Deem Roll Tech Limited, Ahmedabad V. The DCIT, Circle- 1(1)(2), Ahmedabad

ITA 961/AHD/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3691 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Source of fund; Additional evidence; Question of law; Accommodation entries; Onus to prove; Set aside
• Section: 142(1); 133(6); 143(2); 264; 43; 13; 131; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (THROUGH VIRTUAL COURT) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ANDSHRI WASEEM AHMED, ACCOUNTANT MEMBER SL. NO(S) ITA NO(S) ASSET. YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 961/AHD/2016 2012-13 DEEM ROLL TECH LTD. C/3/301, ANUSHRUTI APARTMENT, OPP. NEW YORK TOWER, NR. JAIN MANDIR, S. G. HIGHWAY, THALTEJ, AHMEDABAD-380054 PAN NO. AABCD9176A DCIT CIRCLE-1(1)(2), AHMEDABAD ASSESSEE BY : SHRI P. F. JAIN,AR. REVENUEBY : SHRI VINOD TANWANI, SR. DR / DATE OF HEARING : 23.09.2020 / DATE OF PRONOUNCEMENT : 26.10.2020 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEEFOR A.Y. 2012-13WHICH ISARISING FROM THE ORDER OF THE CIT(A)-1,AHMEDABAD DATED 29.02.2016, IN THE PROCEEDINGS UNDER SECTION 143(3)OF THE INCOME TAX A CT, 1961 FOR A.Y. 2012- 13 (IN SHORT THE ACT). 2. THE ONLY ISSUED RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT-A ERRED IN CONFIRMING THE DISALLOWANCES OF RS. 70 LAKH MADE BY THE AO UNDER SECTION 68 OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF IRO N AND STEEL ROLL. DURING 2 ITA NO. 961/AHD/2016 AY: 2012-13 THE YEAR UNDER CONSIDERATION THE ASSESSEE ISSUED 70 000 FRESH SHARES HAVING FACE VALUE OF RS. 10 EACH AND PREMIUM OF RS. 190 PE R SHARE. THUS, THE ASSESSEE RECEIVED SHARE CAPITAL OF RS. 1.4 CRORE (7 0000 X 200) IN THE YEAR UNDER CONSIDERATION. 4. HOWEVER, THE AO FOUND THAT SOME OF THE SHAREHOLD ERS/INVESTORS HAVE DECLARED INCOME BETWEEN 1.5 LAKH TO 2 LAKH IN THEIR RESPECTIVE RETURNS OF INCOME WHEREAS THEY HAVE INVESTED AMOUNT IN SHARES FOR RS. 5LAKH TO 10 LAKH. THUS, THE AO HELD THAT THESE SHAREHOLDERS/INVESTORS DO NOT HAVE CREDIT WORTHINESS TO INVEST SUCH HUGE AMOUNT AND ACCORDING LY, SUCH TRANSACTIONS ARE NOT GENUINE WITHIN THE MEANING OF THE PROVISIONS OF SECTION 68 OF THE ACT. CONSEQUENTLY, THE AO DISALLOWED THE AMOUNT OF RS. 4 0 LAKHUNDER SECTION 68 OF THE ACT. 4.1 LIKEWISE THE AO FOUND THAT THERE ARE 5 SHAREHOL DERS/INVESTORS WHO HAVE SUBSCRIBED SHARES FOR RS. 30LAKH BUT THE ASSESSEE F AILED TO FILE ANY DOCUMENT TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINE SS OF SUCH PARTIES. HENCE, THE AO HELD THAT THE ASSESSEE FAILED TO COMPLY THE BASIC CONDITIONS AS SPECIFIED UNDER SECTION 68 OF THE ACT. FINALLY, THE AO DISALL OWED THE AGGREGATE AMOUNT OF RS. 70 LAKH UNDER SECTION 68 OF THE ACT AND ADDE D THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT (A). 6. THE ASSESSEE BEFORE THE LEARNEDCIT(A) SUBMITTED THAT IT, DURING THE ASSESSMENT PROCEEDING,HAD FILED THE SHARE APPLICATI ON FORM, BANK DETAILS AND THE CONFIRMATION FROM THE PARTIES. BUT THE AO FAILE D TO CONSIDER THE SAME. 3 ITA NO. 961/AHD/2016 AY: 2012-13 7. THE ASSESSEE FURTHER SUBMITTED THAT THE COPIES O F THE ITR WITH RESPECT TO FIVE INVESTOR WERE NOT FILED AS THEY WERE AFRAID TO FILE THE SAME WITH THE DEPARTMENT BUT THE SAME IS NOW ATTACHED HEREWITH. A CCORDINGLY, THE ASSESSEE PRAYED TO ACCEPT THE SAME AS ADDITIONAL EVIDENCE UN DER RULE 46A OF INCOME TAX RULE. 8. THE ASSESSEE FURTHER CONTENDED THAT ITS BURDEN T O PROVE CREDIT WORTHINESS OF INVESTORS IS LIMITED TO THE EXTENT OF TRANSACTION BETWEEN IT (THE ASSESSEE) AND THE INVESTOR. AS SUCH IT IS NOT LIABL E TO PROVE THE SOURCE OF SOURCE IN THE HANDS OF INVESTOR. THE ASSESSEE ALSO CLAIMED THAT IF TRANSACTION CARRIED OUT THROUGH THE BANKING CHANNEL THEN THE IDENTITY A ND GENUINENESS OF TRANSACTION STAND DISCHARGED. SIMILARLY, THE BURDEN OF PROVING THE CREDIT WORTHINESS OF THE INVESTORS SHIFTS FROM THE ASSESS EE TO THE REVENUE, ONCE THE ASSESSEE DISCHARGES THE ONUS BY PROVING THE IDENTIT Y AND GENUINENESS OF THE TRANSACTIONS. THUS, IT IS THE REVENUE TO BRING EVID ENCES ON RECORD TO SHOW THAT THE INVESTORS DO NOT HAVE SUFFICIENT CREDIT WORTHIN ESS AND THE AMOUNT INVOLVED IN THE IMPUGNED TRANSACTION BELONGS TO ASSESSEE. TH E ASSESSEE IN THIS RESPECT PLACED ITS RELIANCE ON THE JUDGMENT OF HONBLE GAUH ATI HIGH COURT IN THE CASE OF NEMI CHAND KOTHARI VS. CIT REPORTED IN 264 ITR 2 54. 9. HOWEVER, THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER: 2.6 AFTER GOING THROUGH THE FACTS OF THE CASE, IT IS SEEN THAT THE DEPOSITORS (TABLE SUPRA) AT SR. NO. 1 TO 7 ARE FILING THE RETURN OF INCOME WITH MEAGER TOTAL INCOME. IT IS DIFFICULT TO APPREHEND AS HOW THE PERSONS WHO HAVE DISCLOSED TOT AL INCOME OF RS. 1,50,000/- TO RS. 2,00,000/- COULD INVESTMENT SUCH A HUGE AMOUNT OF R S. 5,00,000/- TO RS. 10,00,000/- IN THE APPELLANT COMPANY ON A HEFTY PREMIUM. THE APPELLANT HAS FAILED TO PRODUCE ANY EVIDENCE TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS OF THE INVESTORS MENTIONED AT SR. NO. 1 TO 7. REGARDING SR. NO. 8 TO 12, IT IS SEEN THAT THE ASSESSEE HAS NOT FURNISHED THE IDENTITY OF THE PERSONS BEFORE AO WHO STATED TO HAV E INVESTED IN SHARES OF THE ASSESSEE COMPANY. THE SAME WERE SUBMITTED AT THE TIME OF APP EAL PROCEEDINGS, BUT THESE DO NOT PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS. IT IS A WELL SETTLED LAW-THAT 4 ITA NO. 961/AHD/2016 AY: 2012-13 ONCE AN AMOUNT IS FOUND CREDITED IN THE ACCOUNTS OF THE ASSESSEE; IT IS THE ASSESSEE WHO HAS TO PROVE THAT IDENTITY, SOURCE AND CREDITWORTHINESS OF SUCH PERSONS/PARTIES/DEPOSITORS. IN ALL THE DECISION CITED BY THE APPELLANT THE HON'BLE COU RTS HAVE HELD THAT THE APPELLANT HAS TO PROVE THE IDENTITY, SOURCE AND CREDITWORTHINESS OF SUCH PERSONS/PARTIES/DEPOSITORS. IN VIEW OF THE ABOVEMENTIONED FACTS, IT BECOMES CLEAR THAT APPELLANT INTRODUCED ITS, OWN AND ACCOUNTED INCOME IN THE GARB OF SHARE PREMIUM APPLI CATION. THE INITIAL SOURCE OF FUNDS IN THE CASE OF ALL ALLOTTEE PERSONS REMAINS UNEXPLAINE D. ALLOTMENT OF SHARES BY APPELLANT AT THE HUGE PREMIUM PROVES INVOLVEMENT OF THE APPELLANT. A LL THESE FACTS TAKING IN TOTALITY DO NOT LEAVE AN IOTA OF DOUBT THAT THE TRANSACTIONS ARE BO GUS. THE ASSESSING OFFICER HAS DULY DISCHARGED HIS BURDEN IN THIS CASE BY POINTING ALL VARIOUS CONTRADICTIONS IN THE CLAIM OF APPELLANT WHILE APPELLANT HAS MISERABLY FAILED TO D ISCHARGE HIS BURDEN TO PROVE GENUINENESS OF THESE TRANSACTIONS 2.7. THE ISSUE REGARDING ENTRY (IN RESPECT OF SHARE APPLICATION MONEY HAS BEEN EXAMINED IN DETAIL BY HON'BLE HIGH COURT OF DELHI IN ONE OF ITS LEADING JUDGEMENT IN THE CASE OF CIT V/S NOVA PROMOTERS FIN LEASE PRIVATE LIMITED IN 18 TAXM ANN.COM 217 DELHI. IN THIS CASE THE HON'BLE HIGH COURT HAS CONSIDERED VARIOUS CASE LAWS ON THE ISSUE AND HELD THAT WHERE MODUS OPERANDI OF ENTRY OPERATORS TAKING CASH FROM ASSESSEE COMPANY AND THEN PROVIDING SHARE APPLICATION MONEY THROUGH CHEQUES FROM VARIOU S COMPANIES TO ASSESSEE COMPANY HAS BEEN UNEARTHED. THE FACT THAT THESE MONIES WERE REC EIVED THROUGH BANKING CHANNELS OR THAT COMPANIES EXISTED IN THE ROC'S REGISTER DO NOT MEET THE BURDEN OF PROOF UNDER SECTION 68 OF THE I. T. ACT. THE EVIDENCE ADDUCED BY THE ASSESSEE HAS TO BE EXAMINED AND NOT SUPERFICIALLY BUT IN DEPTH AND HAVING REGARD TO THE TEST OF HUMAN PROBABILITIES AND NORMAL COURSE OF HUMAN CONDUCT. THE AFFIDAVITS SUBMITTED BY THE ASSE SSEE NEED NOT BE ACCEPTED AS A RELIABLE WHEN THERE IS ENOUGH MATERIAL ON RECORD TO DOUBT TH E VERACITY OF THE TRANSACTION. IN SUCH A CASE IT CANNOT SAID THAT THE AFFIDAVITS CAN BE REJE CTED ONLY AFTER CROSS VERIFICATION. 10. BEING AGGRIEVED THE ORDER OF THE LEARNED CIT (A ), THE ASSESSEE IS IN APPEAL BEFORE US. 11. THE LEARNED AR BEFORE US FILED A PAPER BOOK RUN NING FROM PAGES 1 TO 57 OF THE PAPER BOOK AND SUBMITTED THAT ALL THE DET AILS IN SUPPORT OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE IN THE Y EAR UNDER CONSIDERATION WAS FILED BEFORE THE AO AS WELL AS BEFORE THE LEARN ED CIT (A) IN THEIR RESPECTIVE PROCEEDINGS. THERE WAS NO DOUBT ON THE G ENUINENESS OF THE DETAILS FILED BY IT DURING THE RESPECTIVE PROCEEDINGS. HOWE VER, THESE DETAILS WERE REJECTED BY THE AUTHORITIES BELOW WITHOUT ANY PROPE R VERIFICATION. 12. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THA T ALL THE NECESSARY DETAILS FILED BY THE ASSESSEE NEED TO BE VERIFIED B Y THE AO. ACCORDINGLY THE 5 ITA NO. 961/AHD/2016 AY: 2012-13 MATTER SHOULD BE SET ASIDE TO THE FILE OF THE AO FO R NECESSARY VERIFICATION. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AU THORITIES BELOW. 13. THE LEARNED AR IN HIS REJOINDER SUBMITTED THAT THE REVENUE SHOULD NOT BE GIVEN A FRESH INNINGS BY PROVIDING ANOTHER OPPOR TUNITY. THE LEARNED AR OPPOSED TO SET ASIDE THE PROCEEDINGS TO THE FILE OF THE AO. 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE DISPUTE IN THE I NSTANT CASE RELATES TO THE SHARE CAPITAL RECEIVED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION FROM CERTAIN PARTIES AMOUNTING TO RS. 70,00,000/-WHICH W AS TREATED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE INITIA L ONUS IS UPON THE ASSESSEE TO ESTABLISH THREE THINGS NECESSARY TO OBVIATE THE MIS CHIEF OF SECTION 68 OF THE ACT. THESE ARE: (I) IDENTITY OF THE INVESTORS; (II) THEIR CREDITWORTHINESS/INVESTMENTS; AND (III) GENUINENESS OF THE TRANSACTION. 15. THE DEPARTMENTS EXERCISE STARTS ONLY WHEN THESE THREE INGREDIENTS ARE ESTABLISHED PRIMA FACIE, BY THE ASSESSEE AND THE DE PARTMENT IS REQUIRED TO INVESTIGATE INTO THE FACTS PRESENTED BY THE ASSESSE E.AS PER THE STATUTORY PROVISION OF SECTION 68 OF THE ACT AND JURISPRUDENC E OF THE HON'BLE COURT, IT IS CLEAR THAT PRIMARILY THE ONUS IS ON THE ASSESSEE TO DISCHARGE THAT THE CREDIT RECEIVED BY IT IS FROM THE SOURCES WHOSE IDENTITY C AN BE PROVED, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHI NESS OF THE CREDITOR IS PROVED BY DOCUMENTARY EVIDENCE. IF THE ASSESSEE PRE SENTS ALL THESE DETAILS DURING THE ASSESSMENT PROCEEDING BEFORE THE AO, THE RESPONSIBILITY SHIFTS TO 6 ITA NO. 961/AHD/2016 AY: 2012-13 THE AO TO PROVE IT WRONG. IF AO ACCEPTS SUCH EVIDEN CES WITHOUT PROVING IT WRONG, IT CAN BE SAID THAT ASSESSEE HAS DISCHARGED HIS ONUS. IF AO PRESENTS SOME CONTRARY EVIDENCES, THE RESPONSIBILITY AGAIN S HIFTS UPON THE ASSESSEE TO REBUT SUCH CONTRARY EVIDENCES. 15.1 ADMITTEDLY, IN THE CASE ON HAND, THE ASSESSEE HAS DISCHARGED ITS ONUS BY FURNISHING THE NECESSARY DETAILS SUCH AS COPY OF PA N, DRIVING LICENSE, ITR, CONFIRMATION OF THE PARTIES ETC. IN SUPPORT OF IDEN TITY OF THE PARTIES. THESE DETAILS OF THE PARTIES ARE AVAILABLE ON PAGES 11 TO 79 OF THE PAPER BOOK. SIMILARLY, THERE IS ALSO NO DISPUTE TO THE FACT THA T ALL THE TRANSACTIONS WERE CARRIED OUT THROUGH THE BANKING CHANNEL. WHAT IS TH E INFERENCE THAT FLOWS FROM A CUMULATIVE CONSIDERATION OF ALL THE AFORESAID CON TENDING FACTSIS THAT THE ASSESSEE HAS DISCHARGED ITS ONUS IMPOSED UNDER SECT ION 68 OF THE ACT. THE DETAILS FILED BY THE ASSESSEE WAS NOT CROSS VERIFIE D BY THE REVENUE FROM THE RESPECTIVE PARTIES DESPITE HAVING THE NECESSARY DET AILS IN ITS POSSESSION. THUS, WE ARE OF THE VIEW, REVENUE CANNOT GO TO HOLD THE A DDITION UNDER SECTION 68 OF THE ACT IN THE GIVEN FACTS AND CIRCUMSTANCES. IN HOLDING SO, WE DRAW SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HONBLE G UJARAT HIGH COURT IN THE CASE OF CIT VS. CHANAKYA DEVELOPERS REPORTED IN 43 TAXMANN.COM 91 WHEREIN IT WAS HELD AS UNDER: 9. WE ARE IN COMPLETE AGREEMENT WITH CIT (A) AND T HE TRIBUNAL BOTH, WHO HAVE CONCURRENTLY HELD THAT THE ONUS WHICH WAS REQUIRED TO BE DISCHARGED ON THE PART OF THE ASSESSEE RESPONDENT WAS DULY DONE. NOT ONLY THE IDE NTITY OF THE PERSONS CONCERNED BUT ALSO THE PAN NUMBERS WERE BEFORE THE ASSESSING OFFICER. IN THE EVENT OF ANY FURTHER INQUIRY, IT WAS OPEN TO THE ASSESSING OFFICER TO MAKE INQUIRY U NDER SECTION 133(6) OF THE ACT. ON ITS CHOOSING NOT TO EXERCISE SUCH POWERS, IT WAS ERRONE OUS ON THE PART OF THE ASSESSING OFFICER TO MAKE ADDITION OF A SUM OF RS. 23,00,000/-, DESPI TE SUCH COGENT EVIDENCES HAVING BEEN PUT-FORTH BY THE ASSESSEE. BOTH THE AUTHORITIES HAV E CONCURRENTLY HELD THE ISSUE IN FAVOUR OF THE ASSESSEE AND MOREOVER, THE ENTIRE ISSUE IS ESSE NTIALLY IN THE REALM OF FACTS. NO QUESTION OF LAW, THEREFORE, ARISES AND HENCE THIS ISSUE DESE RVES NO FURTHER CONSIDERATION. 7 ITA NO. 961/AHD/2016 AY: 2012-13 15.2 IN CIT V. ORISSA CORP. (P.) LTD. [1986] 159 IT R 78/25 TAXMAN 80 (SC), THE SUPREME COURT HELD THAT WHERE THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS AND IT WAS IN TH E KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEE. T HE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTANCE O F THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER AND DID NOT EXAMINE THE S OURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CRE DIT-WORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. IT WAS FURTHER HELD THAT THERE WAS NO EFFORT MADE TO PURSUE THE SO CALLED ALLEGED CREDITO RS AND IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANYTHINGFU RTHER. THE FINDINGS AND CONCLUSION OF THE TRIBUNAL WERE UPHELD THAT THE ASS ESSEE HAD DISCHARGED THE BURDEN THAT LAY ON HIM. 15.3 IN DEPUTY CIT V. ROHINI BUILDERS [2002] 256 IT R 360/[2003] 127 TAXMAN 523 (GUJ.), THE HIGH COURT RELYING ON THE JU DGMENT OF THE HON'BLE SUPREME COURT IN THE MATTER OF ORISSA CORP. (P.) LT D. (SUPRA) HELD THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAYS ON IT IN TERMS OF SECTION 68 OF THE ACT BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIR NUMBERS/PERMANENT ACCOUNTS NUMBERS A ND THE COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE AND HA S ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE R ECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF T HE CREDITORS AND THE ASSESSEE IS NOT EXPECTED TO PROVE THE GENUINENESS O F THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS BECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURCE OF THE SOURCE. IT WAS HELD THAT MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDITORS COULD NOT BE SERVED OR THEY FAILED TO ATT END BEFORE THE ASSESSING 8 ITA NO. 961/AHD/2016 AY: 2012-13 OFFICER, CANNOT BE A GROUND TO TREAT THE LOANS TAKE N BY THE ASSESSEE FROM THOSE CREDITORS AS NON-GENUINE AND IN ORDER TO SUSTAIN TH E ADDITION THE REVENUE HAS TO PURSUE THE ENQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON-COMPLIANCE OF SUMMONS ISSUED BY THE ASSESSING O FFICER UNDER SECTION 131, BY THE ALLEGED CREDITORS WILL NOT BE SUFFICIEN T TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE. 16. FROM THE ABOVE IT IS INFERRED THAT THE PRINCIPL E, WHICH IS MADE APPLICABLE TO ADDITION UNDER SECTION 68 OF THE ACT IS THAT THE INITIAL ONUS IN ON THE ASSESSEE TO DISCHARGE BY PRODUCING THE EVIDENCE WHICH IS REQUIRED OF HIM AND ONCE THE ASSESSEE PRODUCES THE EVIDENCE WHICH I S IN HIS POWER AND POSSESSION AND WHICH EVIDENCE PRIMA FACIE PROVES TH E - (I) IDENTITY OF THE CREDITOR; (II) THE CAPACITY/CREDITWORTHINESS OF THE CREDITOR TO ADVANCE THE MONEY; AND (III) THE GENUINENESS OF THE TRANSACTION , THE ONUS SHIFTS TO THE ASSESSING OFFICER TO MAKE FURTHER INQUIRIES. THE AS SESSING OFFICER CANNOT PERFUNCTORILY REJECT THE EVIDENCE PRODUCED AND HAS TO STATE COGENT REASONS FOR SUCH REJECTION. 17. ADMITTEDLY, THE ASSESSEE FILED PART OF THE DOCU MENTS DURING ASSESSMENT PROCEEDINGS AND PART OF THE DOCUMENTS DURING APPELL ATE PROCEEDINGS IN SUPPORT OF SHARE CAPITAL RECEIVED BY IT IN THE YEAR UNDER C ONSIDERATION. BUT UNDISPUTEDLY, NEITHER THE AO NOR THE LEARNEDCIT(A) CARRIED OUT ANY VERIFICATION FROM THE RESPECTIVE PARTIES DESPITE HA VING ALL THE NECESSARY DETAILS IN THEIR POSSESSION. THE QUESTION ARISES WHETHER TH E MATTER NEEDS TO BE SET ASIDE TO THE AO FOR FRESH VERIFICATION AND ADJUDICA TION, AS REQUESTED BY THE LEARNED DR FOR THE REVENUE, AS THE ASSESSEE HAS FIL ED THE NECESSARY 9 ITA NO. 961/AHD/2016 AY: 2012-13 DOCUMENTS BEFORE THE LEARNED CIT(A). TO OUR MIND, T HE ASSESSEE CANNOT BE PENALIZED FOR THE INACTION OF THE REVENUE. 18. THE LEARNED CIT (A) POSSESSES COTERMINOUS POWER WITH THAT OF THE INCOME TAX OFFICER. THE LEARNED CIT (A) CAN DO WHAT THE INCOME TAX OFFICER CAN DO AND ALSO DIRECT AO TO DO WHAT HE/SHE FAILED TO DO. THUS, THE LEARNED CIT-A NEITHER CALLED ANY REMAND REPORT FROM THE AO ON THE ADDITIONAL DOCUMENTS FILED BY THE ASSESSEE NOR COND UCTED ANY ENQUIRY ON SUCH ADDITIONAL DOCUMENTS BUT REJECTED THE SAME WITHOUT POINTING OUT ANY DEFECT THEREIN. AS SUCH, THE LEARNED CIT (A) AND THE AO AS SUMED THAT THE INCOME DECLARED BY THE SHAREHOLDERS IN THEIR RESPECTIVE RE TURNS IS NOT COMMENSURATE TO THE INVESTMENTS MADE BY THEM IN THE ASSESSEE COMPAN Y. APPARENTLY, THE INFERENCE OF THE AUTHORITIES BELOW APPEARS TO BE CO RRECT, BUT TO OUR MIND THAT IS NOT SUFFICIENT TO HOLD THAT THE PARTIES DO NOT HAVE SUFFICIENT CREDITWORTHINESS FOR MAKING SUCH INVESTMENTS IN THE ASSESSEE COMPANY . AS SUCH, IT IS A MATTER OF VERIFICATION WHICH HAS NOT BEEN DONE. 19. WE ALSO NOTE THAT THE ITAT IN THE OWN CASE OF T HE ASSESSEE INVOLVING IDENTICAL FACTS AND CIRCUMSTANCES IN ITA NO. 3619/A HD/2015 FOR THE ASSESSMENT YEAR 2011-12 VIDE ORDER DATED 1 ST MARCH 2018 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT EXTRA CT OF THE ORDER IS REPRODUCED AS UNDER: 8. A PERUSAL OF THE SECTION WOULD INDICATE THAT BA SICALLY THIS SECTION CONTEMPLATES THREE CONDITIONS REQUIRED TO BE FULFILLED BY AN ASSESSEE. IN OTHER WORDS, THE ASSESSEE IS REQUIRED TO GIVE EXPLANATION WHICH WILL EXHIBIT NATURE OF TRANS ACTION AND ALSO EXPLAIN THE SOURCE OF SUCH CREDIT. THE EXPLANATION SHOULD BE TO THE SATIS FACTION OF THE AO. IN ORDER TO GIVE SUCH TYPE OF EXPLANATION WHICH COULD SATISFY THE AO, THE ASSESSEE SHOULD FULFILL THREE INGREDIENTS VIZ. (A) IDENTITY OF THE SHARE APPLICANTS, (B) GENU INENESS OF THE TRANSACTION, AND (C) CREDIT- WORTHINESS OF SHARE APPLICANTS. AS FAR AS CONSTRUCT ION OF SECTION 68 AND TO UNDERSTAND ITS MEANING IS CONCERNED, THERE IS NO MUCH DIFFICULTY. DIFFICULTY ARISES WHEN WE APPLY THE CONDITIONS FORMULATED IN THIS SECTION ON THE GIVEN FACTS AND CIRCUMSTANCES. IN OTHER WORDS, IT HAS BEEN PROPOUNDED IN VARIOUS DECISIONS THAT SE CTION 68 CONTEMPLATES THAT THERE SHOULD 10 ITA NO. 961/AHD/2016 AY: 2012-13 BE A CREDIT OF AMOUNTS IN THE BOOKS OF AN ASSESSEE MAINTAINED BY THE ASSESSEE, (B) SUCH AMOUNT HAS TO BE A SUM RECEIVED DURING THE PREVIOUS YEAR, (C) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CRE DIT FOUND IN THE BOOKS, OR (D) THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY. THE HONBLE DELHI HIGH COURT IN THE C ASE OF CIT V. NOVADAYA CASTLES (P.) LTD. 367 ITR 306 HAS CONSIDERED A LARGE NUMBER OF DECISI ONS INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD [ 1971] 82 ITR 540 (SC). ACCORDING TO THE HONBLE DELHI HIGH COURT BASICALLY THERE ARE TW O SETS OF JUDGMENTS. IN ONE SET OF CASE, THE ASSESSEE PRODUCED NECESSARY DOCUMENTS/EVIDENCE TO SHOW AND ESTABLISH IDENTITY OF THE SHARE-HOLDER AND BANK ACCOUNT FROM WHICH PAYMENT WA S MADE. THE FACT THAT PAYMENT WAS RECEIVED THROUGH BANK CHANNELS, FILED NECESSARY AFF IDAVIT OF THE SHAREHOLDERS OR CONFIRMATIONS OF THE DIRECTORS OF THE SHAREHOLDER C OMPANY. BUT THEREAFTER NO FURTHER INQUIRY WAS MADE BY THE AO. THE SECOND SET OF CASES ARE THO SE WHERE THERE WAS EVIDENCE AND MATERIAL TO SHOW THAT THE SHAREHOLDER COMPANY WAS O NLY A PAPER COMPANY HAVING NO SOURCE OF INCOME, BUT HAD MADE SUBSTANTIAL AND HUGE INVESTMENTS IN THE FORM OF SHARE APPLICATION MONEY. THE ASSESSING OFFICER HAS REFERR ED TO THE BANK STATEMENT, FINANCIAL POSITION OF THE RECIPIENT AND BENEFICIARY ASSESSEE AND SURROUNDING CIRCUMSTANCES. 9. LET US TAKE INTO CONSIDERATION OBSERVATIONS MADE BY THE HONBLE DELHI HIGH COURT IN THE CASE OF SOFTLINE CREATIONS P.LTD. (SUPRA) WHILE TAK ING NOTE OF JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. FAIR FINVEST LTD. , 357 ITR 146 (DELHI). HONBLE DELHI HIGH COURT MADE FOLLOWING OBSERVATIONS: .. THIS COURT HAS CONSIDERED THE CONCURRENT ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AS WELL AS THE INCOME-TAX APPE LLATE TRIBUNAL. BOTH THESE AUTHORITIES PRIMARILY WENT BY THE FACT THAT THE ASS ESSEE HAD PROVIDED SUFFICIENT INDICATION BY WAY OF PERMANENT ACCOUNT NUMBERS, TO HIGHLIGHT THE IDENTITY OF THE SHARE APPLICANTS, AS WELL AS PRODUCED THE AFFIDAVIT S OF THE DIRECTORS. FURTHERMORE, THE BANK DETAILS OF THE SHARE APPLICANTS TOO HAD BE EN PROVIDED. IN THE CIRCUMSTANCES, IT WAS HELD THAT THE ASSESSEE HAD ES TABLISHED THE IDENTITY OF THE SHARE APPLICANTS, THE GENUINENESS OF TRANSACTIONS AND THE IR CREDITWORTHINESS; THE ASSESSING OFFICER CHOSE TO PROCEED NO FURTHER BUT M ERELY ADDED THE AMOUNTS BECAUSE OF THE ABSENCE OF THE DIRECTORS TO PHYSICAL LY PRESENT THEMSELVES BEFORE HIM. THE INCOME-TAX APPELLATE TRIBUNAL HAS RELIED UPON A DECISION OF THIS COURT IN CIT V. FAIR FINVEST LTD. [2013] 357 ITR 146 (DEL HI), WHERE IN SOMEWHAT SIMILAR CIRCUMSTANCES, IT WAS STATED AS FOLLOWS (PAGE 152) 'THIS COURT HAS CONSIDERED THE SUBMISSIONS OF THE PARTIES. IN THIS CASE THE DISCUSSION BY THE COMMISSIONER OF INCOME-TAX (APPEA LS) WOULD REVEAL THAT THE ASSESSEE HAS FILED DOCUMENTS INCLUDING CERTIFIED CO PIES ISSUED BY THE REGISTRAR OF COMPANIES IN RELATION TO THE SHARE APPLICATION, AFF IDAVITS OF THE DIRECTORS, FORM 2 FILED WITH THE REGISTRAR OF COMPANIES BY SUCH APPLI CANTS CONFIRMATIONS BY THE APPLICANT FOR COMPANY'S SHARES, CERTIFICATES BY AUD ITORS ETC. UNFORTUNATELY, THE ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON T HE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF THE INVESTIGATION REPORT AND THE STATEMENT OF MR. MAHESH GARG. TO ELEVATE THE INFERENCE WHICH CAN BE DRAWN O N THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CONCLUSIONS WOULD BE IMPROPE R, MORE SO WHEN THE ASSESSEE PRODUCED MATERIAL. THE LEAST THAT THE ASSESSING OFF ICER OUGHT TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY, IF NECESSARY, INVOKING HIS POWERS UNDER SECTION 131 SUMMONING THE SHARE APPLICANTS OR DIRECTORS. NO EFF ORT WAS MADE IN THAT REGARD. IN 11 ITA NO. 961/AHD/2016 AY: 2012-13 THE ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL D ISCLOSED WAS UNTRUSTWORTHY OR LACKED CREDIBILITY THE ASSESSING OFFICER MERELY CON CLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COLLECTED CERTAIN FACTS AND THE STATE MENTS OF MR. MAHESH GARG THAT THE INCOME SOUGHT TO BE ADDED FELL WITHIN THE DESCR IPTION OF SECTION 68. HAVING REGARD TO THE ENTIRETY OF FACTS AND CIRCUMST ANCES, THE COURT IS SATISFIED THAT THE FINDING OF THE TRIBUNAL IN THIS CASE ACCORDS WI TH THE RATIO OF THE DECISION OF THE SUPREME COURT IN LOVELY EXPORTS (SUPRA) 10. WE ALSO DEEM IT APPROPRIATE TO TAKE NOTE OF SOM E OF OBSERVATIONS OF THE HONBLE DELHI HIGH COURT FROM THE DECISION OF FAIR FINVEST LTD. ( SUPRA). THE HONBLE COURT HAS NOTICED PROPOSITION LAID DOWN BY THE HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS. VICTOR ELECTRODES LTD., 329 ITR 271 (DELHI) REGARDING NON- PRODUCTION OF SHARE APPLICANTS BEFORE THE AO. THE FOLLOWING OBSERVATIONS ARE WORTH TO NOT E IN THIS CONNECTION THE OBSERVATION OF THE JURISDI CTIONAL HIGH COURT IN CASE OF DWARKADHISH INVESTMENT (SUPRA) ARE QUITE RELEVANT W HERE THE COURT HAS OBSERVED THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. FURTHER IN THE CASE OF CIT VS. VICTOR ELECTRODES LT D. 329 ITR 271 IT HAS BEEN HELD THAT THERE IS NO LEGAL OBLIGATION ON THE ASSESSEE T O PRODUCE SOME DIRECTOR OR OTHER REPRESENTATIVE OF THE DIRECTOR OR OTHER REPRESENTAT IVE OF THE APPLICANT COMPANIES BEFORE THE A.O. THEREFORE FAILURE ON PART OF THE AS SESSEE TO PRODUCE THE DIRECTORS OF THE SHARE APPLICANT COMPANIES COULD NOT BY ITSELF H AVE JUSTIFIED THE ADDITIONS MADE BY THE AO PARTICULARLY WHEN THE SEVEN SHARE APPLICA NT COMPANIES THROUGH THEIR PRESENT DIRECTORS HAVE NOW AGAIN FILED FRESH AFFIDA VITS CONFIRMING THE APPLICATION AND ALLOTMENT OF SHARES WITH RESPECT TO THE TOTAL A MOUNT OF RS.45 LACS. IT IS OBSERVED THAT NO ATTEMPT WAS MADE BY THE AO TO SUMM ON THE DIRECTORS OF THE SHARE APPLICANT COMPANIES. MOREOVER, IT IS SETTLED LAW TH AT THE ASSESSEE NEED NOT PROVE THE 'SOURCE OF SOURCE'. ACCORDINGLY IT WAS INCUMBEN T UPON THE DEPARTMENT TO HAVE ENFORCED ATTENDANCE OF SHRI MAHESH GARG OR THE ERST WHILE DIRECTORS OF THE SHARE APPLICANT COMPANIES AND CONFRONTED THEM WITH THE EV IDENCES & AFFIDAVITS RELIED UPON BY THE APPELLANT AND THEREUPON GIVEN OPPORTUNI TY TO THE ASSESSEE TO CROSS EXAMINE THESE APPLICANTS. 11. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE F ACTS OF THE PRESENT CASE. A NOTICE UNDER SECTION 143(2) PROVIDING AN OPPORTUNITY TO MAKE SUB MISSION IN SUPPORT OF RETURN OF INCOME WAS SERVED UPON THE ASSESSEE ON 28.9.2012. THEREAFT ER QUESTIONNAIRE UNDER SECTION 142(1) WAS ISSUED ON 26.12.2012. THE AO HAS PASSED ASSESSM ENT ORDER ON 21.2.104. HE EXPECTED THE ASSESSEE TO PRODUCE DEPOSITORS ON 14.2.2014 JUS T IN A FEW DAYS BEFORE FINALIZATION OF THE ASSESSMENT ORDER. THE HONBLE DELHI HIGH COURT IN A LL THESE CASES HAVE PROPOUNDED THAT IF THE ASSESSEE HAS DISCHARGED PRIMARY ONUS BY SUBMITT ING CONFIRMATION, BANK STATEMENTS, COPIES OF INCOME-TAX RETURNS, PAN DATA THEN IT WOUL D BE CONSTRUED THAT THE ASSESSEE HAS DISCHARGED PRIMARY ONUS PUT UPON IT BY VIRTUE OF SE CTION 68. IT IS THE AO WHO HAS TO CARRY OUT INVESTIGATION AND DEMONSTRATE THAT THESE MATERI ALS ARE NOT SUFFICIENT FOR DISCHARGING THE ONUS CAST UPON ASSESSEE BY SECTION 68. NO SUCH STEP S HAVE BEEN TAKEN BY THE AO. HE SIMPLY ASSUMED THAT SINCE THE ASSESSEE WAS DIRECTED TO PRO DUCE APPLICANTS AND IT FAILED TO PRODUCE, THEREFORE, EVERYTHING IS TO BE CONSTRUED AS MANIPUL ATED. THE HONBLE DELHI HIGH COURT DID NOT APPROVE SUCH STEPS AT END OF THE ASSESSEE. WE A LSO MAKE REFERENCE TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. GOE L SONS GOLDEN ESTATE PVT. LTD., RENDERED IN TAX APPEAL NO.212 OF 2012 DATED 11.4.20 12. IT IS ALSO PERTINENT TO OBSERVE THAT SHARE APPLICANTS IN THE PRESENT CASE ARE INDIVIDUAL S FROM SURROUNDING AREAS. THEY ARE NOT 12 ITA NO. 961/AHD/2016 AY: 2012-13 SHELL-COMPANIES FROM KOLKATTA, WHO ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIES. TAKING INTO CONSIDERATION ALL THESE FACTS, WE ARE O F THE VIEW THAT THE AO FAILED TO CARRY OUT ANY INQUIRY FOR FALSIFYING EVIDENCE SUBMITTED BY TH E ASSESSEE IN SUPPORT OF ITS EXPLANATION. THEREFORE, WE ALLOW THIS GROUND OF APPEAL AND DELET E THE ADDITION OF RS.35,00,000/-. 19.1 IN VIEW OF THE ABOVE, WE ARE NOT IMPRESSED WIT H THE FINDING OF THE AUTHORITIES BELOW. ACCORDINGLY, WE SET ASIDE THE FI NDING OF THE LEARNED CIT (A) AND DIRECT THE AO TO DELETE THE ADDITION MADE B Y HIM. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 20. THE SECOND ISSUE RAISED BY THE ASSESSEE IN GROU ND NOS. 7 & 8 IS EITHER CONSEQUENTIAL OR GENERAL IN NATURE. THEREFORE, WE D ISMISS THE SAME AS INFRUCTUOUS. 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 26 TH OCTOBER,2020 AT AHMEDABAD. SD/- SD/- (MAHAVIR PRASAD) JUDICIAL MEMBER ( WASEEM AHMED ) ACCOUNTANT MEMBER (TRUE COPY) AHMEDABAD; DATED 26/10/2020 TANMAY, SR. PS TRUE COPY