADD IT TO THE INCOME OF THE ASSESSEE TH ERE MUST BE A FURTHER FINDING THAT IN FACT THE SHAREHOL DERS WERE MERE NAME-LENDERS AND THE MONEY ALLEGEDLY INVE STED BY THEM REALLY BELONGED TO THE DIRECTORS OF THE ASS ESSEE- COMPANY. IN THE ABSENCE OF A FINDING THAT THE PERSO NS TO WHOM THE SHARE CERTIFICATES WERE ISSUED ON RECEIPT OF CONSIDERATION AS PER THE BOOK ENTRIES WERE IN FACT DUMMIES OR STOOGES OF THE DIRECTORS OF THE ASSESSEE-COMPANY , THE SAME CANNOT BE TREATED AS UNACCOUNTED INCOME OF THE ASSESSEE. THERE WAS NO SUCH FINDING BY THE ASSESSIN G AUTHORITY. IN THIS VIEW OF THE MATTER, THE ULTIMATE CONCLUSION OF THE TRIBUNAL CANNOT BE FAULTED IN ANY CASE. 12.6. IN THE CASE ON HAND THERE IS NO SUCH FINDING MADE BY THE A.O. OR THE LD. CIT(A). 12 ITA.NO.893/HYD/2016 GIRI ROADLINES & COMMERCIAL TRADING P. LTD., SECUNDERABAD 13. THE CIT-DR RELIED ON THE DECISION OF CIT VS. N . TARAK PROPERTIES INVESTMENTS P. LTD., (SUPRA). IN THIS CA SE, THE ASSESSING OFFICER NOTICED THAT THE EXTRACTS OF THE BANK ACCOU NTS SUBMITTED BY THE ASSESSEE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS WERE FABRICATED. HENCE, THIS IS THE CASE OF FRAUD PLAYED BY THE ASSE SSEE ON THE REVENUE. THE ASSESSEE HAD ADDUCED FALSE EVIDENCE TO GET UNDU E ADVANTAGE BY GIVING COLOUR OF GENUINENESS TO BOGUS ENTRIES THROU GH FABRICATED BANK ACCOUNTS. UNDER THESE CIRCUMSTANCES, THE HONBLE DE LHI HIGH COURT UPHELD THE ADDITIONS MADE UNDER SECTION 68 OF THE A CT. HENCE, THE FACTS OF THAT CASE ARE DISTINGUISHABLE FROM THE FAC TS OF THE ASSESSEES CASE. 14. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MADE U/S 68 OF THE ACT IS TO BE DELETED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JANUARY, 2017. SD/- SD/- (SMT. P. MADHAVI DEVI) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 18 TH JANUARY, 2017. VBP/- COPY TO 1. GIRI ROADLINES & COMMERCIAL TRADING P. LTD., 1-7- 293, M.G. ROAD, SECUNDERABAD 500 003. 2. THE INCOME TAX OFFICER, WARD-2(2), PLOT NO.6-P, S URVEY NO.32/A, 32/P, 5 TH FLOOR, SIGNATURE TOWERS, KOTHAGUDA, KONDAPUR, HYDERABAD 500 084. 3. CIT(A)-2, HYDERABAD. 4. PR. CIT-2, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE.