M/s. Max Movers Pvt. Ltd., , Kolkata V. DCIT, Central Circle - 4(3), Kolkata

ITSSA 101/KOL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0798 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 14-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJOY KUMAR SINGH
• Keywords: Unexplained cash credit; Bogus Share capital; Gift; Search and seizure; Document seized; Share purchase agreement; Principle of natural justice; Question of law; Accommodation entries; Onus to prove; Documents seized; Reassessment proceedings
• Section: 143(3); 92A; 153A; 133(6); 131; 68; 56; 132

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER IT (SS) A NO. 99 - 101 / KOL / 20 18 ASSESSMENT YEARS :2010-11 TO 2012-13 M/S MAX MOVERS PVT. LTD., ROOM NO. 206, 2 ND FLOOR, CENTRE POINT, 21, HEMANT BASU SARANI, KOLKATA-700001 [ PAN NO.AAFCM 6575 N ] V/S . DCIT, CENTRAL CIRCLE- 4(3), KOLKATA /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI MAHAVIR ATAL, FCA /BY REVENUE SHRI AJOY KUMAR SINGH, CIT-DR /DATE OF HEARING 26-11-2018 /DATE OF PRONOUNCEMENT 30-11-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE THREE ASSESSEES APPEAL(S) FOR ASSESSMENT YEA RS 2010-11, 2011- 12 &2012-13 ARISE FROM THE COMMISSIONER OF INCOME T AX (APPEALS)- 21,KOLKATAS SEPARATE ORDERS; ALL DATED 27.07.2018 PASSED IN CASE NO.10658, 10686 &10706/DCIT,CC-4(3)/CIT(A)-21/KOL/2017-18, UP HOLDING THE ASSESSING OFFICERS ACTION BOTH IN INVOLVING SEC. 1 53A PROCEEDINGS AS WELL AS ADDITION UNEXPLAINED SHARE CAPITAL / PREMIUM OF 25 LAC, 57 LAC AND 70 LAC (ASSESSMENT YEAR-WISE); RESPECTIVELY, TO BE BOGUS L ACKING GENUINENESS / CREDITWORTHINESS, IN PROCEEDINGS U/S. 153A R.W.S.14 3(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 2 2. IT EMERGES FROM A COMBINED PERUSAL OF ALL THESE THREE CASES THAT THE ASSESSEE HAS RAISED IDENTICAL TWIN SUBSTANTIVE GROU ND THEREIN. ITS FORMER GRIEVANCE IS THAT BOTH THE LOWER AUTHORITIES HAVE E RRED IN LAW AS WELL AS ON FACTS IN INITIATING SEC. 153A PROCEEDINGS IN ABSENC E OF ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARC H. THIS FOLLOWS ITS CHALLENGE TO CORRECTNESS OF THE IMPUGNED SEC. 68 ADDITION ON THE THREE FOLDED FACETS OF IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE I NVESTOR PARTIES. 3. THE CIT(A)S IDENTICAL FINDINGS IN ALL THREE AS SESSMENT YEARS(S) UNDER CHALLENGE READ AS FOLLOWS:- 05. FINDINGS & DECISION: 1. I HAVE CAREFULLY CONSIDERED THE ACTION OF THE LD . AO IN MAKING AN ADDITION OF RS.2S,00,000/-, AS UNEXPLAINED CREDIT UJS 68 OF THE INCOME TAX ACT, 1961. AFTER AN EXHAUSTIVE DISCUSSION AND ELABORATING THE FACTUAL A ND LEGAL MATRIX, I FIND THAT THE LD. AO HAS HELD THAT THE CLAIM OF THE APPELLANT OF HAVI NG RAISED SHARE APPLICATION MONIES WAS TO BE DENIED TO THE ASSESSEE-COMPANY, AND WAS T O BE ASSESSED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I T ACT. THE LD. AO HAS P LACED ON RECORD THE ENTIRE GAMUT OF FINDINGS, AND THERE IS, IN MY CONSIDERED VIEW NO FU RTHER REQUIREMENT FOR ELABORATION FROM THIS FORUM. IN MY VIEW OF THE FACTS THERE ARE ELABORATE AND DIRECT EVIDENCE TO CLEARLY INDICATE THAT THAT THE ENTIRE TRANSACTIONS UNDERTAKEN BY THE APPELLANT WERE MERELY ACCOMMODATION ENTRIES TAKEN FOR THE PURPOSE OF FIVING A LEGAL FACADE TO THE MONEYS WHICH WERE ENTERING THE APPELLANT'S BOOKS OF ACCOUNTS IN THE GRAB OF SHARE APPLICATION MONEY. I ALSO AGREE WITH THE LD. AA THA T THE FINDINGS OF THE ASSESSMENT WERE BASED ON INCRIMINATING DOCUMENTS AS THE ENTIRE MODUS OPERANDI OF THE ACTIVITIES OF THE ASSESSEE- COMPANY WAS LOCATED ON THE BASIS O F THE SEARCH ACTION, AND THEREFORE THE FINDINGS OF THE LD. AO ARE ALSO BASED ON INCRIMINATING DETAILS FOUND DURING THE COURSE OF THE SEARCH OPERATION. THEREFOR E NONE OF THE JUDICIAL PRECEDENTS RELIED UPON BY THE APPELLANT IN SO FAR AS STATING T HAT NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF THE SEARCH TO WARRANT AN Y ADDITIONS COME TO THE ASSISTANCE OF THE APPELLANT. THESE ARGUMENTS ARE AC CORDINGLY REJECTED. 2. THE LD. AO HAS MADE NECESSARY ATTEMPTS AT ENQUIR Y, AND THERE HAS BEEN CONTINUOUS NON- COMPLIANCE EVEN TO SUMMONS BY THE S HARE APPLICANTS. THE APPELLANT-COMPANY HAS FAILED TO DISCHARGE ITS ONUS AND HAS NOT PRODUCED THE APPLICANTS WHO WERE WELL KNOWN TO IT. I FIND THAT T HE BURDEN HAS NOT BEEN DISCHARGED BY THE APPELLANT. 3. I FIND THAT IN SIMILAR CIRCUMSTANCES, WHEN THE L D AO HAS CONDUCTED PROPER ENQUIRIES OR ATTEMPTED TO DO SO, AS IN THE CASE AT HAND, AND THEN MADE THE ADDITIONS, MERELY BECAUSE THE AMOUNTS OF SHARE APPLICATION / S HARE PREMIUM MONEY HAS BEEN ROUTED THROUGH BANKS, THE ASSESSEE COULD NOT HAVE B EEN SAID TO HAVE DISCHARGED THE ONUS CAST UPON HIM IN THE SURROUNDING CIRCUMSTANCES OF THE CASE. SUCH RATIO EMANATES FROM THE DECISION OF THE HON'BLE HIGH COUR TS OF DELHI IN THE CASE OF CIT VS ULTRA MODERN EXPORTS (P) LTD REPORTED IN [2013] 40 TAXMANN.COM 458 (DELHI). THE HEAD NOTES IN THE SAID CASE ARE AS UNDER: IT: WHERE IN ORDER TO ASCERTAIN GENUINENESS OF ASSE SSEE'S CLAIM RELATING TO RECEIPT OF SHARE APPLICATION MONEY, ASSESSING OFFIC ER SENT NOTICES TO SHARE APPLICANTS WHICH RETURNED UNSERVED, HOWEVER, ASSESS EE STILL MANAGED TO SECURE DOCUMENTS SUCH AS THEIR INCOME TAX RETURNS A S WELL AS BANK ACCOUNT IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 3 PARTICULARS, IN SUCH CIRCUMSTANCES, ASSESSING OFFIC ER WAS JUSTIFIED IN DRAWING ADVERSE INFERENCE AND ADDING AMOUNT IN QUESTION TO ASSESSEE'S TAXABLE INCOME UNDER SECTION 68 [2013] 40 TAXMANN.COM 458 (DELHI) HIGH COURT OF DEL HI COMMISSIONER OF INCOME-TAX V. ULTRA MODERN EXPORTS (P.) LTD.* S. RAVINDRA BHAT AND R.V. EASWAR, JJ. IT APPEAL NO. 262 OF 20121 DECEMBER 11, 2012 SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDI TS [SHARE APPLICATION MONEY] - ASSESSMENT YEAR 2007-08 - IN COURSE OF ASSESSMENT, ASSESSING OFFICER NOTICED THAT ASSESSEE RECEIVED SHARE APPLICATION MONEY FROM NINE APPLICANTS - UPON ENQUIRY, FIVE OUT OF NINE NOTICES ISSUED TO SHARE APPLICANTS UNDE R SECTION 133(6) WERE RETURNED UNSERVED - FURTHERMORE, MATERIALS ON RECORD IN FORM OF RETURNS OF INCOME OF SHARE APPLICANTS FURNISHED BY ASSESSEE DISCLOSED THAT APP LICANTS HAD VERY MERGER INCOME - IN SUCH CIRCUMSTANCES, ASSESSING OFFICER ADDED AMOU NT OF SHARE APPLICATION MONEY TO ASSESSEE'S TAXABLE INCOME UNDER SECTION 68 - COM MISSIONER (APPEALS) AS WELL AS TRIBUNAL TOOK A VIEW THAT DOCUMENTARY EVIDENCE FURN ISHED BY ASSESSEE SUCH AS PAN NUMBERS, DETAILED PARTICULARS OF ADDRESSES, AUDITED ACCOUNTS AND BANK STATEMENTS OF SHARE APPLICANTS ETC., SUFFICIENTLY PROVED IDENTITY AND CREDITWORTHINESS OF SHARE APPLICANTS - ACCORDINGLY, ADDITION MADE BY ASSESSIN G OFFICER WAS DELETED - WHETHER INFORMATION THAT ASSESSEE FURNISHES WOULD HAVE TO B E CREDIBLE AND AT SAME TIME VERIFIABLE - HELD, YES - WHETHER IN VIEW OF FACT TH AT NOTICES TO FIVE SHARE APPLICANTS RETURNED UNSERVED AND STILL ASSESSEE WAS ABLE TO SE CURE DOCUMENTS SUCH AS THEIR INCOME TAX RETURNS AS WELL AS BANK ACCOUNT PARTICUL ARS, IT WOULD ITSELF GIVE RISE TO A CIRCUMSTANCE IN WHICH ASSESSING OFFICER RIGHTLY PRO CEEDED TO DRAW ADVERSE INFERENCE - HELD, YES - WHETHER, THEREFORE, COMMISSIONER (APP EALS) AND TRIBUNAL FELL INTO ERROR IN HOLDING THAT ASSESSING OFFICER COULD NOT HAVE AD DED BACK SAID AMOUNT UNDER SECTION 68 - HELD, YES [PARA 9] [IN FAVOUR OF REVEN UE] 4. I ALSO HAVE TO RECORD THAT THE FACTUAL MATRIX OF THE CASE CLEARLY POINTS OUT THAT THE CONTRIBUTIONS RECEIVED BY THE ASSESSEE-COMPANY FROM THE CONTRIBUTORS OF SHARE CAPITAL / SHARE PREMIUM WERE FROM PERSONS WHO DID N OT HAVE THE MEANS TO BE CREDITWORTHY, AND COULD NOT ESTABLISH THEIR CREDIT- WORTHINESS. IN SUCH A SITUATION, THE ASSERTIONS OF THE APPELLANT WERE TO BE DISBELIEVED, AS BROUGHT FORTH IN THE RATIO EMANATING FROM THE CASE DECIDED BY THE HON'BLE HIGH COURT OF MADRAS BY THEIR RECENT ORDER DATED 24TH APRIL, 2017, IN B R PETROCH EM (P) LTD VS ITO, WARD-L{L), CHENNAI REPORTED IN [2017] 81 TAXMANN.COM424 [MAD] . THE HEAD NOTES IN THE SAID CASE ARE AS UNDER: IT : WHERE ASSESSEE RECEIVED SHARE CAPITAL FROM VAR IOUS CONTRIBUTORS, IN VIEW OF FACT THAT THOSE CONTRIBUTORS WERE PERSONS OF INSIGNIFICA NT MEANS AND THEIR CREDITWORTHINESS TO HAVE MADE CONTRIBUTIONS HAD NOT BEEN ESTABLISHED , IMPUGNED ADDITION MADE BY AUTHORITIES BELOW IN RESPECT OF AMOUNT IN QUESTION UNDER SECTION 68 WAS TO BE CONFIRMED . [2017] 81 TAXMANN.COM 424 (MADRAS) HIGH COURT OF MA DRAS B.R. PETROCHEM (P.) LTD. V. INCOME-TAX OFFICER, WARD 1(1), CHENNAI HULUVADI G. RAMESH AND DR. ANITA SUMANTH, JJ. TAX C ASE (APPEAL) NO. 1498 OF 20071 APRIL 24, 2017 SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDI TS (SHARE APPLICATION MONEY) - ASSESSMENT YEAR 2001-02 - DURING RELEVANT YEAR, ASS ESSEE RECEIVED SHARE CAPITAL FROM VARIOUS CONTRIBUTORS - IN COURSE OF ASSESSMENT , ASSESSING OFFICER FOUND VARIOUS DISCREPANCIES IN DATES AND AMOUNTS OF CONTRIBUTIONS VIS-A-VIS STATEMENTS RECORDED FROM CONTRIBUTORS AND DETAILS FURNISHED BY ASSESSEE - IT WAS FURTHER NOTED THAT IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 4 CONTRIBUTORS TO SHARE CAPITAL WERE PERSONS OF INSIG NIFICANT MEANS AND THEIR CREDITWORTHINESS TO HAVE MADE CONTRIBUTIONS HAD NOT BEEN ESTABLISHED - ASSESSING OFFICER THUS ADDED SAID AMOUNT TO ASSESSEE'S TAXABL E INCOME - TRIBUNAL CONFIRMED ADDITION MADE BY ASSESSING OFFICER - WHETHER SINCE ASSESSEE FAILED TO ESTABLISH GENUINENESS OF CASH CONTRIBUTIONS AS WELL AS CAPACI TY OF PERSONS TO HAVE MADE SUCH CONTRIBUTIONS, IMPUGNED ORDER PASSED BY TRIBUNAL DI D NOT REQUIRE ANY INTERFERENCE - HELD, YES [PARA 16][LN FAVOUR OF REVENUE] 5. SIMILARLY, IN THE CASE OF CIT VS NIPUN BUILDERS & DEVELOPERS PVT LTD, REPORTED IN [2013] 30 TAXMANN.COM292 (DELHI) THE HON'BLE HIGH C OURT OF DELHI HAS TAKEN A VIEW THAT WHERE AN ASSESSEE HAS FAILED TO PROVE THE IDEN TITY AND CAPACITY OF THE SUBSCRIBER COMPANIES TO PAY SHARE APPLICATION MONEY, THE AMOUN T SO RECEIVED WAS LIABLE TO BE TAXED UNDER SEC 68 OF THE INCOME TAX ACT, 1961. THE RELEVANT PORTION OF THE JUDGEMENT BEING PRODUCED AS BELOW: [ QUOTE 6. THE REVENUE HAS FILED THE PRESENT APPEAL IMPUGNI NG THE AFORESAID ORDER OF THE TRIBUNAL. THE FOLLOWING SUBSTANTIAL QUESTION OF LAW IS FRAMED: 'WHETHER THE TRIBUNAL WAS RIGHT IN LAW IN UPHOLDING THE ORDER OF THE CIT (A) DELETING THE ADDITION MADE U/S. 68 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS PROVED THE NATURE AND SOURCE OF THE SHARE SUBSCRIPTION AMOUNTI NG TO RS. 1,47,00,000/- AND HAS ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF TH E SHARE SUBSCRIBERS AND THE GENUINENESS OF THE TRANSACTIONS?' THE REVENUE CONTENDS THAT THE TRIBUNAL FAILED TO AP PRECIATE THAT THE ASSESSEE COULD NOT ESTABLISH SATISFACTORILY THE NATURE AND SOURCE OF THE MONIES RECEIVED AS SHARE CAPITAL NOR COULD IT DISCHARGE THE ONUS OF PROVING THE IDENTITY AND CREDITWORTHINESS OF THE SHARE SUBSCRIBERS AND THE GENUINENESS OF THE TR ANSACTIONS WHICH ARE THE FUNDAMENTAL REQUIREMENTS OF SECTION 68. 7. WE ARE IN AGREEMENT WITH THE CONTENTION OF THE R EVENUE. UNDER SECTION 68 THE ONUS IS UPON THE ASSESSEE TO PROVE THE THREE INGRED IENTS, I.E., IDENTITY AND CREDITWORTHINESS OF THE PERSON FROM WHOM THE MONIES WERE TAKEN AND THE GENUINENESS OF THE TRANSACTION. AS TO HOW THE ONUS CAN BE DISCHARGED WOULD DEPEND ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IT IS EXPECTED OF BOTH THE SIDES - THE ASSESSEE AND THE ASSESSING AUTHORITY - TO ADOPT A R EASONABLE APPROACH. THE ASSESSEE HERE IS A PRIVATE LIMITED COMPANY. IT CANN OT ISSUE SHARES IN THE SAME MANNER IN WHICH A PUBLIC LIMITED COMPANY DOES. IT H AS TO GENERALLY DEPEND ON PERSONS KNOWN TO ITS DIRECTORS OR SHAREHOLDERS DIRE CTLY OR INDIRECTLY TO BUY ITS SHARES. ONCE THE MONIES ARE RECEIVED AND SHARES ARE ISSUED, IT IS NOT AS IF THE SHARE- SUBSCRIBERS AND THE ASSESSEE-COMPANY LOSE TOUCH WIT H EACH OTHER AND BECOME INCOMMUNICADO. CALLS DUE ON THE SHARES HAVE TO BE P AID; IF DIVIDENDS ARE DECLARED, THE WARRANTS HAVE TO BE SENT TO THE SHAREHOLDERS. I T IS A CONTINUING RELATIONSHIP, EVEN GRANTING THAT IT MAY NOT BE OF THE SAME DEGREE IN W HICH IT EXISTS BETWEEN A DEBTOR AND CREDITOR. THE SHARE-SUBSCRIBERS IN THE PRESENT CASE HAVE EACH INVESTED SUBSTANTIAL AMOUNTS IN THE ASSESSEE'S SHARES, AS TH E CHART AT PAGES 2-3 OF THE ASSESSMENT ORDER WOULD SHOW. MOST OF THEM, BARRING TWO OR THREE, ARE THEMSELVES PRIVATE LIMITED COMPANIES. IT CANNOT THEREFORE BE C ONTENDED, AS WAS CONTENDED BEFORE US ON BEHALF OF THE ASSESSEE, THAT IF THE SU MMONS ISSUED U/S. 131 TO THE SUBSCRIBING COMPANIES AT THE ADDRESSES FURNISHED BY THE ASSESSEE RETURNED UNSERVED, THE AO IS DUTY-BOUND TO ENFORCE THEIR ATT ENDANCE WITH ALL THE POWERS VESTED IN HIM. THE UNREASONABLENESS OF SUCH A GENER AL PROPOSITION IS WRIT LARGE IN THE FACE OF THE CONTENTION. THE ASSESSEE-COMPANY RE CEIVED THE SHARE MONIES; IT EVEN SAYS THAT THE COMMUNICATIONS SENT BY IT AT THE ADDRESSES DID NOT RETURN UNSERVED, YET WHEN THE AO REQUESTED IT - THAT TOO O NLY AFTER TRYING TO SERVE THE SUMMONS UNSUCCESSFULLY - TO PRODUCE THE PRINCIPAL O FFICER OF THE SUBSCRIBING COMPANIES, THE ASSESSEE DEVELOPED COLD FEET AND SAI D IT CANNOT HELP IF THOSE COMPANIES DID NOT APPEAR AND THAT IT WAS FOR THE AS SESSING OFFICER TO ENFORCE THEIR ATTENDANCE. IT NEEDS TO BE REMEMBERED THAT THE AO D ID NOT MERELY STOP WITH ISSUING IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 5 SUMMONS; HE FOLLOWED IT UP WITH A VISIT BY THE INSP ECTOR WHO CONFIRMED THAT NO SUCH COMPANIES FUNCTIONED FROM THE ADDRESSES FURNISHED B Y THE ASSESSEE. LET US SEE THE ATTITUDE OF THE ASSESSEE TOWARDS DISCHARGING ITS ON US IN SUCH CIRCUMSTANCES. IT SAYS THAT THE AO MAY GET THE ADDRESSES FROM THE ROC'S WE BSITE. WE DO NOT THINK THAT AN ASSESSEE CAN TAKE SUCH AN UNREASONABLE ATTITUDE TOW ARDS HIS ONUS U/S. 68, LITTLE REALISING THAT WHEN THE FINDING IS THAT THE SUBSCRI BING COMPANIES HAVE NOT BEEN FOUND EXISTING AT THE ADDRESSES GIVEN BY THE ASSESSEE, IT IS OPEN TO THE AD TO EVEN HOLD THAT THE IDENTITY OF THE SHARE-SUBSCRIBERS HAS NOT BEEN PROVED, LET ALONE THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSAC TIONS. IT WAS NOT OPEN TO THE ASSESSEE, GIVEN THE FACTS OF THIS CASE, TO DIRECT T HE AO TO GO TO THE WEBSITE OF THE COMPANY LAW DEPARTMENT/ROC AND SEARCH FOR THE ADDRE SSES OF THE SHARE- SUBSCRIBERS AND THEN COMMUNICATE WITH THEM FOR PROO F OF THE GENUINENESS OF THE SHARE SUBSCRIPTION. THAT IS THE ONUS OF THE ASSESSE E, NOT OF THE AO. 8. S0 FAR AS THE CREDITWORTHINESS OF THE SHARE SUBS CRIBERS IS CONCERNED, THE CONTENTION OF THE ASSESSEE BEFORE US IS THAT IT WAS PROVED BY THE BANK STATEMENTS OF THOSE SUBSCRIBERS SUBMITTED BEFORE THE AO. THE AO H AS NOT REFERRED TO THEM IN THE ASSESSMENT ORDER BUT IT IS NOT IN DISPUTE THAT THE COPIES OF THE BANK STATEMENTS WERE FURNISHED BEFORE HIM. EVEN ASSUMING THAT THE BANK S TATEMENTS WERE FILED BEFORE THE AO, THAT BY ITSELF MAY NOT BE SUFFICIENT TO PROVE T HE CREDITWORTHINESS WITHOUT ANY EXPLANATION FOR THE DEPOSITS IN THE ACCOUNTS AND TH EIR SOURCE. THE USUAL ARGUMENT IN ALL SUCH CASES, INCLUDING THE PRESENT CASE, IS THAT IT IS NOT FOR THE ASSESSEE TO PROVE THE SOURCE OF SOURCE AND ORIGIN OF ORIGIN OF THE RE CEIPTS. WE ARE ALIVE TO THE DIFFICULTY THAT MAY BE FACED BY AN ASSESSEE TO UNIMPEACHABLY E STABLISH THE CREDITWORTHINESS OF THE SHARE SUBSCRIBERS BUT AT THE SAME TIME WE AR E OF THE OPINION THAT MERE FURNISHING OF THE COPIES OF THE BANK ACCOUNTS OF TH E SUBSCRIBERS IS NOT SUFFICIENT TO PROVE THEIR CREDITWORTHINESS. THERE MUST BE, IN OUR OPINION, SOME POSITIVE EVIDENCE TO SHOW THE NATURE AND SOURCE OF THE RESOURCES OF T HE SHARE SUBSCRIBER HIMSELF AND THEREFORE IT IS NECESSARY FOR HIM TO COME BEFORE TH E AO AND CONFIRM HIS SOURCES FROM WHICH HE SUBSCRIBED TO THE CAPITAL. IN THE PRESENT CASE THE ASSESSEE DID NOT PRODUCE THE PRINCIPAL OFFICER OF THE COMPANIES WHO SUBSCRIB ED TO THE SHARES; IT MERELY FILED A LETTER AT THE 'DAK' COUNTER OF THE AO, STATING THAT THE COMMUNICATIONS SENT BY IT TO THE SHARE SUBSCRIBERS HAVE NOT COME BACK UNSERVED. THIS IS NOT COMPLIANCE WITH THE DIRECTION OF THE AO WHO HAD ISSUED NOTICE TO THE AS SESSEE TO PRODUCE THE PRINCIPAL OFFICERS OF THE SUBSCRIBING COMPANIES. AS IS WELL K NOWN, IN THE CASE OF PRIVATE LIMITED COMPANIES, IT CANNOT BE DENIED. THAT THERE IS A CON TINUING CONTACT AND RELATIONSHIP WITH THE SHARE HOLDERS AND IF THE ASSESSEE WAS SERI OUS ENOUGH TO ESTABLISH ITS CASE, IT OUGHT TO HAVE PRODUCED THE PRINCIPAL OFFICERS OF THE SUBSCRIBING COMPANIES BEFORE THE AO SO THAT THEY CAN EXPLAIN THE SOURCES FROM WH ICH THE SHARE SUBSCRIPTION WAS MADE. THAT WOULD ALSO HAVE TAKEN CARE OF THE DIFFIC ULTY OF THE ASSESSEE IN PROVING THE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES. IT WA S, THEREFORE, IN THE ASSESSEE'S OWN INTEREST TO HAVE ACTIVELY PARTICIPATED AND COOP ERATED IN THE ASSESSMENT PROCEEDINGS AND COMPLIED WITH THE DIRECTION OF THE AO TO PRODUCE THE PRINCIPAL OFFICERS OF THE SUBSCRIBING COMPANIES. INSTEAD, THE ASSESSEE TOOK AN ADAMANT, IF WE MAY USE THAT EXPRESSION, ATTITUDE AND FAILED TO COM PLY WITH THE DIRECTION OF THE AO; NOT ONLY THAT, IT CHALLENGED THE AO'S FINDING THAT THE SUMMONS SENT TO THE COMPANIES CAME BACK UNSERVED WITH THE REMARK 'NO SUCH COMPANY ', WHICH WAS ALSO SUPPORTED BY THE REPORT OF THE INSPECTOR WHO MADE A VISIT TO THE ADDRESSES. THE ASSESSEE THUS TOOK A VERY EXTREME STAND WHICH WAS IN OUR OPINION NOT JUSTIFIED; CERTAINLY IT DID NOTHING WORTHWHILE TO DISCHARGE THE ONUS TO PROVE T HE CREDITWORTHINESS OF THE SUBSCRIBING COMPANIES. 9. WE REFERRED TO THE ARGUMENT OF THE ASSESSEE THAT IT IS NOT PART OF ITS ONUS TO PROVE THE SOURCE OF SOURCE AND ORIGIN AND ORIGIN OF THE S HARE SUBSCRIPTIONS. IN ADDITION TO WHAT WE HAD SAID WITH REFERENCE TO THAT ARGUMENT IN THE PRECEDING PARAGRAPH WE CANNOT ALSO HELP OBSERVING THAT THE BASIS OF THE AR GUMENT IS PERHAPS THE JUDGMENT OF THE MADRAS HIGH COURT IN S. HASTIMAL V. CIT [1963J 49 ITR 273. THAT WAS A CASE OF IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 6 REASSESSMENT COMMENCED IN THE YEAR 1957 CALLING UPO N THE ASSESSEE TO EXPLAIN A CREDIT IN HIS FAVOUR IN THE BOOKS OF ACCOUNT OF THE FIRM, MADE IN THE YEAR 1947. THE ASSESSEE EXPLAINED THAT HE HAD BORROWED THE AMOUNT FROM ONE V IN ORDER TO PROVIDE THE MONIES TO THE FIRM. THE EXPLANATION WAS NOT ACC EPTED RIGHT UP TO THE TRIBUNAL. COMMENTING ON THE ORDER OF THE TRIBUNAL, A DIVISION BENCH OF THE MADRAS HIGH COURT OBSERVED AS UNDER: 'THE TRIBUNAL HOWEVER HAS NOT CHOSEN TO ACCEPT THE ASSESSEE'S CASE ON GROUNDS WHICH WE ARE UNABLE TO APPRECIATE. THE TRIB UNAL COMMENTING UPON THE FACT THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE KEPT ONLY AT PHALODI, THAT PAKKA AND KATCHA ROKER OF THE ASSESSEE AT PHAL ODI HAD NOT BEEN PRODUCED, AND THAT THE NECESSARY LINK BETWEEN THE B ORROWING OF VIJAYARAM AND THE MONEY BROUGHT TO COONOOR HAD NOT BEEN ESTAB LISHED. AS STATED ALREADY, WITH REGARD TO THE SUM OF RS. 15,000, THE ASSESSEE PRODUCED INDISPUTABLE DOCUMENTARY EVIDENCE TO SHOW THAT THE AMOUNT CAME OUT OF HIS BORROWING AT JODHPUR WHETHER IT WAS FROM VIJAYARAM GANESHDAS OR FROM GOWRI SHANKAR BAGDY. THE ASSESSEE HAS BEEN ABLE TO POINT OUT A SOURCE FOR THIS SUM OF RS. 15,000 AND THIS CANNOT BE REFUTED B Y A MERE STEADY DISABILITY ON THE PART OF THE DEPARTMENT OR THE TRIBUNAL. AFTE R THE LAPSE OF TEN YEARS THE ASSESSEE SHOULD NOT BE PLACED UPON THE RACK AND CAL LED UPON TO EXPLAIN NOT MERELY THE ORIGIN AND SOURCE OF HIS CAPITAL CONTRIB UTION BUT THE ORIGIN OF ORIGIN AND THE SOURCE OF SOURCE AS WELL.' THE QUOTED OBSERVATIONS WILL CLEARLY EXPLAIN THE CO NTEXT AND SETTING IN WHICH THEY WERE MADE. THEY CANNOT, THEREFORE, BE UNDERSTOOD AS PLACING AN EMBARGO ON THE POWER OF THE AO TO ASK THE ASSESSEE TO PROVE THE CR EDITWORTHINESS OF THE CREDITOR/SHARE HOLDER FOR THE PURPOSE OF SECTION 68 . IN AN APPROPRIATE CASE, IF THE FACTS AND CIRCUMSTANCES JUSTIFY, IT WOULD BE OPEN T O THE AO TO SEEK INFORMATION FROM THE ASSESSEE AS TO THE CREDITWORTHINESS OF THE CRED ITOR/SHARE SUBSCRIBER WHICH MAY INCLUDE INFORMATION AS TO THE SOURCES OF THE CREDIT OR/SHARE SUBSCRIBER. IF PROVING THE CREDITWORTHINESS OF THE CREDITOR/SUBSCRIBER IS NOW JUDICIALLY ACCEPTED AS ONE OF THE INGREDIENTS OF THE ONUS CAST ON THE ASSESSEE UNDER SECTION 68, WE DO NOT SEE HOW PROOF OF THE RESOURCES OF THE CREDITOR/SHARE SUBSCR IBER CAN BE COMPLETELY EXCLUDED FROM THE SWEEP OF THE BURDEN. IT MAY NOT BE REQUIRE D OF THE ASSESSEE TO GIVE IN-DEPTH PARTICULARS AND DETAILS ABOUT THE RESOURCES OF THE CREDITOR OR THE SHARE SUBSCRIBER, BUT THE MINIMUM REQUIRED OF HIM WOULD BE, IN OUR OPINIO N, INFORMATION THAT WILL PRIMA FACE SATISFY THE AO ABOUT THE CREDITWORTHINESS. MERE FUR NISHING OF THE BANK STATEMENTS OF THE SHARE SUBSCRIBERS WITHOUT ANY EXPLANATION FOR T HE DEPOSITS IN THE ACCOUNTS MAY NOT MEET THE REQUIREMENTS OF SECTION 68. IT MAY BE NECESSARY TO KNOW THE BUSINESS ACTIVITIES OF THE SHARE-SUBSCRIBERS IN ORDER TO ASC ERTAIN WHETHER THEY ARE FINANCIALLY SOUND AND ARE ABLE TO PURCHASE SHARES FOR SUBSTANTI AL AMOUNTS; IF THEY HAVE BORROWED MONIES FOR MAKING THE INVESTMENT, WHETHER THEY WERE CAPABLE OF REPAYING THEM HAVING REGARD TO THE NATURE OF THEIR BUSINESS, VOLUME OF THE BUSINESS, ETC. THESE ARE VERY RELEVANT, IN OUR OPINION, TO ESTABLI SH THE CREDITWORTHINESS OF THE INVESTORS. IT IS FOR THIS PURPOSE THAT IT IS NECESS ARY FOR THE ASSESSEE, IN APPROPRIATE CASES WHERE THE FACTS AND SURROUNDING CIRCUMSTANCES JUSTIFY, TO SEEK THE ASSISTANCE OF THE PRINCIPAL OFFICER OF THE SUBSCRIBING COMPANI ES AND PRESENT HIM BEFORE THE AD SO THAT HE WILL BE IN A POSITION TO EXPLAIN IN DETA IL THE SOURCE FROM WHICH THE SHARES WERE SUBSCRIBED. A CURIOUS ASPECT OF THE MATTER WHI CH CANNOT BE LOST SIGHT OF IS THAT THE RECORD REVEALS THE ASSESSEE'S ABILITY TO PROCUR E THE SHARE APPLICANT'S BANK STATEMENT. THIS SPEAKS VOLUME ABOUT ITS CONDUCT, AN D BELIES THE ARGUMENT ABOUT ITS INABILITY TO ENSURE THE PRESENCE OF SUCH COMPANY'S PRINCIPAL OFFICERS. 10. IT WAS FURTHER ARGUED FOR THE ASSESSEE THAT THE INVESTIGATION REPORT ON THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED AND WHICH ALLEGED LY CONTAINED INFORMATION THAT THE SHARE SUBSCRIPTIONS RECEIVED BY THE ASSESSEE WE RE IN FACT ACCOMMODATION ENTRIES WAS NOT PUT TO THE ASSESSEE FOR REBUTTAL IN THE COURSE OF THE REASSESSMENT PROCEEDINGS AND SO THE ASSESSEE DID NOT HAVE ANY OP PORTUNITY TO REBUT THE FINDINGS IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 7 THEREIN. IT IS TRUE THAT THE ASSESSMENT ORDER DOES NOT SHOW THAT THE INVESTIGATION REPORT WAS PLACED BEFORE THE ASSESSEE FOR REBUTTAL. BUT THE ADDITION CANNOT BE DELETED MERELY ON THAT GROUND. THE INVESTIGATION RE PORT WHICH PERMITTED THE REOPENING OF THE ASSESSMENT WAS ONLY A STARTING POI NT FOR THE ENQUIRY. IT WAS NOT THE SOLE BASIS FOR MAKING THE ADDITION. BASED ON THE MA TERIAL CONTAINED IN THE INVESTIGATION WING'S REPORT, THE AO HAD INITIATED A N ENQUIRY INTO THE GENUINENESS OF THE SHARE SUBSCRIPTION. IT IS BECAUSE OF THE SUSPIC ION JUSTIFIABLY BASED ON THE FACT THAT THE INVESTIGATION WING'S REPORT CONTAINED INFORMATI ON AS TO THE COMPLICITY OF THE COMPANIES FROM WHOM THE ASSESSEE RECEIVED SHARE SUB SCRIPTION IN THE RACKET OF PROVIDING ACCOMMODATION ENTRIES FOR COMMISSION, THA T THE AO WANTED TO ENQUIRE INTO THE MATTER SINCE IT IS FROM THOSE COMPANIES THAT TH E ASSESSEE HAD SHOWN RECEIPT OF MONIES AS SHARE CAPITAL. IN MAKING ASSESSMENTS, INC LUDING REASSESSMENTS, THE AO HAS TO ACT ON INFORMATION OR MATERIAL IN HIS POSSES SION. IF HE WANTS TO MAKE USE OF THE MATERIAL OR INFORMATION, IT IS CERTAINLY NECESSARY ACCORDING TO THE PRINCIPLES OF NATURAL JUSTICE THAT THE INFORMATION BE PUT TO THE ASSESSEE FOR REBUTTAL. THERE IS NO REQUIREMENT THAT THE REPORT OF THE INVESTIGATION WI NG ITSELF SHOULD HAVE BEEN PUT TO THE ASSESSEE BECAUSE THE REPORT ONLY CONTAINED MATERIAL WHICH IMPLICATED THE COMPANIES FROM WHOM THE ASSESSEE CLAIMED TO HAVE RE CEIVED SHARE MONIES IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES FOR COM MISSION. IT WAS, THEREFORE, NECESSARY FOR THE AO TO HAVE THE INFORMATION VERIFI ED BECAUSE THE ASSESSEE ALSO HAS SHOWN RECEIPT OF SHARE MONIES FROM THOSE COMPANIES. THE AO HAD ISSUED SUMMONS TO THE COMPANIES IN AN ATTEMPT TO VERIFY THEIR IDEN TITY, EXISTENCE AND THE GENUINENESS OF THE TRANSACTION. IT WAS ONLY WHEN HE FAILED TO F IND THE COMPANIES AT THE ADDRESSES FURNISHED, THAT HE CALLED UPON THE ASSESSEE TO PROD UCE THE PRINCIPAL OFFICERS OF THOSE COMPANIES SO THAT HE CAN ELICIT THE TRUTH BEHIND TH E ASSESSEE'S CLAIM. IN THESE CIRCUMSTANCES, IT WAS NOT NECESSARY TO HAVE PUT THE REPORT OF THE INVESTIGATION WING TO THE ASSESSEE FOR REBUTTAL. THE ASSESSEE CAN HARD LY RAISE THE ISSUE, HAVING ITSELF FAILED TO COMPLY WITH THE DIRECTION OF THE AO AND H AVING TAKEN AN UNREASONABLE ATTITUDE TOWARDS THE DISCHARGE OF ITS ONUS. WE, THE REFORE, HOLD THAT THE NON-FURNISHING OF THE REPORT OF THE INVESTIGATION WING TO THE ASSE SSEE WAS NOT FATAL TO THE VALIDITY OF THE ADDITION. 11. IT WAS THEN CONTENDED ON BEHALF OF THE ASSESSEE WITH CONSIDERABLE VEHEMENCE THAT THERE WAS NOTHING TO SHOW THAT THE MONIES REPR ESENTED THE UNDISCLOSED INCOME OF THE ASSESSEE BROUGHT IN UNDER THE GUISE OF SHARE SUBSCRIPTION. IT WAS SUBMITTED THAT IT WAS INCUMBENT UPON THE AO TO SHOW THAT THE MONIES EMANATED FROM THE COFFERS OF THE ASSESSEE IN ORDER TO SUSTAIN THE ADD ITION UNDER SECTION 68. WE ARE AFRAID THAT THESE ARE UNTENABLE PROPOSITIONS AND WE RE REJECTED AT LEAST ON THREE OCCASIONS BY THE SUPREME COURT. IN A. GOVINDARAJULU MUDALIAR .V, CIT [1958] 34 ITR 807 SUCH A CONTENTION WAS REJECTED IN THE FOLLOWING WORDS:- 'NOW THE CONTENTION OF THE APPELLANT IS THAT ASSUMI NG THAT HE HAD FAILED TO ESTABLISH THE CASE PUT FORWARD BY HIM, IT DOES NOT FOLLOW AS A MATTER OF LAW THAT THE AMOUNTS IN QUESTION WERE INCOME RECEIVED O R ACCRUED DURING THE PREVIOUS YEAR, THAT IT WAS THE DUTY OF THE DEPARTME NT TO ADDUCE EVIDENCE TO SHOW FROM WHAT SOURCE THE INCOME WAS DERIVED AND WH Y IT SHOULD BE TREATED AS CONCEALED INCOME. IN THE ABSENCE OF SUCH EVIDENC E, IT IS ARGUED, THE FINDING IS ERRONEOUS. WE ARE UNABLE TO AGREE. WHETH ER A RECEIPT IS TO BE TREATED AS INCOME OR NOT, MUST DEPEND VERY LARGELY ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IN THE PRESENT CASE THE RECEIPTS ARE SHOWN IN THE ACCOUNT BOOKS OF A FIRM OF WHICH THE APPELLANT AND GOVINDASWAMY MUDALIAR WERE PARTNERS. WHEN HE WAS CALLED UPON TO GIVE EXPL ANATION HE PUT FORWARD TWO EXPLANATIONS, ONE BEING A GIFT OF RS. 80,000 AN D THE OTHER BEING RECEIPT OF RS. 42,000 FROM BUSINESS OF WHICH HE CLAIMED TO BE THE REAL OWNER. WHEN BOTH THESE EXPLANATIONS WERE REJECTED, AS THEY HAVE BEEN, IT WAS CLEARLY OPEN TO THE INCOME-TAX OFFICER TO HOLD THAT THE INCOME M UST BE CONCEALED INCOME. THERE IS AMPLE AUTHORITY FOR THE POSITION THAT WHER E AN ASSESSEE FAILS TO PROVE IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 8 SATISFACTORILY THE SOURCE AND NATURE OF CERTAIN AMO UNT OF CASH RECEIVED DURING THE ACCOUNTING YEAR, THE INCOME-TAX OFFICER IS ENTI TLED TO DRAW THE INFERENCE THAT THE RECEIPTS ARE OF AN ASSESSABLE NATURE. THE CONCLUSION TO WHICH THE APPELLATE TRIBUNAL CAME APPEARS TO US TO BE AMPLY W ARRANTED BY THE FACTS OF THE CASE. THERE IS NO GROUND FOR INTERFERING WITH T HAT FINDING, AND THESE APPEALS ARE ACCORDINGLY DISMISSED WITH COSTS. ' AGAIN IN CIT V. M. GANAPATHI MUDALIAR [1964] 53 ITR 623 THE SUPREME COURT HELD AS FOLLOWS: - 'ONCE IT IS HELD THAT AN AMOUNT CREDITED IN THE ACC OUNT BOOKS OF THE ASSESSEE IS THE INCOME OF THE ASSESSEE IT IS NOT NECESSARY F OR THE DEPARTMENT TO LOCATE ITS EXACT SOURCE. ' VISHWANATH PRASAD [1969] 72 ITR 194 WHEREIN SHAH, J . (AS HIS LORDSHIP THEN WAS) HELD AS FOLLOWS: - 'THE QUESTION AGAIN ASSUMES THAT IT WAS FOR THE INC OME-TAX OFFICER TO INDICATE THE SOURCE OF THE INCOME BEFORE THE INCOME COULD BE HELD TAXABLE AND UNLESS HE DID SO, THE ASSESSEE WAS ENTITLED TO SUCCEED. TH AT IS NOT, IN OUR JUDGMENT, THE CORRECT LEGAL POSITION. WHERE THERE IS AN EXPLA INED CASH CREDIT, IT IS OPEN TO THE INCOME-TAX OFFICER TO HOLD THAT IT IS INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE INCOME-TAX OFFICER TO SH OW THAT THAT INCOME IS FROM ANY PARTICULAR SOURCE. IT IS FOR THE ASSESSEE TO PR OVE THAT EVEN IF THE CASH CREDIT REPRESENTS INCOME IT IS INCOME FROM A SOURCE WHICH HAS ALREADY BEEN TAXED. ' THE LAW AS STATED ABOVE HAS NOT UNDERGONE ANY CHANG E BECAUSE OF THE INTRODUCTION OF SECTION 68 IN THE INCOME TAX ACT, 1961. AS OBSE RVED BY S. RANGANATHAN J IN YADU HARI DALMIA V. CIT [1980J 126 ITR 48 (DELBT), A DECISION OF A DIVISION BENCH OF THIS COURT: - 'IT IS WELL KNOWN THAT THE WHOLE CATENA OF SECTIONS STARTING FROM S. 68 HAVE BEEN INTRODUCED INTO THE TAXING ENACTMENTS STEP BY STEP IN ORDER TO PLUG LOOPHOLES AND IN ORDER TO PLACE CERTAIN SITUATIONS BEYOND DOUBT EVEN THOUGH THERE ~ERE JUDICIAL DECISIONS COVERING SOME OF THE ASPECTS. FOR EXAMPLE, EVEN LONG PRIOR TO THE INTRODUCTION OF S. 68 IN THE STAT UTE BOOK, COURTS HAD HELD THAT WHERE ANY AMOUNTS WERE FOUND CREDITED IN THE BOOKS OF THE ASSESSEE IN THE PREVIOUS YEAR AND THE ASSESSEE OFFERED NO EXPLANATI ON ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED WAS, IN T HE OPINION OF THE ITO, NOT SATISFACTORY, THE SUMS SO CREDITED COULD BE CHARGED TO INCOME-TAX AS INCOME OF THE ASSESSEE OF A RELEVANT PREVIOUS YEAR. SECTIO N 68 WAS INSERTED IN THE I. T. ACT, 1961, ONLY TO PROVIDE STATUTORY RECOGNITION TO A PRINCIPLE WHICH HAD BEEN CLEARLY ADUMBRATED IN JUDICIAL DECISIONS. ' SECTION 68 THUS ONLY CODIFIED THE LAW AS IT EXISTED BEFORE 1.4.1962 AND DID NOT INTRODUCE ANY NEW PRINCIPLE OR RULE. THEREFORE THE RATIO LAID DOWN IN THE THREE SUPREME COURT JUDGMENTS IS EQUALLY APPLICABLE TO TH E INTERPRETATION OF SECTION 68 OF THE 1961 ACT. WE MAY ALSO STATE THAT THE LEARNED CO UNSEL FOR THE ASSESSEE VAGUELY REFERRED TO SOME DECISIONS TAKING THE VIEW THAT IT WAS NECESSARY FOR THE AO, BEFORE MAKING THE ADDITION UNDER SECTION 68, TO PROVE THAT THE SHARE APPLICATION MONIES ACTUALLY EMANATED FROM THE ASSESSEE AND REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE. HE, HOWEVER, DID NOT CITE ANY OF THOSE DE CISIONS. IN ANY CASE THE LAW HAVING BEEN LAID DOWN BY THE SUPREME COURT IN THE J UDGMENTS CITED ABOVE, WE DO NOT THINK THAT THERE IS ANY MERIT IN HIS SUBMISSION . 12. A PERUSAL OF THE ORDER OF THE TRIBUNAL SHOWS TH AT IT HAS GONE ON THE BASIS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE BEFORE THE AO A ND HAS HELD THAT IN THE LIGHT OF THOSE DOCUMENTS, IT CAN BE SAID THAT THE ASSESSEE H AS ESTABLISHED THE IDENTITY OF THE PARTIES. IT HAS FURTHER BEEN OBSERVED THAT THE REPO RT OF THE INVESTIGATION WING CANNOT CONCLUSIVELY PROVE THAT THE ASSESSEE'S OWN MONIES W ERE BROUGHT BACK IN THE FORM OF SHARE APPLICATION MONEY. AS NOTED IN THE EARLIER PA RAGRAPH, IT IS NOT THE BURDEN OF THE IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 9 AO TO PROVE THAT CONNECTION. THERE HAS BEEN NO EXAM INATION BY THE TRIBUNAL OF THE ASSESSMENT PROCEEDINGS IN ANY DETAIL IN ORDER TO DE MONSTRATE THAT THE ASSESSEE HAS DISCHARGED ITS ONUS TO PROVE NOT ONLY THE IDENTITY OF THE SHARE APPLICANTS, BUT ALSO THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE T RANSACTIONS. NO ATTEMPT WAS MADE BY THE TRIBUNAL TO SCRATCH THE SURFACE AND PROBE TH E DOCUMENTARY EVIDENCE IN SOME DEPTH, IN THE LIGHT OF THE CONDUCT OF THE ASSESSEE AND OTHER SURROUNDING CIRCUMSTANCES IN ORDER TO SEE WHETHER THE ASSESSEE HAS DISCHARGED ITS ONUS UNDER SECTION 68. WITH RESPECT, IT APPEARS TO US THAT THE RE HAS ONLY BEEN A MECHANICAL REFERENCE TO THE CASE-LAW ON THE SUBJECT WITHOUT AN Y SERIOUS APPRAISAL OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 13. WE, THEREFORE, ANSWER THE SUBSTANTIAL QUESTION OF LAW FRAMED BY US IN THE NEGATIVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE APPEAL OF THE REVENUE IS ALLOWED WITH NO ORDER AS TO COSTS. ' [ UNQUOTE] 6. IT IS ALSO PERTINENT TO MENTIONED THAT THE ADJUD ICATION OF THE HON'BLE HIGH COURT BEARING JURISDICTION IS ALSO AGAINST THE APPELLANT IN A SIMILAR SET OF FACTS AND CIRCUMSTANCES. THE HON'BLE JURISDICTIONAL HIGH COUR T HAS OBSERVED IN THE CASE OF CIT VS NIVEDAN VANIJYA NIYOJAN LTD REPORTED IN [130 ] TAXMAN 153 (CALCUTTA) THAT THE MAIN INGREDIENT THAT HAS TO BE SATISFIED BY THE TAX PAYER IS TO ESTABLISH THE IDENTITY OF THE SHARE SUBSCRIBERS THE CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. MERE BANK ENTRIES AND PAN WOULD NOT BE SUFFICIENT T O DISCHARGE THE ONUS, WHEN THE SURROUNDING CIRCUMSTANCES AND PROBABILITIES POINT A GAINST THE APPELLANT. THE RELEVANT PORTION OF THE SAID ORDER OF THE HON'BLE HIGH COURT IS AS UNDER: [ QUOTE] 2. SO FAR AS THE FIRST QUESTION IS CONCERNED, IT RE LATES TO ADDITION OF RS. 3,93,000 ON ACCOUNT OF THE SUBSCRIPTION TO SHARE CAPITAL BEING HELD AS IN-GENUINE TRANSACTION UNDER SECTION 68 OF THE INCOME-TEX ACT, 1961. THE L AW WITH REGARD THERETO HAS SINCE BEEN CRYSTALLIZED. SIMILAR QUESTION WAS INVOLVED IN HINDUSTHAN TEA TRADING CO. LTD. V. CIT [IT REFERENCE NO. 20 OF 1996, DATED 11/12-3- 2003J AND CIT V. RUBY TRADERS & EXPORTERS LTD. [IT REFERENCE NO. 78 OF 1995, DATE D 11/12-3-2003J. THE PRINCIPAL INGREDIENT THAT HAS TO BE SATISFIED IS TO ESTABLISH THE IDENTITY OF THE SUBSCRIBERS AND PROVE THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION. WE HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AT PAGES 9-13 OF THE PAPER BOOK. IT APPEARS THAT THE ASSESSEE HAD FAILED TO ESTABLISH A NY OF THESE THREE INGREDIENTS IN RESPECT OF THE SAID AMOUNT. THE COMMISSIONER (APPEA LS) MODIFIED THE ORDER TO RS. 83,000 AND ACCEPTED THE BALANCE SIMPLY BECAUSE INCO ME-TAX FILE NUMBERS OF THE OTHER SUBSCRIBERS WERE DISCLOSED. IT APPEARS FROM P AGES 36-37 OF THE PAPER BOOK CONTAINING THE ORDER OF THE COMMISSIONER (APPEALS) THAT THESE FEW PERSONS WHO HAD SUBSCRIBED 8,300 SHARES WERE NOT INCOME-TAX ASSESSE ES. THEREFORE, ONLY THESE WERE ADDED. 3. MR. SOM HAD RELIED ON A DECISION IN CIT V. KORLA Y TRADING CO. LTD. [19987232 ITR 820 (CAL.), WHERE IT WAS HELD THAT FURNISHING OF IN COME-TAX FILE NUMBER IS NOT SUFFICIENT TO DISCHARGE THE BURDEN. THE PROPOSITION MAY BE COR RECT. BUT WHEN SOME MATERIAL IS PRODUCED, IT IS INCUMBENT ON THE REVENUE TO ENQUIRE INTO THE SAME. IN THIS CASE AFTER THE INITIAL ONUS WAS DISCHARGED BY THE ASSESSEE, TH E INCOME-TAX AUTHORITY HAD MADE ENQUIRIES AND HAD COMMUNICATED THE RESULT OF THE EN QUIRY TO THE ASSESSEE AND REQUIRED THE ASSESSEE TO PRODUCE THE SUBSCRIBERS AN D ESTABLISH ITS CASE. BUT THE ASSESSEE DID NOT DO SO. THEREFORE, WE DO NOT THINK THAT THE COMMISSIONER (APPEALS) HAD RIGHTLY APPROACHED THE CASE. THE PRINCIPLE IS A LREADY LAID DOWN IN THE AFORESAID TWO DECISIONS NAMELY HINDUSTHAN TEA TRADING CO. LTD . 'S CASE (SUPRA) AND RUBY TRADERS & EXPORTERS LTD. 'S CASE (SUPRA). 4. THE LEARNED TRIBUNAL, HOWEVER, PROCEEDED ON THE BASIS OF THE RATIO DECIDED IN CIT V. STELLAR INVESTMENT LTD. [19917192 ITR 287J (DELH I). ACCORDING TO THE LEARNED TRIBUNAL, IF THE SUBSCRIBERS WERE NOT AVAILABLE, IN THAT EVENT, IT CAN BE ASSESSED AT THE IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 10 HANDS OF SUCH SUBSCRIBERS, NOT AT THE HANDS OF THE ASSESSEE. BUT THIS DECISION WAS OVERRULED BY THE FULL BENCH DECISION IN CIT V. SOPH IA FINANCE LTD. [19947 205 ITR 982 (DELHI). THEREFORE, THE RATIO DECIDED IN STELLAR INVESTMENT LTD.'S CASE (SUPRA) IS NO MORE A GOOD LAW. THOUGH AN SLP WAS PREFERRED AGAINST STELL AR INVESTMENT LTD.'S CASE (SUPRA) AND THE SLP WAS DISMISSED - CIT V. STELLER INVESTMENT LTD. [20017 251 ITR 2633, YET THE ORDER OF THE APEX COURT WHILE DISMISS ING THE SLP IS NOT A RATIO DECIDED BINDING UNDER ARTICLE 141 OF THE CONSTITUTION OF IN DIA, AS WE HAVE HELD IN THE SAID DECISIONS IN RUBY TRADERS & EXPORTERS LTD.'S CASE ( SUPRA) AND HINDUSTHAN TEA TRADING CO. LTD.'S CASE (SUPRA). THE LEARNED TRIBUN AL, THEREFORE, PROCEEDED ON THE BASIS OF A WRONG PROPOSITION OF LAW. 5. THEREFORE, WE ARE OF THE VIEW THAT THE ORDER PAS SED BY THE ASSESSING OFFICER WAS IN ACCORDANCE WITH LAW AND THAT OF THE COMMISSIONER (APPEALS) CANNOT BE SUSTAINED TO THE EXTENT, WHICH IS CONTRARY TO THE FINDING OF THE ASSESSING OFFICER. WE, THEREFORE, HEREBY SET ASIDE THE ORDER OF THE LEARNED TRIBUNAL AND THAT OF THE COMMISSIONER (APPEALS) AND AFFIRM THE ORDER OF THE ASSESSING OFF ICER AND ANSWER THE QUESTION NO. 1 IN FAVOUR OF THE REVENUE IN THE NEGATIVE. [UNQUOTE] 7. HON'BLE COURTS HAVE ALSO OBSERVED THAT THEN THE PERSONS WORKING BEHIND THE COMPANIES (INVESTING, AS IN THIS CASE) DO NOT APPEA R BEFORE THE AD AND ARE EVASIVE IN APPROACH, THE MATTER OF DUE DISCHARGE OF ONUS BY THE ASSESSEE-COMPANY IS NOT FULFILLED. SUCH RATIO EMERGES IN THE CASE OF THE OR DER OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS N R PORTFOLIO (PVT ) LT D, REPORTED IN [2014] 42 TAXMANN.COM 339 (DELHI). THE RELEVANT PORTION OF TH E ORDER OF THE HON'BLE HIGH COURT IS WORTH REPRODUCING IN THE NECESSARY DETAIL, AS UN DER: [ QUOTE] 1.4. WHEN AN ASSESSEE DOES NOT PRODUCE EVIDENCE OR TRIES TO AVOID APPEARANCE BEFORE THE ASSESSING OFFICER, IT NECESSARILY CREATE S DIFFICULTIES AND PREVENTS ASCERTAINMENT OF TRUE AND CORRECT FACTS AS THE ASSE SSING OFFICER IS DENIED ADVANTAGE OF THE CONTENTION OR FACTUAL ASSERTION BY THE ASSES SEE BEFORE HIM. IN CASE AN ASSESSEE DELIBERATELY AND INTENTIONALLY FAILS TO PR ODUCE EVIDENCE BEFORE THE ASSESSING OFFICER WITH THE DESIRE TO PREVENT INQUIR Y OR INVESTIGATION, AN ADVERSE VIEW SHOULD BE TAKEN. WE SHALL NOW COME TO THE MERITS AN D THE FINDINGS RECORDED BY THE COMMISSIONER (APPEALS), WHICH AS NOTED ABOVE, HAVE BEEN SIMPLY AFFIRMED BY THE TRIBUNAL WITHOUT VERIFYING OR REFERRING TO THE FACT S. 15. IN THE PRESENT CASE, THE UNDISPUTED POSITION IS THAT THE RESPONDENT HAD RECEIVED SHARE APPLICATION MONEY OF RS. 68,30,1 00/- AND RS. 75,60,200/- IN THE ASSESSMENT YEARS 2002-03 AND 2003-04 RESPECTIVELY. FOR THE ASS ESSMENT YEAR 2002-03, THE ASSESSING OFFICER HAD TAKEN THE SHARE APPLICATION M ONEY RECEIVED IN THE YEAR AS RS.1,20,34,100/-, WHICH INCLUDED RS.32,80,000/- AND RS.19,24,000/- RELATED TO PREVIOUS YEARS OR WAS THE OPENING SHARE CAPITAL. AS NOTED ABOVE, ADDITION OF RS.4, 50, 0001- HAS BEEN SUSTAINED IN THE ASSESSMENT YEAR 2002-03. THUS, THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE DELETE D ADDITIONS OF RS. 63,80,100/- AND RS.75,60,200/- IN THE TWO ASSESSMENT YEARS. BEF ORE THE COMMISSIONER (APPEALS), THE RESPONDENT-ASSESSEE HAD FURNISHED NA ME OF THE SHARE APPLICANTS WHICH MOSTLY CONSISTED OF COMPANIES. IT WAS ACCORDI NGLY SUBMITTED THAT THE RESPONDENT HAD BEEN ABLE TO ESTABLISH IDENTITY OF T HE SHAREHOLDERS, THEIR CREDITWORTHINESS AND ALSO GENUINENESS OF THE TRANSA CTION AS THE PAYMENTS WERE RECEIVED THROUGH BANKING CHANNELS. THUS, THE RESPON DENT HAD DISCHARGED THE PRIMARY ONUS AND THERE WAS NO EVIDENCE OR MATERIAL TO SHOW THAT UNACCOUNTED FOR MONEY WAS RECYCLED AND INTRODUCED IN THE BOOKS AS S HARE APPLICATION MONEY. THE COMMISSIONER (APPEALS) HAS RECORDED THAT VERIFICATI ON OF PAN NUMBERS WAS DONE IN THE PRESENT CASE AND WAS FOUND TO BE CORRECT EXCEPT IN THE CASE OF TECHNOCHEM IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 11 ASSOCIATES PRIVATE LIMITED AND M/S YOGESH GUPTA FRO M WHOM SHARE APPLICATION MONEY OF RS.1,50,000/-EACH WAS RAISED BUT NO PAN DE TAILS WERE FURNISHED. REGARDING GANGA INFIN PRIVATE LIMITED, PAN NUMBER F URNISHED WAS FOUND TO BE INCORRECT AND ACCORDINGLY ADDITION OF RS. 1,50,000/ - WAS JUSTIFIED. WITH REGARD TO OTHERS, THE COMMISSIONER (APPEALS) HAS RECORDED THA T THE ASSESSING OFFICER HAD NOT AFFECTED INQUIRES TO BRING ON RECORD AND ESTABLISH THAT THE OTHER PARTIES HAD GIVEN ACCOMMODATION ENTRIES AND THE MONEY, I.E., THE SHAR E APPLICATION MONEY WAS ASSESSEE'S OWN UNDISCLOSED INCOME. IT WAS FURTHER R ECORDED THAT THE RESPONDENT HAD NOT BEEN PROVIDED AN OPPORTUNITY TO CROSS-EXAMINE T HE SO-CALLED ENTRY PROVIDERS AND THE ASSESSING OFFICER SIMPLY RELIED UPON THE INVEST IGATION REPORTS/INFORMATION PROVIDED BY THE INFORMATION WING OF THE DEPARTMENT. 16. THE AFORESAID FINDING OF THE COMMISSIONER (APPE ALS), WHICH HAVE BEEN AFFIRMED BY THE TRIBUNAL, IGNORES THE FINDING OF THE ASSESSI NG OFFICER THAT THE ASSESSEE HAD FAILED TO ATTEND THE ASSESSMENT PROCEEDINGS, EXPLAI N AND PUT FORWARD THEIR STAND AND STANCE. TO THIS EXTENT, THERE IS CONTRADICTION IN T HE ORDER PASSED BY THE COMMISSIONER (APPEALS), WHICH WAS IGNORED AND NOT T AKEN NOTE OF BY THE TRIBUNAL. 17. THE COMMISSIONER (APPEALS) THEREAFTER PROCEEDED ON THE BASIS THAT EVEN IF THE SUBSCRIBERS TO THE SHARE CAPITAL WERE NOT GENUINE, THE AMOUNT RECEIVED CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE RESPONDENT-AS SESSEE. REFERENCE WAS MADE TO THE DECISION OF THE DELHI HIGH COURT IN LOVELY E XPORTS (P.) LTD. (SUPRA). REFERENCE WAS MADE TO SOME DECISION OF THE TRIBUNAL. IT WOULD BE HERE RELEVANT TO HIGHLIGHT AND NOTE WHAT WAS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS MENTIONED THAT THE SUBSCRIBER S BELONGED TO MAHESH GARG GROUP OF ENTRY OPERATORS, WHICH INCLUDED 51 COMPANI ES/ PERSONS, WHO WERE OPERATING MORE THAN 100 BANK ACCOUNTS IN DIFFERENT BANKS/BRAN CHES. THEIR MODUS OPERANDI WAS TO PROVIDE ACCOMMODATION ENTRIES TO DIFFERENT P ERSONS/BENEFICIARIES. REFERENCE WAS MADE TO THE BANK STATEMENTS OF THE ENTRY OPERAT ORS THAT SHOWED SUBSTANTIAL DEPOSIT OF CASH IN THE BANK ACCOUNTS AND SUBSEQUENT ISSUE OF CHEQUES TO THE BENEFICIARIES. THIS WAS THE ONLY ACTIVITY OF THESE COMPANIES/PERSONS. THE SAID COMPANIES/PERSONS WERE NOT CARRYING ON ANY OTHER BU SINESS ACTIVITY I.E., MANUFACTURING OR TRADING ACTIVITY. THE ASSESSMENT O RDER HAS QUOTED AND REFERRED TO THE BANK ACCOUNT STATEMENTS IN SUPPORT OF THE SAID ASSERTION AND FINDING. THE ASSESSING OFFICER HAS MENTIONED THAT THE RESPONDENT -ASSESSEE WAS A PRIVATE LIMITED COMPANY, CLOSELY HELD AND THERE SHOULD BE PROXIMATE RELATIONSHIP BETWEEN THE PROMOTER DIRECTORS AND THE SHAREHOLDERS. CLOSELY HE LD COMPANIES USUALLY RECEIVE SHARE CAPITAL SUBSCRIPTIONS FROM FRIENDS, RELATIVES AND NOT FROM UNRELATED/ UNKNOWN THIRD PARTIES/ GENERAL PUBLIC. THERE WAS NO RELATIO NSHIP OR CONNECTION BETWEEN THE SUBSCRIBERS AND THE RESPONDENT-ASSESSEE, FOR SUBSCR IBERS TO BECOME INVESTORS. ASSESSMENT ORDER RECORDS THAT TO ESTABLISH IDENTITY AND AVAILABILITY OF FUNDS, IT WAS NECESSARY TO HAVE AT LEAST SOME IDEA IF NOT COMPLET E DETAILS OF THE ACTUAL BUSINESS UNDERTAKEN AND ENGAGED IN BY THE RESPONDENT-ASSESSE E AND EXPLAINED HOW AND WHY THESE UNRELATED AND UNCONNECTED THIRD PARTIES DECID ED TO BECOME INVESTORS IN THE ABSENCE OF PUBLIC ISSUE OR ADVERTISEMENT. 18. IN THE REMAND REPORT, THE ASSESSING OFFICER REF ERRED TO THE PROVISIONS OF SECTION 68 OF THE ACT AND THEIR APPLICABILITY. THE WORD 'ID ENTITY' AS DEFINED, IT WAS OBSERVED MEANT THE CONDITION OR FACT OF A PERSON OR THING BE ING THAT SPECIFIED UNIQUE PERSON OR THING. THE IDENTIFICATION OF THE PERSON WOULD INCLU DE THE PLACE OF WORK, THE STAFF, THE FACT THAT IT WAS ACTUALLY CARRYING ON BUSINESS AND RECOGNITION OF THE SAID COMPANY IN THE EYES OF PUBLIC. MERELY PRODUCING PAN NUMBER OR ASSESSMENT PARTICULARS DID NOT ESTABLISH THE IDENTITY OF THE PERSON. THE ACTUAL AN D TRUE IDENTITY OF THE PERSON OR A COMPANY WAS THE BUSINESS UNDERTAKEN BY THEM. THIS A CCORDING TO US IS THE CORRECT AND TRUE LEGAL POSITION, AS IDENTITY, CREDITWORTHIN ESS AND GENUINENESS HAVE TO BE ESTABLISHED. PAN NUMBERS ARE ALLOTTED ON THE BASIS OF APPLICATIONS WITHOUT ACTUAL DE FACTO VERIFICATION OF THE IDENTITY OR ASCERTAINING ACTIVE NATURE OF BUSINESS ACTIVITY. PAN IS A NUMBER WHICH IS ALLOTTED AND HELPS THE REVENUE KEEP TRACK OF THE TRANSACTIONS. IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 12 PAN NUMBER IS RELEVANT BUT CANNOT BE BLINDLY AND WI THOUT CONSIDERING SURROUNDING CIRCUMSTANCES TREATED AS SUFFICIENT TO DISCHARGE TH E ONUS, EVEN WHEN PAYMENT IS THROUGH BANK ACCOUNT. 19. ON THE QUESTION OF CREDITWORTHINESS AND GENUINE NESS, IT WAS HIGHLIGHTED THAT THE MONEY NO DOUBT WAS RECEIVED THROUGH BANKING CHANNEL S, BUT DID NOT REFLECT ACTUAL GENUINE BUSINESS ACTIVITY. THE SHARE SUBSCRIBERS DI D NOT HAVE THEIR OWN PROFIT MAKING APPARATUS AND WERE NOT INVOLVED IN BUSINESS ACTIVIT Y. THEY MERELY ROTATED MONEY, WHICH WAS COMING THROUGH THE BANK ACCOUNTS, WHICH M EANS DEPOSITS BY WAY OF CASH AND ISSUE OF CHEQUES. THE BANK ACCOUNTS, THEREFORE, DID NOT REFLECT THEIR CREDITWORTHINESS OR EVEN GENUINENESS OF THE TRANSAC TION. THE BENEFICIARIES, INCLUDING THE RESPONDENT-ASSESSEE, DID NOT GIVE ANY SHARE-DIV IDEND OR INTEREST TO THE SAID ENTRY OPERATORS/SUBSCRIBERS. THE PROFIT MOTIVE NORMAL IN CASE OF INVESTMENT, WAS ENTIRELY ABSENT. IN THE PRESENT CASE, NO PROFIT OR DIVIDEND WAS DECLARED ON THE SHARES. AN PERSON, WHO WOULD INVEST MONEY OR GIVE LOAN WOULD C ERTAINLY SEEK RETURN OR INCOME A CONSIDERATION. THESE FACTS ARE NOT ADVERTED TO AND AS NOTICED BELOW ARE TRUE AND CORRECT. THE ARE UNDOUBTEDLY RELEVANT AND MATERIAL FACTS FOR ASCERTAINING CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. 20. VICKY CHAURASIA, ADDITIONAL DIRECTOR OF THE RES PONDENT COMPANY WAS ASKED TO APPEAR BEFORE THE ASSESSING OFFICER PURSUANT TO THE LETTER BY THE COMMISSIONER (APPEALS) DIRECTING THE ASSESSING OFFICER TO GO THR OUGH THE SUBMISSIONS AND SUBMIT A REPORT AFTER CARRYING OUT NECESSARY INQUIRIES. HE W AS ASKED TO PRODUCE BOOKS OF ACCOUNTS AND EVIDENCE IN SUPPORT. BY LETTER DATED 1 2TH OCTOBER, 2009, THE RESPONDENT-ASSESSEE WAS ASKED TO FURNISH DETAILS/IN FORMATION. THESE INCLUDED DETAILS OF DIVIDEND PAID TO THE SHAREHOLDERS AND TO SHOW AND ESTABLISH CREDITWORTHINESS OF THE PARTIES. STATEMENT OF VICKY CHAURASIA RECORDED UNDER SECTION 131 OF THE ACT DATED 5TH NOVEMBER, 2009 HAS BEEN PL ACED ON RECORD BY THE RESPONDER: IN ITA NO. 1019/2011. HE HAS STATED THAT HE ALONG WITH SANDEEP CHAURASIA HAD BEEN DIRECTOR OF THE COMPANY SINCE JU NE, 2003 AND THE COMPANY WAS ENGAGED IN INVESTMENT AND FINANCE, BUT HE COULD NOT !JIVE DETAILS OF THE SUBSCRIBED SHARE CAPITAL OF RS.2 CRORES AS IT WAS STATED THAT THIS WAS BEFORE HE BECAME THE DIRECTOR. HE COULD NOT ALSO GIVE DETAILS OF HOW SHA RE CAPITAL GO SUBSCRIBED IN A PRIVATE LIMITED COMPANY. SPECIFIC QUESTION WAS PUT TO HIM R EGARDING VERIFICATION OF THE SHAREHOLDERS AS THE SUMMONS ISSUED TO THEM HAD BY A ND LARGE REMAINED UNCOMPLIED FOR WANT OF CORRECT ADDRESSES. IN RESPONSE, HE HAD STATED THAT THE COMPANY HAD SUPPLIED ADDRESSES OF SHAREHOLDERS AS PER SHARE APP LICATION FORMS AND IN THE ABSENCE OF DIVIDEND OR ANY FORM OF RETURN ON THE IN VESTMENT, THE COMPANY WAS NOT IN A POSITION TO CALL THE SUBSCRIBERS FOR CROSS- EXAM INATION. THE COMPANY HAD NOT RECEIVED ANY LETTER FOR CHANGE OF ADDRESS ETC. VIDE ; CHAURASIA STATED THAT ACCORDING TO HIM THE SUBSCRIBERS, WHO WERE ALLOTTED SHARES, C ONTINUE AND HAD NOT CEASED TO BE SHAREHOLDERS. WITH REGARD TO THE PAST DIRECTORS, HE HAD STATED THAT THEY HAD RESIGNED AND HE WAS NOT IN A POSITION TO PRODUCE THE SAME. I N THE REMAND REPORT, IT WAS SPECIFICALLY MENTIONED THAT BOOKS OF ACCOUNTS WERE NEITHER PRODUCED ON 5TH NOVEMBER, 2009 NOR DURING THE COURSE OF REMAND PROC EEDINGS. 21. THE ASSESSING OFFICER HAD ISSUED NOTICES BY SPE ED POST TO 31 PARTIES AS PER ADDRESSES GIVEN BY THE RESPONDENT-ASSESSEE REQUIRIN G THEM TO APPEAR FOR PERSONAL DEPOSITION, PRODUCE BOOKS OF ACCOUNTS WITH COMPLETE VOUCHERS AND BILLS AND STATEMENT OF BANK ACCOUNTS FOR THE RELEVANT PERIOD . IN RESPECT OF 22 PARTIES, THE NOTICE SUMMONS WERE RECEIVED BACK WITH POSTAL REMAR KS ' NO SUCH FIRM/COMPANY/PERSON ' OR A FEW ' LEFT WITHOUT ADDRESS ' AND A VERY FEW ' REFUSED TO ACCEPT '. REMAINING 9 PARTIES NEITHER ATTENDED AND FILED A NY APPLICATION FOR ADJOURNMENTS NOR FILED DETAILS. THUS, IT WAS OBSERV ED THAT THE IDENTITIES HAD BEEN ONLY PROVED ON PAPER, I.E., IN FORM OF NEUTRAL DOCUMENTS LIKE PAN NUMBER, ITR, REGISTRAR OF COMPANIES REGISTRATION, BUT WITHOUT FULL DETAILS AS TO THE ACTUAL BUSINESS ACTIVITIES UNDERTAKEN BY THESE COMPANIES, THE REASON WHY THESE COMPANIES HAD MADE IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 13 INVESTMENT IN A PRIVATE LIMITED COMPANY ETC. THIS C OUPLED WITH THE FACT THAT THERE WAS CASH DEPOSITS IN THEIR BANK ACCOUNTS AND WITHDRAWAL S WERE HIGHLIGHTED. 22. IN THE REJOINDER FILED TO THE REMAND REPORT, IT WAS STATED THAT THE SHARE APPLICANTS WERE REQUIRED TO APPEAR IN PERSON ON 17TH NOVEMBER, 2008 IN RESPONSE TO SUMMONS UNDER SECTION 131 DATED 23RD OCTOBER, 2009. SUBSEQU ENTLY, FRESH SUMMONS DATED 30TH OCTOBER, 2009 WERE ISSUED REQUIRING COMPLIANCE BY 7TH NOVEMBER, 2009, BUT THE ASSESSING OFFICER HAD SENT THE REMAND REPORT ON 6TH NOVEMBER, 2009 WITHOUT WAITING FOR COMPLIANCE OF SUMMONS. THE SAID SUBMIS SION IS WITHOUT MERIT AS WE NOTICE THAT THE ORDER OF THE COMMISSIONER (APPEALS) IS DATED 1ST OCTOBER, 2010, I.E., MUCH AFTER THE DATE 7TH NOVEMBER. 2009. A WRONG YEA R WAS MENTIONED IN THE EARLIER SUMMONS DATED 23 RD OCTOBER, 2009. IT WAS TYPOGRAPHICAL ERROR AND A RE SPONSE OR REPLY FROM THE SHAREHOLDER WOULD HAVE BEEN SUFFICIE NT. 23. THE CONTENTION THAT THE REVENUE MUST HAVE EVIDE NCE TO SHOW CIRCULATION OF MONEY FROM THE ASSESSEE TO THE THIRD PARTY IS FALLA CIOUS AND HAS BEEN REPEATEDLY REJECTED, EVEN WHEN SECTION 68 OF THE ACT WAS NOT I N THE STATUTE. IN A. GOVINDARAJULU MUDALIAR V. CIT {1958 7 34 ITR 807 (SC), SUPREME CO URT OBSERVED THAT IT WAS NOT THE DUTY OF THE REVENUE TO ADDUCE EVIDENCE TO SHOW FROM WHAT SOURCE, INCOME WAS DERIVED AND WHY IT SHOULD BE TREATED AS CONCEALED I NCOME. THE ASSESSEE MUST PROVE SATISFACTORILY THE SOURCE AND NATURE OF CASH RECEIV ED DURING THE ACCOUNTING YEAR. SIMILARLY OBSERVATIONS WERE MADE IN CIT V. M. GANAP ATHI MUDALIAR [1964] 53 ITR 623 (SC)' INTER ALIA HOLDING THAT IT WAS NOT NECESSARY FOR THE REVENUE TO LOCATE THE EXACT SOURCE. THIS PRINCIPLE WAS REITERATED IN CIT V. DEV I PRASAD VISHWANATH [1969772 ITR 194 ~ WHEREIN THE CONTENTION THAT THE ASSESSING OFF ICER SHOULD INDICATE THE SOURCE OF INCOME BEFORE IT WAS TAXABLE, WAS DESCRIBED AS AN I NCORRECT LEGAL POSITION. THUS WHEN THERE IS AN UNEXPLAINED CASH CREDIT, IT IS OPE N TO THE ASSESSING OFFICER TO HOLD THAT IT WAS INCOME OF THE ASSESSEE AND NO FURTHER B URDEN LIES ON HIM TO SHOW THE SOURCE. IN YADU HARI DALMIA V. CIT 09807126 ITR 481 4 TAXMAN 525 (DELHI), A DIVISION BENCH OF DELHI HIGH COURT HAS OBSERVED:- 'IT IS WELL KNOWN THAT THE WHOLE CATENA OF SECTIONS STARTING FROM S. 68 HAVE BEEN INTRODUCED INTO THE TAXING ENACTMENTS STEP BY STEP IN ORDER TO PLUG LOOPHOLES AND IN ORDER TO PLACE CERTAIN SITUATIONS BEYOND DOUBT EVEN THOUGH THERE WERE JUDICIAL DECISIONS COVERING SOME OF THE ASPECTS. FOR EXAMPLE, EVEN LONG PRIOR TO THE INTRODUCTION OF S. 68 IN THE STATUTE BOOK, COURTS HAD HELD THAT WHERE ANY AMOUNTS WERE FOUND CREDITED IN THE B OOKS OF THE ASSESSEE IN THE PREVIOUS YEAR AND THE ASSESSEE OFFERED NO EXPLA NATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED WAS, IN THE OPINION OF THE ITO, NOT SATISFACTORY, THE SUMS SO CREDITED COULD BE CHA RGED TO INCOME-TAX AS INCOME OF THE ASSESSEE OF A RELEVANT PREVIOUS YEAR. SECTION 68 WAS INSERTED IN THE I. T. ACT'1961, ONLY TO PROVIDE STATUTORY RE COGNITION TO A PRINCIPLE WHICH HAD BEEN CLEARLY ADUMBRATED IN JUDICIAL DECISIONS. ' 24. WE ARE CONSCIOUS OF THE DOCTRINE OF 'SOURCE OF SOURCE' OR 'ORIGIN OF ORIGIN' AND ALSO POSSIBLE DIFFICULTY WHICH AN ASSESSEE MAY BE FACED WITH WHEN ASKED TO ESTABLISH UNIMPEACHABLE CREDITWORTHINESS OF THE SHARE SUBSCRI BERS. BUT THIS ASPECT HAS TO BE DECIDED ON FACTUAL MATRIX OF EACH CASE AND STRICT O R STRINGENT TEST MAY NOT BE APPLIED TO ARMS LENGTH ANGEL INVESTORS OR NORMAL PUBLIC ISS UES. DOCTRINE OF 'SOURCE OF SOURCE' OR 'ORIGIN OF ORIGIN' CANNOT BE APPLIED UNIVERSALLY , WITHOUT REFERENCE TO THE FACTUAL MATRIX AND FACTS OF EACH CASE. THE SAID TEST IN CAS E OF NORMAL BUSINESS TRANSACTIONS MAY BE LIGHT AND NOT VIGOROUS. THE SAID DOCTRINE IS APPLIED WHEN THERE IS EVIDENCE TO SHOW THAT ASSESSEE MAY NOT BE AWARE, COULD NOT HAVE KNOWLEDGE OR WAS UNCONCERNED AS TO THE SOURCE OF MONEY PAID OR BELON GING TO THE THIRD PARTY. THIS MAY BE DUE TO THE NATURE AND CHARACTER OF THE COMMERCIA L/BUSINESS TRANSACTION RELATIONSHIP BETWEEN THE PARTIES, STATUTORY POSTULA TES ETC. HOWEVER, WHEN THERE IS SURROUNDING EVIDENCE AND MATERIAL MANIFESTING AND R EVEALING INVOLVEMENT OF THE ASSESSEE IN THE 'TRANSACTION' AND THAT IT WAS NOT E NTIRELY AN ARM'S LENGTH TRANSACTION, RESORT OR RELIANCE TO THE SAID DOCTRINE MAY BE COUN TER- PRODUCTIVE AND CONTRARY TO IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 14 EQUITY AND JUSTICE. THE DOCTRINE IS NOT AN ELDRITCH OR A CAMOUFLAGE TO CIRCULATE ILL GOTTEN AND UNRECORDED MONEY. WITHOUT BEING OBLIVIOU S TO THE CONSTRAINTS OF THE ASSESSEE, AN OBJECTIVE AND FAIR APPROACH/DETERMINAT ION IS REQUIRED. THUS, NO ASSESSEE SHOULD BE HARASSED AND HARRIED BUT ANY DIS HONEST FACADE AND SMOKESCREENS WHICH MASQUERADE AS PRETENCE SHOULD BE EXPOSED AND NOT ACCEPTED. 25. IN LOVELY EXPORTS LTD. (SUPRA), A DIVISION BENC H EXAMINED TWO EARLIER DECISIONS OF THIS COURT IN CIT V. STELLER INVESTMENT LTD. [19 917 192 ITR 287159 TAXMAN 568 (DELHI) AND EIT V. SOPHIA FINANCE LTD. [19947 205 I TR 98([19937 70 TAXMAN 69 (DELHI) (FB ). THE DECISION IN STELLER INVESTMENT'S CASE (SUPRA) WAS AFFIRMED BY THE SUPREME COURT BUT, BY OBSERVING THAT THE CONCLUSION WAS ON THE FACTS AND NO INTERFERENCE WAS CALLED FOR. LOVELY EXPORTS LTD. (S UPRA) WAS A CASE OF PUBLIC LIMITED COMPANY WHERE SHARES WERE SUBSCRIBED BY PUBLIC AND IT WAS ACCORDINGLY OBSERVED: 'THIS REASONING MUST APPLY A FORTIORI TO LARGE SCAL E SUBSCRIPTIONS TO THE SHARES OF A PUBLIC COMPANY WHERE THE LATTER MAY HAVE NO MA TERIAL OTHER THAN THE APPLICATION FORMS AND BANK TRANSACTION DETAILS TO G IVE SOME INDICATION OF THE IDENTITY OF THESE SUBSCRIBERS. IT MAY NOT APPLY IN CIRCUMSTANCES WHERE THE SHARES ARE ALLOTTED DIRECTLY BY THE COMPANY/ASSESSE E OR TO CREDITORS OF THE ASSESSEE. THIS IS WHY THIS COURT HAS ADOPTED A VERY STRICT APPROACH TO THE BURDEN BEING LAID ALMOST ENTIRELY ON AN ASSESSEE WH ICH RECEIVES A GIFT. 26. THEREAFTER REFERENCE WAS MADE TO FULL BENCH DEC ISION IN THE CASE OF SOPHIA FINANCE LTD.S (SUPRA) WHEREIN IT HAS BEEN OBSERVE D THAT IF THE SHAREHOLDERS EXISTS THEN, 'POSSIBLY', NO FURTHER ENQUIRY NEEDS TO BE MA DE AND THAT THE FULL BENCH HAD NOT REFLECTED UPON THE QUESTION OF WHETHER THE BURDEN O F PROOF RESTED ENTIRELY ON THE ASSESSEE AND AT WHICH POINT THIS BURDEN JUSTIFIABLY SHIFTED TO THE ASSESSING OFFICER. THE FULL BENCH HAS OBSERVED THAT THEY WERE NOT DECI DING AS TO ON WHOM AND TO WHAT EXTENT WAS THE ONUS TO SHOW THAT THE AMOUNT CREDITE D IN THE BOOKS OF ACCOUNTS WAS SHARE CAPITAL AND WHEN THE ONUS WAS DISCHARGED, WAS NOT DECIDED. THE STANDARD OF PROOF MIGHT BE RIGOROUS AND STRINGENT AND WAS DEPEN DENT UPON NATURE OF THE TRANSACTION AND WHERE THERE WAS EVIDENCE THAT THE S OURCE OF INVESTMENT CANNOT BE MANIPULATED, IT WAS MATERIAL. SIMILARLY, IT WAS OBS ERVED THAT ASSESSEE COULD SCARCELY BE HEARD TO SAY THAT HE DID NOT KNOW THE PARTICULAR S OF A DONOR IN CASE OF A GIFT. IT WAS HELD:- 'THERE CANNOT BE TWO OPINIONS ON THE ASPECT THAT TH E PERNICIOUS PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE MASQUER ADE OR CHANNEL OF INVESTMENT IN THE SHARE CAPITAL OF A COMPANY MUST B E FIRMLY EXCORIATED BY THE REVENUE. EQUALLY, WHERE THE PREPONDERANCE OF EVIDEN CE INDICATES ABSENCE OF CULPABILITY AND COMPLEXITY OF THE ASSESSEE IT SH OULD NOT BE HARASSED BY THE REVENUE'S INSISTENCE THAT IT SHOULD PROVE THE NEGAT IVE. IN THE CASE OF A PUBLIC ISSUE, THE COMPANY CONCERNED CANNOT BE EXPECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDENTITY AS WELL AS FINANCIAL WOR TH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST, HOWEVER, MAINTAIN AND MAKE AVAILA BLE TO THE ASSESSING OFFICER FOR HIS PERUSAL, ALL THE INFORMATION CONTAI NED IN THE STATUTORY SHARE APPLICATION DOCUMENTS. IN THE CASE OF PRIVATE PLACE MENT THE LEGAL REGIME WOULD NOT BE THE SAME. A DELICATE BALANCE MUST BE M AINTAINED WHILE WALKING THE TIGHTROPE OF SECTION 68 AND 69 OF THE INCOME TA X ACT. THE BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSE E; IF THE AO HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY- BOUND, TO CARRY OUT THOROUGH INVESTIGATIONS. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY .... ** ** ** .... ONCE MATERIAL TO PROVE THESE INGREDIENTS ARE P RODUCED IT IS FOR THE ASSESSING OFFICER TO FIND OUT AS TO WHETHER, ON THE SE MATERIALS, THE ASSESSED HAS SUCCEEDED IN ESTABLISHING THE INGREDIENTS MENTI ONED ABOVE. THE IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 15 ASSESSING OFFICER . LIFT THE VEIL' AND ENQUIRE INTO THE REAL NATURE OF THE TRANSACTION. CIT V. RUBY TRADERS AND EXPORTERS LTD. [20037 263 ITR 300 (CAL. ). CIT V. NIVEDAN VANIJYA NIYOJAN LTD. [20037 263 I TR 623 (CAL.) AND CIT V. KUNDAN INVESTMENT LTD. [2003] 263 ITR 626 (CAL.) AR E THE OTHER THREE. IN THIS ANALYSIS, A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE IT ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CR EDITOR/SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER. (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS RE GISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER ETC., IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE A SSESSED. (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADV ERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS T O RESPOND TO ITS NOTICES; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR /SUBSCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE N OR SHOULD THE ASSESSING OFFICER TAKE SUCH REPUDIATION AT FACE VALUE AND CON STRUE IT, WITHOUT MORE, AGAINST THE ASSESSEE; AND (7) THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORTHINESS OF THE CREDITOR/ SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIAT ION. ' 27. THE DECISION IN THE CASE OF LOVELY EXPORTS LTD. (SUPRA) WAS CONSIDERED IN NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) AND IT WAS ELUCIDATED:- '38. THE RATIO OF A DECISION IS TO BE UNDERSTOOD AN D APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD , IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SU CH AS THEIR NAMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWOR THINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER, SHARE TRANSFER R EGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POS SESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THE N NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC.68 AND THE RE MEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCO RDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SU CH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MAT ERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF-CONFESSED ' ACCOMMODATION ENTRY PROVIDERS ', WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR B OOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBS CRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAI N SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE A SSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHOR ITIES INTO THE ACTIVITIES OF SUCH ' ENTRY PROVIDERS '. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATE RIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE- MEDITATED PLAN - A SMOKESCREEN - CONCEIVED AND EXEC UTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE IDENTIT Y AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRAN SACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED H ANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSES SION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 16 ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE CA SE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF T RUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. ' 28. IN NOVA PROMOTERS & FINLEASE (SUPRA), IT WAS HE LD THAT IN VIEW OF THE LINK BETWEEN THE ENTRY PROVIDERS AND INCRIMINATING EVIDENCE, MER E FILING OF PAN NUMBER, ACKNOWLEDGEMENT OF INCOME TAX RETURNS OF THE ENTRY PROVIDER, BANK ACCOUNT STATEMENTS ETC. WAS NOT SUFFICIENT TO DISCHARGE THE ONUS. 29. IN CIT V. NIPUN BUILDERS & DEVELOPERS (P.) LTD. [20137350 ITR 4071214 TAXMAN 429/30 TAXMANN.COM 292 (DELHO, THIS PRINCIPLE HAS B EEN REITERETED HOLDING THAT THE ASSESSEE AND THE ASSESSING OFFICER HAVE TO ADOPT A REASONABLE APPROACH AND WHEN THE INITIAL ONUS ON THE ASSESSEE WOULD STAND DISCHA RGED DEPENDS UPON FACTS AND CIRCUMSTANCES OF EACH CASE. IN CASE OF PRIVATE LIMI TED COMPANIES, GENERALLY PERSONS KNOWN TO DIRECTORS OR SHAREHOLDERS, DIRECTLY OR IND IRECTLY, BUY OR SUBSCRIBE TO SHARES. UPON RECEIPT OF MONEY, THE SHARE SUBSCRIBERS DO NOT LOSE TOUCH AND BECOME INCOMMUNICADO. CAJL MONIES, DIVIDENDS, WARRANTS ETC . HAVE TO BE SENT AND THE RELATIONSHIP IS/WAS A CONTINUING ONE. IN SUCH CASES , THEREFORE, THE ASSESSEE CANNOT SIMPLY FURNISH DETAILS AND REMAIN QUIET EVEN WHEN S UMMONS ISSUED TO SHAREHOLDERS UNDER SECTION 131 RETURN UNSERVED AND UN COMPLIED. THIS APPROACH WOULD BE UNREASONABLE AS A GENERAL PROPOSITION AS THE ASSESS EE CANNOT PLEAD THAT THEY HAD RECEIVED MONEY, BUT COULD DO NOTHING MORE AND IT WA S FOR THE ASSESSING OFFICER TO ENFORCE SHARE HOLDERS ATTENDANCE. SOME CASES MIGHT REQUIRE OR JUSTIFY VISIT BY THE INSPECTOR TO ASCERTAIN WHETHER THE SHAREHOLDERS/SUB SCRIBERS WERE FUNCTIONING OR AVAILABLE AT THE ADDRESSES, BUT IT WOULD BE INCORRE CT TO STATE THAT THE ASSESSING OFFICER SHOULD GET THE ADDRESSES FROM REGISTRAR OF COMPANIE S' WEBSITE OR SEARCH FOR THE ADDRESSES OF SHAREHOLDERS AND COMMUNICATE WITH THEM . SIMILARLY, CREDITWORTHINESS WAS NOT PROVED BY MERE ISSUE OF A CHEQUE OR BY FURN ISHING A COPY OF STATEMENT OF BANK ACCOUNT. CIRCUMSTANCES MIGHT REQUIRE THAT THER E SHOULD BE SOME EVIDENCE OF POSITIVE NATURE TO SHOW THAT THE SAID SUBSCRIBERS H AD MADE A GENUINE INVESTMENT, ACTED AS ANGEL INVESTORS, AFTER DUE DILIGENCE OR FO R PERSONAL REASONS. THUS, FINDING OR A CONCLUSION MUST BE PRACTICABLE, PRAGMATIC AND MIG HT IN A GIVEN CASE TAKE INTO ACCOUNT THAT THE ASSESSEE MIGHT FIND IT DIFFICULT T O UNIMPEACHABLY ESTABLISH CREDITWORTHINESS OF THE SHAREHOLDERS. 30. WHAT WE PERCEIVE AND REGARD AS CORRECT POSITION OF LAW IS THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOUT THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ONUS TO PROVE THE THREE FACTUM IS ON THE ASSESSEE AS THE FACTS ARE WITHIN THE ASSESSEE'S KNOWLEDGE. MERE PRODUCTIO N OF INCORPORATION DETAILS, PAN NOS. OR THE FACT THAT THIRD PERSONS OR COMPANY HAD FILED INCOME TAX DETAILS IN CASE OF A PRIVATE LIMITED COMPANY MAY NOT BE SUFFICIENT WHE N SURROUNDING AND ATTENDING FACTS PREDICATE A COVER UP. THESE FACTS INDICATE AND REFL ECT PROPER PAPER WORK OR DOCUMENTATION BUT GENUINENESS, CREDITWORTHINESS, ID ENTITY ARE DEEPER AND OBTRUSIVE. COMPANIES NO DOUBT ARE ARTIFICIAL OR JURISTIC PERSO NS BUT THEY ARE SOULLESS AND ARE DEPENDENT UPON THE INDIVIDUALS BEHIND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS THE PERSONS BEHIND THE COMPANY WHO TAKE THE DECISIONS, CONTROLS AND MANAGE THEM. 31. THE RESPONDENT HEREIN IS A PRIVATE LIMITED COMP ANY. IT IS NOT THE CASE OF THE RESPONDENT THAT THE DIRECTORS OR PERSONS BEHIND THE COMPANIES MAKING THE INVESTMENT IN THEIR SHARES WERE RELATED OR KNOWN TO THEM. IT IS HIGHLY IMPLAUSIBLE THAT AN UNKNOWN PERSON HAD MADE SUBSTANTIAL INVESTMENT I N A PRIVATE LIMITED COMPANY TO THE TUNE OF RS.63,80100/- AND RS.75,60,200/- IN TWO CONSECUTIVE ASSESSMENT YEARS 2002-03 AND 2003-04 RESPECTIVELY WITHOUT ADEQUATELY PROTECTING THE INVESTMENT AND ENSURING APPROPRIATE RETURNS. OTHER THAN THE SHARE APPLICATION FORMS, NO OTHER AGREEMENT BETWEEN THE RESPONDENT AND THIRD COMPANIE S HAD BEEN PLACED ON RECORD. THE PERSONS BEHIND THESE COMPANIES WERE NOT PRODUCE D BY THE RESPONDENT. ON THE OTHER HAND RESPONDENT ADOPTED PREVARICATE AND NON- COOPERATION ATTITUDE BEFORE THE IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 17 ASSESSING OFFICER ONCE THEY CAME TO KNOW ABOUT THE DIRECTED ENQUIRY AND THE INVESTIGATION BEING MADE. EVASIVE AND TRANSIENT APP ROACH BEFORE THE ASSESSING OFFICER IS LIMPID AND PERSPICUOUS. IDENTITY, CREDIT WORTHINESS OR GENUINENESS OF THE TRANSACTION IS NOT ESTABLISHED BY MERELY SHOWING TH AT THE TRANSACTION WAS THROUGH BANKING CHANNELS OR BY ACCOUNT PAYEE INSTRUMENT. IT MAY, AS IN THE PRESENT CASE REQUIRED ENTAIL A DEEPER SCRUTINY. IT WOULD BE INCO RRECT TO STATE THAT THE ONUS TO PROVE THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHI NESS OF THE CREDITOR STANDS DISCHARGED IN ALL CASES IF PAYMENT IS MADE THROUGH BANKING CHANNELS. WHETHER OR NOT ONUS IS DISCHARGED DEPENDS UPON FACTS OF EACH CASE. IT DEPENDS ON WHETHER THE TWO PARTIES ARE RELATED OR KNOWN TO EACH; THE MANNER OR MODE BY WHICH THE PARTIES APPROACHED EACH OTHER, WHETHER THE TRANSACTION WAS ENTERED INTO THROUGH WRITTEN DOCUMENTATION TO PROTECT THE INVESTMENT, WHETHER TH E INVESTOR PROFESSES AND WAS AN ANGEL INVESTOR, THE QUANTUM OF MONEY, CREDITWORTHIN ESS OF THE RECIPIENT, THE OBJECT AND PURPOSE FOR WHICH PAYMENT/INVESTMENT WAS MADE E TC. THESE FACTS ARE BASICALLY AND PRIMARILY IN KNOWLEDGE OF THE ASSESSEE AND IT I S DIFFICULT FOR REVENUE TO PROVE AND ESTABLISH THE NEGATIVE. CERTIFICATE OF INCORPORATI ON OF COMPANY, PAYMENT BY BANKING CHANNEL, ETC. CANNOT IN ALL CASES TANTAMOUNT TO SAT ISFACTORY DISCHARGE OF ONUS. THE FACTS OF THE PRESENT CASE NOTICED ABOVE SPEAK AND A RE OBVIOUS. WHAT IS UNMISTAKABLY VISIBLE AND APPARENT, CANNOT BE SPURRED BY FORMAL B UT UNRELIABLE PALE EVIDENCE IGNORING THE PATENT AND WHAT IS PLAIN AND WRIT LARG E. 32. IN VIEW OF THE AFORESAID DISCUSSION THE SUBSTAN TIAL QUESTION OF LAW FRAMED IN THE TWO APPEALS IS ANSWERED IN FAVOUR OF APPELLANT-REVE NUE AND AGAINST THE RESPONDENT- ASSESSEE. THE APPEAL IS ACCORDINGLY ALL OWED TO THE EXTENT INDICATED ABOVE. THE APPELLANT IS ALSO ENTITLED TO COSTS WHIC H IS ASSESSED AT RS.20,000/- [ UNQUOTE] 8. IN ANOTHER RECENT JUDGMENT OAF THE HON'BLE HIGH COURT OF DELHI, THE CASE OF RIDDHI PROMOTERS (PVT) LTD VS CIT-7, DELHI, REPORTED IN [2 015] TAXMANN.COM 367, THE HON'BLE HIGH COURT HAS HELD THAT MERELY ESTABLISHIN G THE IDENTITY OF THE SHARE APPLICANT WOULD NOT SUFFICE, THE ASSESSEE IS BOUND TO BRING ON RECORD AND SATISFY REVENUE ABOUT THE GENUINENESS OF THE TRANSACTION, A S WELL AS THE CREDITWORTHINESS OF THE SHARE APPLICANT. THE HEAD NOTES ARE AS UNDER: IT : ESTABLISHING IDENTITY OF SHARE APPLICANT IS NO T SUFFICIENT TO DISCHARGE INITIAL ONUS THAT LAY ON ASSESSEE UNDER SECTION 68; ASSESSE E HAS TO FURTHER SATISFY REVENUE AS TO GENUINENESS OF TRANSACTION AND CREDIT WORTHINESS OF SHARE APPLICANT OR INDIVIDUAL WHO IS ADVANCING AMOUNTS [2015] 58 TAXMANN.COM 367 (DELHI) HIGH COURT OF DEL HI RIDDHI PROMOTERS (P.) LTD. V. COMMISSIONER OF INCOME-TAX-7.* S. RAVINDRA BHAT AND R. K. GAUBA, JJ. IT APPEAL NO. 227 OF 20151 MARCH 27, 2015 SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDI T (SHARE APPLICATION MONEY) - ASSESSMENT YEAR 2002-03 - WHETHER ESTABLISHING IDEN TITY OF SHARE APPLICANT OR CREDITOR IS NOT SUFFICIENT FOR ASSESSEE TO DISCHARG E ONUS UNDER SECTION 68; ASSESSEE HAS TO FURTHER SATISFY REVENUE AS TO GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF SHARE APPLICANT OR INDIVIDUAL WHO IS ADVANCING A MOUNTS - HELD, YES - WHETHER CREDITWORTHINESS OF SHARE APPLICANTS HAS TO BE SEEN IN CONTEXT OF ASSERTION MADE BY THEM OR MATERIALS PRESENTED BEFORE ASSESSING OFFICE R AT RELEVANT TIME - HELD, YES [P.ARA 6] [IN FAVOUR OF REVENUE] 9. I ALSO FIND THAT ALL THE SUBMISSIONS MADE BY THE APPELLANT DURING THE COURSE OF THE APPEAL POINT TOWARDS THE ELABORATE DOCUMENTATION, M EANING THEREBY THAT THE APPELLANT HAS PRODUCED PAPERS RELATING TO APPLICATI ON FOR THE SHARES, THE ALLOTMENT OF THE SHARES, THE SHARE CERTIFICATES, PAYMENTS BY CHE QUE AND THE NECESSARY PAPERS FILED BEFORE THE REGISTRAR OF COMPANIES, WHERE THE NAME OF THE ASSESSEE HAS BEEN REFLECTED AS A SHAREHOLDER. THE APPELLANT HAS ALSO FILED PROOF OF AMALGAMATION OF THE COMPANIES WHEREIN TILE SHAREHOLDING HAS CHANGED HAN DS. IT IS ALSO THE CONTENTION OF THE APPELLANT THAT IT HAS PROCEEDED COPIES OF THE B ANK STATEMENT, BANK CONTRACT NOTES IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 18 AND DELIVERY INSTRUCTIONS TO THE BROKER BY WAY OF P ROOF THAT ALL THESE TRANSACTIONS WERE GENUINE. HOWEVER, IN MY CONSIDERED VIEW OF THE MATT ER, IT IS PRECISELY THIS ELABORATE PAPERWORK THAT STRENGTHENS THE MATTER RELATING TO T HE BOGUS BENEFIT OF THE LTCG, WHICH CLEARLY HAS BEEN SCHEMED, PRE-PLANNED AND EXE CUTED WITH MALA FIDE INTELLIGENCE AND PRECISION. THEREFORE ALL THESE PAP ERS ARE MERE DOCUMENTS AND NOT ANY EVIDENCE. THE WHOLE GAMUT OF TRANSACTIONS ARE U NNATURAL AND HIGHLY SUSPICIOUS, AND THEREFORE THE RULES OF SUSPICIOUS TRANSACTIONS TO APPLY IN THE INSTANT CASE. THERE ARE GRAVE DOUBTS IN THE STORY BEFORE TH E AUTHORITIES BELOW. NONE OF THE MATERIAL PRODUCED BEFORE THE LD. AO BY THE ASSESSEE -APPELLANT ARE ENOUGH TO JUSTIFY THE HUMONGOUS GAINS ACCRUING TO THE ASSESSEE BY WAY OF CAPITAL GAINS. IN MY CONSIDERED VIEW THE BANKING DOCUMENTS ARE MERE SELF SERVING RECITALS. THE LAW IN THE MATTER OF SELF-SERVING RECITALS HAS BEEN LONG ESTAB LISHED BY THE HON'BLE APEX COURT. IN THE CASE OF CIT VS P.MOHANKALA 291 ITR 278, THE HON'BLE SUPREME COURT HELD THAT' THE MONEY CAME BY WAY OF BANK CHEQUE AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTIONS WAS NOT BY ITSELF OF ANY CONSE QUENCES.' THE BURDEN OF PROOF IS ON THE ASSESSEE IN THE MATTER OF JUSTIFICATION OF R ECEIPTS WHICH ARE OF SUSPICIOUS AND DUBIOUS NATURE. IN THE CASE OF CIT VS. DURGA PRASAD MORE (1971)82 ITR 540 (SC), THEIR LORDSHIPS LAYING DOWN THE SIGNIFICANCE OF HUM AN PROBABILITIES HELD AS UNDER: 'IN A CASE WHERE A PARTY RELIED ON SELF SERVING RECITAL S IN DOCUMENTS, IT WAS FOR THAT PARTY TO ESTABLISH THE TRUTH OF THOSE RECITALS: THE TAXIN G AUTHORITIES WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALI TY OF SUCH RECITALS.' SIMILARLY IN THE CASE OF SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SE ), THEIR LORDSHIPS HELD AS UNDER: 'IN VIEW OF SECTION 68 OF THE ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SAME MAY BE CHA RGED TO INCOME TAX AS THE INCOME OF THE ASSESSES OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY. IN SUCH A CASE, THERE IS PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE VIZ. THE RECEIPT OF MONEY, AND IF HE FAILS -TO REBUT, THE SAID EVIDENCE BEING UN-REBUTTED, CAN BE USED AGAINST HIM BY HOLDING THA T IT WAS A RECEIPT OF AN INCOME NATURE.' IN THE CASE OF SAJJAN DAS & SONS VS. CIT ( 2003) 264 ITR 435 (DELHI), THEIR LORDSHIPS OF THE HIGH' COURT OF DELHI, WHILE CONSID ERING A CASE IN WHICH GIFTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKING CHANNELS L AID IMPORTANCE ON THE CAPACITY OF THE DONOR FOR MAKING THE GIFT AND HIS IDENTITY A S WELL AS IMPORTANCE OF RELATIONSHIP BETWEEN THE DONOR AND DONEE IN DETERMINATION OF GEN UINENESS OF GIFT HELD AS UNDER: 'THAT A MERE IDENTIFICATION OF THE DONOR AND SHOWIN G THE MOVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROV E THE GENUINENESS OF THE GIFT. SINCE THE CLAIM OF THE GIFT WAS MADE BY THE ASSESSE E, THE ONUS LAY ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE PERSON MAKING THE GIF T BUT ALSO HIS CAPACITY TO MAKE A GIFT AND THAT IT HAD ACTUALLY BEEN RECEIVED AS A GIFT FR OM THE DONOR. 'IN MY CONSIDERED VIEW WHEREVER DOCUMENTS ARE RELIED UPON THEY SHOULD PASS THE TEST OF NORMAL BEHAVIOUR OF THE ASSESSEE IN THE COURSE OF BUSINESS VIZ., HUMAN CONDUCT, PREPONDERANCE OF PROBABILITY AND SURROUNDING CIRCUM STANCES. IN MY CONSIDERED VIEW, EVEN IF DOCUMENTARY EVIDENCE IS PRODUCED, THE SAME MUST PASS THE TEST OF HUMAN PROBABILITIES AND SURROUNDING CIRCUMSTANCES IF THEY DO NOT, THEN ADDITION JUSTIFIED. RELIANCE ON SUCH MATTERS IS PLACED ON THE CASE OF S MT PHOOLWATI DEVI 314 ITR (AT) 1 (DEL.) 10.IN THE CASE OF RAJMANDIR ESTATE PVT LTD AND A DE CISION IN FAVOUR OF THE REVENUE HAS BEEN MADE AS ABOVE IN GA NO 509 OF 2016. IT IS HELD AS UNDER:- '(21) AFTER HEARING THE LEARNED ADVOCATES, WE ARE O F THE OPINION THAT THE FOLLOWING QUESTIONS ARISE FOR CONSIDERATION ;- (A) WHETHER IN THE LIGHT OF THE VIEWS EXPRESSED IN THE CASE OF LOVELY EXPORTS ( SUP RA) & STELLER INVESTMENT ( SUPRA) THE ORDER UNDER SECTION 263 DIRECTING FURTHE R INVESTIGATION IS LEGAL? (B) IS THE FINDING OF THE COMMISSIONER OF INCOME TAX TH AT UNACCOUNTED MONEY WAS OR COULD HAVE BEEN LAUNDERED AS CLEAN SHARE CAP ITAL BY CREATING FACADE OF PAPER WORK, ROUTING THE MONEY THROUGH SEVERAL BA NK ACCOUNTS AND GETTING IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 19 IT THE SEAL OF STATUTORY APPROVAL BY GETTING THE CA SE REOPENED UNDER SECTION 143(3) /147 OF THE INCOME TAX ACT IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE? (D) WHETHER THE IMPUGNED J UDGMENT OF THE LEARNED TRIBUNAL IS PERVERSE? [22J WE SHALL CONSIDER THE SECOND QUESTION FIRST. I N A COMMENTARY ON THE PREVENTION OF MONEY LAUNDERING ACT,-2002 BY DR.M.C. MEHANATHAN PUBLISHED BY TEXIS NEXIS, 2014, THE STEPS OF MONEYS LAUNDERING ARE DESCRIBED AS FOLLOWS:- 'STEPS OF MONEY - LAUNDERING' ALTHOUGH MONEY-LAUNDERING OFTEN INVOLVES A COMPLEX SERIES OF TRANSACTIONS, IT GENERALLY INCLUDES THE F OLLOWING THREE BASIC STEPS: 1. PLACEMENT IT INVOLVES INTRODUCTION OF THE PROCEEDS OF CRIME INTO THE FINANCIAL SYSTEM. THIS IS ACCOMPLISHED BY BREAKING UP LARGE AMOUNTS O F CASH INTO SMALLER SUMS THAT ARE THEN DEPOSITED DIRECTLY INTO A BANK ACCOUNT, OR BY PURCHASING MONETARY INSTRUMENTS, TRANSFERRING THE CASH OVERSEAS FOR DEP OSIT IN BANKING /FINANCIAL INSTITUTIONS, USE FOR PURCHASE OF HIGH VALUE THINGS SUCH AS GOLD, PRECIOUS STONES, ART WORKS ETC. AND RESELLING THE SAME THROUGH CHEQUES O R BANK TRANSFER ETC. 2. LAYERING THIS INVOLVES FORMATION OF COMPLEX LAYERS OF FINANC IAL TRANSACTIONS WHICH DISTANCE THE ILLICIT PROCEEDS FROM THEIR SOURCE AND DISGUISE THE AUDIT TRAIL. IN THIS PROCESS A SERIES OF CONVERSIONS OR TRANSACTIONS ARE INVOLVED FOR MOV ING THE FUNDS TO PLACES SUCH AS OFFSHORE FINANCIAL CENTRES OPERATING IN A LIBERAL R EGULATORY REGIME. OFTEN 'FRONT' COMPANIES ARE FORMED TO ACCOMPLISH THIS TASK. THESE COMPANIES OBSCURE THE REAL OWNERS OF MONEY THROUGH THE BANK SECRECY LAWS AND A TTORNEY-CLIENT PRIVILEGE. THE TECHNIQUES USED FOR THE PURPOSE ARE TO LEND THE PRO CEEDS BACK TO THE OWNER AS LOANS, GIFTS AND ETC. UNDER INVOICING THE ITEMS EXP ORTED TO THE REAL OWNER OR ETC. CASES, THE TRANSFERS MAY BE DISGUISED AS PAYMENTS F OR GOODS OR SERVICES, THUS GIVING THEM A LEGITIMATE APPEARANCE. 3. INTEGRATION THIS I NVOLVES INVESTMENT IN THE LEGITIMATE ECONOMY SO THAT THE MONEY GETS THE COLOU R OF LEGITIMACY. THIS IS ACHIEVED BY TECHNIQUES SUCH AS LENDING THE MONEY THROUGH 'FR ONT' COMPANIES ETC. HE MAY BE INVESTED IN REAL ESTATES, BUSINESS AND ETC. THE STA GES AT WHICH MONEY- LAUNDERING COULD BE EASILY DETECTED ARE THOSE WHERE CASH ENTER S INTO THE DOMESTIC FINANCIAL SYSTEM, EITHER FORMALLY OR INFORMALLY, WHERE IT IS SENT ABROAD TO BE INTEGRATED INTO THE FINANCIAL SYSTEMS OF TAX HAVEN COUNTRIES AND WHERE IT IS REPATRIATED IN THE FORM OF TRANSFERS'. THE ROLE OF THE REVENUE AUTHORITIES IN TACKLING THE MENECE OF LAUNDERING BLACK MONEY WAS COMMENTED BY THE LEARNED AUTHOR AS FOLLOWS:- ' IT HAS TO BE KEPT IN VIEW THAT INDIA HAS A PROBLEM OF BLACK ECONOMY, WHI CH IS UNACCOUNTED AND MANY A TIME THE HOLDERS OF BLACK MONEY ALSO LAUNDER THE BL ACK MONEY IN ORDER TO ACQUIRE LEGITIMATE ASSETS. LEGAL OR ILLEGAL INCOME WHICH EV ADES TAX AND ILLEGAL INCOME THAT COMES WITHIN THE EXEMPTED TAXATION SLAB CONSTITUTE THE UNREPORTED THE GROSS DOMESTIC PRODUCT OR BLACK ECONOMY. LAUNDERING THE B LACK MONEY AND LAUNDERING PROCEEDS OF CRIME ARE TWO DIFFERENT ISSUES, ALTHOUG H THERE IS FREQUENT OVERLAP BETWEEN THE TWO. WHILE LAUNDERING THE BLACK MONEY I S TO BE HANDLED THROUGH TAXATION LAWS OR SIMILAR LAWS, THE LAUNDERING OF PROCEEDS OF CRIME IS TO BE HANDLED THROUGH SPECIAL ANTI-MONEY-IAUNDERING LAWS. ' [24] FROM THE AFORESAID EVIDENCE THE FOLLOWING, PRI MA FACIE, INFERENCES CAN SAFELY BE DRAWN:- 9(A) THE PROMOTER/DIRECTORS OF THE ASSESSEE AND THEIR CLOSE RELATIVES AND FRIENDS HAS UNITED WITH THE COMMON OBJECT OF CREATI NG AT LEAST TWENTY ( 19+1) COMPANIES APPARENTLY HAVING A LARGE CAPITAL BASE, B UT, IN FACT THESE ARE MERE PAPER COMPANIES HAVING NO REAL WORTH. THE TRANSACTION OF SALE AND PURCHASE OF SHARES WAS NOMINAL RATHER THAN REAL. (B) THE ALLEGATION, IN RE SPONSE TO THE NOTICE TO SHOW-CAUSE U/S. 263 THAT 'IT BEARS IMPORTANCE TO STATE HERE TH AT THE INVESTOR COMPANIES OF SHARES WERE INTERESTED TO SUBSCRIBE SHARES OF THE ASSESSEE COMPANY AS , ACCORDING TO THEM, THE ASSESSEE COMPANY HAD PROSPECT IN FUTURE,' IS A PLAN LIE. (C) THE BLANK SHARE APPLICATION FORMS ETC. TABULATED ABOVE GO TO SHOW THAT THE ALLEGED APPLICATION FOR SHARES AND THE ALLEGED ALLOTMENT WERE NOT IN TH E USUAL COURSE OF THE BUSINESS. (D) IN THE LIGHT OF THE AFORESAID PIECES OF EVIDENCE AN D THE PRIMA FACIE FINDING, WE ARE EMBOLDENED TO SAY THAT THE THREE REQUIREMENTS: (A) IDENTITY OF THE SHARE-HOLDERS; (B) IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 20 GENUINENESS OF THE TRANSACTION AND (C) THE CREDITWO RTHINESS OF THE SHARE-HOLDERS REPEATEDLY IMPRESSED, BY MR.PODDAR, UPON US, HAVE N OT BEEN SATISFIED. IDENTITY OF THE ALLEGED SHARE-HOLDERS IS KNOWN BUT THE TRANSACTION WAS NOT A GENUINE TRANSACTION. THE TRANSACTION WAS NOMINAL RATHER THAN REAL. THE C REDITWORTHINESS OF THE ALLEGED SHARE HOLDERS IS ALSO NOT ESTABLISHED BECAUSE THEY DID NOT HAVE ANY MONEY OF THEIR OWN. EACH ONE OF THEM RECEIVED FROM SOMEBODY AND TH AT SOMEBODY RECEIVED FROM A THIRD PERSON. THEREFORE, PRIMA FACIE, THE SHARE-HOL DERS ARE MERE NAME LENDERS. [25J FOR THE REASONS DISCUSSED IN THE PRECEDING PAR AGRAPH, WE ARE SATISFIED THAT THE JUDGEMENT IN THE CASE OF CIT-VS-STELLER INVESTMENT (SUPRA) HAS NO MANNER OF APPLICATION TO THE FACTS AND CIRCUMSTANCES OF THIS CASE. THE QUESTION AS TO WHETHER THERE HAS BEEN A DEVICE ADOPTED FOR MONEY LAUNDERIN G ALSO DID NOT CROP UP FOR CONSIDERATION IN THAT CASE. THE PREVENTION OF MONEY LAUNDERING ACT, 2002 WAS NOT ALSO THERE ON THE STATUTE AT THAT POINT OF TIME. B EFORE THE APPEAL IN STELLER INVESTMENT LTD. WAS DISMISSED BY THE APEX COURT, THE QUESTION HAD CROPPED UP IN THE CASE OF SOPHIA FINANCE LTD. REPORTED IN (1994) 205ITR 98 WH EREIN A SPECIAL BENCH HELD AS FOLLOWS: -'AS WE READ SECTION 68 IT APPEARS THAT WH ENEVER A SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE THEN, IRRESPEC TIVE OF THE COLOUR OR THE NATURE OF THE SUM RECEIVED WHICH IS SOUGHT TO BE GIVEN BY THE ASSESSEE, THE INCOME -TAX OFFICER HAS THE JURISDICTION TO ENQUIRE FROM THE AS SESSEE THE NATURE AND SOURCE OF THE SAID AMOUNT. WHEN AN EXPLANATION IS REGARD THERETO IS GIVEN BY THE ASSESSEE, THEN IT IS FOR THE INCOME-TAX OFFICER TO BE SATISFIED WHETH ER THE SAID EXPLANATION IS CORRECT OR NOT. IT IS IN THIS REGARD THAT ENQUIRIES ARE USUALL Y MADE IN ORDER TO FIND OUT AS TO WHETHER, FIRSTLY, THE PERSONS FROM WHOM MONEY IS AL LEGED TO HAVE BEEN RECEIVED ACTUALLY EXISTED OR NOT. SECONDLY, DEPENDING UPON T HE FACTS OF EACH CASE, THE INCOME-TAX OFFICER MAY EVEN BE JUSTIFIED IN TRYING TO ASCERTAIN THE SOURCE OF THE DEPOSITOR, ASSUMING HE IS IDENTIFIED, IN ORDER TO D ETERMINE WHETHER THAT DEPOSITOR IS A MERE NAME-LENDER OR NOT. BE THAT AS IT MAY, IT IS C LEAR THAT THE INCOME-TAX OFFICER HAS JURISDICTION TO MAKE ENQUIRIES WITH REGARD TO THE N ATURE AND SOURCE OF A SUM CREDITED IN THE BOOKS OF ACCOUNT OF AN ASSESSEE AND IT WOULD BE IMMATERIAL AS TO WHETHER THE AMOUNT SO CREDITED IS GIVEN THE COLOUR OF A LOAN OR A SUM REPRESENTING THE SALE PROCEEDS OR EVEN RECEIPT OF SHARE APPLICATION MONEY . THE USE OF THE WORDS 'ANY SUM FOUND CREDITED IN THE BOOKS' IN SECTION 68 INDICATE S THAT THE SAID SECTION IS VERY WIDELY WORDED AND AN INCOME- TAX OFFICER IS NOT PRE CLUDED FROM MAKING AN ENQUIRY AS TO THE TRUE NATURE AND SOURCE THEREOF EVEN IF TH E SAME IS CREDITED AS RECEIPT OF SHARE APPLICATION MONEY.' IN THE CASE OF SUMATI DAY AL-VS- CIT REPORTED IN (1(95) 214 ITR 801 (SC) THEIR LORDSHIPS HELD THAT A CAPITAL RE CEIPT CAN BECOME TAXABLE IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATUR E AND SOURCE THEREOF IS NOT SATISFACTORILY EXPLAINED. THE JUDGEMENT IN THE CASE OF CIT-VS- LOVELY EXPORTS PVT. LTD. REPORTED IN (2008) 299 ITR 268 LENDS NO ASSIST ANCE TO THE ASSESSEE BECAUSE IN THAT CASE THE DIVISION BENCH REITERATED THAT OMISSI ON TO MAKE AN ENQUIRY, WHERE SUCH AN EXERCISE IS PROVOKED, SHALL RENDER THE ORDER TO THE ASSESSING OFFICER BOTH ERRONEOUS AND PREJUDICIAL TO THE REVENUE. THE DIVIS ION BENCH WENT ON TO HOLD THAT THE REVENUE SHOULD NOT HARASS THE ASSESSEE WHERE 'THE P REPONDERANCE OF EVIDENCE INDICATES ABSENCE OF CULPABILITY'. IN THE PRESENT C ASE THERE EXISTS REASONABLE SUSPICION IF NOT PRIMA FACIE EVIDENCE OF CULPABILIT Y. [26] THE LEARNED TRIBUNAL IN THE IMPUGNED JUDGEMENT IN PARAGRAPH 3,4, AND 5 OBSERVED, INTER ALIA AS FOLLOWS ;- 'WE HAVE HEARD T HE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS RELEVANT TO MENTION THAT WE HAVE DISPOSED OF MORE THAN 500 CASES INVOLVING SAME ISSUE THROUGH CE RTAIN ORDERS WITH THE MAIN ORDER HAVING BEEN PASSED IN A GROUP OF CASES LED BY SUBHL AKSHMI VANIJYA PVT. LTD -VS. CIT (ITA NO. 1104/KOL/2014) DATED 30.07.2015 FOR TH E A. Y. 2009-10. BOTH THE SIDES HAVE FAIRLY ADMITTED THAT FACTS AND CIRCUMSTANCES I F THE CASES UNDER CONSIDERATION ARE MUTATIS MUTANDIS SIMILAR TO THOSE DECIDED EARLIER, EXCEPT FOR CERTAIN ISSUES WHICH WE WILL ADVERT TO A LITTLE LATER. IN OUT AFORESAID ORD ER IN SUBHALAKSHMI VANIJYA PVT. LTD, VS. IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 21 CIT (ITA NO. 1104/KOL/2014 A. Y. 2009-10), WE HAVE DRAWN THE FOLLOWING CONCLUSION: - *** IT IS NOTICED THAT ALL OR SOME OF THE ABOVE CON CLUSIONS ARE APPLICABLE TO THE APPEALS IN THIS BATCH. 'THE APPELLANT HAS DISCLOSED A COPY OF THE JUDGEMENT DELIVERED BY THE LEARNED TRIBUNAL IN SUBHALAKSHMI V ANIJYA PVT. LTD, -VS. - CIT. THE LEARNED TRIBUNAL IN PARAGRAPH 17 .II OPINE D AS FOLLOWS :- 'ALL THE CASES UNDER CONSIDERATION HAVE THE SAME COMMON FEAT URE OF PASSING ASSESSMENT ORDERS IN UNDUE HASTE. WHEN WE CONSIDER THE ABOVE FACTUAL MATRIX, THERE CAN BE NO ESCAPE FROM AN AXIOMATIC CO NCLUSION THAT IN ALL THESE CASES THE ENQUIRY CONDUCTED BY THE AO'S IS EXCEEDIN GLY INADEQUATE AND HENCE FALL IN THE CATEGORY OF 'NO ENQUIRY' CONDUCTE D BY THE AO, WHAT TO TALK OF CHARACTERING IT AS AN 'INADEQUATE ENQUIRY'. IN OUR CONSIDERED OPINION, THE HIGHLY INADEQUATE ENQUIRY CONDUCTED BY THE AO RESUL TING IN DRAWING INCORRECT ASSUMPTION OF FACTS, MAKES THE ORDERS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. [28] WE HAVE INDICATED ABOVE THE PIECES OF EVIDENC E WHICH GO TO SHOW THAT THE COMMISSIONER HAD REASONS TO ENTERTAIN THE BELIE F THA1:-.THIS WAS OR COULD BE A CASE OF MONEY LAUNDERING WHICH WENT UNNOTICED BECAUSE THE ASSESSING OFFICER DID NOT HOLD REQUISITE INVESTIGATION EXCEPT FOR CALLING FOR THE RECORDS. THE EVIDENCE WHICH WE HAVE TABULATED ABOVE AND THE PRIMA FACIE INFERENCE DRAWN BY US IS DEDUCIBLE FROM THE DOCUMENTS ALSO SU BMITTED BEFORE THE ASSESSING OFFICER. THE FACT THAT THE ASSESSING OFFI CER DID NOT APPLY HIS MIND TO THOSE PIECES OF EVIDENCE WOULD BE EVIDENT FROM THE ASSESSMENT ORDER ITSELF. [28] WE FIND NO SUBSTANCE IN THE SUBMISSION THAT TH E ORDER OF THE LEARNED TRIBUNAL IS PERVERSE, AFTER EXAMINING ALL THE SUBMISSIONS ADVAN CED BY MR.PODDAR. [29] WHETHER RECEIPT OF SHARE CAPITAL WAS A TAXABLE EVENT PRIOR TO 1 ST APRIL, 2013 BEFORE INTRODUCTION OF CLAUSE (VII B) TO THE SUB- S ECTION 2 OF SECTION 56 OF THE INCOME TAX ACT; WHETHER THE CONCEPT OF ARMS LENGTH PRICING IN A DOMESTIC TRANSACTION BEFORE INTRODUCTION OF SECTION 92A AND 92BA OF THE INCOME TAX ACT WAS THERE AT THE RELEVANT POINT OF TIME ARE NOT QUESTIONS WHICH ARIS E FOR DETERMINATION IN THIS CASE. THE ASSESSEE WITH AN AUTHORISED SHARE CAPITAL OF RS . 1.36 CRORES RAISED NEARLY A SUM OF RS. 32 CRORES ON ACCOUNT OF PREMIUM AND CHOSE NO T TO GO IN FOR INCREASE OF AUTHORISED SHARE CAPITAL MERELY TO AVOID PAYMENT OF STATUTORY FEES IS AN IMPORTANT POINTER NECESSITATING INVESTIGATION. MONEY ALLEGEDL Y RECEIVED ON ACCOUNT OF SHARE APPLICATION CAN BE ROPED IN UNDER SECTION 68 OF THE INCOME TAX ACT IF THE SOURCE OF THE RECEIPT IS NOT SATISFACTORILY ESTABLISHED BY TH E ASSESSEE. REFERENCE IN THIS REGARD MAY BE MADE TO THE JUDGEMENT IN THE CASE OF SUMATI DAYAL VS. CIT( SUPRA) WHEREIN THEIR LORDSHIPS HELD THAT ANY SUM 'FOUND CREDITED I N THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SAME MAY BE CHARGED TO INCOM E TAX '. WE ARE UNABLE TO ACCEPT THE SUBMISSION THAT ANY FURTHER INVESTIGATIO N IS FUTILE BECAUSE THE MONEY WAS RECEIVED ON CAPITAL ACCOUNT. THE SPECIAL BENCH IN T HE CASE OF SOPHIA FINANCE LTD ( SUPRA) OPINED THAT 'THE USE OF WORDS' ANY SUM FOUND CREDITED IN THE BOOKS 'IN SECTION 68 INDICATES THAT THE SAID SECTION IS VERY WIDELY W ORDED AND AN INCOME - TAX OFFICER IS NOT PRECLUDED FROM MAKING AN ENQUIRY AS TO THE T RUE NATURE AND SOURCE THEREOF EVEN IF THE SAME IS CREDITED AS RECEIPT OF SHARE AP PLICATION MONEY. MERE FACT THAT THE PAYMENT WAS RECEIVED BY CHEQUE OR THAT THE APPLICAN TS WERE COMPANIES, BORNE ON THE FILE OF REGISTRAR OF COMPANIES WERE HELD TO BE NEUTRAL FACTS AND DID NOT PROVE THAT THE TRANSACTION WAS GENUINE AS WAS HELD IN THE CASE OF CIT -VS. -NOVE PROMOTERS AND FINLEASE (P) LTD ( SUPRA).SIMILAR VIEWS WERE EX PRESSED BY THIS COURT IN THE CASE OF CIT-VS. PRECISION FINANCE PVT. LTD. ( SUPRA). WE NEED NOT DECIDE IN THIS CASE AS TO WHETHER THE PROVISO TO SECTION 68 OF THE INCOME TAX ACT IS RETROSPECTIVE IN NATURE. TO THAT EXTENT THE QUESTION IS KEPT OPEN. WE MAY HOWEV ER POINT OUT THAT THE SPECIAL BENCH OF DELHI HIGH COURT IN THE CASE OF SOPHIA FIN ANCE LTD( SUPRA) HELD THAT 'THE ITO MAY EVEN BE JUSTIFIED IN TRYING TO ASCERTAIN TH E SOURCE OF DEPOSITOR'. THEREFORE, THE SUBMISSION THAT THE SOURCE OF SOURCE IS NOT A R ELEVANT ENQUIRY DOES NOT APPEAR TO IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 22 BE CORRECT. WE FIND NO SUBSTANCE IN THE SUBMISSION THAT THE EXERCISE OF POWER UNDER SECTION 263 BY THE COMMISSIONER WAS AN ACT OF REACT IVATING STALE ISSUES. IN THE CASE OF GABRIEL INDIA LTD( SUPRA) THE CIT WAS UNABLE TO POINT OUT ANY ERROR IN THE EXPLANATION FURNISHED BY THE ASSESSEE. WHEREAS IN T HE PRESENT CASE WE HAVE TABULATED THE EVIDENCE WHICH OFFICER DID NOT ATTACH ANY IMPORTANCE TO THAT ASPECT OF THE MATTER AS DISCUSSED ABOVE BY US. THE JUDGMENT I N THE CASE OF LEISURE WEAR EXPORTS PVT. LTD ( SUPRA) RELIED UPON BY MR. PODDAR HAS NO APPLICABILITY BECAUSE THE EVIDENCE FURNISHED BY THE ASSESSEE IN THIS CASE DOE S SUGGEST A COVER UP. WE ALSO HAVE HELD PRIMA FACIE THAT NEITHER THE TRANSACTION APPEARS TO BE GENUINE NOR ARE THE APPLICANTS OF SHARE ARE CREDITWORTHY. THE JUDGMENT IN THE CASE OF OMAR SALAY MOHAMED SAIT (SUPRA) CITED BY MR. PODDAR HAS NO APP LICATION FOR REASONS ALREADY DISCUSSED. IT IS NOT TRUE THAT THE COMMISSIONER IN THIS CASE HAS MERELY ON THE BASIS OF SUSPICION HELD THAT THIS WAS OR COULD BE A CASE OF MONEY LAUNDERING. WE AS A MATTER OF FACT HAVE DISCUSSED THIS ISSUE IN GREAT DETAIL A ND NEED NOT REITERATE THE SAME. THE ORDER PASSED BY THE COMMISSIONER IS BY NO MEANS AN ACT OF SUBSTITUTING HIS OWN VIEWS TO THAT OF THE ASSESSING OFFICER. IT IS TRUE THAT THE ASSESSING OFFICE HAD REQUISITIONED THE NECESSARY DETAILS BY HIS NOTICE U /S. 142 (1) BUT HE THEREAFTER DID NOT APPLY HIS MIND THERETO. THE JUDGEMENT IN THE CASE O F J.L.MORRION ( INDIA) LTD. HAS NO MANNER OF APPLICATION BECAUSE IN THAT CASE THE QUES TION ESSENTIALLY WAS WHETHER THE RECEIPT WAS OF CAPITAL OR REVENUE NATURE. THE FACTS AND CIRCUMSTANCES WERE NOT IN DISPUTE. MOREOVER THE VIEW TAKEN BY THE ASSESSING O FFICER WAS NOT SHOWN NOR WAS HELD BY THE COURT TO BE AN ERRONEOUS VIEW. WHEREAS IN THIS CASE WE HAVE DEMONSTRATED IN SOME DETAIL AS TO WHY IS THE ORDER OF THE ASSESSING OFFICER ERRONEOUS AND PREJUDICIAL TO THE REVENUE. THE JUDGE MENT IN THE MALABAR INDUSTRIAL CO. LTD. (SUPRA) AND MAX INDIA LTD. DO NOT APPLY TO THE FACTS OF THIS CASE FOR REASONS ALREADY DISCUSSED BY US. FROM THE JUDGEMENT OF THE LEARNED TRIBUNAL IN THE SUBHOLAXMI, PLACED BEFORE US IN GREAT DETAIL BY MR. PODDAR, WE FIND THAT ALL IMPORTANT PLACED FOR CONSIDERATION BY NO OTHER THAN MR. PODDA R HIMSELF WERE DULY CONSIDERED BY THE LEARNED TRIBUNAL. THE HON'BLE CALCUTTA HIGH COURT HAS DISCUSSED THE I SSUE IN DETAIL WITH REFERENT MONEY LAUNDERING ACT, PROVISION OF SECTION 68 AND T HE CASE OF CREDITORS BEING NAME LENDERS. THE HON'BLE HIGH COURT WHILE PASSING THE A BOVE DECISION HAS TAKEN INTO CONSIDERATION THE FINDINGS GIVEN BY THE APEX COURT IN THE CASE OF LOVELY EXPORT (P) LTD (216 CTR 195 ) TO COME TO THE CONCLUSIONS THAT IT DOES NOT HELP THE CASE OF THE PETITIONER. THE SLP FILED BY THE PETITIONER AGAINST THE ORDER OF THE HON'BLE CALCUTTA HIGH COURT IN RAJMANDIR ESTATE PVT. LTD. (SUPRA) HA S NOW BE DISMISSED BY THE HON'BLE SUPREME COURT; THEREFORE THE OBSERVATIONS I N THE ABOVE ORDER HAS NOW ATTENDED FINALITY. 11.IT MUST ALSO BE STATED HERE THAT IN COMMISSIONER OF INCOME TAX VS NR PORTFOLIO PVT LTD ON 22 NOVEMBER, 2013, THE HON'BLE DELHI HIG H COURT HAS HELD ..... 'THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR AND AN ADJUDICATOR. WHEN A FACT IS ALLEGED AND STATED BEFORE THE ASSESSING OFF ICER BY AN ASSESSEE, HE MUST AND SHOULD EXAMINE AND VERIFY, WHEN IN DOUBT O R WHEN THE ASSERTION IS DEBATABLE. NORMALLY A FACTUAL ASSERTION MADE SHOULD BE ACCEPTED BY THE ASSESSING OFFICER UNLESS FOR JUSTIFICATION AND REAS ONS THE ASSESSING OFFICER FEELS THAT HE NEEDS/REQUIRES A DEEPER AND DETAILED VERIFICATION OF THE FACTS ALLEGED. THE ASSESSEE IN SUCH CIRCUMSTANCES SHOULD COOPERATE AND FURNISH PAPERS, DETAILS AND PARTICULARS. THIS MAY ENTAIL IS SUE OF NOTICES TO THIRD PARTIES TO FURNISH AND SUPPLY INFORMATION OR CONFIRM FACTS OR EVEN ATTEND AS WITNESSES. THE ASSESSING OFFICER CAN ALSO REFER TO INCRIMINATING MATERIAL OR EVIDENCE AVAILABLE WITH HIM AND CALL UPON THE ASSES SEE TO FILE THEIR RESPONSE. WE CANNOT LAY DOWN OR STATE A GENERAL OR UNIVERSAL PROCEDURE OR METHOD WHICH SHOULD BE ADOPTED BY THE ASSESSING OFFICER WH EN VERIFICATION OF FACTS IS REQUIRED. THE MANNER AND MODE OF CONDUCTING ASSESSM ENT PROCEEDINGS HAS TO BE LEFT TO THE DISCRETION OF THE ASSESSING OFFIC ER, AND THE SAME SHOULD BE IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 23 JUST, FAIR AND SHOULD NOT CAUSE ANY HARASSMENT TO T HE ASSESSEE OR THIRD PERSONS FORM WHOM CONFIRMATION OR VERIFICATION IS R EQUIRED. THE VERIFICATION AND INVESTIGATION SHOULD BE ONE WITH THE LEAST AMOU NT OF INTRUSION, INCONVENIENCE OR HARASSMENT ESPECIALLY TO THIRD PAR TIES, WHO MAY HAVE ENTERED INTO TRANSACTIONS WITH THE ASSESSEE. THE UL TIMATE FINDING OF THE ASSESSING OFFICER SHOULD REFLECT DUE APPLICATION OR MIND ON THE RELEVANT FACTS AND THE DECISION SHOULD TAKE INTO CONSIDERATION THE ENTIRE MATERIAL, WHICH IS GERMANE AND WHICH SHOULD NOT BE IGNORED AND EXCLUDE THAT WHICH IS IRRELEVANT. CERTAIN FACTS OR ASPECTS MAY BE NEUTRAL AND SHOULD BE NOTED. THESE SHOULD NOT BE IGNORED BUT THEY CANNOT BECOME THE BEDROCK OR SUBSTRATUM OF THE CONCLUSION. THE PROVISIONS OF EVI DENCE ACT ARE NOT APPLICABLE, BUT THE ASSESSING OFFICER BEING A QUASI JUDICIAL AUTHORITY, MUST TAKE CARE AND CAUTION TO ENSURE THAT THE DECISION IS REA SONABLE AND SATISFIES THE CANONS OF EQUITY, FAIRNESS AND JUSTICE. THE EVIDENC E SHOULD BE IMPARTIALLY AND OBJECTIVELY ANALYZED TO ENSURE THAT THE ADVERSE FIN DINGS AGAINST THE ASSESSEE WHEN RECORDED ARE ADEQUATELY AND DULY SUPPORTED BY MATERIAL AND EVIDENCE AND CAN WITHSTAND THE CHALLENGE IN APPELLATE PROCEE DINGS. PRINCIPLE OF PREPONDERANCE OF PROBABILITIES APPLIES. WHAT IS STA TED AND THE SAID STANDARD, EQUALLY APPLY TO THE TRIBUNAL AND INDEED THIS COURT . THE REASONING AND THE GROUNDS GIVEN IN ANY DECISION OR PRONOUNCEMENT WHIL E DEALING WITH THE CONTENTIONS AND ISSUES SHOULD REFLECT APPLICATION O F MIND ON THE RELEVANT ASPECTS. WHEN AN ASSESSEE DOES NOT PRODUCE EVIDENCE OR TRIES TO: AVOID APPEARANCE BEFORE THE ASSESSING OFFICER, IT NECESSA RILY CREATES DIFFICULTIES AND PREVENTS ASCERTAINMENT OF TRUE AND CORRECT FACT S AS THE ASSESSING OFFICER IS DENIED ADVANTAGE OF THE CONTENTION OR FACTUAL AS SERTION BY THE ASSESSEE BEFORE HIM. IN CASE AN ASSESSEE DELIBERATELY AND IN TENTIONALLY FAILS TO PRODUCE EVIDENCE BEFORE THE ASSESSING OFFICER WITH THE DESI RE TO PREVENT INQUIRY OR INVESTIGATION, AN ADVERSE VIEW SHOULD BE TAKEN'. 12.LN THIS CONNECTION, I WOULD ALSO WISH TO REFER T O THE DECISION OF THE HON'BLE ITAT BOMBAY BENCH 'B' (ITA NO.614/BOM/87 A.Y. 1983-84) I N THE CASE OF M/S. MONT BLANE PROPERTIES AND INDUSTRIES PVT. LTD., WHICH WAS UPHE LD BY THE HON'BLE SUPREME COURT. THE HON'BLE TRIBUNAL HELD THAT THE WORD 'EVIDENCE' AS USED IN SEC. 143(3) COVERED CIRCUMSTANTIAL EVIDENCE ALSO. THE WORD 'EVIDENCE' A S USED IN SEC.143 (3) OBVIOUSLY COULD NOT BE CONFINED TO DIRECT EVIDENCE. THE WORD 'EVIDENCE' WAS COMPREHENSIVE ENOUGH TO COVER THE CIRCUMSTANTIAL EVIDENCE ALSO. U NDER THE TAX JURISPRUDENCE, THE WORD 'EVIDENCE' HAD MUCH WIDER CONNOTATIONS. WHILE THE WORD 'EVIDENCE' MIGHT RECALL THE ORAL AND DOCUMENTARY EVIDENCE AS MAY BE ADMISSI BLE UNDER THE INDIAN EVIDENCE ACT THE USE OF WORD 'MATERIAL' IN SEC.143(3) SHOWED THAT THE ASSESSING OFFICER, NOT BEING A COURT COULD RELY UPON MATERIAL, WHICH MIGHT NOT STRICTLY BE EVIDENCE ADMISSIBLE UNDER THE INDIAN EVIDENCE ACT FOR THE PU RPOSE OF MAKING AN ORDER OF ASSESSMENT. COURT OFTEN TOOK JUDICIAL NOTICE OF CER TAIN FACTS WHICH NEED NOT BE PROVED BEFORE THEM. THE PLAIN READING OF SECTION 14 2 AND 143 CLEARLY SUGGESTS THAT THE ASSESSING OFFICER MAY ALSO ACT ON THE MATERIAL GATHERED BY HIM. THE WARD 'MATERIAL' CLEARLY SHOWS THAT THE ASSESSING OFFICER , IS NOT FETTERED BY THE TECHNICAL RULES OF EVIDENCE AND THE LIKE, AND THAT HE MAY ACT ON MATERIAL WHICH MAY NOT STRICTLY SPEAKING BE ACCEPTED EVIDENCE IN COURT OF LAW. 13.THE HON'BLE SUPREME COURT IN CIT V. DURGA PRASAD MORE[1971] 82 ITR 540 AT PAGES 545-547 MADE A REFERENCE TO THE TEST OF HUMAN PROBABILITIES IN THE FOLLOWING FACT SITUATION IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS. OTHERWISE IT WILL BE VERY EASY TO MAKE SE LF- SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THO SE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME RECITALS MAD E IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOR THEN THE DOOR WILL BE LEFT WIDE-OPEN TO EVADE TAX. A IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 24 LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE T O SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO P UT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITA LS MADE IN THOSE DOCUMENTS . 14. IT IS A WELL SETTLED PRINCIPLE OF LAW AS DECLAR ED BY THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS.CIT (214 ITR 801)(SC) T HAT THE TRUE NATURE OF TRANSACTION HAVE TO BE ASCERTAINED IN THE LIGHT OF SURROUNDING CIRCUMSTANCES. IT NEEDS TO BE EMPHASIZED THAT STANDARD OF PROOF BEYOND REAS ONABLE DOUBT HAS NO APPLICABILITY IN DETERMINATION OF MATTERS UNDER TAX ING STATUTES. IN THE PRESENT CASE, IT IS CLEAR THAT APPARENT IS NOT THE REAL AS EVIDENCED FROM THE INVESTIGATION REPORT. FURTHER, THE HON'BLE SUPREME COURT, IN THE CASE OF CHUHAR MAL V CIT (1988) 172 ITR 250, HIGHLIGHTED THE FACT THAT THE PRINCIPLE OF EVI DENCE LAW ARE NOT TO BE IGNORED BY THE AUTHORITIES, BUT AT THE SAME TIME, HUMAN PROBAB ILITY HAS TO BE THE GUIDING PRINCIPLE, SINCE THE AO IS NOT FETTERED, BY TECHNIC AL RULES OF EVIDENCE, AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF DHAKESHWARI CO TTON MILLS V CIT (1954) 261 TR 775. THE HON'BLE SUPREME COURT, IN THE CASE OF CHUH AR MAL V CIT (SUPRA) HELD THAT WHAT WAS MEANT BY SAYING THAT EVIDENCE ACT DID NOT APPLY TO THE PROCEEDINGS UNDER INCOME-TAX ACT,1961, WAS THAT THE RIGORS OF RULES O F EVIDENCE, CONTAINED IN THE EVIDENCE ACT WAS NOT APPLICABLE; BUT THAT DID NOT M EAN THAT WHEN THE TAXING AUTHORITIES WERE DESIROUS OF INVOKING THE PRINCIPLE S OF EVIDENCE ACT, IN PROCEEDINGS BEFORE THEM, THEY WERE PREVENTED FROM DOING SO. IT WAS FURTHER HELD BY THE HON'BLE APEX COURT THAT ALL THAT SECTION 110 OF THE EVIDENC E ACT, 1872 DID, WAS TO EMBODY A SALUTARY PRINCIPLE OF COMMON LAW, JURISPRUDENCE VIZ , WHERE A PERSON WAS FOUND IN POSSESSING OF ANYTHING, THE ONUS OF PROVING THAT HE WAS NOT ITS OWNER, WAS ON THAT PERSON. THUS, THIS PRINCIPLE COULD BE ATTRACTED TO A SET OF CIRCUMSTANCES THAT SATISFIES ITS CONDITIONS AND WAS APPLICABLE TO TAXING PROCEED INGS. 15. I AM IN AGREEMENT WITH THE LD. AO THAT THE TRAN SACTIONS RELATING TO THE CLAIM OF LTCG AS MADE BY THE LD. AO COME WITHIN THE AMBIT OF 'SUSPICIOUS TRANSACTIONS', AND THEREFORE THE RULES OF SUSPICIOUS TRANSACTIONS WOULD APPLY TO THE CASE. PAYMENT THROUGH BANKS, PERFORMANCE THROUGH STOCK EXCHANGE A ND OTHER SUCH FEATURES ARE ONLY APPARENT FEATURES. THE REAL FEATURES ARE THE M ANIPULATED AND ABNORMAL PRICE OF OFF LOAD AND THE SUDDEN DIP THEREAFTER. THEREFORE, I HAVE TO REACH THE INEVITABLE CONCLUSION THAT THE TRANSACTIONS AS DISCUSSED BY TH E LD.AO FALL IN THE REALM OF 'SUSPICIOUS' AND 'DUBIOUS' TRANSACTIONS. THE LD. AO HAS THEREFORE NECESSARILY TO CONSIDER THE SURROUNDING CIRCUMSTANCES, WHICH HE IN DEED HAS DONE IN A VERY METICULOUS AND CAREFUL MANNER. IN THE CASE OF WIN C HADHA VS CIT (INTERNATIONAL TAXATION) IN ITA NO.3088& 3107/DEL/200S, THE HON'BL E DELHI ITAT 'B'-BENCH HAS OBSERVED, ON 31.12.2010 AS UNDER: 'SUSPICIOUS AND DIBIOUS TRASANCTION HOW TO BE DEAL T WITH: 6.1.1.. THE TAX LIABILITY IN THE CASES OF SUSPICIOU S TRANSACTIONS, IS TO BE ASSESSED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD, SURR OUNDING CIRCUMSTANCES, HUMAN CONDUCT, PREPONDERANCE OF PROBABILITIES AND NATURE OF INCRIMINATING INFORMATION/ EVIDENCE AVAILABLE WITH AO. 6.1.2. IN THE CASE OF SUMATIDAYAL V. CIT (1.995) 80 TAXMAN 89 (SC), THE HON'BLE SUPREME COURT HAS DEALT WITH THE RELEVANCE OF HUMAN CONDUCT, PREPONDERANCE OF PROBABILITIES AND SURROUNDING CIRCUMSTANCE, BURDEN OF PROOF AND ITS SHIFTING ON THE DEPARTMENT IN CASES OF SUSPICIOUS CIRCUMSTANCES, BY FOLLOWING OBSERVATIONS: ' ..... IT IS, NO DOUBT, TRUE THAT IN ALL CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION AND IF A RECEIPT IS IN THE NATURE OF INCO ME, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE BECAUSE IT FALLS WITHIN EXEMPTION PROVIDED BY THE ACT LIES UPON THE ASSESSEE. BUT IN VIEW OF SECTION 68, WHERE ANY SUM IS FOUND C REDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SAME MAY BE CHA RGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 25 OFFICER, NOT SATISFACTORY. IN SUCH CASE THERE IS PR IMA FACIE EVIDENCE AGAINST THE ASSESSEE, VIZ., THE RECEIPT OF MONEY, AND IF HE FAI LS TO REBUT THE SAME, THE SAID EVIDENCE BEING UN-REBUTTED, CAN BE USED AGAINST HIM BY HOLDING THAT IT IS A RECEIPT OF AN INCOME NATURE. WHILE CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE DEPARTMENT CANNOT, HOWEVER, ACT UNREASONABLY. ........... HAVING REGARD TO THE CONDUCT OF THE APP ELLANT AS DISCLOSED IN HER SWORN STATEMENT AS WELL AS OTHER MATERIAL ON THE RECORD, AN INFERENCE COULD REASONABLY BE DRAWN THAT THE WINNING TICKETS WERE PURCHASED BY TH E APPELLANT AFTER THE EVENT. THE MAJORITY OPINION AFTER CONSIDERING SURROUNDING CIRC UMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAD RIGHTLY CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES, WAS NOT GENUINE. IT C OULD NOT BE SAID THAT THE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAD BEEN REJECTED UNREASONABLY AND THAT THE FINDING THAT THE SAID AMO UNTS WERE INCOME OF THE APPELLANT' FROM OTHER SOURCES WAS NOT BASED ON EVID ENCE. ' CIRCUMSTANTIAL EVIDENCE HOW TO BE USED 6.13. IT WOULD, AT THIS STAGE, BE RELEVANT TO CONS IDER THE ADMISSIBILITY AND USE OF CIRCUMSTANTIAL EVIDENCE IN INCOME TAX PROCEEDING S. CIRCUMSTANTIAL EVIDENCE IS EVIDENCE OF THE CIRCUMSTANCES, AS OPPOSED TO DIRECT EVIDENCE. IT MAY CONSIST OF EVIDENCE AFFORDED BY THE BEARING ON THE FACT TO BE PROVED, OF OTHER AND SUBSIDIARY FACTS, WHICH ARE RELIED ON AS INCONSISTENT WITH ANY RESULT OTHER THAN THE TRUTH OF THE PRINCIPAL FACT. IT IS EVIDENCE OF VARIOUS FACTS, OT HER THAN THE FACT IN ISSUE WHICH ARE SO ASSOCIATED WITH THE FACT IN ISSUE, THAT TAKEN TOGET HER, THEY FORM A CHAIN OF CIRCUMSTANCES LEADING TO AN INFERENCE OR PRESUMPTIO N OF THE EXISTENCE OF THE PRINCIPAL FACT. IN THE APPRECIATION OF CIRCUMSTANTI AL EVIDENCE, THE RELEVANT ASPECTS, AS LAID DOWN FROM TIME TO TIME ARE - (1) THE CIRCUMSTANCES ALLEGED MUST BE ESTABLISHED B Y SUCH EVIDENCE, AS IN THE CASE OF OTHER EVIDENCE (2) THE CIRCUMSTANCES PROVED MUST BE OF A CONCLUSIV E NATURE AND NOT TOTALLY INCONSISTENT WITH THE CIRCUMSTANCES OR CONTRADICTOR Y TO OTHER EVIDENCE. (3) ALTHOUGH THERE SHOULD BE NO MISSING LINKS IN TH E CASE, YET IT IS NOT ESSENTIAL THAT EVERY ONE OF THE LINKS MUST APPEAR ON THE SURFACE O F THE EVIDENCE ADDUCED ; SOME OF THESE LINKS MAY HAVE TO BE INFERRED FROM THE PROVED FACTS; (4) IN DRAWING THOSE INFERENCES OR PRESUMPTIONS, TH E AUTHORITIES MUST HAVE REGARD TO THE COMMON COURSE OF NATURAL EVENTS, TO HUMAN CONDU CT AND THEIR RELATION TO THE FACTS OF THE PARTICULAR CASE. (5)THE CIRCUMSTANTIAL EVIDENCE CAN, WITH EQUAL FACI LITY, BE RESORTED TO IN PROOF OF A FACT IN ISSUE WHICH ARISES IN PROCEEDINGS FOR THE A SSESSMENT OF TAXES BOTH DIRECT AND INDIRECT, CIRCUMSTANTIAL EVIDENCE CAN BE MADE USE O F IN ORDER TO PROVE OR DISPROVE A FACT ALLEGED OR IN ISSUE. IN FACT, IN WHATEVER PROC EEDINGS OR CONTEXT INFERENCES ARE REQUIRED TO BE DRAWN FROM THE EVIDENCE OR MATERIALS AVAILABLE OR LACKING, CIRCUMSTANTIAL EVIDENCE HAS ITS PLACE TO ASSIST THE PROCESS OF ARRIVING AT THE TRUTH. ' 6.14. IT WILL ALSO BE WORTHWHILE TO CONSIDER THE NA TURE OF BURDEN OF PROOF ON THE AO FOR PROVING A FACT OR CIRCUMSTANCE IN THE INCOME TAX PR OCEEDINGS. THE QUESTIONS RAISED ABOUT THE TAX LIABILITY BY THE AO ARE TO BE ANSWERE D BY THE ASSESSEE BY FURNISHING REASONABLE AND PLAUSIBLE EXPLANATIONS. IF ASSESSEE IS NOT FORTHCOMING WITH PROPER OR COMPLETE FACTS OR HIS STATEMENT OR EXPLANATION IS C ONTRADICTORY, DRAWING OF SUITABLE INFERENCES AND ESTIMATION OF FACTS IS INEVITABLE. C OURTS GENERALLY WILL NOT INTERFERE WITH SUCH ESTIMATE OF FACTS, UNLESS THE INFERENCES OR ES TIMATES ARE PERVERSE OR CAPRICIOUS. 6.15. THE ASSESSEE'S TECHNICAL CONTENTIONS ABOUT AD MISSIBILITY AND RELIANCE ON MATERIAL AVAILABLE ON THE AO'S RECORD ARE IN THE NA TURE OF CONTENTIONS CHALLENGING CRIMINAL OR CIVIL LIABILITIES IN A COURT OF LAW. WE ARE DEALING WITH A PROCESS OF ADJUDICATION OF ASSESSES TAX LIABILITY I.E. ASSESSM ENT UNDER INCOME TAX ACT RATHER THAN CONDUCTING CRIMINAL OR CIVIL COURT PROCEEDINGS . AS HELD BY THE HON 'BLE SUPREME COURT IN THE CASE OF S.S. GADGIL (SUPRA) NO 'LIS' I S INVOLVED IN ADJUDICATION OF TAX LIABILITY. THE ASSESSEE'S CONTENTION THAT THERE WAS NO NEW MATERIAL BEFORE THE AO IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 26 AFTER THE CIT(A)'S SETTING ASIDE ORDER CANNOT BE AC CEPTED. NEW INFORMATION AND MATERIAL DID INDEED COME ON RECORD. IN OUR VIEW, IN A SENSITIVE MATTER LIKE THIS, EVEN A SINGLE CLUE OR REVELATION CAN BE OF GREAT IMPORTANC E. TO REVERSE THE ORDER OF THE AO ON THIS TECHNICAL PLEA WILL AMOUNT TO TAKING A LOPS IDED VIEW OF THE PROCEEDINGS. BESIDES, THE JPC HAS UNDERLINED THE IMPORTANCE OF R EPORTS OF INVESTIGATION AGENCIES LIKE CBI, ORI, EO WHOSE WERE IN THE OFFING, AS THE RELEVANT INVESTIGATIONS WERE IN PROCESS. IN VIEW OF THESE OBSERVATIONS, WE DO NOT A CCEDE TO THE ASSESSEE'S PLEAS IN THIS BEHALF THE ASSESSEE'S CONTENTIONS AND OBJECTIO NS IN THIS BEHALF THAT THE MATERIAL AVAILABLE ON RECORD WAS NOT ADMISSIBLE AS EVIDENCE AND THAT IT CANNOT BE RELIED ON BY THE AO, ARE DEVOID OF ANY MERIT AND ARE REJECTED OU TRIGHT. IN VIEW OF THE ABOVE DISCUSSION, I FIND NO INFIRMIT Y IN THE ORDERS OF THE LD. AO, AND I CONFIRM THE SAME. THESE GROUNDS -7 ARE THEREFORE DI SMISSED. 4. WE HAVE HEARD RIVAL CONTENTIONS. IT EMERGES WIT H THE ASSISTANCE OF LEARNED AUTHORIZED REPRESENTATIVE APPEARING AT ASSE SSEES BEHEST THAT THIS ASSESSEE / COMPANY HAD FILED ITS REGULAR RETURNS U/ S. 139(1) OF THE ACT ON 22.09.2010, 15.09.2011 AND 19.09.2012 FOR ALL THRE E IMPUGNED ASSESSMENT YEARS STATING NIL INCOME(S). LEARNED CIT DR FAILS T O DISPUTE THE FACT THAT NO NOTICE U/S. 1433(2) HAD BEEN ISSUED WITHIN THE TIME STIPULATED I.E. SIX MONTHS FROM THE END OF THE FINANCIAL YEAR OF THE FILING OF THESE THREE RETURNS. THIS FOLLOWED THE IMPUGNED SEARCH DATED 01.12.2015 CONDU CTED IN OFFICIAL AND RESIDENTIAL PREMISES OF THE ASSESSEE BELONGING TO M /S BHALOTIA GROUP. THE ASSESSING OFFICER THEN INITIATED SEC. 153A PROCEEDI NGS FINALLY CULMINATING IN THE IMPUGNED ADDITION(S) OF UNEXPLAINED SHARE CAPIT AL/PREMIUM OF 25 LAC, 57 LAC AND 70 LAC U/S 68 OF THE ACT. 5. WE AFFORDED SUFFICIENT OPPORTUNITIES TO THE REVE NUE FOR HIGH ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE C OURSE OF IMPUGNED SEARCH FORMING FOUNDATION OF SEC. 153A PROCEEDINGS IN ISSU E. MR.SINGH HAS TAKEN A LOT OF PAINS TO HIGHLIGHT THAT ASSESSEE HAD DECLARE D NINE INVESTORS FOR THE IMPUGNED SHARE CAPITAL OUT OF WHICH 5 ARE STATED TO HAVE NOT EVEN BEEN FOUND DURING SCRUTINY. FOUR OF THEM STOOD SERVED. ALL OF THE SAID FOUR PARTIES CHOSE NOT TO RESPOND. HE VEHEMENTLY CONTENDS THAT ALL THE SE NINE INVESTORS ARE SHELL COMPANIES AND THEREFORE, BOTH THE LOWER AUTHORITIES HAVE RIGHTLY MADE THE IMPUGNED ADDITION(S). 6. WE AGAIN EMPHASISED TO THE REVENUE AS TO WHAT WA S INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARC H AGAINST THE ASSESSEE. IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 27 MR. SINGH ARGUES THAT ASSESSEES BANK ACCOUNTS PART ICULARLY FROM THE RELEVANT INCRIMINATING MATERIAL. WE FIND NO MERIT IN REVENUE S INSTANT ARGUMENTS AS ALL RELEVANT DETAILS INCLUDING ASSESSEES BANK ACCOUNT / STATEMENTS DULY RECORDED IN ITS BOOKS AT THE TIME OF FILING REGULAR RETURNS (SUPRA). 7. WE NEXT NOTICE THAT THE QUARTERS AS TO WHETHER S EC. 153A PROCEEDINGS CAN BE INITIATED IN ABSENCE OF ANY INCRIMINATING MA TERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH STANDS ANSWERED IN ASSE SSEES FAVOUR AS PER THIS TRIBUNALS CO-ORDINATE BENCHS DECISION IN ACIT VS. M/S SETHIA AGROTECH LTD. IT(SS() NO.91/KOL/2017 DECIDED ON 01.12.2017 AS FOL LOWS: 5. WE ALSO NOTICE THAT THE CIT(A)S FINDINGS EXTRAC TED IN PRECEDING PARAGRAPHS HAVE MADE IT CLEAR THAT THE SAID SEIZED DOCUMENTS WERE N OT IN THE NATURE OF INCRIMINATING MATERIAL WHICH COULD BE USED AGAINST THE INSTANT TA XPAYER. WE MAKE IT CLEAR THAT THE ASSESSEES STAND TIME AND AGAIN IN FURTHERANCE TO S EC. 153C NOTICE HAS DISPUTED THE SAID DOCUMENTS NATURE TO BE INCRIMINATING AS PER C OPIES OF NECESSARY CORRESPONDENCE IN THIS REGARD DATED 14.10.2015, 13.11.2015 & 04.03 .2016 FILED IN PAPER BOOK AT PAGES 93 TO 126. IT IS THEREFORE CLEAR THAT BOTH THE LOWE R AUTHORITIES HAVE FRAMED IMPUGNED ASSESSMENT IN THE ABSENCE OF ANY INCRIMINATING MATE RIALS FOUND OR SEIZED DURING THE COURSE OF SEARCH IN ISSUE. THIS TRIBUNALS CO-ORDIN ATE BENCHS DECISION IN ACIT VS. M/S SETHIA AGROTECH LTD. IT(SS)A NO.91/KOL/2017 DECIDED ON 01.12.2017 PERTAINING TO THE VERY SEARCH HAS QUASHED SIMILAR ASSESSMENTS TO BE U NSUSTAINABLE AS UNDER:- 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND IT WOULD BE NECESSARY TO ADDRESS THE PRELIMINARY ISSUE OF WHETHER THE ADDITION COULD BE FRAMED U/S 153A OF THE ACT IN RESPECT OF A CONCLUDED PROCEEDING WITHOUT THE EXIST ENCE OF ANY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH. THE SCHEME OF THE ACT PROVIDES FOR ABATEMENT OF PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. IT IS NOT IN DISPUTE THAT THE ASSESSMENT FOR THE ASST YEAR 2010-11 WAS ORIGIN ALLY COMPLETED U/S 143(1) OF THE ACT AND THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 1 43(2) OF THE ACT HAD EXPIRED AND HENCE IT FALLS UNDER CONCLUDED PROCEEDING , AS ON T HE DATE OF SEARCH. WE HOLD THAT THE LEGISLATURE DOES NOT DIFFERENTIATE WHETHER THE ASSESSMENTS ORIGINALLY WERE FRAMED U/S 143(1) OR 143(3) OR 147 OF THE ACT. HENCE UNLE SS THERE IS ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH RELATABL E TO SUCH CONCLUDED YEAR, THE STATUTE DOES NOT CONFER ANY POWER ON THE LD AO TO D ISTURB THE FINDINGS GIVEN THEREON AND INCOME DETERMINED THEREON, AS FINALITY HAD ALRE ADY BEEN REACHED THEREON, AND SUCH PROCEEDING WAS NOT PENDING ON THE DATE OF SEAR CH TO GET ITSELF ABATED. THE PROVISIONS OF SECTION 153A OF THE ACT ARE REPRODUCE D HEREUNDER FOR THE SAKE OF CONVENIENCE :- '[ASSESSMENT IN CASE OF SEARCH OR REQUISITION 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN S ECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BO OKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SEC TION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURN ISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RE SPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING F ORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SH ALL, SO FAR AS MAY BE, APPLY IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 28 ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRE D TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESS MENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASS ESSMENT YEARS:' 8.1. WE FIND THAT THE CO-ORDINATE BENCH OF DELHI TR IBUNAL IN THE CASE OF DY. CIT V. AGGARWAL ENTERTAINMENT (P.) LTD REPORTED IN [2016] 72 TAXMANN.COM 340 (DELHI - TRIB.) HAD ADDRESSED THIS ASPECT. THE RELEVANT HEADNOTES I S REPRODUCED BELOW:- 'SECTION 153A, READ WITH SECTION 143, OF THE INCOME -TAX ACT, 1961-SEARCH AND SEIZURE - ASSESSMENT IN CASE OF (IN CASE OF SECTION 143(1) ASSESSMENT)-ASSESSMENT YEAR 2004-05- WHETHER ASSESSMENT IN RESPECT OF WHIC H RETURN HAS BEEN PROCESSED UNDER SECTION 143(1), CANNOT BE REGARDED AS PENDING FOR PURPOSE OF SECTION 153A AS ASSESSING OFFICER IS NOT REQUIRED TO DO ANYTHING FU RTHER ABOUT SUCH A RETURN AND, THUS, SAID ASSESSMENT CANNOT BE REOPENED IN EXERCISE OF P OWER OF SECTION 153A-HELD YES (PARAS 10 AND 12) (IN FAVOUR OF ASSESSEE) .' 8.2. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRI BUNAL IN THE CASE OF ACIT VS KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 REPORTED IN 2016-TIOL-167- ITAT-KOL HAD EXPLAINED THE AFORESAID PROVISIONS AS BELOW :- ' 6.4 IN OUR OPINION, THE SCHEME OF ASSESSMENT PROCEE DINGS SHOULD BE UNDERSTOOD IN THE FOLLOWING MANNER PURSUANT TO THE SEARCH CONDUCT ED U/S. 132 OF THE ACT :- (A) NOTICE U/S. 153A OF THE ACT WOULD BE ISSUED ON TH E PERSON ON WHOM THE WARRANT OF AUTHORIZATION U/S. 132 OF THE ACT WAS ISSUED FOR TH E SIX ASSESSMENT YEARS PRECEDING THE YEAR OF SEARCH AND ASSESSMENTS THEREON WOULD BE COMPLETED U/S. 153A OF THE ACT FOR THOSE SIX ASSESSMENT YEARS. (B) IN RESPECT OF THE YEAR OF SEARCH, NOTICE U/S. 143(2) OF THE ACT WOULD BE ISSUED AND ASSESSMENT THEREON WOULD BE COMPLETED U/S. 143(3) O F THE ACT. (C) IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO THE YE AR OF SEARCH, NO ADDITION COULD BE MADE IN THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE REL EVANT ASSESSMENT YEAR. (D) PURSUANT TO THE SEARCH U/S. 132 OF THE ACT, THE P ENDING PROCEEDINGS WOULD GET ABATED. IN RESPECT OF ABATED ASSESSMENTS, THE TOTAL INCOME NEEDS TO BE DETERMINED AFRESH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A AND OTHER PROVISIONS OF THE ACT. 6.4.1 THE CONCLUDED ASSESSMENTS FOR THE PURPOSE OF SECTION 153A OF THE ACT SHALL BE - (I) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY CO MPLETED U/S. 143(1) AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT HAS EXPIRED OR; (II) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY CO MPLETED U/S. 143(3) OF THE ACT ; UNLESS THEY ARE REOPENED U/S. 147 OF THE ACT FOR SO ME OTHER PURPOSE IN BOTH THE SCENARIOS STATED ABOVE. 6.4.2 THE SCHEME OF ASSESSMENT PROCEEDINGS CONTEMPL ATED U/S. 153A OF THE ACT ARE TOTALLY DIFFERENT AND DISTINCT FROM THE PROCEEDINGS CONTEMPLATED U/S. 147 OF THE ACT AND THESE PROCEDURES OF ASSESSMENT OPERATE IN DIFFERENT FIELDS AND HAVE DIFFERENT PURPOSES TO BE FULFILLED ALTOGETHER. IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 29 6.4.3 THE EXPRESSION 'ASSESS OR REASSESS' STATED IN SECTION 153A(1)(B) HAS TO BE UNDERSTOOD AS BELOW:- ' ASSESS ' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF ABAT ED ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER THERE ARE ANY INCR IMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO RELEVANT ASSESSMEN T YEARS ; ' REASSESS ' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF CONC LUDED ASSESSMENT YEARS WHERE INCRIMINATING MATERIALS WERE FOUND DURI NG THE COURSE OF SEARCH IN RESPECT OF THE RELEVANT ASSESSMENT YEAR. ' 8.3. WE ALSO FIND THAT RECENTLY THE HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) H ELD AS UNDER :- ' 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF TH E ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE P ERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE LD AOS AS A FRESH EXERCISE. (III) THE LD AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE LD AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED S IX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEAR S. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUG HT TO TAX'. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH , OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE LD AO WHICH CAN BE R ELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASS ESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COM PLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMP LETE ASSESSMENT PROCEEDINGS. (VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ME RGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE LD AO. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY T HE LD AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE O F ORIGINAL ASSESSMENT.' 38. THE PRESENT APPEALS CONCERN AYS 2002-03, 2005-0 6 AND 2006-07, ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPL ETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 30 8.4. WE FIND THAT THE DECISION RELIED UPON BY THE L D DR IN THE CASE OF CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (DEL) DOES NO T IN ANY MANNER ADVANCE THE CASE OF THE REVENUE AS ADMITTEDLY THE HONBLE DELHI HIGH COURT IN PARA 24 OF ITS ORDER HAD HELD AS UNDER:- 24. WE ARE NOT CONCERNED WITH A CASE WHERE NO INCRI MINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN IN SUCH A SITUATION. THAT QUESTION IS THEREFO RE LEFT OPEN. 8.5. THE LD DR ALSO RELIED ON THE RECENT DECISION O F THE HONBLE KERALA HIGH COURT IN THE CASE OF E.N.GOPAKUMAR VS CIT REPORTED IN (2016) 75 TAXMANN.COM 215 (KERALA) IN SUPPORT OF HIS CONTENTIONS. WE FIND THAT THE D ECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (201 6) 380 ITR 573 (DEL) HAD DULY CONSIDERED THE DECISIONS OF CIT VS ANIL KUMAR BHATI A REPORTED IN (2013) 352 ITR 493 (DEL) ; CIT VS CHETAN DAS LACHMAN DAS REPORTED IN (2012) 211 TAXMAN 61 (DEL HC) ; MADUGULA VENU VS DIT REPORTED IN (2013) 215 TAXMAN 298 (DEL HC) ; CANARA HOUSING DEVELOPMENT CO. VS DCIT REPORTED IN (2014) 49 TAXMANN.COM 98 (KAR HC) ; FILATEX INDIA LTD VS CIT REPORTED IN (2014) 229 TAX MAN 555 (DEL HC) ; JAI STEEL (INDIA) VS ACIT REPORTED IN (2013) 219 TAXMAN 223 ( DEL HC) ; CIT VS MURLI AGRO PRODUCTS LTD REPORTED IN (2014) 49 TAXMANN.COM 172 (BOM HC) ; CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD REPORTED IN (2015) 374 ITR 645 (BOM HC) AND ALL CARGO GLOBAL LOGISTICS LTD VS DCIT REPO RTED IN (2012) 137 ITD 287 (MUM ITAT) (SB). WE ALSO FIND THAT AGAINST THE DECISION OF THE HONB LE DELHI HIGH COURT IN 380 ITR 573 (DEL) , THE REVENUE PREFERRED SPECIAL LEAVE PETITIO N BEFORE THE HONBLE SUPREME COURT AND THE SAME WAS DISMISSED BY THE APEX COURT WHICH IS REPORTED IN 380 ITR (ST.) 4 (SC). HENCE IT COULD BE SAFELY CONCLUDED THAT THE DECISION OF HONBLE DELHI HC IN THE CASE OF KABUL CHAWLA SUPRA WOULD HAVE TO BE CONSIDERED ON THE IMPUGNED ISSUE AND IN ANY CASE, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS VEGETABLE PRODUCTS LTD REPORTED IN 88 ITR 192 (SC) HAD HELD T HAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED. 8.6. WE ALSO FIND THAT THE HONBLE JURISDICTIONAL H IGH COURT RECENTLY IN THE CASE OF PRINCIPAL CIT VS M/S SALASAR STOCK BROKING LTD IN G .A.NO. 1929 OF 2016 ITAT NO. 264 OF 2016 DATED 24.8.2016 HAD ENDORSED THE AFORES AID VIEW OF HONBLE DELHI HIGH COURT IN KABUL CHAWLAS CASE AND ALSO PLACED RELIAN CE ON ITS OWN DECISION IN THE CASE OF CIT VS VEERPRABHU MARKETING LTD REPORTED IN (2016) 73 TAXMANN.COM 149 (CAL HC). 8.7. WE FIND THAT THE PROVISIONS OF SECTION 132 OF THE ACT RELIED UPON BY THE LD DR WOULD BE RELEVANT ONLY FOR THE PURPOSE OF CONDUCTIN G THE SEARCH ACTION AND INITIATING PROCEEDINGS U/S 153A OF THE ACT. ONCE THE PROCEEDI NGS U/S 153A OF THE ACT ARE INITIATED, WHICH ARE SPECIAL PROCEEDINGS, THE LEGIS LATURE IN ITS WISDOM BIFURCATES DIFFERENTIAL TREATMENTS FOR ABATED ASSESSMENTS AND UNABATED ASSESSMENTS. AT THE COST OF REPETITION, WE STATE THAT IN RESPECT OF ABA TED ASSESSMENTS (I.E PENDING PROCEEDINGS ON THE DATE OF SEARCH) , FRESH ASSESSME NTS ARE TO BE FRAMED BY THE LD AO U/S 153A OF THE ACT WHICH WOULD HAVE A BEARING O N THE DETERMINATION OF TOTAL INCOME BY CONSIDERING ALL THE ASPECTS, WHEREIN THE EXISTENCE OF INCRIMINATING MATERIALS DOES NOT HAVE ANY RELEVANCE. HOWEVER, IN RESPECT OF UNABATED ASSESSMENTS, THE LEGISLATURE HAD CONFERRED POWERS O N THE LD AO TO JUST FOLLOW THE ASSESSMENTS ALREADY CONCLUDED UNLESS THERE IS AN IN CRIMINATING MATERIAL FOUND IN THE SEARCH TO DISTURB THE SAID CONCLUDED ASSESSMENT. I N OUR CONSIDERED OPINION, THIS WOULD BE THE CORRECT UNDERSTANDING OF THE PROVISION S OF SECTION 153A OF THE ACT, AS OTHERWISE, THE NECESSITY OF BIFURCATION OF ABATED A ND UNABATED ASSESSMENTS IN SECTION 153A OF THE ACT WOULD BECOME REDUNDANT AND WOULD LOSE ITS RELEVANCE. IT(SS)A NO.99-101/KOL/2018 A.YS 10-11 TO 12-13 M/S MAX MOVERS PVT LTD. VS. DCIT, C C-4(3), KOL. PAGE 31 HENCE THE ARGUMENTS ADVANCED BY THE LD DR IN THIS R EGARD DESERVES TO BE DISMISSED. 8.8. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTF ULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSMEN T FRAMED U/S 143(1) OF THE ACT FOR THE ASST YEAR 2010-11, WHICH WAS UNABATED / CON CLUDED ASSESSMENT, ON THE DATE OF SEARCH, DESERVES TO BE UNDISTURBED IN THE ABSENC E OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND ACCORDINGLY THE A DDITION MADE ON ACCOUNT OF SHARE CAPITAL U/S 68 OF THE ACT IS HEREBY DIRECTED TO BE DELETED. SINCE THE ISSUE IS ADDRESSED ON PRELIMINARY GROUND OF ABSENCE OF INCRI MINATING MATERIALS, WE REFRAIN TO GIVE OUR FINDINGS ON THE MERITS OF THE ADDITION U/S 68 OF THE ACT FOR THE ASST YEAR 2010-11. ACCORDINGLY THE GROUNDS RAISED BY THE REV ENUE IN THIS REGARD ARE DISMISSED. 8. WE ADOPT THE ABOVE DETAILED REASONING MUTATIS MU TANDIS TO HOLD THAT THE BOTH THE LOWER AUTHORITIES ACTION IN INITIATIN G SEC. 153A PROCEEDINGS AGAINST THIS TAXPAYER IN ABSENCE OF ANY INCRIMINATI NG MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH IS NOT SUSTAINABLE IN T HE EYES OF LAW. WE THUS QUASH ALL THESE THREE ASSESSMENT(S). THE ASSESSEE S UCCEEDS IN ITS FORMER LEGAL SUBSTANTIVE GROUND. ITS LATTER SUBSTANTIVE GR OUND ON MERITS (SUPRA) IS RENDERED INFRUCTUOUS. 9. THESE THREE ASSESSEES APPEALS ARE ALLOWED ACCO RDINGLY. ORDER PRONOUNCED IN THE OPEN COURT 30/11/2018 SD/- SD/- ( ) (( ) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S )- 30 / 11 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S MAX MOVERSPVT.LTD. R.NO.206, 2 ND FL,CENTRE POINT, 21, HEMANT BASU SARANI, KOLKATA-01 2. /REVENUE-DCIT, CENTRAL CIRCLE-4(3), KOLKATA 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ((4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ / 4,