M/s Bhatia International Ltd, Indore V. The Addl. CIT Range-3, Indore

ITSSA 105/IND/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2401 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 11-05-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 28-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHNEY; R A VERMA DRS
• Assessee Lawyers: ARPIT GAUR CAS
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained investment; Gift; Income from undisclosed sources; Search and seizure; Document seized; Opportunity of being heard; Source of fund; Additional evidence; Question of law; Accommodation entries; Assessment record; Block assessment; Onus to prove; Documents seized; Reassessment proceedings
• Section: 143(3); 142(1); 153A; 133(6); 131; 68; 69; 148; 132

Judgement Text

BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER IT(SS)A NOS. 104 TO 106/IND/2011 A.YS. 2002-03 TO 2004-05 BHATIA INTERNATIONAL LTD., INDORE PAN AABCB 4177 H :: APPELLANT VS ADDL. CIT, RANGE-3, INDORE :: RESPONDENT ASSESSEE BY SHRI ANIL KAMAL GARG AND SHRI ARPIT GAUR, CAS RESPONDENT BY SHRI RAJEEV VARSHNEY AND SHRI R.A. VERMA, DRS DATE OF HEARING 18.05.2016 DATE OF PRONOUNCEMENT 18.05.2016 O R D E R PER SHRI D.T.GARASIA, JM THE ABOVE APPEALS ARE FILED BY THE ASSESSEE CHALLEN GING THE DIFFERENT ORDERS OF LD. CIT(A)-I, INDORE, DATED 16.9.2011 FOR THE ASSES SMENT YEARS 2002-03 TO 2004-05. BOTH THE PARTIES SUBMITTED THAT THE LEAD CASE PERTA INS TO ASSESSMENT YEAR 2002-03, THEREFORE, WE DEAL THE ASSESSMENT YEAR 2002-03 AT F IRST. ASSESSEES APPEAL NO. : IT(SS)A NO.104/IND/2011 A.Y . 2002-03 GROUND NOS. 1.1 & 1.2 BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 2 2. THESE GROUNDS ARE DIRECTED AGAINST THE AOS ACTI ON OF MAKING ADDITIONS U/S 153A ON THOSE ISSUES IN RESPECT OF WHICH NO INCRIMI NATING MATERIAL WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH. 3. SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY BELONGS TO A GROUP PREDOMINANTLY ENGAGED IN COAL TRADING AND TRANSPORT ATION, KNOWN AS BCC GROUP. SEARCH AND SEIZURE OPERATIONS U/S. 132(1) OF THE IN COME-TAX ACT, 1961 WERE CARRIED OUT BY THE ASSISTANT DIRECTOR OF INCOME-TAX (INV.)-II, INDORE, ON 25-09-2007, IN THE BUSINESS PREMISES OF THE VARIOUS COMPANIES OF THE BCC GROUP AND AS ALSO IN THE RESIDENTIAL PREMISES OF THEIR DIRECTORS. DURING THE COURSE OF T HE SEARCH, THE BHATIA GROUP HAD ADMITTED ADDITIONAL INCOME AGGREGATING TO RS.26,15, 24,529/- AND AS AGAINST SUCH ADMITTED INCOME OF RS.26,15,24,529/-, THE GROUP, AS A WHOLE, HAD SHOWN AN ADDITIONAL INCOME OF RS.27,33,73,087/- IN THE RETURNS OF INCOM E FURNISHED UNDER S.153A OF THE ACT. THE ASSESSEE HAS NEITHER ADMITTED NOR DECLARED ANY ADDITIONAL INCOME IN ITS RETURN OF INCOME. DURING THE COURSE OF THE SEARCH, NO UNDISCL OSED OR UNEXPLAINED MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS PERTAINING T O THE ASSESSEE WAS FOUND OR SEIZED EITHER FROM THE PREMISES OF THE ASSESSEE OR OF ANY OTHER PERSON IN WHOSE CASE SEARCH UNDER S.132 WAS INITIATED. THE ASSESSEE FURNISHED I TS ORIGINAL RETURN OF INCOME PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATI ON U/S. 139(1) OF THE I.T. ACT, 1961 ON 29-10-2002 WITH THE JCIT-3, INDORE DECLARING AN INCOME OF RS.1,10,96,470/-. IT IS UNDISPUTED THAT ON THE DATE OF SEARCH UNDER S. 132( 1), I.E. ON 25-09-2007, NO PROCEEDINGS RELATED TO THE ASSESSMENT YEAR UNDER CO NSIDER WAS PENDING AND, FURTHER, THE TIME LIMIT FOR ISSUANCE OF ANY NOTICE UNDER S. 143(2) HAD ALSO GOT EXPIRED MUCH PRIOR TO THE DATE OF SEARCH. IN PURSUANCE OF THE SEARCH, A NOTICE U/S. 153A DATED 03-03-2008 WAS ISSUED TO THE ASSESSEE TO FURNISH ITS RETURN OF INCOME. IN RESPONSE TO THE NOTICE U/S. 153A, THE ASSESSEE FURNISHED ITS RETURN OF INCOME O N 10-06-2008 DECLARING THE SAME TOTAL INCOME OF RS.1,10,96,470/- AS WAS DECLARED BY IT IN THE ORIGINAL RETURN FURNISHED U/S. 139(1). AS AGAINST SUCH RETURNED INCOME, THE A SSESSMENT HAS BEEN FRAMED BY THE AO UNDER S. 153A R.W.S. 143(3) OF THE ACT BY DETERM INING THE TOTAL INCOME OF THE ASSESSEE AT RS.4,02,96,470/-. THE ENTIRE ADDITION O F RS.2,92,00,000/- HAS BEEN MADE IN BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 3 THE ASSESSEES INCOME ON ACCOUNT OF UNEXPLAINED SHA RE CAPITAL/SHARE PREMIUM UNDER S. 68 OF THE ACT. 4. MATTER CARRIED TO LEARNED CIT(A), WHO, AFTER CON SIDERING THE SUBMISSION OF THE ASSESSEE, UPHELD THE ACTION OF THE AO BY GIVING HIS FINDINGS AT PARA 5.1, P. 64 OF HIS ORDER. THE LD. CIT(A) HAS HELD THAT THE ADDITIONS A ND DISALLOWANCES IN RESPECT OF VARIOUS ITEMS DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND DULY DISCLOSED BEFORE THE DEPARTMENT CAN ALSO BE MADE EVEN WHEN NO INCRIM INATING DOCUMENT WAS FOUND OR SEIZED DURING THE COURSE OF THE SEARCH. THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN WHILE ADJUDICATING THE APPEAL IN THE CASE OF ONE OF THE GROUP ASSESSEES NAMELY, SHRI AMANDEEP SINGH BHATIA, FOR A.Y. 2002-03. 5. THE LD. AR HAS MADE ORAL AND WRITTEN SUBMISSION S AS UNDER: IT IS SUBMITTED THAT FOR THESE GROUNDS, A DETAILE D SUBMISSION HAS BEEN MADE IN THE CASE OF APPEAL OF ONE OTHER GROUP ASSES SEE NAMELY OF SHRI AMANDEEP SINGH BHATIA IN APPEAL NO. IT(SS)A-112/IND /2011 FOR A.Y. 2002-03 PENDING FOR ADJUDICATION BEFORE THIS BENCH. SINCE, WHILE ADJUDICATING THE GROUNDS OF APPEAL RAISED BEFORE TH E CIT(A), THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN IN THE AFORE SAID CASE OF SHRI AMANDEEP SINGH BHATIA, OUR SUBMISSIONS MADE BEFORE THIS HONBLE BENCH IN THE CASE OF SHRI AMANDEEP SINGH BHATIA MAY KINDLY BE TAKEN INTO CONSIDERATION. RELEVANT DOCUMENTS FILED IN THE PAPER BOOK ON WHICH THE APPELLANT IS PLACING RELIANCE FOR THESE GROUNDS PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 2 44 COPY OF THE PANCHNAMA DRAWN IN THE CASE OF THE APPELLANT AND COPY OF THE INVENTORY OF THE DOCUMENTS SEIZED. ESTABLISHING THAT THE DOCUMENTS WERE MERELY IN THE NATURE OF SHARE APPLICATION FILED AND THESE WERE NOT IN THE NATURE OF INCRIMINATING DOCUMENTS. 50 50 COPY OF ACKNOWLEDGMENT OF RETURN FILED UNDER S.139 OF THE ACT FOR A.Y. 2002-03 ESTABLISHING THAT MUCH PRIOR TO THE DATE OF SEARCH, THE APPELLANT HAD FURNISHED BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 4 ITS RETURN OF INCOME UNDER S.139 56 84 COPY OF AUDITED FINANCIAL STATEMENTS OF THE APPELLANT FOR THE FINANCIAL YEAR ENDED ON 31-03-2002 ESTABLISHING THAT THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WAS DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND THE SAME WAS ALSO DISCLOSED TO THE DEPARTMENT BY WAY OF FILING AUDITED BALANCE SHEET ALONG WITH THE RETURN OF INCOME AND THEREFORE, THE SHARE CAPITAL AND SHARE PREMIUM CANNOT BE HELD TO BE A NEW ITEM DISCOVERED DURING THE COURSE OF SEARCH. 92 93 COPY OF THE SHOW CAUSE NOTICE DATED 07-12-2009 ISSUED BY THE AO, CONTAINING INTER ALIA, THE ISSUE OF SHARE CAPITAL. ESTABLISHING THAT THE ISSUE OF SHARE CAPITAL EMANATED FROM THE ASSESSMENT PROCEEDINGS THEMSELVES AND SUCH RECEIPTS WERE FOUND CREDITED IN THE REGULAR BOOKS OF ACCOUNT OF THE APPELLANT. 292 299 COPIES OF THE REGULAR ASSESSMENT ORDERS PASSED UNDER S. 143(3) OF THE ACT, IN THE CASE OF THE APPELLANT, FOR A.Y. 2003-04 AND A.Y. 2004-05 IN RESPONSE TO THE RETURNS FILED UNDER S. 139(1). ESTABLISHING THAT THE ISSUE OF SHARE CAPITAL WAS DULY EXAMINED IN THE REGULAR ASSESSMENT UNDER S.143(3) OF THE ACT AND NO ADVERSITY WAS FOUND IN THE SHARE CAPITAL TRANSACTIONS. 6. LD. DR RELIED ON THE ORDERS OF THE REVENUE AUTHO RITIES AND SUBMITTED THAT OUR ARGUMENTS GIVEN IN THE CASE OF AMANDEEP SINGH BHATI A MAY BE CONSIDERED. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 5 7. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUES RAISED THROUGH THE ABOVE GROUNDS IN THE CASE OF THE PRESENT APPEAL ARE THE SAME WITH THAT O F APPEAL IN THE CASE OF AMANDEEP SINGH BHATIA IN APPEAL NO. IT(SS)A NO. 112/IND/2011 FOR A.Y. 2002-03 WHEREIN WE HAVE HELD THAT IN THE CASES OF THE NON-ABATED ASSES SMENT YEARS, NO ADDITION CAN BE MADE WITHOUT HAVING ANY RECOURSE TO ANY INCRIMINATI NG MATERIAL OR DOCUMENT. IN THE PRESENT CASE TOO, THE BASIS OF MAKING THE ONLY ADDI TION BY THE AO, ON ACCOUNT OF SHARE CAPITAL/ SHARE PREMIUM, WAS THE AUDITED BALANCE SHE ET OF THE ASSESSEE WHICH WAS AVAILABLE IN THE ORIGINAL RETURN ITSELF AND NOT ANY OTHER INCRIMINATING DOCUMENT OR MATERIAL. THE AO HAS MADE THE ADDITION BY INVOKING THE PROVISIONS OF S. 68 OF THE ACT WHICH PROVES THAT THE VERY FOUNDATION OF MAKING THE ADDITION IS THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE IN WHICH THE ENTRIES RELATI NG TO SHARE APPLICATION/SHARE CAPITAL/SHARE PREMIUM WERE FOUND BY THE AO. IN THE INSTANT CASE ALTHOUGH THE VARIOUS DOCUMENTS SUCH AS SHARE APPLICATION FORMS, COPIES O F THE MEMORANDUM & ARTICLES OF ASSOCIATION OF THE SHARE APPLICANT COMPANIES, COPIE S OF THE BOARD RESOLUTIONS OF THE SHARE APPLICANT COMPANIES FOR AUTHORIZATION OF INVE STMENT, COPIES OF AUDITED FINANCIAL STATEMENTS OF SHARE APPLICANT COMPANIES, COPIES OF BANK STATEMENTS OF SHARE APPLICANT COMPANIES, COPIES OF INCOME-TAX RETURNS OF SHARE AP PLICANT COMPANIES, ETC. WERE FOUND AND SEIZED DURING THE COURSE OF THE SEARCH BU T NONE OF THESE DOCUMENTS HAVE BEEN FOUND INCRIMINATING IN THE NATURE BY THE ASSES SING OFFICER AND EVEN OTHERWISE, THE ADDITIONS HAVE NOT BEEN MADE ON THE BASIS OF SUCH D OCUMENTS BUT THOSE HAVE BEEN MADE ON THE BASIS OF THE ENTRIES FOUND MADE IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE FOLLOWED BY THE SUBSEQUENT ENQUIRIES MADE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER. TH EREFORE, FOLLOWING OUR ORDER IN THE CASE OF ONE OF GROUP CONCERNS I.E. AMANDEEP SINGH B HATIA IN APPEAL NO. IT(SS)A NO. 112/IND/2011 FOR A.Y. 2002-03, WE HOLD THAT IN THE CASES OF THE NON-ABATED ASSESSMENT YEARS, NO ADDITION CAN BE MADE WITHOUT H AVING ANY RECOURSE TO ANY INCRIMINATING MATERIAL OR DOCUMENT. THUS, THE PRESE NT NON-ABATED ASSESSMENT ORDER U/S 153A OF THE ACT FOR ASSESSMENT YEAR 2002-03 IS HELD AS ILLEGAL AND VOID-AB-INITIO. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE ON T HIS ISSUE. GROUND NO.2 BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 6 8. THIS GROUND IS DIRECTED AGAINST THE CIT(A)S FIN DING OF UPHOLDING AOS ACTION OF PASSING THE ASSESSMENT ORDER ARBITRARILY WITHOUT GI VING PROPER OPPORTUNITY OF BEING HEARD TO THE APPELLANT. THE LEARNED CIT(A) HAS DEAL T WITH THIS GROUND AT PARA 5.2 OF PAGE NO. 64 OF HIS ORDER. ACCORDING TO THE CIT(A), THE ASSESSEE WAS GIVEN DUE OPPORTUNITY BY THE AO. BEFORE US, THE LD. AR FOR TH E ASSESSEE DID NOT PRESS THIS GROUND. THEREFORE, SAME IS DISMISSED BEING NOT PRESSED. GROUND NO. 3 9. THIS GROUND OF APPEAL IS DIRECTED AGAINST UPHOLD ING THE ADDITION MADE BY THE AO AT RS.2,92,00,000/- ON ACCOUNT OF SHARE CAPITAL/SHA RE APPLICATION/SHARE PREMIUM. BOTH THE PARTIES SUBMITTED THAT THIS ISSUE IS ALSO INVOL VED IN THE OTHER GROUP APPEALS. THE DETAILS OF APPEALS IN WHICH ISSUE OF SHARE CAPITAL/ SHARE APPLICATION/SHARE PREMIUM IS INVOLVED AS UNDER: S. NO. IT(SS)A NO. NAME OF THE ASSESSEE A.Y. GROUND NO(S) ADDITION 1 104/2011 M/S BHATIA INTERNATIONAL LTD. 2002-03 1. 1 & 1.2 2,92,00,000 2 105/2011 -DO- 2003-04 1.1 & 1.2 19,00,000 3 106/2011 -DO- 2004-05 1.1 & 1.2 11,59,00,000 4 108/2011 M/S. BCC CARGO PVT. LTD. 2005-06 1.1 & 1 .2 6,90,00,000 5 109/2011 M/S. BCC INVESTMENT INDIA PVT. LTD. 2005-06 1.1 & 1.2 6,55,00,000 6 110/2011 M/S. BHATIA COAL TRADING & CONSIGNMENT PVT. LTD. 2006-07 1.1 & 1.2 4,92,00,000 7 111/2011 -DO- 2007-08 1.1 & 1.2 4,15,50,000 8 126/2011 M/S ISHAR OVERSEAS PVT. LTD. 2003-04 1.1 & 1.2 26,31,000 9 127/2011 -DO- 2005-06 1.1, 1.2, 1.3 6,55,00,000 10 107/2011 M/S. BHATIA COAL SALES LTD. 2002-03 1.1, 1.2 & 1.3 5,18,75,000 T O T A L 49,22,56,000 BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 7 10. SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY IS ENGAGED IN THE BUSINESS OF COAL TRADING IN DOMESTIC AS WELL AS IN THE INTERNATIONAL MARKET AT A VERY LARGE SCALE. DURING THE RELEVANT PREVIOUS YEAR, THE ASSES SEE COMPANY, IN ITS REGULAR BOOKS OF ACCOUNT, SHOWN TO HAVE RECEIVED A SUM OF RS.3,10,00 ,000/- BY WAY OF SHARE CAPITAL/ SHARE APPLICATION/ SHARE PREMIUM MONEY FROM THE VAR IOUS RELATED AND NON-RELATED COMPANIES. OUT OF SUCH SUM OF RS.3,10,00,000/-, A S UM OF RS.18,00,000/- WAS RECEIVED BY THE ASSESSEE COMPANY FROM ITS TWO GROUP COMPANIE S NAMELY M/S. ISHHAR OVERSEAS PVT. LTD. AND M/S. BCC CARGO PVT. LTD., BY WAY O F ALLOTMENT OF 18,000 EQUITY SHARES OF RS.10/- EACH AT A PREMIUM OF RS.90/- PER SHARE, AS FULLY PAID-UP SHARES. THE REMAINING SUM OF RS.2,92,00,000/- WAS RECEIVED BY THE ASSESSE E COMPANY BY WAY OF ALLOTMENT OF 5,84,000 EQUITY SHARES OF RS.10/- EACH AT A SHARE P REMIUM OF RS.90/- EACH FROM 16 NON-RELATED COMPANIES, AS PARTLY PAID-UP SHARES. TH E COMPANIES SUBSCRIBING TO THE PARTLY PAID-UP SHARES, PAID A SUM OF RS.5/- & RS.45 /- PER SHARE RESPECTIVELY TOWARDS SHARE CAPITAL AND SHARE PREMIUM. THUS, THE ASSESSEE COMPANY RECEIVED A FRESH SUM OF RS.29,20,000/- AND RS.2,62,80,000/- RESPECTIVELY TOWARDS PARTLY PAID-UP SHARE CAPITAL AND SHARE PREMIUM, AGGREGATING TO RS.2,92,0 0,000/-. THE DETAILS OF SUCH RECEIPTS HAVE BEEN GIVEN BY THE CIT(A) AT PAGE NO.2 6 TO 29 OF HIS ORDER. THE AO HAS DEALT WITH THIS ISSUE AT PAGE NO. 3 TO 98 OF HIS OR DER. THE AO, AT PAGE NO. 97 OF THE ORDER, HAS HELD THAT THE CAPITAL INTRODUCED BY THE ASSESSEE COMPANY THROUGH PARTLY PAID-UP SHARES WERE NOT GENUINE AS THE ASSESSEE COU LD NOT ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT COMPANIES. THE AO MADE THE ADDITION BY INVOKING PROVISIONS OF SECTION 68 OF THE ACT. THE M AIN GROUNDS TAKEN BY THE AO FOR MAKING THE ADDITION ARE : (I) HUGE SHARE CAPITAL AN D SHARE PREMIUM MONEY WERE RECEIVED BY THE ASSESSEE AND OTHER GROUP COMPANIES DURING THE PERIODS UNDER ASSESSMENT; (II) IN RECENT YEARS, THE FIELD OFFICER S OF THE INCOME-TAX DEPARTMENT HAVE COME ACROSS TO A SITUATION IN WHICH CALCUTTA, MUMBA I AND SURAT BASED COMPANIES ARE PROVIDING ACCOMMODATION ENTRIES TO INDORE BASED COM PANIES; (III) SHARE APPLICANT COMPANIES ARE VERY SYSTEMATICALLY ISSUING HUGE AMOU NTS OF CHEQUES TO EACH OTHER WITHOUT ANY COMMERCIAL SENSE; (IV) SHARE APPLICANT COMPANIES WERE INDULGED IN MONEY LAUNDERING ACTIVITIES; (V) BALANCE SHEET OF SOME SH ARE APPLICANT COMPANIES WERE NOT AVAILABLE; (VI) IN THE BANK ACCOUNTS OF THE SHARE A PPLICANT COMPANIES CALLED UNDER BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 8 S.133(6) OF THE ACT, TRANSFER OF HUGE AMOUNT IN OTH ER ACCOUNTS THROUGH CHEQUES WERE FOUND AND IN SOME CASES, CASH DEPOSITS WERE MADE IN THE ACCOUNT OF THIRD PARTIES FROM WHOM CHEQUES WERE TAKEN; (VII) THE COPIES OF MEMORA NDUM & ARTICLES OF ASSOCIATION, CERTIFICATE OF INCORPORATION, BOARD RESOLUTION OF T HE SHARE APPLICANT COMPANIES WERE FOUND IN THE PREMISES OF THE GROUP; (VIII) MOST OF THE NOTICES ISSUED UNDER S.133(6) RETURNED UNSERVED; AND (IX) THE SHARES WERE ULTIMAT ELY REPURCHASED FROM THE SHARE APPLICANT COMPANIES BY THIRD PARTIES/ GROUP ASSESSE ES AT THE NOMINAL PRICE. 11. MATTER CARRIED TO LEARNED CIT(A), WHO REPRODUCE D THE WRITTEN SUBMISSION OF THE APPELLANT MADE ON THIS ISSUE AT PAGE NO. 9 TO 25 OF HIS ORDER. THE LEARNED CIT(A) DEALT WITH THE ISSUE AT PARA 4.2, PAGE NO. 26 TO PARA 4.2 .14, PAGE NO. 63 OF THE ORDER. THE LEARNED CIT(A) AT OPERATIVE PARA 4.2.14 HAS CONFIRM ED THE ACTION OF THE AO IN MAKING THE ADDITION OF SHARE APPLICATION/SHARE CAPITAL/SHA RE PREMIUM UNDER S. 68 OF THE ACT. THE LEARNED CIT(A), AT PARA 5.3 OF HIS ORDER, WHILE ADJUDICATING THE GROUND, HAS AGAIN CONFIRMED THE ADDITION OF RS.2,92,00,000/- MADE BY THE AO. THE LEARNED CIT(A) CONFIRMED THE ADDITION ON FOLLOWING GROUNDS: (A) THE BHATIA GROUP, TO WHICH THE APPELLANT BELONG S, MANAGED ACCOMMODATION ENTRIES IN THE FORM OF SHARE CAPITAL FROM KOLKATA/MUMBAI BASED COMPANIES ON VERY HUGE PREMIUM WHICH WERE EIT HER FORFEITED OR BOUGHT BACK BY THE FAMILY MEMBERS OF THE BHATIA GRO UP AT A VERY NOMINAL PRICE. (B) FROM THE STUDY OF VARIOUS BANK ACCOUNTS, THE AO OBSERVED THAT AFTER PROVIDING ACCOMMODATION ENTRIES, MANY OF THE BANK A CCOUNTS OF THE SHARE APPLICANT COMPANIES EITHER REMAINED DORMANT OR CLOS ED. (C) IN THE BANK ACCOUNTS HUGE HIGH VALUE CHEQUES HA VE BEEN EXCHANGED SENSELESSLY TO MAKE IT DIFFICULT FOR ENFORCEMENT AG ENCIES TO CARRY OUT INVESTIGATION. IN SOME OF THE CASES, CASH WERE FOUN D DEPOSITED IN ACCOUNTS OF THIRD PARTIES (LAYERS) AND FROM THE ACC OUNTS OF THIRD PARTIES THE FUNDS WERE TRANSFERRED TO THE SHARE APPLICANT COMPA NIES AND SUCH FUNDS WERE ULTIMATELY GIVEN TO THE APPELLANT COMPANY UNDE R THE GARB OF SHARE CAPITAL. (D) THERE WERE FREQUENT CHANGES OF DIRECTORS TO MIS LEAD THE REAL IDENTITY OF THE SHARE APPLICANT COMPANIES. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 9 (E) THE AO ISSUED NOTICES TO 47 SHARE APPLICANT COM PANIES OUT OF WHICH ONLY 5 COMPANIES HAVE RESPONDED AND IN MANY OF THE CASES LETTERS RETURNED UNSERVED. (F) THE COMPANIES WHO RESPONDED HAD ALSO NOT GIVEN THE COMPLETE DETAILS. (G) THE ADDITIONAL DIT (INV.), KOLKATA, IN RESPONSE TO THE COMMISSION UNDER S. 131(1)(D) ISSUED BY THE AO TO HIM REPORTED THAT SOM E OF THE COMPANIES AND INDIVIDUALS FROM WHICH SUCH COMPANIES OBTAINED THE FUNDS WERE NOT FOUND AT THE GIVEN ADDRESS. (H) IN CASES WHERE SHARES HAVE BEEN FORFEITED BY TH E COMPANIES OF THE GROUP THERE WAS NO JUSTIFICATION FOR SUCH FORFEITURE. THE TRANSACTION OF FORFEITURE WAS NOT BELIEVABLE. (I) THE ADDITIONAL EVIDENCES IN THE FORM OF AFFIDAV ITS OF THE SHARE APPLICANT COMPANIES FURNISHED BY THE APPELLANT UNDER RULE 46A OF THE INCOME TAX RULES, 1962 CANNOT BE ADMITTED AS THE APPELLANT ATT EMPTED TO FURNISH SUCH EVIDENCES ON 13-09-2011 WHEREAS THE AFFIDAVITS WERE DATED 01-09-2010, 03-09-2010 AND 02-02-2010. ACCORDING TO THE CIT(A), SUCH AFFIDAVITS WERE SELF-SERVING DOCUMENTS. 12. THE LD. AR HAS MADE ORAL AND WRITTEN SUBMISSION S AS UNDER: A. ON LEGAL GROUND - IN ABSENCE OF ANY INCRIMINATING MATERIAL NO ADDITION COULD HAVE BEEN MADE 1.00 AT THE OUTSET, IT IS SUBMITTED THAT THE APPELL ANT HAD DULY RECORDED THE RECEIPT OF SHARE CAPITAL/SHARE APPLICATION MONEY/SH ARE PREMIUM, MADE BY IT DURING THE RELEVANT PREVIOUS YEAR, FOR AN AGGREGATE SUM OF RS.2,92,00,000/-, IN ITS REGULAR BOOKS OF ACCOUNT MAINTAINED IN THE ORDI NARY COURSE OF ITS BUSINESS. IT IS SUBMITTED THAT IN THE INSTANT CASE, THE ADDITION HAS BEEN MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT WH ICH AUTOMATICALLY PROVES THAT CREDIT ENTRIES IN RESPECT OF SUCH RECEIPTS WERE DUL Y MADE BY THE APPELLANT IN ITS REGULAR BOOKS OF ACCOUNT. 2.00 THE APPELLANT COMPANY HAD FURNISHED ITS ORIGIN AL RETURN OF INCOME UNDER S.139(1) OF THE INCOME-TAX ACT, 1961 ON 29-10-2002 [REFER PB PAGE NO. 50]. ALONG WITH THE RETURN OF INCOME FILED UNDER S. 139( 1), THE APPELLANT HAD ALSO FURNISHED COPY OF ITS AUDITED FINANCIAL STATEMENTS FOR THE RELEVANT PREVIOUS YEAR. IN SUCH FINANCIAL STATEMENTS, THE FACTS AS REGARD T O THE RECEIPT OF SHARE CAPITAL/SHARE PREMIUM/SHARE APPLICATION MONEY WAS C LEARLY DISCERNIBLE [KINDLY REFER PB PAGE NO.67]. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 10 3.00 IN RESPONSE TO THE RETURN SO FILED UNDER S.139 (1), NO ACTION WAS TAKEN BY THE DEPARTMENT THEREBY MEANING THAT THE ASSESSMENT WAS DEEMED TO HAVE BEEN COMPLETED UNDER S.143(1)(A) OF THE ACT. IN RESPECT OF SUCH ASSESSMENT YEAR, NO NOTICE UNDER S.143(2) OF THE ACT WAS EVER ISSUED IN RESPONSE TO THE ORIGINAL RETURN FILED. 3.01 IN THE SIMILAR MANNER AND CIRCUMSTANCES, THE A PPELLANT HAD ALSO TAKEN THE SHARE CAPITAL/SHARE APPLICATION/SHARE PREMIUM, IN S UBSEQUENT YEARS RELEVANT TO A.Y. 2003-04 AND A.Y. 2004-05 AND THE REGULAR ASSES SMENTS, IN RESPONSE TO RETURNS FILED UNDER S. 139(1), FOR SUCH ASSESSMENT YEARS WERE DULY FRAMED UNDER S. 143(3) OF THE ACT. THE ASSESSING OFFICERS MAKING THE ASSESSMENTS MADE IN- DEPTH ENQUIRY ON THIS ISSUE AND NO ADVERSITY WAS OB SERVED AND, CONSEQUENTLY, WHILE FRAMING THE ASSESSMENT, NO ADDITION WAS MADE IN THE ORIGINAL ASSESSMENTS. SUCH FACT IS EVIDENT FROM THE COPIES O F THE RELEVANT ASSESSMENT ORDERS PLACED AT PAGE NO.292 TO 299 OF THE PAPER BO OK. 4.00 IN THE APPELLANTS CASE, THE SEARCH WAS INITIA TED ON 25-09-2007 AND BY SUCH DATE, THE TIME LIMIT FOR ISSUANCE OF ANY NOTIC E UNDER S.143(2) IN RESPONSE TO THE ORIGINAL RETURN FILED UNDER S.139 HAD ALREADY G OT EXPIRED MUCH PRIOR. IN THESE CIRCUMSTANCES, THE ASSESSMENT YEAR UNDER CONSIDERAT ION HAS TO BE REGARDED AS THE NON-ABATED ASSESSMENT YEAR IN TERMS OF SECOND P ROVISO TO SECTION 153A OF THE ACT. IN OTHER WORDS, SUCH ASSESSMENT YEAR CAN B E TERMED ONLY AS A COMPLETED YEAR OF ASSESSMENT. 5.00 SINCE THE ASSESSMENT YEAR UNDER CONSIDERATION IS A NON-ABATED ASSESSMENT YEAR, IN VIEW OF THE DETAILED DISCUSSION MADE IN RESPECT OF GROUND NO. 1.1 & 1.2 SUPRA , AND MORE PARTICULARLY, IN VIEW OF THE DECISIONS O F THIS HONBLE BENCH IN THE CASE OF KALANI BROTHERS AND ANANT STEELS , ANY ADDITION IN THE APPELLANTS INCOME COULD HAVE BEEN MADE ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL SEIZED DURING THE COURSE OF THE SEARCH WHEREAS IN THE INSTANT CASE, THE ADDITION ON ACCOUNT OF SHARE CAPI TAL HAS BEEN MADE UNDER S.68 OF THE ACT MERELY ON THE BASIS OF BALANCE SHEET FIL ED BY THE APPELLANT ITSELF. 6.00 IT IS SUBMITTED THAT SEIZURE OF CERTAIN DOCUME NTS WHICH ARE ALREADY IN THE KNOWLEDGE AND POSSESSION OF THE DEPARTMENT CANNOT S AID TO BE INCRIMINATING DOCUMENTS AND RATHER SUCH DOCUMENTS OUGHT NOT TO HA VE BEEN SEIZED BY THE SEARCH PARTY. THE HON'BLE HIGH COURT OF DELHI IN CA SE OF S.R. BATLIBOI & CO. VS. DIT (INV.) (2009) 315 ITR 137 (DEL) HAS HELD THAT PROVISIONS OF SECTION 132 DOES NOT ENTITLE AND EMPOWER THE DDIT TO SEIZE ANY OR AL L THE ARTICLES, VALUABLES OR DOCUMENTS FOUND DURING THE COURSE OF SEARCH REGARDL ESS OF WHETHER THEY ARE RELEVANT FOR THE PURPOSE OF ASSESSMENT OF THE ASSES SEE ON WHOM SEARCH AND SEIZURE IS CONDUCTED. 6.01 IN THE CASE OF DCIT VS. C.S.L. SECURITIES (P) LTD. (2008) 15 DTR ( DEL) (TRIB) 318, THE PROCEEDINGS U/S. 158BD WERE HELD TO BE UNJUSTI FIED SINCE IT WAS BASED UPON THE CONTRACT NOTES, BILLS ETC. FOUND DUR ING THE COURSE OF SEARCH FROM PREMISES OF SOME OTHER PERSONS AND SUCH CONTRACT NO TES, BILLS WERE FOUND RECORDED IN THE BOOKS OF THE ASSESSEE. 6.02 RELIANCE IS ALSO PLACED ON FOLLOWING JUDICIAL PRONOUNCEMENTS: BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 11 I) LMJ INTERNATIONAL LTD. VS. DCIT (2008) 119 TTJ (KOL) 214 II) MEGHMANI ORGANICS LTD. VS. DCIT (2010) 129 TTJ (AHD) 255 7.00 IN VIEW OF THE ABOVE FACTS, THE IMPUGNED ADDIT ION IS LIABLE TO BE DELETED ON THIS LEGAL GROUND ALONE. B. ON MERITS (I) SPECIFIC FACTS RELATING TO THE ISSUE OF SHARE CAPIT AL 7.00 THE APPELLANT COMPANY IS ENGAGED IN THE BUSINE SS OF COAL TRADING IN DOMESTIC AS WELL AS IN THE INTERNATIONAL MARKET AT A VERY LARGE SCALE. DURING THE RELEVANT PREVIOUS YEAR, THE APPELLANT COMPANY, IN I TS REGULAR BOOKS OF ACCOUNT, SHOWN TO HAVE RECEIVED A SUM OF RS.3,10,00,000/- BY WAY OF SHARE CAPITAL/ SHARE APPLICATION/ SHARE PREMIUM MONEY FROM THE VAR IOUS RELATED AND NON- RELATED COMPANIES. OUT OF SUCH SUM OF RS.3,10,00,00 0/-, A SUM OF RS.18,00,000/- WAS RECEIVED BY THE APPELLANT COMPAN Y FROM ITS TWO GROUP COMPANIES NAMELY M/S. ISHHAR OVERSEAS PVT. LTD. A ND M/S. BCC CARGO PVT. LTD., AS PER DETAILS FURNISHED BEFORE THE LEARNED AO. [KINDLY REFER PB PAGE NO. 118], BY WAY OF ALLOTMENT OF 18,000, EQUITY SHARES OF RS.10/- EACH AT A PREMIUM OF RS.90/- PER SHARE, AS FULLY PAID-UP SHARES. THE REMAINING SUM OF RS.2,92,00,000/- WAS RECEIVED BY THE APPELLANT COMP ANY BY WAY OF ALLOTMENT OF 5,84,000 EQUITY SHARES OF RS.10/- EACH AT A SHARE P REMIUM OF RS.90/- EACH TO 16 NON-RELATED COMPANIES, AS PARTLY PAID-UP SHARES. THE COMPANIES SUBSCRIBING TO THE PARTLY PAID-UP SHARES, PAID A SUM OF RS.5/- & RS.45/- PER SHARE RESPECTIVELY TOWARDS SHARE CAPITAL AND SHARE PREMIU M. THUS, THE APPELLANT COMPANY RECEIVED A FRESH SUM OF RS.29,20,000/- AND RS.2,62,80,000/- RESPECTIVELY TOWARDS PARTLY PAID-UP SHARE CAPITAL A ND SHARE PREMIUM, AGGREGATING TO RS.2,92,00,000/-. THE DETAILS OF FRE SH SHARE CAPITAL/ SHARE PREMIUM OF RS.2,92,00,000/-, AS SUBMITTED BEFORE TH E LEARNED AO, ARE PLACED AT PAGE NO. 120 TO 121 OF THE COMPILATION. THE DETAILS OF SUCH RECEIPTS HAVE ALSO BEEN GIVEN BY THE CIT(A) AT PAGE NO.26 TO 29 OF HIS ORDER. 8.00 DURING THE COURSE OF THE SEARCH CARRIED OUT UN DER S. 132(1) OF THE ACT IN THE BUSINESS PREMISES OF THE APPELLANT COMPANY ON 2 5-09-2007, CERTAIN DOCUMENTS INVENTORISED UNDER THE CAPTION SHARE APP LICATION FILE OF BHATIA INTERNATIONAL LIMITED WERE FOUND AND SEIZED AS BS- 95 TO BS-142 & BS-182 TO BS-232, VIDE A COMMON PANCHNAMA DRAWN FOR THE PERIO D FROM 25-09-2007 TO 29- 09-2007. [KINDLY REFER PB PAGE NO. 22 TO 26 & 30 T O 34 OF OUR COMPILATION]. 9.01 DURING THE COURSE OF THE ASSESSMENT PROCEEDING S, CARRIED OUT UNDER S. 153A, THE LEARNED AO VIDE A QUESTIONNAIRE ANNEXED T O THE NOTICE UNDER S. 142(1) DATED 22-09-2008, [KINDLY REFER PB PAGE NO. 89], RE QUIRED THE APPELLANT COMPANY TO FURNISH THE NAME AND ADDRESSES OF ALL TH E PERSONS FROM WHOM THE APPELLANT COMPANY HAD TAKEN SHARE APPLICATION/ SHAR E PREMIUM. THE APPELLANT COMPANY WAS FURTHER REQUIRED TO FURNISH THE LETTERS OF CONFIRMATION OF THE SUBSCRIBING COMPANIES ALONG WITH THE PROOF OF FILIN G OF RETURNS OF INCOME BY THE SHARE APPLICANT COMPANIES. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 12 9.02 IN RESPONSE TO THE SPECIFIC QUERY RAISED BY TH E LEARNED AO, THE APPELLANT COMPANY THROUGH ITS COUNSELS LETTER DATED 01-09-20 09, FURNISHED THE COMPLETE DETAILS IN RESPECT OF EACH AND EVERY SHARE APPLICAT ION/ SHARE PREMIUM MONEY RECEIVED DURING THE RELEVANT PREVIOUS YEAR ALONG WI TH NECESSARY DOCUMENTARY EVIDENCES. [KINDLY REFER PB PAGE NO. 114 OF OUR COM PILATION]. FOR A READY REFERENCE, THE FIRST REPLY ON THE ISSUE, MADE BY TH E APPELLANT, IS REPRODUCED AS UNDER: DETAILS OF SHARE APPLICATION WITH NAMES, ADDRESSES , AMOUNT & PAN OF APPLICANT IS ENCLOSED. ALL THE ALLOTTEE ARE COMPANIES REGISTE RED UNDER COMPANIES ACT, 1956, AND ABIDES WITH SHARE CAPITAL FOR ITS ALL TYP ES OF FINANCIAL ACTIVITIES. ALL COMPANIES ARE HAVING PAN & ASSESSED TO INCOME-TAX. THE ENTIRE PAYMENT IS RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. ORIGINAL SH ARE APPLICATIONS ALONG WITH ALL THE RELEVANT DOCUMENTS LIKE MEMORANDUM OF ASSOC IATION, COPY OF BANK STATEMENT, INCOME TAX ACKNOWLEDGMENT ETC. WERE SEIZ ED DURING THE SEARCH OPERATION AS SEIZER NO. BS-1 TO BS-285 INDORE. IN S UPPORT OF THAT WE ARE ALSO ENCLOSING HEREWITH LEDGER OF SHARE APPLICATION MONE Y ACCOUNT, SHARE CAPITAL ACCOUNT & SHARE PREMIUM ACCOUNT. PLEASE FIND ENCLOS ED ALL THE RELEVANT DOCUMENTS FOR READY REFERENCE IN SEPARATE BOX FILE NOS. 01 TO 04 (CONTAINING PAGES 01 TO 1840). 9.03 SUBSEQUENTLY, THE LEARNED AO ISSUED A SHOW CAU SE NOTICE TO THE APPELLANT ON 07-12-2009 [KINDLY REFER PB PAGE NO. 9 2]. THROUGH SUCH SHOW CAUSE NOTICE, THE LEARNED AO, FOR THE FIRST TIME, I NTIMATED THE APPELLANT COMPANY THAT LETTERS WERE ISSUED BY HIS OFFICE DIRECTLY TO THE VARIOUS SHARES SUBSCRIBING COMPANIES AND TO THE BANKERS OF THESE COMPANIES BUT MANY OF THE LETTERS HAVE COME BACK. THE LEARNED AO MADE THE AVERMENT THAT NO N-SERVICING OF THE NOTICES MEANS THESE COMPANIES ARE NOT EXISTING IN THE GIVEN ADDRESSES. THE LEARNED AO, IN THE SHOW CAUSE NOTICE, FURTHER STATED THAT T HE REPLIES MADE BY THE COMPANIES WERE INADEQUATE FOR CONSIDERING THEM GENU INE. THE AO FURTHER MADE AVERMENT THAT FROM THE ENQUIRIES CONDUCTED THROUGH BANKING CHANNEL, IT TRANSPIRED THAT HUGE AMOUNTS HAD CHANGED HANDS AND A VICIOUS CIRCLE THROUGH MULTI LAYERING HAVE BEEN CREATED TO HIDE THE NATURE OF REAL TRANSACTIONS. THE LEARNED AO FURTHER STATED THAT MOST OF THE COMPANIE S APPEARS TO BE ONLY A LARGE PART OF MONEY LAUNDERING RACKET SINCE THERE WERE IN STANCES OF HUGE CASH DEPOSITS IN THE LAYERING ACCOUNT. FINALLY ON THE IS SUE, THE LEARNED AO REQUIRED THE APPELLANT TO INSPECT ALL THE DOCUMENTS WHICH WE RE GATHERED BY HIS OFFICE AND ALSO TO SHOW CAUSE WHY ALL SHARE CAPITAL/ SHARE PRE MIUM SHOULD NOT BE CONSIDERED AS ACCOMMODATION ENTRIES WHERE THESE COM PANIES HAVE ROUTED THESE TRANSACTIONS IN CHEQUE BY DEPOSITING CASH IN SOME U NKNOWN INDIVIDUAL AND THROUGH FURTHER MULTIPLE LAYERING ULTIMATELY REACHI NG TO THE HANDS OF THE APPELLANT COMPANY. RELEVANT ABSTRACTS OF THE SHOW CAUSE NOTIC E DATED 07-12-2009 HAVE BEEN REPRODUCED BY THE LEARNED AO AT PAGE NO. 34 TO 35 OF THE IMPUGNED ASSESSMENT ORDER. 9.04 IN REPLY TO THE SHOW CAUSE NOTICE, AS REFERRED HEREINABOVE, THE APPELLANT COMPANY THROUGH ITS COUNSELS MADE A VERY DETAILED REPLY ON 14-12-2009 CONTAINING AS MANY AS 49 PAGES. A COPY OF THE DETAI LED REPLY MADE BEFORE THE AO IS PLACED AT PAGE NO. 117 TO 165 OF OUR COMPILAT ION. SUCH REPLY HAS ALSO BEEN REPRODUCED BY THE LEARNED AO AT PAGE NO. 36 TO 71 OF THE IMPUGNED ASSESSMENT ORDER. IN THE REPLY, THE APPELLANT COMPA NY FURNISHED A VERY PIN- BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 13 POINTED BUT COMPLETE DETAILS OF THE IMPUGNED SHARE CAPITAL OF RS.2,92,00,000/- RECEIVED BY IT DURING THE RELEVANT PREVIOUS YEAR FR OM 16 COMPANIES. [KINDLY REFER PB PAGE NO. 122 TO 153 OF OUR COMPILATION]. THE APP ELLANT COMPANY FURNISHED THE DETAILS OF CHEQUE NUMBER, DATE OF CHEQUES AND A MOUNT OF EACH CHEQUE RECEIVED FROM EACH OF THE 16 COMPANIES. THE APPELLA NT COMPANY FURTHER PLACED RELIANCE ON THE SHARE APPLICATION FORMS AND LETTERS OF CONFIRMATIONS WHICH WERE DULY SEIZED/ SUBMITTED AT AN EARLIER OCCASION. THE APPELLANT COMPANY FURTHER FURNISHED/ REFERRED ALL THE NECESSARY DOCUMENTS SUC H AS COPY OF CERTIFICATE OF INCORPORATION ALONG WITH COPY OF MEMORANDUM AND AR TICLES OF ASSOCIATION OF THE SHARE APPLICANT COMPANIES, COPY OF THE AUDITED FINA NCIAL STATEMENTS OF THE SHARE APPLICANT COMPANIES, COPY OF THE BOARDS RESO LUTION IN CONNECTION WITH MAKING OF INVESTMENT IN THE APPELLANT COMPANY, LIST OF DIRECTORS OF THE SHARE APPLICANT COMPANIES, COPY OF ACKNOWLEDGEMENT OF INC OME-TAX RETURNS FILED BY THE SHARE APPLICANT COMPANIES, COPIES OF THE STATEM ENT CONTAINING SIGNATURE OF THE DIRECTORS OF THE SHARE APPLICANT COMPANIES DULY VERIFIED BY THEIR BANKERS, COPY OF ALLOTMENT OF TAN BY THE INCOME-TAX DEPARTME NT TO THE SHARE APPLICANT COMPANIES ETC. THE APPELLANT COMPANY THUS SUBMITTED THAT BY FURNISHING ALL THE NECESSARY EVIDENCES FOR ESTABLISHING THE IDENTITY O F THE SHARE APPLICANT COMPANIES, GENUINENESS OF THE TRANSACTIONS AND CRED ITWORTHINESS OF THE SHARE APPLICANT COMPANIES, IT HAD DISCHARGED ITS INITIAL ONUS OF PROVING, AS CONTEMPLATED UNDER THE PROVISIONS OF SECTION 68 OF THE ACT, AND THEREFORE, NO ADVERSE INFERENCE DESERVED TO BE DRAWN AGAINST THE APPELLANT COMPANY. IN SUPPORT OF ITS CONTENTION, THE APPELLANT COMPANY MA DE RELIANCE ON THE VARIOUS JUDICIAL PRONOUNCEMENTS, AS DISCUSSED AT PARA 5.1 T O 7.6.6 OF THE REPLY LETTER DATED 14-12-2009 [KINDLY REFER PB PAGE NO. 153 TO 1 65 OF OUR COMPILATION]. 9.05 AFTER RECEIPT OF THE DETAILED REPLY MADE BY TH E APPELLANT ON 14-12-2009, THE LEARNED AO ISSUED A SECOND SHOW CAUSE NOTICE TO THE APPELLANT ON 19-12- 2009. A COPY OF SUCH SHOW CAUSE NOTICE IS PLACED AT PAGE NO. 95 TO 96 OF OUR COMPILATION. THE ABSTRACTS OF SUCH NOTICE CAN ALSO BE FOUND AT PAGE NO. 76 & 77 OF THE ASSESSMENT ORDER. IN TERMS OF SUCH SHOW CAUS E NOTICE, THE APPELLANT COMPANY WAS REQUIRED TO FURNISH ITS REPLY ON POINT NO. 5 TO 9 OF THE EARLIER SHOW CAUSE NOTICE DATED 07-12-2009. THE APPELLANT COMPAN Y WAS FURTHER INFORMED THAT AN INSPECTION OF THE MATERIAL GATHERED, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, WAS CARRIED OUT BY THE THEN AR OF THE APPELLANT ALONG WITH ASSISTANT MANAGER ACCOUNTS. THE LEARNED AO PROVIDED A LIST OF UN-SERVED LETTERS CONTAINING SERIAL NUMBER 1 TO 38 AND AS ALSO A LIST OF THE BANKS FROM WHOM THE INFORMATION WERE CALLED UNDER S. 133(6) OF THE ACT CONTAINING 77 ITEMS FROM SERIAL NUMBER 1 TO 77. ALTHOUGH, IN THE SAME NOTICE, THE L EARNED AO MADE A REFERENCE OF INFORMATION RECEIVED AT HIS END UNDER S. 133(6) FROM VARIOUS COMPANIES, SERIALIZED AT SNO. 1 TO 59 BUT THE DETAILS OF THE C OMPANIES FROM WHOM THE INFORMATION WAS DIRECTLY RECEIVED AT HIS END AS ALS O THE NATURE OF THE INFORMATION WAS NOT PROVIDED TO THE APPELLANT. THE DETAILS OF T HE LETTERS, WHICH ACCORDING TO THE AO, REMAINED UN-SERVED TO THE SUBSCRIBING COMPA NIES ARE PLACED AT PAGE NO. 99 TO 103 OF OUR COMPILATION. LIKEWISE, THE DET AILS OF INFORMATION CALLED BY THE LEARNED AO FROM VARIOUS BANKS ARE PLACED AT PAGE NO . 104 TO 113 OF THE COMPILATION. 9.06 IN REPLY TO THE SECOND SHOW CAUSE NOTICE, THE APPELLANT COMPANY FURNISHED ITS WRITTEN SUBMISSION BEFORE THE LEARNED AO ON 24-12-2009. A COPY OF THE SUBMISSION IS PLACED AT PAGE NO. 166 TO 174 OF OUR COMPILATION. THE BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 14 ABSTRACTS OF THE ABOVE SAID SUBMISSION HAVE DULY BE EN REPRODUCED BY THE LEARNED AO AT PAGE NO. 77 TO 84 OF THE ASSESSMENT O RDER. IN THE ABOVE SAID REPLY, THE APPELLANT COMPANY, INTER-ALIA, MADE ITS REPLY ON POINT NO. 5 TO 9 OF THE EARLIER SHOW CAUSE NOTICE DATED 07-12-2009. IN THE SAID REPLY, THE APPELLANT COMPANY VIDE PARA 2.2 [KINDLY REFER PB PAGE NO. 167 AND PAGE NO. 79 OF THE ASSESSMENT ORDER] MADE A SPECIFIC REQUEST TO THE LE ARNED AO TO PROVIDE COPIES OF ALL THE DOCUMENTS/ UN-SERVED LETTERS, WHICH WERE REFERRED TO BY THE LEARNED AO IN HIS SECOND SHOW CAUSE NOTICE. THE APPELLANT COMPANY VIDE PARA 1-A [PB PAGE NO. 168] CATEGORICALLY CLARIFIED THE CIRCUMSTA NCES UNDER WHICH, THE LETTERS LISTED IN SERIAL NUMBER 1 TO 38 RETURNED UN -SERVED. THE COMPANY VIDE SUB-PARA D, FURNISHED A LIST CONTAINING THE NE W POSTAL ADDRESS OF ALL THE COMPANIES, FROM WHOM THE LETTERS RETURNED UN-SE RVED, TO THE LEARNED AO [KINDLY REFER PB PAGE NO. 168 AND PAGE NO. 79 OF THE ASSESSMENT ORDER]. A COPY OF THE LIST CONTAINING THE CORRECTED ADDRESS ES OF THE SHARE SUBSCRIBING COMPANIES, AS FURNISHED BEFORE THE LEAR NED AO, IS PLACED AT PAGE NO. 279 TO 286 OF OUR COMPILATION. LIKEWISE, T HE APPELLANT COMPANY MADE ITS DETAILED EXPLANATION ON THE LETTERS ISSUED BY THE LEARNED AO TO VARIOUS BANKS UNDER S. 133(6), VIDE PARA II OF ITS REPLY [KINDLY REFER PB PAGE NO. 170 TO 172]. IT WAS DULY SUBMITTED THAT IN ONE OR TWO CASES, WHERE THE LEARNED AO FOUND THAT THE BANK ACCOUNTS OF THE SHAR E APPLICANTS GOT CLOSED/ BECAME INOPERATIVE, THE APPELLANT COMPANY M ADE TRANSACTIONS MUCH PRIOR I.E. MORE THAN 3-4 YEARS PRIOR TO THE EV ENT OF CLOSURE/ INOPERATIVE STATUS OF THE CONCERNING BANK ACCOUNT. THE APPELLANT VIDE PARA IV [PAGE NO. 172] COMMENTED THAT RECEIPT OF NECESSA RY INFORMATION FROM VARIOUS COMPANIES AS SERIALIZED AT SNO. 1 TO 59 PRO VES THE VERY EXISTENCE OF THE CONCERNING SHARE APPLICANT COMPANIES AS WELL AS THE GENUINENESS OF THE TRANSACTIONS CARRIED OUT BY THE APPELLANT WITH THOSE COMPANIES. IN PARA V OF THE REPLY [PAGE NO. 173], THE APPELLANT POINTE D OUT THAT MANY OF THE NAMES APPEARING IN THE LIST OF INFORMATION CALLED U NDER S. 133(6), SERIALIZED AT SNO. 1 TO 77, ARE NOT A SHAREHOLDER OF EITHER TH E APPELLANT COMPANY OR THE GROUP COMPANIES AND THEREFORE, SUCH INFORMATION ARE NOT RELEVANT. IT WAS FURTHER SUBMITTED THAT FROM THE BANK ACCOUNTS, DIRE CTLY CALLED UPON BY THE LEARNED AO, THE GENUINENESS OF THE SHARE APPLICATIO NS STAND PROVED AUTOMATICALLY. 9.07 MEANWHILE, AS ON 24-09-2009, THE LEARNED AO RECORDE D STATEMENTS OF TWO PERSONS, NAMELY SHRI SANJAY KUMAR PATNI AND SHR I SACHIN KUMAR JAIN, WHO GOT THEMSELVES APPEARED IN RESPONSE TO SUMMONS UNDER S. 131 OF THE ACT, ON BEHALF OF THREE SHARES SUBSCRIBING COMPANIE S NAMELY M/S. GLADIATOR VYAPAR PVT. LTD., M/S. BLUE RING COMMERCI AL PVT. LTD. AND M/S. WINSHER COMMERCIAL PVT. LTD.. THE CONTENTS OF SUCH STATEMENTS HAVE BEEN REPRODUCED BY THE LEARNED AO AT PAGE NO. 7 TO 10 OF THE IMPUGNED ASSESSMENT ORDER. A COPY OF SUCH STATEMENTS ARE ALSO PLACED AT PAGE NO. 300 TO 307 OF OUR COMPILATION. IN REPLY TO Q. NO. 7 GIVEN BY SHRI SAC HIN KUMAR JAIN AND Q. NO. 6 GIVEN BY SHRI SANJAY KUMAR PATNI, THE TRANSACTIONS OF MAKING INVESTMENT IN GROUP COMPANIES WERE DULY CONFIRMED IN UNAMBIGUOUS TERMS. 10.01 THE LEARNED AO IN THE BODY OF THE ASSESSMENT ORDER, AT THE PAGE NO. 10 TO 13, MADE THE ANALYSIS OF THE NET WORTH OF SOME O F THE SHARE APPLICANT COMPANIES WHOSE BALANCE-SHEETS WERE AVAILABLE ON HI S RECORD. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 15 10.02 THE LEARNED AO FURTHER ATTEMPTED TO MAKE AN A NALYSIS OF THE DEBIT/ CREDIT ENTRIES APPEARING IN THE BANK ACCOUNTS OF SOME OF T HE SHARE APPLICANT COMPANIES AT PAGE NO. 19 TO 32 OF THE ASSESSMENT ORDER. 10.03 THE LEARNED AO AT PAGE NO. 72 TO 75 OF THE AS SESSMENT ORDER MADE REFERENCE OF THE COMMISSION ISSUED BY HIM UNDER S. 131(1)(D) OF THE ACT TO THE ADIT(INV.), CALCUTTA AND ENQUIRY REPORT RECEIVED IN RESPONSE THERETO. 10.04 THE LEARNED AO AT PAGE NO. 75 CAME OUT WITH A FINDING THAT THE SHARE APPLICANT COMPANIES, WHO PROVIDED SHARE CAPITAL TO BHATIA GROUP OF COMPANIES, APPEARED TO BE EXISTING ON PAPER ONLY AND NO PHYSIC AL EXISTENCE COULD BE ASCERTAINED DESPITE HIS BEST EFFORTS. 10.05 THE LEARNED AO ALSO AT PAGE NO. 95 TO 97 OF T HE ASSESSMENT ORDER, OBSERVED THAT SHARES SUBSCRIBED BY THE VARIOUS COMP ANIES HAVE EITHER BEEN BOUGHT BACK BY THE PROMOTERS OF THE BHATIA GROUP OR THEY HAVE CHANGED HANDS. 11.00 FINALLY, THE LEARNED AO BY RELYING UPON THE M ONEY LAUNDERING THEORY, DISCUSSED BY HIM AT PAGES NO. 13 TO 19 OF THE ORDER AND AS ALSO RELYING UPON THE VARIOUS JUDICIAL PRONOUNCEMENTS, AS DISCUSSED A T PAGE NO. 86 TO 95 OF THE ASSESSMENT ORDER, AT SECOND LAST PARA OF PAGE NO. 9 7 OF THE ASSESSMENT ORDER, REACHED TO THE FINDING THAT THE CAPITAL INTRODUCED THROUGH PARTLY CONVERTIBLE SHARES AMOUNTING TO RS.2.92 CRORES WHICH INCLUDES S HARE PREMIUM ALSO IS NOT GENUINE AS THE SOURCES, IDENTITY AND CREDITWORTHINE SS OF THE COMPANIES HAVE NOT BEEN PROVED AND CONSEQUENTLY, MADE THE ADDITION UND ER S. 68 OF THE INCOME-TAX ACT, 1961. 12.01 BEFORE THE LEARNED CIT(A), THE APPELLANT MADE VERY DETAILED SUBMISSIONS FURNISHING THE COMPLETE DETAILS OF THE SHARE CAPITA L/SHARE APPLICATION/SHARE PREMIUM RECEIVED BY THE APPELLANT COMPANY AS WELL A S OTHER GROUP COMPANIES, AMOUNTING TO RS.49,22,56,000/- [KINDLY REFER PB PAG E NO.192 TO 265 OF OUR COMPILATION]. 12.02 IN THE SAID SUBMISSION BEFORE THE CIT(A), THE APPELLANT, AT PARA 1.4 [PAGE NO.194 TO 199 OF OUR COMPILATION], MET OUT WITH EAC H AND EVERY ADVERSE FINDING OF THE LEARNED AO. AT PARA 1.10.1A TO PARA 1.10.6B (PA GE NO. 201 TO 211 OF OUR COMPILATION), THE APPELLANT HAS MADE ITS DETAILED S UBMISSION ON THE BANK STATEMENTS OBTAINED BY THE LEARNED AO. THE APPELLAN T ALSO POINTED OUT THE CASES IN WHICH NO BANK STATEMENT WAS CALLED FOR BY THE AO . AT PARA 1.12 (PB PAGE NOS. 212 TO 256), THE APPELLANT VERY CATEGORICALLY REBUTTED THE CHARGE OF LAYERING OF FUNDS LEVELED AGAINST IT BY THE LEARNED AO. THE APPELLANT AND THE GROUP COMPANIES MADE THEIR REBUTTAL ON EACH AND EVERY OBS ERVATION OF THE LEARNED AO ON THE BANK STATEMENTS OF EACH AND EVERY SHARE APPL ICANT COMPANIES. FINALLY, BY RELYING UPON THE VARIOUS JUDICIAL PRONOUNCEMENTS, A S TABULATED AT PARA 1.13, PB PAGE NO. 257 AND CERTAIN OTHER JUDICIAL PRONOUNCEME NTS AS DISCUSSED AT PARA 1.13.1 TO PARA 1.17, THE APPELLANT URGED THE LEARNE D CIT(A) TO DELETE THE ADDITION MADE BY THE LEARNED AO UNDER S. 68 OF THE ACT. 12.03 DURING THE COURSE OF THE PROCEEDINGS BEFORE T HE FIRST APPELLATE AUTHORITY, THE APPELLANT SUBMITTED COPIES OF SEVEN AFFIDAVITS, DULY SWORN-IN BEFORE THE NOTARY PUBLIC BY THE DIRECTORS OF FIVE COMPANIES WH O HAD SUBSCRIBED THE SHARE CAPITAL OF VARIOUS COMPANIES OF THE BHATIA GROUP. T HE APPELLANT HAD FILED SUCH BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 16 AFFIDAVITS, AS ADDITIONAL EVIDENCES, BEFORE THE LEA RNED CIT(A), ALONG WITH AN APPLICATION DATED 13-09-2011 FOR ADMISSION OF SUCH EVIDENCES. A COPY OF THE APPLICATION IS PLACED AT PAGE NOS. 269 TO 271 OF TH E COMPILATION. FURTHER, THE COPIES OF THE AFFIDAVITS ARE PLACED AT PAGE NOS.272 TO 278 OF OUR COMPILATION. AT PARA 5 OF THE LETTER DATED 13-09-2011 [KINDLY REFER PB PAGE NO.270], THE APPELLANT HAD MADE A SPECIFIC REQUEST BEFORE THE LE ARNED CIT(A) TO EXAMINE THE SHAREHOLDERS FOR ARRIVING AT THE CONCLUSION ON GENUINENESS OF SHARE APPLICATION MONEY/SHARE CAPITAL. BEFORE MAKING THE WRITTEN SUBMISSION DATED 19-08-2011, THE APPELLANT HAD ALREADY MADE A CONSOL IDATED COMMON REPLY ON 25-05-2011 BEFORE THE LEARNED CIT(A). A COPY OF SUC H WRITTEN SUBMISSION IS PLACED AT PAGE NOS.175 TO 191 OF THE COMPILATION. D URING THE COURSE OF THE APPELLATE PROCEEDINGS, THE APPELLANT FURTHER MADE S UPPLEMENTARY SUBMISSION WHICH IS PLACED AT PAGE NO. 287 TO 291 OF OUR COMPI LATION. IN ORDER TO ESTABLISH THE FACT THAT THE GENUINENESS OF SHARE CAPITAL/SHA RE PREMIUM WAS DULY ACCEPTED BY THE DEPARTMENT DURING THE COURSE OF REG ULAR ASSESSMENTS FRAMED UNDER S. 143(3) OF THE ACT, THE APPELLANT AN D THE GROUP COMPANIES ALSO FURNISHED COPIES OF THE RELEVANT ASSESSMENT OR DERS BEFORE THE LEARNED CIT(A). [KINDLY REFER PB PAGE NOS. 292 TO 296 & 297 TO 299]. 13.00 HOWEVER, THE LEARNED CIT(A), VIDE PARA 5.3 (P AGE NO. 64 OF THE CIT(A)S ORDER), CONFIRMED THE ADDITION OF RS.2,92,00,000/- MADE BY THE LEARNED AO UNDER S. 68 OF THE ACT. THE LEARNED CIT(A) DEALT WI TH THIS ISSUE FROM PARA 4.2 (PAGE NO.26) TO PARA 4.2.14 (PAGE NO.63) OF HIS ORD ER. 14.01 THE LEARNED CIT(A), AT PARA 4.2 OF THE ORDER (PAGE NO.26), HAS GIVEN THE DETAILS OF TOTAL ADDITION OF RS.49,22,56,000/-, MAD E BY THE AO UNDER S. 68 OF THE ACT IN RESPECT OF VARIOUS COMPANIES OF THE BHATIA G ROUP. 14.02 THE LEARNED CIT(A) AT PARA 4.2.1 (PAGE NOS.26 TO 37) HAS GIVEN THE DETAILS OF THE SHARE APPLICATION/SHARE CAPITAL/ SHA RE PREMIUM RECEIVED BY THE VARIOUS COMPANIES OF BHATIA GROUP IN VARIOUS ASSESS MENT YEARS INVOLVED IN THE BLOCK ASSESSMENT. 14.03 AT PARA 4.2.2 (PAGE NO.37), THE LEARNED CIT(A ) DISCUSSED THE VERACITY OF THE STATEMENTS OF SHRI SANJAY KUMAR PATNI AND SHRI SACHIN KUMAR JAIN, RECORDED BY THE AO UNDER S. 131 OF THE ACT. 14.04 AT PARA 4.2.3 (PAGE NOS. 38 TO 40), THE LEARN ED CIT(A) DISCUSSED AT LENGTH THE INFORMATION GATHERED BY THE AO UNDER S. 133(6) OF THE ACT FROM THE VARIOUS BANKS OF THE SHARE APPLICANT COMPANIES AND AS ALSO THE INFORMATION GATHERED BY WAY OF ISSUANCE OF COMMISSION UNDER S. 131(1)(D) OF THE ACT. 14.05 AT PARA 4.2.4 (PAGE NOS. 40 & 41), THE LEARNE D CIT(A) DISCUSSED THE SUBMISSION MADE BY THE APPELLANT BEFORE HIM. 14.06 AT PARA 4.2.5 (PAGE NOS. 41 & 42), THE LEARNE D CIT(A) MADE OBSERVATIONS ON THE BANK STATEMENTS OF SOME OF THE SHARE APPLIC ANT COMPANIES GATHERED BY THE LEARNED AO. 14.07 AT PARA 4.2.6 (PAGE NOS. 43 TO 51), THE LEARN ED CIT(A) SET OUT THE DETAILS OF BUYBACK OF SHARES MADE BY THE VARIOUS MEMBERS OF THE BHATIA FAMILY IN A TABULAR FORM. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 17 14.08 AT PARA 4.2.7 (PAGE NOS. 51 TO 54), THE LEARN ED CIT(A) AGAIN MADE OUT VARIOUS TABLES GIVING THE DETAILS OF SHARE CAPITAL TAKEN BY VARIOUS COMPANIES OF THE BHATIA GROUP AND DETAILS OF THE BUYBACK PRICE O F THE SHARES. 14.09 AT PARA 4.2.8 (PAGE NOS. 54 TO 56), THE LEARN ED CIT(A) DISCUSSED THE BUYBACK THEORY ADOPTED BY THE BHATIA GROUP OF COMPA NIES. 14.10 AT PARA 4.2.9 (PAGE NOS. 56 TO 59), THE LEARN ED CIT(A) DISCUSSED FORFEITURE OF SHARES MADE BY THE APPELLANT COMPANY OF THE SHARES OF ONE OF THE SHARE APPLICANTS, NAMELY M/S. SHEETAL DIAMONDS LTD. IN SUCH PARA, THE LEARNED CIT(A) DOUBTED THE FORFEITURE/BUYBACK OF SHARES. 14.11 AT PARA 4.2.10 (PAGE NOS.59 TO 60), THE LEARN ED CIT(A) DECLINED TO ADMIT FRESH EVIDENCES IN THE FORM OF AFFIDAVITS DULY GIVE N BY DIRECTORS OF FIVE SHARE APPLICANT COMPANIES FOR THE NON-FULFILLMENT OF COND ITIONS ENJOINED IN RULE 46A OF THE IT RULES, 1962. 14.12 AT PARA 4.2.11 (PAGE NO.60), THE LEARNED CIT( A) DEFENDED THE ACTION OF THE AO IN MAKING THE ADDITION ON ACCOUNT OF SHARE C APITAL IN VARIOUS GROUP COMPANIES DESPITE THERE BEING A REGULAR ASSESSMENTS UNDER S. 143(3) ON THE GROUND THAT THE FACTS OF SHARE FORFEITURE/BUYBACK W ERE NOT BEFORE THE AO COMPLETING THE REGULAR ASSESSMENT. 14.13 AT PARA 4.1.12 (PAGE NOS. 61 & 62), THE LEARN ED CIT(A), DISCUSSED AND UPHELD THE ASSESSMENT PROCEEDINGS UNDER S. 153C IN THE CASE OF TWO GROUP COMPANIES, NAMELY M/S. BHATIA COAL SALES LIMITED AN D M/S. ISHHAR OVERSEAS PVT. LTD. 14.14 AT PARA 4.1.13 (PAGE NOS. 62 & 63), THE LEARN ED CIT(A) DISTINGUISHED THE CASE OF THE BHATIA GROUP OF COMPANIES WITH THAT OF THE LOVELY EXPORTS PVT. LTD. (216 CTR 195) . 14.15 AT PARA 4.2.14 (PAGE NO.63), THE LEARNED CIT( A) HELD THAT THE AO HAD RIGHTLY MADE THE ADDITION AS REGARD TO THE SHARE CA PITAL/SHARE PREMIUM IN VARIOUS CASES OF BHATIA GROUP. 15.00 FINALLY, ADJUDICATING THE GROUND AT THE PARA 5.3 (AT PAGE NOS. 64 & 65), THE LEARNED CIT(A) CONFIRMED THE ADDITION OF RS.2,9 2,00,000/- MADE BY THE LEARNED AO ON ACCOUNT OF SHARE APPLICATION/ SHARE C APITAL/ SHARE PREMIUM IN THE HANDS OF THE APPELLANT COMPANY FOR THE YEAR UNDER C ONSIDERATION. OUR SUBMISSIONS ON MERITS OF THE CASE 16.00 IN THIS CONTEXT, AT THE OUTSET, KIND ATTENTIO N OF YOUR HONOURS IS INVITED TO THE VARIOUS WRITTEN SUBMISSIONS MADE BEFORE THE LEA RNED CIT(A) WHICH ARE PLACED AT PAGE NOS.175 TO 191, 192 TO 265 & 266 TO 268 OF OUR COMPILATION. GIST OF THE MAIN WRITTEN SUBMISSION HAS ALSO BEEN REPROD UCED BY THE LEARNED CIT(A) AT PAGE NOS.9 TO 25 OF HIS ORDER. WE, IN ADDITION T O OUR WRITTEN SUBMISSIONS MADE HEREUNDER, ALSO WISH TO PLACE RELIANCE ON THE ABOVE REFERRED WRITTEN SUBMISSIONS MADE BEFORE THE LEARNED CIT(A), ON THE SUBJECT GROUND. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 18 17.01 YOUR HONOURS, IN THE PRESENT CASE, THE LEARNE D AO HAS MADE THE ENTIRE ADDITION BY INVOKING PROVISIONS OF SECTION 68 OF TH E INCOME-TAX ACT, 1961. FOR A READY REFERENCE, THE PROVISIONS OF SECTION 68 ARE R EPRODUCED AS UNDER: CASH CREDITS 68 WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HI M IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME- TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 17.02 ON A PLAIN READING OF THE PROVISIONS OF SECTI ON 68 OF THE ACT, IT BECOMES ABUNDANTLY CLEAR THAT THE PROVISIONS OF THE SECTION CAN BE PUT INTO OPERATION ONLY IF EITHER AN ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ANY CREDIT ENTRY FOUND CREDITED IN THE BOOKS OF THE ASS ESSEE MAINTAINED FOR ANY PREVIOUS YEAR OR THE EXPLANATION OFFERED BY THE ASS ESSEE, IN THE OPINION OF THE ASSESSING OFFICER, IS NOT SATISFACTORY. ADMITTEDLY, SECTION 68 PLACES A BURDEN OF PROOF ON THE ASSESSEE TO EXPLAIN THE NATURE AND THE SOURCE OF ANY CREDIT FOUND IN THE BOOKS BUT AT THE SAME TIME IT HAS TO KEPT IN TH E MIND THAT THE BURDEN CASTED UPON THE ASSESSEE IS ONLY AN INITIAL BURDEN. IT HAS CONSISTENTLY BEEN LAID DOWN THAT WHEN AN ASSESSEE CLAIMS THAT HE HAD BORROWED M ONEY FROM A THIRD PARTY THE INITIAL ONUS LIES ON THE ASSESSEE TO ESTABLISH (A) THE IDENTITY OF THE THIRD PARTY; (B) THE ABILITY OF THE THIRD PARTY TO ADVANCE MONEY; AN D (C) PRIMA-FACIE THAT THE LOAN IS GENUINE ONE. IF THE ASSESSEE ESTABLISHES THE AFORES AID THREE PRE-CONDITIONS, THE BURDEN GETS SHIFTED TO THE DEPARTMENT AND THEN IT W OULD BE FOR THE DEPARTMENT TO DISPROVE THE SAME. [CIT VS. BAISHNAB CHARAN MOHANTI (1995) 212 ITR 199 (ORI)]. HOWEVER, THE DEGREE OF BURDEN OF PROVING VARIES FRO M CASE TO CASE DEPENDING UPON THE NATURE OF CASH CREDIT. THE BURDEN OF PROVING IS RELATIVELY LIGHTER WHEN THE CREDIT IS IN THE NATURE OF SHARE CAPITAL T HEN THE CREDIT IN THE NATURE OF LOAN. IN THE INSTANT CASE, THE NATURE OF IMPUGNE D CREDITS ARE THAT OF RECEIPT OF SHARE APPLICATION/ SHARE CAPITAL/ SHARE PREMIUM SHOWN BY THE APPELLANT COMPANY IN ITS BOOKS OF ACCOUNT AND THERE FORE, AS PER THE SETTLED LAW, THE APPELLANT COMPANY WAS ONLY REQUIRED TO EST ABLISH IDENTITY OF THE SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTION S BUT THE APPELLANT COMPANY WENT ONE STEP FURTHER AND IT ALSO ESTABLISH ED THE CREDITWORTHINESS OF THE SHARE APPLICANTS AND THUS IT DISCHARGED ITS BURDEN OF PROVING, AS CONTEMPLATED UNDER THE PROVISIONS OF SECTION 68 OF THE ACT, BEYOND ALL DOUBTS. THE MANNER IN WHICH THE APPELLANT COMPANY DISCHARG ED ITS INITIAL BURDEN HAS BEEN DISCUSSED IN THE ENSUING PARAS. 18.01 STATUTORY IDENTITY OF THE SHARE APPLICANTS GOT ESTA BLISHED BEYOND ALL DOUBTS I) DURING THE RELEVANT PREVIOUS YEAR, THE APPELLANT COMPANY RECEIVED SHARE APPLICATION/ SHARE PREMIUM AMOUNTING TO RS.2,92,00, 000/- FROM THE VARIOUS COMPANIES AS PER THE DETAILS GIVEN BY THE LEARNED C IT(A) IN TABLE NO. 6, AT PARA 4.2.1, PAGE NO. 26 OF THE IMPUGNED ORDER. THE NECES SARY DETAILS HAVE ALSO BEEN GIVEN AT PAGE NO. 97 & 98 OF OUR COMPILATION OF VOL UME-1. II) ON A PERUSAL OF THE LIST OF THE SHARE APPLICANT S, IT SHALL BE OBSERVED BY YOUR HONOURS THAT ALL THE SHARE APPLICANTS ARE EITH ER PRIVATE LIMITED COMPANIES OR BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 19 PUBLIC LIMITED COMPANIES DULY INCORPORATED AND REGI STERED UNDER THE COMPANIES ACT, 1956. III) DURING THE COURSE OF THE ASSESSMENT PROCEEDING S, IN ORDER TO ESTABLISH THE EXISTENCE OF THE SHARE APPLICANT COMPANIES, THE APPELLANT, INITIALLY, MADE A SPECIFIC REQUEST TO THE LEARNED AO TO REFER VARIOUS DOCUMENTS INVENTORISED AS PER PANCHNAMA DATED 29-09-2007, AS PER ANNEXURES BS-95 TO BS-142 AND BS-182 TO BS-232, CONTAINING THE COMPLETE SET OF DOCUMENTS FOR ESTABLISHING IDENTITY OF THE SHARE APPLICANT COMPANIES, GENUINENESS OF THE T RANSACTIONS AND CREDITWORTHINESS OF THE SHARE APPLICANT COMPANIES, AS FOUND AND SEIZED FROM THE BUSINESS PREMISES OF THE APPELLANT COMPANY ITSELF, DURING THE COURSE OF THE SEARCH OPERATIONS CARRIED OUT UNDER S. 132(1) OF TH E ACT [KINDLY REFER COPY OF THE INVENTORY OF BOOKS FOUND AS PLACED AT PB PAGE NO. 22 TO 26 AND 30 TO 34 OF THE COMPILATION]. THE NECESSARY FINDINGS RELATING TO SE IZURE OF SUCH DOCUMENTS HAVE ALSO BEEN GIVEN BY THE LEARNED AO AT THE FIRST PARA OF PAGE NO. 7 OF HIS ASSESSMENT ORDER. HOWEVER, IN ORDER TO BRING THE NE CESSARY DOCUMENTARY EVIDENCES ON THE ASSESSMENT RECORDS, THE APPELLANT COMPANY VIDE ITS COUNSELS LETTER DATED 01-09-2009, FURNISHED ALL THE RELEVANT DOCUMENTS FOR ESTABLISHING THE GENUINENESS OF THE TRANSACTIONS. THE APPELLANT COMP ANY FURNISHED AS MANY AS 1840 DOCUMENTS, CONTAINED IN FOUR SEPARATE BOX FILE S, BEFORE THE LEARNED AO [KINDLY REFER PB PAGE NO. 114]. IV) THE APPELLANT COMPANY, ALONG WITH ITS ABOVE REF ERRED LETTER DATED 01-09- 2009, INTER-ALIA FURNISHED THE FOLLOWING DOCUMENTS FOR ESTABLISHING THE IDENTITY OF THE SHARE APPLICANT COMPANIES: A) COPIES OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE SHARE APPLICANT COMPANIES. B) COPIES OF CERTIFICATE OF INCORPORATION, DULY ISS UED BY THE CONCERNING REGISTRAR OF COMPANIES, UNDER THE COMPANIES ACT, 19 56, TO THE SHARE APPLICANT COMPANIES. C) COPIES OF PAN CARDS/ TAN CARDS ISSUED TO THE SHA RE APPLICANT COMPANIES BY THE INCOME-TAX DEPARTMENT. D) COPIES OF ACKNOWLEDGEMENTS OF RETURNS OF INCOME FILED BY THE SHARE APPLICANT COMPANIES WITH THEIR CONCERNING ASSESSING OFFICERS. E) COPIES OF THE LETTER OF ALLOTMENT OF TAN/PAN TO THE SHARE APPLICANT COMPANIES BY THE INCOME-TAX DEPARTMENT. F) COPIES OF THE BANK STATEMENTS OF THE SHARE APPLI CANT COMPANIES. G) COPIES OF THE WEB PAGES DOWNLOADED FROM THE OFFI CIAL WEBSITE OF THE MINISTRY OF CORPORATE AFFAIRS, CONTAINING THE MASTE R DETAILS OF THE SHARE APPLICANT COMPANIES. H) COPIES OF THE LIST CONTAINING THE DETAILS OF DIR ECTORS OF THE SHARE APPLICANT COMPANIES. I) COPIES OF BANKS CERTIFICATE CERTIFYING THE SIGN ATURE OF THE DIRECTORS OF THE SHARE APPLICANT COMPANIES. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 20 J) COPIES OF CERTIFICATE OF REGISTRATION GRANTED BY THE RESERVE BANK OF INDIA TO SOME OF THE SHARE APPLICANT COMPANIES WHICH ARE FALLING IN THE CATEGORY OF NBFCS. V) IT SHALL BE WORTHWHILE TO MENTION HERE THAT THE NECESSARY FINDINGS IN CONNECTION WITH THE FILING OF THE VARIOUS DOCUMENTS BY THE APPELLANT COMPANY BEFORE THE LEARNED AO, AS AFORESAID HAS ALSO BEEN G IVEN BY THE LEARNED CIT(A), IN THE MIDDLE LINES OF PAGE NO. 39 OF THE IMPUGNED ORDER. AS SUCH THE FACT REGARDING FILING OF THE AFORESAID DOCUMENTS BY THE APPELLANT BEFORE THE LEARNED AO IS BEYOND ALL DOUBTS . VI) IN THE LIGHT OF THE ABOVE STATED DOCUMENTARY EV IDENCES, THERE DOES NOT REMAIN ANY DOUBTS AS REGARD THE EXISTENCE, AT LEAST STATUTORY, OF THE SHARE APPLICANT COMPANIES. IT IS SUBMITTED THAT UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, FOR BRINGING INTO EXISTENCE, THE PROMOTE RS OF A PROPOSED COMPANY ARE REQUIRED TO COMPLY WITH CERTAIN STATUTORY REQUIREME NTS AS CONTAINED UNDER PART II OF THE ACT. ONLY UPON COMPLETION OF CERTAIN STATUTO RY REQUIREMENTS, THE REGISTRAR OF COMPANIES ISSUES A CERTIFICATE OF INCORPORATION TO THE COMPANY AND SUCH CERTIFICATE OF INCORPORATION, GRANTED BY THE REGIST RAR OF COMPANIES, BECOMES THE CONCLUSIVE EVIDENCE OF THE EXISTENCE OF THE COMPANY TILL THE COMPANY IS WOUND- UP IN ACCORDANCE WITH THE VARIOUS PROVISIONS CONTAI NED IN THE ACT ITSELF. THE ALLOTMENT OF PERMANENT ACCOUNT NUMBER AND TAX DEDUC TION ACCOUNT NUMBER BY THE INCOME-TAX DEPARTMENT FURTHER PROVES THE EXISTE NCE OF SHARE APPLICANT COMPANIES. THE RETURNS OF INCOME FURNISHED BY THE S HARE APPLICANT COMPANIES FURTHER SPEAK IN VOLUME FOR THE VERY EXISTENCE OF T HE SHARE APPLICANT COMPANIES. IT IS AN UNDISPUTED FACT THAT ANY ENTITY, WHETHER H AVING PHYSICAL EXISTENCE OR NOT, CAN HAVE ITS ACCOUNTS OPENED WITH ANY BANK ONLY AFT ER SATISFYING WITH THE BANK REGARDING ITS PHYSICAL AND/OR LEGAL EXISTENCE BY FU RNISHING THE NECESSARY DOCUMENTS PRESCRIBED BY THE RESERVE BANK OF INDIA O N THIS BEHALF. EVEN THE MASTER DETAILS OF THE SHARE APPLICANT COMPANIES, AS GETTING HOISTED ON THE OFFICIAL WEBSITE OF THE MINISTRY OF CORPORATE AFFAIRS, SHOWI NG THE STATUS OF THE SHARE APPLICANT COMPANIES AS ACTIVE, PROVES BEYOND ALL DOUBTS THE EXISTENCE AND IDENTITY OF THE SHARE APPLICANT COMPANIES. FURTHERM ORE, GRANT OF CERTIFICATE OF REGISTRATION BY THE RESERVE BANK OF INDIA TO NBFC C OMPANIES ALSO PROVES THE LEGAL EXISTENCE AND IDENTITY OF SUCH COMPANIES. THE LISTING OF SHARES OF SOME OF THE SHARE APPLICANT COMPANIES WITH THE RECOGNIZED S TOCK EXCHANGE SUCH AS BSE ALSO ESTABLISHES THE IDENTITY OF THE COMPANIES BEYO ND ALL DOUBTS. VII) IT IS SUBMITTED THAT ALL THE DOCUMENTARY EVIDE NCES DULY FURNISHED BY THE APPELLANT BEFORE BOTH THE AUTHORITIES BELOW, HAVE B EEN COMPILED IN A SEPARATE PAPER BOOKS, TITLED AS 'VOLUME-2' CONTAINING PAGES FROM SNO. 308 TO 1415 AND SUCH COMPILATION HAS DULY BEEN PLACED ON RECORD OF YOUR HONOURS. HERE, IT SHALL BE WORTHWHILE TO NOTE THAT GENUINENESS AND VERACITY OF THE DOCUMENTARY EVIDENCES FURNISHED BY THE APPELLANT COMPANY/GROUP BEFORE THE AO/CIT(A) HAVE NOT BEEN DOUBTED AT ANY STAGE. IN SUCH A SITUATION, IT SHALL BE APPRECIATED THAT THE DOCUMENTS SO FOUND AND SEIZED DURING THE COURSE OF THE SEARCH, CANNOT BE TERMED AS INCRIMINATING IN THE NATURE. VIII) IT IS SUBMITTED THAT IN ORDER TO FURTHER ESTA BLISH THE IDENTITY OF THE SHARE APPLICANT COMPANIES BEYOND ALL DOUBTS, THE APPELLAN T HAS ALSO FILED ADDITIONAL EVIDENCES, IN A SEPARATE PAPER BOOK, ALONG WITH AN APPLICATION UNDER SUB-RULE (4) BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 21 OF RULE 18 READ WITH RULE 29 OF THE APPELLATE TRIBU NAL RULES, 1963 FOR ADMISSION OF SUCH ADDITIONAL EVIDENCES. IN SUCH PAPER BOOK, THE APPELLANT COMPANY HAS FURTHER SUBMITTED FOLLOWING DOCUMENTS: (A) COPIES OF THE ASSESSMENT ORDERS PASSED UNDER S. 153C OF THE ACT IN RESPECT OF SOME OF THE SHARE APPLICANT COMPANIES. (B) COPIES OF THE NOTICES ISSUED TO SOME OF THE SHA RE APPLICANT COMPANIES BY THE INCOME-TAX DEPARTMENT UNDER S. 153C/148 OF THE INCOME-TAX ACT, 1961. (C) COPIES OF THE CERTIFICATES ISSUED BY REGISTERED COMPANY SECRETARIES CERTIFYING THE RELEVANT DETAILS OF SOME OF THE SHAR E APPLICANT COMPANIES. (D) COPIES OF THE ORDERS OF THE HONBLE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI PASSED IN CASE OF TWO OF THE SHARE APPLICANT COMPANIES. (E) COPY OF THE ORDER OF THE HONBLE CUSTOMS, EXCIS E & GOLD TRIBUNAL, BANGALORE BENCH IN CASE OF ONE SHARE APPLICANT COMP ANY. (F) COPY OF NOTICE OF RECOVERY ISSUED BY THE TAX RE COVERY OFFICER OF ONE OF THE SHARE APPLICANT COMPANIES TO THE APPELLANT COMP ANY. (IX) IN VIEW OF THE PLENTY OF THE DOCUMENTARY EVIDE NCES, AS REFERRED TO HEREINABOVE, IT SHALL BE APPRECIATED BY YOUR HONOUR S THAT THE APPELLANT COMPANY COULD BE ABLE TO ESTABLISH THE STATUTORY IDENTITY O F THE SHARE APPLICANT COMPANIES BEYOND ALL DOUBTS. (X) IN THE FOLLOWING JUDICIAL PRONOUNCEMENTS, IT HA S BEEN HELD THAT ONCE THE PERMANENT ACCOUNT NUMBER OF THE SHARE APPLICANT IS PROVIDED AND THE TRANSACTION HAS TAKEN PLACE THROUGH BANKING CHANNEL, THE IDENTI TY OF THE SHARE APPLICANT GETS ESTABLISHED: A) CIT VS. ROCK FORT METAL & MINERAL 198 TAXMAN 497 (DEL.) B) CIT VS. WINSTRAL PETROCHEMICALS PVT. LTD. 330 IT R 603 (DEL.) C) CIT VS. OASIS HOSPITALITIES PVT. LTD. 333 ITR 11 9 (DEL.) D) CIT VS. GANGOUR INVESTMENT LTD. 335 ITR 359 (DEL .) E) CIT VS. TULIP FINANCE LTD. 015 DTR 185 (DEL.) 18.02 PHYSICAL IDENTITY OF THE SHARE APPLICANTS IS ALSO G ETTING ESTABLISHED BEYOND ALL DOUBTS (I) IN THE CASE OF THE APPELLANT, ALL THE SHARE APP LICANTS ARE THE CORPORATE ENTITIES WHICH ARE DULY REGISTERED UNDER THE COMPAN IES ACT, 1956. UNDER THE SCHEME OF THE LAW, CORPORATE ENTITIES ARE CONSIDERE D TO BE ARTIFICIAL JURISTIC PERSONS HAVING NO PHYSICAL EXISTENCE BUT ACTING THR OUGH ITS DIRECTORS AND AGENTS. IN SUCH A SITUATION, THE PHYSICAL EXISTENCE OF THE SHARE APPLICANT COMPANIES CAN NEITHER BE EXPECTED NOR CAN BE PROVED. (II) HOWEVER, SINCE THE AO AS WELL AS THE CIT(A) HA S LEVELED A CHARGE AGAINST THE APPELLANT THAT THE SHARE APPLICANT COMP ANIES ARE MERELY PAPER BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 22 COMPANIES AND THESE COMPANIES DO NOT HAVE ANY PHYSI CAL EXISTENCE, IT HAS BECOME IMPERATIVE FOR THE APPELLANT COMPANY TO REBU T SUCH FINDING OF THE AUTHORITIES BY ESTABLISHING THAT SUCH COMPANIES WER E NOT ONLY HAVING THEIR LEGAL EXISTENCE BUT IN FACT SUCH COMPANIES WERE ALSO FUNC TIONING AT THE RELEVANT TIME WHEN THEY MADE THEIR INVESTMENT IN THE APPELLANT CO MPANY. (III) IT IS SUBMITTED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO HAD ISSUED NOTICES UNDER S. 133(6) OF THE INCOME -TAX ACT, 1961 TO THE VARIOUS BANKS OF THE SHARE APPLICANTS AND IN RESPON SE TO SUCH NOTICES, THE BANKS HAD MADE AVAILABLE THE COPIES OF BANK STATEMENTS OF THE RELEVANT SHARE APPLICANTS TO THE AO. THE AO HAS GIVEN SUCH FINDING AT 2 ND LAST PARA AT PAGE NO.13 OF HIS ASSESSMENT ORDER. IT IS SUBMITTED THAT PHYSICAL EXISTENCE OF THE BANKS AND BANK ACCOUNTS OF THE SHARE APPLICANTS AUT OMATICALLY PROVES THE EXISTENCE OF SHARE APPLICANTS AS ANY BANK BEFORE OP ENING ANY BANK ACCOUNT IS COMPULSORILY REQUIRED TO ENSURE ITSELF ABOUT THE EX ISTENCE AND IDENTITY OF ITS CUSTOMERS. (IV) IT IS FURTHER SUBMITTED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO HAD REQUIRED THE BHATIA GROUP T O PRODUCE SOME OF THE SHARE APPLICANT COMPANIES ON SAMPLE BASIS [KINDLY R EFER 3 RD PARA AT PAGE NO.7 OF AOS ORDER]. IN COMPLIANCE OF SUCH DIRECTION, THE B HATIA GROUP HAD STARTED PRODUCING THE DIRECTORS OF THE SHARE APPLICANT COMP ANIES. ACCORDINGLY, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE APPELLANT COMPANY HAD PRODUCED DIRECTORS OF THREE COMPANIES NAMELY OF M/S. GLADIER VYAPAR PVT. LTD., M/S. BLUE RING COMMERCIAL PVT. LTD. AND M/S. WINDSOR COMMERCI AL PVT. LTD., ON SAMPLE BASIS. THE AO HAD DULY RECORDED THE STATEMENTS OF D IRECTORS OF SUCH COMPANIES. THE ABSTRACTS OF THE STATEMENTS HAVE DULY BEEN REPR ODUCED BY THE AO HIMSELF AT PAGE NO.7 TO 10 OF HIS ASSESSMENT ORDER. COPIES OF RELEVANT STATEMENTS ARE PLACED AT PAGE NO. 300 TO 307 OF OUR PAPER BOOK [VO L. I]. IT SHALL BE APPRECIATED THAT PERSONAL APPEARANCE OF THE DIRECTORS OF THE SH ARE APPLICANT COMPANIES BEFORE THE AO ESTABLISHES THE IDENTITY OF THE SHARE APPLICANT COMPANIES BEYOND ALL DOUBTS. (V) IT IS SUBMITTED THAT IN THE INSTANT CASE, INIT IALLY, THE AO REQUIRED THE APPELLANT COMPANY TO PRODUCE THE DIRECTORS OF THE S HARE APPLICANT COMPANIES BEFORE HIM, ON SAMPLE BASIS AND, IN COMPLIANCE OF S UCH DIRECTION, THE APPELLANT, BY CONTACTING THE CONCERNING PERSONS OVER THE PHONE , HAD STARTED PRODUCING THE DIRECTORS OF SUCH COMPANIES BEFORE THE AO AND ACCOR DINGLY, THE STATEMENTS OF SUCH DIRECTORS WERE ALSO RECORDED BY THE AO UNDER S . 131 OF THE ACT, AS STATED IN THE PRECEDING PARA. HOWEVER, ABRUPTLY, THE AO INSIS TED THE APPELLANT TO STOP PRODUCING THE DIRECTORS. INSTEAD, THE AO, AT HIS OW N, MAINLY BY TAKING SUPPORT FROM THE COPIES OF THE SHARE APPLICATION FORMS SEIZ ED DURING THE COURSE OF SEARCH, ISSUED NOTICES TO THE SHARE APPLICANT COMPA NIES DIRECTLY. (VI) IT IS SUBMITTED THAT IN THE CASE OF THE BCC GR OUP, THE TRANSACTIONS OF SHARE CAPITAL HAD TAKEN PLACE DURING THE FINANCIAL YEARS 20001-02 TO 2006-07, BUT THE AO ISSUED NOTICES UNDER S. 133(6) AS LATE AS IN THE YEAR 2009 I.E. AFTER ELAPSE OF A CONSIDERABLE LONG TIME. IT IS SUBMITTED THAT M EANWHILE, MANY OF THE SHARE APPLICANT COMPANIES, WHICH WERE BASICALLY STATIONED AT METRO CITIES IN WHICH THE RENTALS AND TENANCY ALWAYS REMAIN CRUCIAL ISSUES, H AD GOT THEIR OFFICES SHIFTED TO SOME OTHER PLACES THAN THAT MENTIONED IN THE SHARE APPLICATION FORMS AND IN BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 23 SUCH CIRCUMSTANCES, THE NOTICES SO ISSUED BY ASSESS ING OFFICER COULD NOT GET SERVED ON MANY OF THE COMPANIES. (VII) IT IS SUBMITTED THAT THE FACT REGARDING NON-S ERVICING OF THE NOTICES UNDER S. 133(6) TO THE SHARE APPLICANT COMPANIES WAS BROUGHT TO THE NOTICE OF THE APPELLANT BY THE AO ONLY AT THE FAG END OF THE ASSE SSMENT PROCEEDINGS I.E. BY WAY OF HIS LETTER DATED 7.12.2009 [KINDLY REFER PB PAGE NO.92]. EVEN IN SUCH LETTER, THE APPELLANT WAS NOT PROVIDED WITH ANY SPE CIFIC INFORMATION AS REGARD TO THE NAMES OF THE SHARE APPLICANTS IN WHOSE CASES TH E NOTICES GOT RETURNED UNSERVED. IT IS SUBMITTED THAT IT WAS ONLY AFTER MA KING REQUEST BY THE APPELLANT, THE AO VIDE HIS SUBSEQUENT LETTER DATED 19.12.2009 , PROVIDED THE DETAILS OF UNSERVED LETTERS TO THE APPELLANT [KINDLY REFER PB PAGE NO.95]. ACCORDING TO THE LIST PROVIDED TO THE APPELLANT BY THE AO, IN CASES OF 37 COMPANIES THE NOTICES ISSUED HAD RETURNED UNSERVED. A COPY OF THE LIST OF THE UNSERVED LETTERS ARE PLACED AT PAGE NO.99 TO 103 OF OUR PAPER BOOK. (VIII) THE APPELLANT, UPON MAKING ENQUIRY FROM ITS OWN SOURCES, CAME TO KNOW THAT THE LETTERS WHICH HAVE GOT UNSERVED WERE ISSUE D ON INCORRECT ADDRESSES AND DUE TO ISSUANCE THEREOF AT THE WRONG ADDRESSES, TH E SAME COULD NOT BE SERVED. THE APPELLANT CAME TO KNOW THAT MANY OF THE SHARE A PPLICANTS HAD CHANGED THEIR ADDRESSES. THE APPELLANT HAD DULY BROUGHT SUCH FACT TO THE NOTICE OF THE AO VIDE ITS LETTER FILED IN THE OFFICE OF THE AO ON 24.12.2 009 [KINDLY REFER PB PAGE NO.166 TO 174]. ON A PERUSAL OF PARA 2.2(A) OF THE REPLY [ PAGE NO.168], IT CAN BE OBSERVED THAT THE APPELLANT HAD DULY PROVIDED THE LIST OF CO RRECT ADDRESSES OF THE SHARE APPLICANTS. A COPY OF THE LIST OF CORRECT ADDRESS O F THE SHARE APPLICANTS IS PLACED AT PAGE NO.279 TO 286 OF OUR PAPER BOOK. ON A PERUSAL OF THE LIST, IT SHALL BE OBSERVED BY YOUR HONOURS THAT THE APPELLANT COULD B E ABLE TO PROVIDE COMPLETE AND CORRECT ADDRESS IN RESPECT OF ALL THE SHARE APPLICANTS FOR WHICH THE AO HAD CLAIMED THAT THE NOTICES GOT RETUR NED UNSERVED . (IX) YOUR HONOURS, IT IS A SETTLED LAW THAT FOR EXP ECTING SERVICING OF ANY NOTICE OR SUMMON TO THE PURPORTED PERSON, IT IS ESSENTIAL THAT SUCH NOTICE/SUMMON IS ADDRESSED CORRECTLY AND IF IT IS NOT SO, NO FAULT C AN BE FOUND EITHER OF THE NOTICEE OR ANYONE ELSE IF THE SAME RETURNS UNSERVED. PRESUM PTION OF SERVICING CAN BE TAKEN ONLY IF THE ENVELOPE CONTAINING THE NOTICE IS PROPERLY ADDRESSED. THUS, PROPER ADDRESSING IS SINE QUO NON FOR EFFECTING THE PROPER SERVICING OF ANY NOTICE. FOR SUCH PROPOSITION, RELIANCE IS PLACED ON THE DEC ISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAJESH KUMAR SHARMA (2009) 311 ITR 235 (DEL .) . (X) YOUR HONOURS, DURING THE COURSE OF THE APPELLAT E PROCEEDINGS, THE APPELLANT AGAIN, THROUGH ITS COUNSELS LETTER DATED 13.09.2011, HAD MADE A REQUEST TO THE CIT(A) FOR EXAMINATION OF THE SHARE APPLICANT BUT, UNFORTUNATELY, SUCH REQUEST OF THE APPELLANT COULD NOT FIND FAVOUR FROM THE LEARNED CIT(A) [KINDLY REFER PB PAGE NO.277]. (XI) IT IS SUBMITTED THAT POST APPELLATE ORDER, THE APPELLANT HAD SENT LETTERS FOR CONFIRMATION OF INVESTMENT IN SHARES TO THE SHARE A PPLICANT COMPANIES. SUCH LETTERS WERE DULY SENT BY THE APPELLANT THROUGH SPE ED POST REGISTERED A.D.. THE APPELLANT COMPANY HAD SENT SUCH LETTERS TO ALL THE SHARE APPLICANT COMPANIES WHO HAD MADE INVESTMENT WITH IT AND IN RESPECT OF W HOM, THE AO HAD CLAIMED THAT NOTICES UNDER S. 133(6) HAD GOT RETURNED UNSER VED. IT IS SUBMITTED THAT THE BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 24 APPELLANT HAD ACCEPTED THE SHARE APPLICATION MONEY FROM AS MANY AS 16 NON- RELATED COMPANIES AND OUT OF WHICH, ACCORDING TO TH E AO, NOTICES UNDER S. 133(6) HAD GOT RETURNED IN RESPECT OF 11 COMPANIES. POST A PPELLATE ORDER, THE APPELLANT HAD ISSUED NOTICES OF CONFIRMATION TO ALL SUCH 11 C OMPANIES AS PER DETAILS GIVEN AT PAGE NO.1418 OF OUR PAPER BOOK CONTAINING THE AD DITIONAL EVIDENCES. IT SHALL BE WORTHWHILE TO NOTE HERE THAT POST PASSING OF THE APPELLATE ORDERS, THE SIMILAR EXERCISE WAS ALSO MADE BY THE OTHER COMPANIES OF TH E BCC GROUP AND IN ALL THE CASES, THE NOTICES DULY GOT SERVED AND ACKNOWLEDGED TO THE CONCERNING SHARE APPLICANT COMPANIES. (XII) IT IS SUBMITTED THAT LETTERS OF CONFIRMATION OF INVESTMENT ISSUED BY THE APPELLANT COMPANY TO ALL THE SHARE APPLICANT COMPAN IES HAVE NOT ONLY GOT SERVED UPON THE CONCERNING COMPANIES, BUT THE NECESSARY AC KNOWLEDGEMENTS/ CONFIRMATION FROM THE POSTAL AUTHORITIES, EVIDENCI NG SERVICING OF SUCH LETTERS HAVE ALSO COME TO THE POSSESSION OF THE APPELLANT C OMPANY. COPIES OF THE ACKNOWLEDGEMENTS/CONFIRMATION BY THE INDIAN POSTAL DEPARTMENT ARE PLACED AT PAGE NO.1419 TO 1448 OF OUR PAPER BOOK CONTAINING T HE ADDITIONAL EVIDENCES. THE SERVICING OF SUCH NOTICES SPEAK IN VOLUME REGARDING THE PHYSICAL EXISTENCE OF SUCH COMPANIES AND NOW, THERE DOES NOT REMAIN ANY D OUBT FOR HOLDING ANY ADVERSE VIEW AGAINST THE APPELLANT COMPANY AS REGAR D TO THE PHYSICAL EXISTENCE OF THE OFFICES OF THE SHARE APPLICANT COMPANIES. (XIII) YOUR HONOURS, IT SHALL BE PERTINENT TO NOTE THAT THE APPELLANT GROUP HAD ALSO MADE COMMUNICATION TO THE SHARE APPLICANT COMP ANIES BY WAY OF SENDING LETTER THROUGH REGISTERED A.D. / U.P.C. AND SUCH LE TTERS HAD GOT DULY SERVED UPON SUCH SHARE APPLICANT COMPANIES AS IS EVIDENT FROM T HE COPIES OF THE ACKNOWLEDGEMENTS DULY SIGNED BY THE RECIPIENT SHARE APPLICANT COMPANIES [KINDLY REFER PB PAGE NO.1581 TO 1614 OF THE PAPER BOOK CONTAINING ADDITIONAL EVIDENCES]. (XIV) YOUR HONOURS, EVEN IN CASE OF SOME OF THE SHA RE APPLICANT COMPANIES, ASSESSMENT ORDERS HAVE BEEN PASSED BY THE INCOME TA X DEPARTMENT ITSELF UNDER THE PROVISIONS OF S. 153C OF THE ACT. COPIES OF SUCH ASSESSMENT ORDERS ARE PLACED AT PAGE NO.1449 TO PAGE NO.1563 OF OUR PAPER BOOK. FURTHER, IN RESPECT OF SOME OF THE COMPANIES NOTICES ISSUED BY THE INCOME TAX DEPARTMENT UNDER S. 153C AND UNDER S. 148 HAVE GOT DULY SERVED AS IS E VIDENT FROM THE COPIES SUCH NOTICES PLACED AT PAGE NO.1564 TO 1569 OF OUR COMPI LATION CONTAINING ADDITIONAL EVIDENCES. (XV) YOUR HONOURS, IN THE CASE OF THE SHARE APPLICA NT COMPANIES, NOT ONLY THE ASSESSMENT HAVE BEEN MADE UNDER S. 153C OF THE ACT BY THE INCOME TAX DEPARTMENT, BUT IN RESPECT OF SOME OF THE COMPANIES , EVEN APPELLATE ORDERS HAVE BEEN PASSED BY THE HONBLE INCOME TAX APPELLAT E TRIBUNAL AS WELL AS HONBLE CUSTOMS, EXCISE & GOLD TRIBUNAL. COPIES OF SUCH ORDERS ARE PLACED AT PAGE NO.1627 TO 1646 OF OUR COMPILATION CONTAINING ADDITIONAL EVIDENCES. (XVI) EVEN IN RESPECT OF ONE SHARE APPLICANT COMPAN Y, THE INCOME TAX DEPARTMENT HAS ISSUED A NOTICE TO THE APPELLANT COM PANY FOR MAKING RECOVERIES OF DUES AGAINST SUCH SHARE APPLICANT COMPANY. A COP Y OF SUCH RECOVERY LETTER IS PLACED AT PAGE NO.1649 OF OUR COMPILATION. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 25 (XVII) YOUR HONOURS WOULD APPRECIATE THAT HAD THE S HARE APPLICANT COMPANIES NOT BEEN IN EXISTENCE, AS ALLEGED BY THE AO, THERE COULD NOT HAVE BEEN PASSED ANY ASSESSMENT ORDER OR APPELLATE ORDER OR RECOVERY ORDER AGAINST SUCH COMPANIES. THE DOCUMENTS EVIDENCING PASSING OF SUCH ORDERS AUTOMATICALLY PROVES THE EXISTENCE OF SHARE APPLICANT COMPANIES. 19.00 GENUINENESS OF THE TRANSACTIONS HAVE BEEN ESTABLISH ED BEYOND ALL DOUBTS (I) YOUR HONOURS, IN THE INSTANT CASE, THE APPELLAN T/GROUP COMPANIES HAD ACCEPTED THE SHARE APPLICATION MONEY FROM THE COMPA NIES WHICH ARE DULY REGISTERED UNDER THE COMPANIES ACT, 1956. SOME COMP ANIES WERE ALSO GRANTED LICENSE BY THE RESERVE BANK OF INDIA FOR CARRYING O UT THE BUSINESS OF NON- BANKING FINANCE COMPANIES. SOME COMPANIES WERE DULY LISTED IN THE BSE STOCK EXCHANGE. THUS, THERE CANNOT BE ANY DOUBT AS REGARD TO THE GENUINENESS OF THE OTHER PARTY TO THE TRANSACTION. THE GENUINEN ESS OF THE SHARE APPLICANT COMPANIES HAVE ALREADY BEEN DISCUSSED IN DETAIL IN THE PRECEDING PARAS AND THE DOCUMENTARY EVIDENCES FURNISHED FULLY ESTABLISHES T HE GENUINENESS OF THESE COMPANIES. (II) YOUR HONOURS, THE APPELLANT HAD ACCEPTED THE E NTIRE SHARE APPLICATION MONEY THROUGH ACCOUNT PAYEE CHEQUES/DRAFTS/RTGS OR OTHER BANKING CHANNELS. IT IS SUBMITTED THAT NOT A SINGLE PENNY WAS TAKEN B Y THE APPELLANT/GROUP COMPANIES IN FORM OF CASH TOWARDS SHARE APPLICATION MONEY. THE ENTIRE PROCEEDS WERE DULY DEPOSITED IN THE BANK ACCOUNTS O F THE APPELLANT/GROUP COMPANIES. THE AO/CIT(A) HAS NOT CONTRAVENED SUCH F ACT. (III) YOUR HONOURS, THE GENUINENESS OF THE TRANSACT IONS IS FURTHER FORTIFIED BY THE COPIES OF THE BANKS STATEMENTS OF THE SHARE APP LICANT COMPANIES DIRECTLY PROCURED BY THE AO BY WAY OF ISSUANCE OF NOTICES UN DER S. 133(6) OF THE ACT. SUCH FACT IS EVIDENT FROM THE FINDINGS GIVEN BY THE AO HIMSELF AT LAST BUT ONE PARA OF PAGE NO.13 OF HIS ORDER. IT IS SUBMITTED TH AT IT IS NOT THE CASE OF THE AO THAT IN THE BANK STATEMENTS OF THE SHARE APPLICANT COMPANIES, THE ENTRIES REGARDING THE ISSUANCE OF THE CHEQUES BY SUCH COMPA NIES IN FAVOUR OF THE APPELLANT/GROUP COMPANIES WERE NOT FOUND BY THE AO. IN OTHER WORDS, THE TRANSACTIONS OF SHARE APPLICATION ARE GETTING REFLE CTED IN THE BANK ACCOUNTS OF BOTH THE PARTIES TO THE TRANSACTIONS. IN SUCH CIRCU MSTANCES, THERE CANNOT REMAIN ANY ROOM FOR CASTING ANY DOUBT ON THE GENUINENESS O F THE TRANSACTIONS. (IV) YOUR HONOURS, THE GENUINENESS OF THE TRANSACTI ONS IS ALSO EVIDENT FROM THE COPIES OF THE SHARE APPLICATION FORMS DULY SIGN ED BY SUCH SHARE APPLICANT COMPANIES WHICH WERE FOUND AND SEIZED DURING THE CO URSE OF THE SEARCH PROCEEDINGS THEMSELVES. (V) YOUR HONOURS, THE SHARE APPLICANT COMPANIES HAV E DULY CONFIRMED THE TRANSACTIONS OF MAKING INVESTMENT BY THEM IN THE AP PELLANT COMPANY. IT IS SUBMITTED THAT SOME OF THE COMPANIES HAVE CONFIRMED THE TRANSACTIONS BY MAKING RESPONSE TO THE NOTICES ISSUED BY THE AO UND ER S. 133(6) OF THE ACT. SOME OF THE COMPANIES MADE THE CONFIRMATION BY GETT ING THEIR STATEMENTS RECORDED BEFORE THE AO. SOME COMPANIES RE-CONFIRMED THE TRANSACTIONS OF MAKING INVESTMENTS BY MAKING RESPONSE TO THE LETTER S ISSUED TO THEM POST APPELLATE ORDER BY THE APPELLANT COMPANY. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 26 (VI) YOUR HONOURS, ALL THE SHARE APPLICANTS ARE COR PORATE ENTITIES DULY REGISTERED UNDER THE COMPANIES ACT, 1956 AND ACCOUN TS OF SUCH COMPANIES WERE ALSO SUBJECTED TO AUDIT. IN THE AUDITED FINANC IAL STATEMENTS OF SUCH COMPANIES, THE INVESTMENT BY THEM IN THE APPELLANT / GROUP COMPANIES, IS GETTING CLEARLY REFLECTED. SUCH FACT ALSO ESTABLISHES THE G ENUINENESS OF THE TRANSACTION. (VII) YOUR HONOURS, EVEN THE STATUTORY AUDITORS OF THE SHARE APPLICANT COMPANIES HAVE ISSUED CERTIFICATES, CERTIFYING THE INVESTMENTS MADE BY SUCH SHARE APPLICANT COMPANIES IN THE APPELLANT COMPANY/ GROUP COMPANIES AND COPIES OF SUCH CERTIFICATES WERE DULY FURNISHED BEF ORE THE AUTHORITIES BELOW. (VIII) YOUR HONOURS, DURING THE COURSE OF THE ENTIR E SEARCH PROCEEDINGS, NOT EVEN A SINGLE INCRIMINATING PAPER WAS FOUND FROM WH ICH IT COULD HAVE BEEN ESTABLISHED THAT THE SHARE CAPITAL TRANSACTIONS CLA IMED BY THE APPELLANT ARE NOT GENUINE OR THE FUNDS IN FORM OF SHARE CAPITAL WERE INFUSED BY THE APPELLANT / GROUP COMPANIES THEMSELVES. THERE IS NO SINGLE EVID ENCE THAT THE APPELLANT COMPANY OR ANYONE ELSE PROVIDED FUNDS IN CASH TO TH E SHARE APPLICANT COMPANIES FOR MAKING SUBJECT INVESTMENT THROUGH CHE QUES. IT IS SUBMITTED THAT THE ENTIRE THEORY OF MONEY LAUNDERING IS MERELY GUE SS WORK, CONJECTURES AND SURMISES OF THE AUTHORITIES BELOW WITHOUT HAVING AN Y COGENT MATERIAL. FOR SUCH PROPOSITION, RELIANCE IS PLACED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF VALUE CAPITAL SERVICES PVT. LTD. AS REPORTED IN 221 CTR 511 (DEL.) . (IX) YOUR HONOURS, DURING THE COURSE OF THE ASSESSM ENT PROCEEDINGS, THE AO MADE SOME ENQUIRY BUT NOWHERE IT HAS BEEN BROUGHT O N RECORD THAT ANY OF THE SHARE APPLICANT COMPANIES OR ANY PERSON DENIED THE GENUINENESS OF THE TRANSACTION AS CLAIMED BY THE APPELLANT. IT IS SUBM ITTED THAT NOT EVEN IN A SINGLE CASE THERE WAS ANY DENIAL OF THE TRANSACTION BY ANY SHARE APPLICANT COMPANY. (X) YOUR HONOURS, DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS, THE APPELLANT HAD PRODUCED ABUNDANT DOCUMENTARY EVIDENC ES BEFORE THE ASSESSING OFFICER FOR ESTABLISHING THE GENUINENESS OF THE TRA NSACTION BUT THE AO COULD NOT FIND ANY SINGLE DEFECT OR DISCREPANCY IN THE DOCUME NTARY EVIDENCES SO PRODUCED BY THE APPELLANT/ GROUP COMPANIES. SUCH FACT CLEARL Y PROVES THE GENUINENESS OF THE TRANSACTIONS BEYOND ALL DOUBTS. 20.00 CREDITWORTHINESS OF THE SHARE APPLICANT COMPANIES H AVE BEEN ESTABLISHED BEYOND ALL DOUBTS (I) YOUR HONOURS, THE CREDITWORTHINESS OF SOME OF T HE SHARE APPLICANT COMPANIES ARE EVIDENT FROM THEIR RESPECTIVE COPIES OF THE AUDITED FINANCIAL STATEMENTS AS WERE SEIZED/FILED DURING THE COURSE O F THE ASSESSMENT PROCEEDINGS. IT IS SUBMITTED THAT EVEN THE LEARNED AO, AT PAGE NO.10 OF HIS ORDER, HAS MADE AN ANALYSIS OF THE NET WORTH OF SOME OF TH E SHARE APPLICANT COMPANIES. (II) YOUR HONOURS, DURING THE COURSE OF THE ASSESSM ENT PROCEEDINGS, ACCORDING TO THE AO, THE BALANCE-SHEETS OF SOME OF THE COMPANIES WERE NOT PRODUCED. IT IS SUBMITTED THAT ALL THE SHARE APPLIC ANTS BEING COMPANIES, HAD FILED THEIR RESPECTIVE AUDITED BALANCE-SHEET AND OTHER FI NANCIAL STATEMENTS BEFORE THE CONCERNING REGISTRAR OF COMPANIES IN ACCORDANCE WIT H THE PROVISIONS OF THE COMPANIES ACT, 1956. IT IS SUBMITTED THAT THE BALAN CE-SHEET OF A COMPANY IS CONSIDERED TO BE A PUBLIC DOCUMENT WHICH CAN BE ACC ESSED BY ANY PERSON. IN BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 27 SUCH SITUATION, THE BALANCE-SHEETS OF THE SHARE APP LICANT COMPANIES, BEING IN THE PUBLIC DOMAIN, COULD HAVE BEEN ACCESSED TO BY THE A O HIMSELF, IF HE WOULD HAVE SO DESIRED. HOWEVER, NOW THE APPELLANT HAS DOWNLOAD ED THE COPIES OF AUDITED FINANCIAL STATEMENTS OF ALL THE SHARE APPLICANT COM PANIES FOR THE RELEVANT PERIOD FROM THE OFFICIAL WEBSITE OF THE MINISTRY OF CORPOR ATE AFFAIRS [MCA], DEPARTMENT OF COMPANY LAW AND AFFAIRS, GOVERNMENT OF INDIA, AND A LL SUCH FINANCIAL STATEMENTS HAVE BEEN FILED BY IT AS ADDITIONAL EVID ENCES IN SEPARATE PAPER BOOKS [KINDLY REFER PB PAGE NO. . TO .]. IT IS SUBMITTE D THAT FROM THE BALANCE-SHEET OF THE SHARE APPLICANT COMPANIES, NOT ONLY THE NET WOR TH AND CREDITWORTHINESS OF THE SHARE APPLICANT COMPANIES CAN BE ADJUDGED, BUT IN M ANY OF THE CASES, EVEN THE GENUINENESS OF THE TRANSACTIONS CAN ALSO BE VERIFIE D AS IN THE FINANCIAL STATEMENTS OF SUCH COMPANIES MAKING OF INVESTMENT B Y THEM IN THE APPELLANT/GROUP COMPANIES IS CLEARLY GETTING REFLEC TED. (III) ALL THE SHARE APPLICANT COMPANIES ARE REGULAR LY ASSESSED TO INCOME-TAX AND SUCH COMPANIES ARE HAVING THEIR INDEPENDENT SOU RCES OF INCOME. SUCH FACT IS EVIDENT FROM THE COPIES OF THE INCOME-TAX RETURN S OF THE SHARE APPLICANT COMPANIES FILED IN THE PAPER BOOK. (IV) ALL THE SHARE APPLICANT COMPANIES WERE HAVING SUFFICIENT FUNDS IN THEIR RESPECTIVE BANK ACCOUNTS BEFORE ISSUANCE OF CHEQUES TOWARDS SHARE CAPITAL TRANSACTIONS IN FAVOUR OF THE APPELLANT/GROUP COMPA NIES. IT IS SUBMITTED THAT SUCH FACT IS EVIDENT FROM THE COPIES OF THE BANK STATEME NTS FILED IN THE PAPER BOOK. IT WOULD BE APPRECIATED THAT COPIES OF SUCH BANK STATE MENTS WERE ALSO PROCURED DIRECTLY BY THE AO BY ISSUING NOTICES UNDER S. 133( 6) OF THE ACT. IT WOULD BE APPRECIATED THAT IN NONE OF THE BANK ACCOUNTS OF TH E SHARE APPLICANTS, ANY CASH, IMMEDIATELY BEFORE ISSUANCE OF CHEQUE BY THEM IN FA VOUR OF THE APPELLANT COMPANY, WAS FOUND DEPOSITED. IT IS SUBMITTED THAT THE LEARNED AO HAS GIVEN FINDING THAT IN SOME OF THE CASES, CASH WAS FOUND D EPOSITED BY HIM IN THE BANK ACCOUNTS OF THIRD PARTIES WHO ISSUED CHEQUES IN FAV OUR OF THE SHARE APPLICANT COMPANIES. HOWEVER, SUCH A FINDING CANNOT BE VIEWED AGAINST THE APPELLANT FOR THE REASON THAT (I) FIRST OF ALL THE SO-CALLED FIND ING OF THE LEARNED AO WAS NOT FACTUALLY CORRECT, (II) IN MANY OF THE CASES, THE T HIRD PARTIES IN WHOSE BANK ACCOUNTS CASH WAS FOUND DEPOSITED BY THE AO HAD NOT CARRIED OUT ANY TRANSACTION EITHER WITH THE APPELLANT OR WITH THE S HARE APPLICANT COMPANIES, (III) IN MANY OF THE CASES, THERE WAS NO CORRELATION OF THE DEPOSIT OF CASH BY THE THIRD PARTY IN THEIR OWN BANK ACCOUNTS WITH THE CHEQUES I SSUED BY THE SHARE APPLICANT COMPANIES IN FAVOUR OF THE APPELLANT. EVEN OTHERWIS E, IT IS SUBMITTED THAT THE SUBJECT SHARE TRANSACTIONS WERE CARRIED OUT BY THE APPELLANT/GROUP COMPANIES MUCH PRIOR TO THE AMENDMENT MADE BY THE FINANCE ACT , 2012 IN S. 68 OF THE ACT BY WAY OF INSERTION OF A PROVISO THEREIN, W.E.F. 1- 4-2013 AND, THEREFORE, FOR THE SUBJECTED TRANSACTIONS, THE APPELLANT IS NOT REQUIR ED TO ESTABLISH THE SOURCES OF THE SOURCES. IT WILL BE APPRECIATED THAT MANY JUDIC IAL AUTHORITIES INCLUDING THE APEX COURT, TIME AND AGAIN, HAVE HELD THAT IN RESPE CT OF THE SHARE CAPITAL TRANSACTIONS, ONLY THE IDENTITY OF THE SHARE HOLDER AND THE GENUINENESS OF THE SHARE TRANSACTION IS TO BE ESTABLISHED AND IN ANY E VENT, THE CREDITWORTHINESS OF THE SHAREHOLDER IS NOT REQUIRED TO BE ESTABLISHED. IT WILL BE APPRECIATED THAT THE PROVISO INSERTED IN S. 68 WOULD NOT RESTROSPECTIVEL Y OVERRULE THE RATIOS LAID DOWN BY THE APEX COURT. EVEN OTHERWISE, IT IS SUBMITTED IT IS A SETTLED LAW THAT IF THE CASH IS FOUND DEPOSITED IN THE BANK ACCOUNTS OF THE SHARE APPLICANT COMPANIES, BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 28 NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY WHICH HAS ACCEPTED SHARE APPLICATION. RELIANCE IS PLACED ON THE FOLLOWING JU DICIAL PRONOUNCEMENTS: A) ADDL. CIT VS. SUPERTECH DIAMOND TOOLS PVT. LTD. (2012) 146 TTJ 0596 (JD.) B) .. 21.00 TRANSFER OF SHARES BY THE SHARE APPLICANTS TO THIRD PARTIES/RELATED PERSONS IN SUBSEQUENT YEARS AT A LOW PRICE CANNOT B E A GROUND FOR DISBELIEVING THE GENUINENESS OF THE TRANSACTION (I) YOUR HONOURS, IN THE INSTANT CASE, THE LEARNED AO AND CIT(A) HAVE PLACED HEAVY RELIANCE ON THE FACT THAT THE SHARES W HICH WERE SUBSCRIBED BY THE SHARE APPLICANTS WERE SUBSEQUENTLY PURCHASED BY SOM E THIRD PARTIES AT A VERY LOW PRICE AND IN TURN, SUCH THIRD PARTIES HAD SOLD SHARES TO SOME OF THE GROUP ASSESSEES. (II) YOUR HONOURS, IN THE INSTANT CASE, THE ADDITIO NS HAVE BEEN MADE BY INVOKING THE PROVISIONS OF S. 68 OF THE ACT WHICH C ONTEMPLATES A DEEMING ADDITION IN THE HANDS OF AN ASSESSEE IN WHOSE BOOKS OF ACCOU NT ANY SUM IS FOUND CREDITED WHICH REMAINS UNEXPLAINED TO THE SATISFACT ION OF THE AO. FROM A PLAIN READING OF THE PROVISIONS OF THE ACT, IT BECOMES EV IDENT THAT THE ADDITION DEPENDS UPON THE NATURE OF THE CREDIT ENTRY WHEN IT WAS MAD E AND ANY SUBSEQUENT DEVELOPMENT OR TRANSACTION MADE IN RESPECT OF SUCH ENTRY CANNOT ALTER OR DETERMINE THE TAXABILITY OF SUCH CREDIT. IT IS SUBM ITTED THAT FIRST OF ALL, THE TRANSACTIONS OF SUBSEQUENT SALE OF SHARES HAD TAKEN PLACE IN OTHER ASSESSMENT YEARS AND, THEREFORE, FOR ADJUDGING THE CORRECTNESS OF ADDITION MADE IN THE ASSESSMENT YEARS UNDER CONSIDERATION, SUCH TRANSACT IONS CANNOT BE TAKEN INTO CONSIDERATION. SECONDLY, IT IS SUBMITTED THAT SUCH SALE TRANSACTIONS HAD TAKEN PLACE BETWEEN THE SHARE APPLICANTS AND SOME OTHER I NDIVIDUALS AND THE APPELLANT COMPANY WAS NOT A PARTY TO SUCH TRANSACTIONS. IN SU CH EVENT, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE APPELLANT COMPAN Y. (III) YOUR HONOURS, IN THE SIMILAR CIRCUMSTANCES, T HIS HONBLE BENCH, IN THE CASE OF M/S. ANANT STEELS LTD. VS. ACIT [IT(SS)A NOS. 31, 28, 29 & 30/IND/2010 DATED 18.11.2015], AT PARA 7, HAS OBSERVED AS UNDER : 7. THE LD CIT(A) WHILE MAINTAINING THE ADDITION, H EAVILY RELIED ON THE BUYBACK OF THE SHARES BY THE DIRECTORS AND HIS OTHER FAMILY ME MBERS ON SINGLE DATE I.E. ON 25-08-2005. THE PURCHASE OF SHARES BY THE DIRECTORS AND HIS OTHER FAMILY MEMBERS AND THAT TOO IN THE PREVIOUS YEAR RELEVANT TO THE AY 2006-07. HERE, IT IS TO BE NOTED THAT THE ASSESSEE COMPANY HAD NOT PURCH ASED ANY SHARES. THAT PURCHASE OF THE SHARES BY THE DIFFERENT FAMILY MEMB ERS AGAIN PROVED THE IDENTITY OF THE SHAREHOLDERS. HENCE, IN ANY CASE, ADDITION T O THE INCOME OF THE ASSESSEE WAS NOT JUSTIFIED. IF THE LD. CIT(A) WAS OF THE OPI NION THAT SHARES WERE PURCHASED AT VERY LOW PRICE IN THAT CASE, NECESSARY ADDITION IS TO BE MADE IN THE HAND OF THE DIRECTORS AND OTHER FAMILY MEMBERS UNDER THE I.T. A CT BUT NOT IN THE CASE OF THE APPELLANT COMPANY. IN THE PRESENT APPEAL, SINCE THE ASSESSEE HAS DISCHARGED ITS ONUS BY PROVING THE IDENTITY OF SUBSCRIBERS AND EVE N OTHERWISE HAD ANY SUSPICION STILL REMAINED IN HIS MIND, NOTHING PREVENTED HIM TO INITIATE ACTION AS PER THE PROVISIONS OF THE ACT. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 29 22.00 LEGAL AUTHORITIES ON THE ISSUE IN FAVOUR OF THE APPELLANT 22.01 ALTHOUGH IN THE INSTANT CASE, THE APPELLANT, BESIDES ESTABLISHING THE IDENTITY OF THE SHARE APPLICANT, HAD ALSO ESTABLISH ED THE GENUINENESS OF THE TRANSACTIONS AS ALSO THE CREDITWORTHINESS OF SHARE APPLICANTS BUT AS PER THE RULING OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 , IT WAS REQUIRED TO ESTABLISH THE IDENTITY ONLY. T HE HON'BLE APEX COURT IN THE CASE OF M/S. LOVELY EXPORTS PVT. LTD. HAS HELD THAT ONCE THE IDENTITY OF THE SHARE APPLICANT IS ESTABLISHED, NO ADDITION UNDER S.68 CAN BE MADE IN THE HANDS OF THE RECIPIENT COMPANY. THE RELEVANT CATCH NOTE IS REPRODUCED AS UNDER : INCOMECASH CREDITSHARE APPLICATION MONEYIF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSME NTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOM E OF ASSESSEE COMPANY. 22.02 THIS HONBLE BENCH, IN THE CASE OF M/S. ANANT STEELS LTD. VS. ACIT [IT(SS)A NOS. 31, 28, 29 & 30/IND/2010 DATED 18.11. 2015], HAS HELD THAT ONCE THE CONFIRMATION LETTERS OF THE SHARE APPLICANTS AR E FILED, NO ADDITION CAN BE MADE ON ACCOUNT OF SHARE APPLICATION IN THE HANDS OF THE APPELLANT COMPANY. THE HONBLE BENCH AT PARA 7 HAS OBSERVED AS UNDER : THE EXISTENCE OF SUBSCRIBER TO SHARE APPLICATION IS NOT IN DOUBT AS THE ASSESSEE DULY FURNISHED THEIR NAMES, AGE, ADDRESS, DATE OF F ILING THE APPLICATION, NUMBER OF SHARES FOR WHICH RESPECTIVE APPLICATIONS WERE MADE, AMOUNT GIVEN AND THE SOURCE OF INCOME OF THE APPLICANT. IN VIEW OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO JUSTIFICATION F OR MAKING THE IMPUGNED ADDITION BECAUSE ONCE THE EXISTENCE OF THE INVESTOR/SHARE SU BSCRIBERS IS PROVED, ONUS SHIFTS ON THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPLICANTS ARE BOGUS OR THE IMPUGNED MONEY BELONGS TO THE ASSESSEE COMPANY ITSELF. ONCE THE CONFIRMATION LETTERS ARE FILED, NO ADDITION CAN BE MADE ON ACCOUNT OF SHARE APPLICATION IN THE HANDS OF THE COMPANY. 22.03 THIS HONBLE BENCH, WHILE REACHING TO THE ABO VE FINDING, HAS RELIED UPON ITS EARLIER DECISION IN THE CASE OF STL EXTRUSION P VT. LTD. IN ITA NO.(SS) 259,260/IND/2008 DATED 10-05-2010. IN THE CASE OF S TL EXTRUSIONS SUPRA, THIS HONBLE BENCH AFTER CONSIDERING THE DECISION OF JUR ISDICTIONAL HIGH COURT IN THE CASE OF RATHI FINLEASE LTD. REPORTED IN 215 CTR 429 (MP), AT PARA 7 HAS HELD AS UNDER : IN THE PRESENT APPEAL, SINCE THE ASSESSEE HAS DISC HARGED ITS ONUS BY PROVING THE IDENTITY OF SUBSCRIBERS AND EVEN OTHERWISE HAD ANY SUSPICION STILL REMAINED IN HIS MIND, NOTHING PREVENTED HIM TO INITIATE ACTION AS PER THE PROVISIONS OF THE ACT. THE EXISTENCE OF SUBSCRIBERS TO SHARE APPLICATION I S NOT IN DOUBT AS THE ASSESSEE DULY FURNISHED THEIR NAMES. AGE, ADDRESS, DATE OF F ILING THE APPLICATION, NUMBER OF SHARES FOR WHICH RESPECTIVE APPLICATIONS WERE MADE, AMOUNT GIVEN AND THE SOURCE OF INCOME OF THE APPLICANT. IN VIEW OF THESE FACTS, WE ARE OF THE BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 30 CONSIDERED OPINION THAT THAT THERE IS NO JUSTIFICAT ION FOR MAKING THE IMPUGNED ADDITION BECAUSE ONCE THE EXISTENCE OF THE INVESTOR /SHARE SUBSCRIBERS IS PROVED, ONUS SHIFTS ON THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPLICANTS ARE BOGUS OR THE IMPUGNED MONEY BELONGS TO THE ASSESSEE COMPA NY ITSELF. ONCE THE CONFIRMATION LETTERS ARE FILED, NO ADDITION CAN BE MADE ON ACCOUNT OF SHARE APPLICATION MONEY IN THE HANDS OF THE COMPANY. OUR VIEW FINDS SUPPORT FROM THE DECISION IN SHRI BARKHA SYNTHETICS LIMITED V. ACIT; 155 TAXMAN 289 (RAJ). THE CASES LIKE CIT V. GP INTERNATIONAL LIMITED; 229 CTR (P&H) 86, CIT V. STELLER INVESTMENT LIMITED; 192 ITR 287 AND SOPHIA FINANCE LIMITED; 205 ITR 98 (DEL) SUPPORTS THE CASE OF THE ASSESSEE. 23.00 THERE ARE PLETHORA OF JUDGMENTS INCLUDING THO SE OF THE HONBLE JURISDICTIONAL HIGH COURT WHICH HAVE HELD THAT ONCE THE IDENTITY OF THE SHAREHOLDERS IS ESTABLISHED, NO ADDITION CAN BE MAD E IN THE HANDS OF THE SHARE CAPITAL RECIPIENT COMPANY. THE BRIEF NOTES OF SUCH JUDGMENTS ARE GIVEN BELOW: 1. COMMISSIONER OF INCOME TAX VS. PEOPLES GENERAL HOSPITAL LTD. (2013) 356 ITR 65 (MP) LEGISLATION REFERRED TO SECTION 68 DECISION IN FAVOUR OF: ASSESSEE INCOMECASH CREDITSHARE APPLICATION MONEYGENUINEN ESS OF TRANSACTION AND CREDITWORTHINESS OF CREDITORDISCHA RGE OF BURDEN OF PROOF BY ASSESSEE, EFFECT OFAO OBSERVED THAT COMPANY A H AD MADE SHARE SUBSCRIPTION TO CAPITAL OF ASSESSEEAO DOUBTED CRED ITWORTHINESS OF A AND DIRECTED ADDITION OF AMOUNT OF SHARE SUBSCRIPTION P ROVIDED BY A TO ASSESSEECIT(A) AND TRIBUNAL DELETED ADDITION MADE BY AOHELD, IF IDENTITY OF PERSON PROVIDING SHARE APPLICATION MONE Y IS ESTABLISHED THEN BURDEN WAS NOT ON ASSESSEE TO PROVE CREDITWORTHINES S OF SAID PERSON COMPANY A WAS NOT BOGUS OR FICTITIOUS COMPANYIN IN STANT CASE ASSESSEE HAD ESTABLISHED IDENTITY OF INVESTOR WHO HAD PROVID ED SHARE SUBSCRIPTION AND IT WAS ESTABLISHED THAT TRANSACTION WAS GENUINE NO ADDITION COULD BE MADE U/S 68REVENUES APPEALS DISMISSED HELD: IF THE IDENTITY OF THE PERSON PROVIDING SHARE APPLI CATION MONEY IS ESTABLISHED THEN THE BURDEN WAS NOT ON THE ASSESSEE TO PROVE THE CRE DITWORTHINESS OF THE SAID PERSON. HOWEVER, THE DEPARTMENT CAN PROCEED AGAINST THE SAID COMPANY IN ACCORDANCE WITH LAW. THE POSITION OF THE PRESENT CA SE IS IDENTICAL. IT IS NOT THE CASE OF ANY OF THE PARTIES THAT M/S ALLIANCE INDUST RIES LIMITED, SHARJAH WAS A BOGUS COMPANY OR A NON-EXISTENT COMPANY AND THE AMO UNT WHICH WAS BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 31 SUBSCRIBED BY THE SAID COMPANY BY WAY OF SHARE SUBS CRIPTION WAS IN FACT THE MONEY OF THE RESPONDENT ASSESSEE. IN THE PRESENT CA SE, THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF INVESTOR WHO HAD PROVID ED THE SHARE SUBSCRIPTION AND IT WAS ESTABLISHED THAT THE TRANSACTION WAS GENUINE THOUGH AS PER CONTENTION OF THE RESPONDENT THE CREDITWORTHINESS OF THE CREDITOR WAS ALSO ESTABLISHED. NO ADDITION COULD BE MADE UNDER SECTION 68 IN THE ABSE NCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRE SENTED COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. REVENUES APPEALS DISMISS ED. COMMISSIONER OF INCOME TAX VS. DIVINE LEASING & FINANCE LTD. DECIDE D BY DELHI HIGH COURT (2008) 299 ITR 268 (DEL); COMMISSIONER OF INCOME TA X VS. LOVELY EXPORTS (P) LTD, (2008) 11 ITJ 357 (SC), FOLLOWED. 2. COMMISSIONER OF INCOME TAX VS. GANGESHWARI METAL PVT. LTD. HIGH COURT OF DELHI (2013) 84 CCH 037 DELHC UNEXPLAINED INCOMEGENUINENESS OF TRANSACTION PROVE D BY ASSESSEE NO INVESTIGATION MADE BY AOADDITIONSUSTAINABILITY ASSESSMENT ORDER INDICATED ASSESSEE EXPLAINED THAT SEVERAL ENT RIES HAD BEEN TAKEN INTO ACCOUNT TWICE, REMOVING THOSE SHARE APPLICATION MON EY AMOUNTED TO ONLY RS. 55.5 LACSASSESSEE HAD FURNISHED VARIOUS DOCUME NTATION IN SUPPORT OF SHARE APPLICATION MONEY RECEIVEDAO FOUND EXPLAN ATIONS TO BE UNACCEPTABLE AND MADE ADDITION OF SAMECIT (A) DELE TED ADDITIONHELD, SHARE APPLICATION MONEY WAS RECEIVED THROUGH A/C PA YEE CHEQUES, DETAIL OF WHICH HAD BEEN FILED BY ASSESSEE BY FILING COPY OF BANK A/C OF SHARE APPLICANTSTHUS WHERE ROI WAS FILED BY CREDITORS OF ASSESSEE AND WAS ACCEPTED BY AO, AND PAYMENTS WERE THROUGH A/C PAYEE CHEQUES GENUINENESS OF TRANSACTION CANNOT BE DOUBTEDREVENU E COULD NOT PROVE THAT MONEY RECEIVED' BY ASSESSEE IN FORM OF SHARE A PPLICATION HAS COME FROM ITS OWN SOURCESIT WAS HELD THAT WHERE COMPLET E PARTICULARS OF SHARE APPLICANTS ARE FURNISHED TO AO AND AO HAS NOT CONDU CTED ANY ENQUIRY INTO SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW T HAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITIO N CAN BE MADE IN HANDS OF COMPANY U/S 68APPEAL DISMISSED. HELD: REVENUES APPEAL DISMISSED THE CIT (A) HAD HELD THAT THE GENUINENESS OF THE TR ANSACTIONS IS ESTABLISHED AS THE TRANSACTIONS ARE ROUTED THROUGH BANKING CHANNEL S. IT WAS SEEN THAT THE SHARE APPLICATION MONEY WAS RECEIVED THROUGH A/C PAYEE CH EQUES, DETAIL OF WHICH HAD BEEN FILED BY THE ASSESSEE BY FILING THE COPY OF TH E BANK A/C OF THE SHARE APPLICANTS. THUS WHERE THE ROI WAS FILED BY THE CRE DITORS OF THE ASSESSEE AND WAS ACCEPTED BY THE AO AND PAYMENTS WERE THROUGH A/ C PAYEE CHEQUES THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. T HE REVENUE COULD NOT PROVE THAT THE MONEY RECEIVED' BY THE APPELLANT IN THE FO RM OF SHARE APPLICATION HAS BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 32 COME FROM ITS OWN SOURCES. NO EVIDENCES REGARDING T HIS HAVE BEEN BROUGHT ON RECORD BY THE AO. 3.COMMISSIONER OF INCOME TAX VS. SAMIR BIO-TECH (P) LTD. HIGH COURT OF DELHI (2010) 325 ITR 294 INCOMECASH CREDITSHARE APPLICATION MONEYIDENTITY OF THE SUBSCRIBERS NOT BEING IN DOUBT, SHARE APPLICATION M ONEY HAVING BEEN PAID BY ACCOUNT PAYEE CHEQUES, SUBSCRIBERS HAVING SHOWN THE AMOUNTS IN THEIR AUDITED BALANCE SHEETS AND HAVING GIVEN COMPLETE DE TAILS WITH REGARD TO THEIR RETURNS AND ASSESSMENTS, NO ADDITION COULD BE MADE UNDER S. 68 ONLY BECAUSE THE SUBSCRIBERS DID NOT INITIALLY RESPOND T O SUMMONS. HELD : IDENTITIES OF THE SUBSCRIBERS ARE NOT IN DOUBT. THE TRANSACTIONS HAVE ALSO BEEN UNDERTAKEN THROUGH BANKING CHANNELS INASMUCH AS THE APPLICATION MONEY FOR THE SHARES WAS GIVEN THROUGH ACCOUNT PAYEE CHEQUES. THE CREDITWORTHINESS HAS ALSO BEEN ESTABLISHED, AS INDICATED BY THE TRIBUNAL . THE SUBSCRIBERS HAVE GIVEN THEIR COMPLETE DETAILS WITH REGARD TO THEIR TAX RET URNS AND ASSESSMENTS. IN THESE CIRCUMSTANCES, THE DEPARTMENT COULD NOT DRAW AN ADV ERSE INFERENCE AGAINST THE ASSESSEE ONLY BECAUSE THE SUBSCRIBERS DID NOT INITI ALLY RESPOND TO THE SUMMONS. THE SUBSCRIBERS, HOWEVER, SUBSEQUENTLY GAVE THEIR C ONFIRMATION LETTERS AS WOULD BE APPARENT FROM THE IMPUGNED ORDER. THE IDENTITY O F THE SUBSCRIBERS STANDS ESTABLISHED AND IT IS ALSO A FACT THAT THEY HAVE SH OWN THE SAID AMOUNTS IN THEIR AUDITED BALANCE SHEETS AND HAVE ALSO FILED RETURNS BEFORE THE IT AUTHORITIES. THE DECISION OF THE TRIBUNAL DELETING THE ADDITION CANN OT BE FAULTED. THE APPEAL IS DISMISSED. CIT VS. DIVINE LEASING & FINANCE LTD. (2007) 207 CTR (DEL) 38 : (2008) 299 ITR 268 (DEL) AND CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 RELIED ON . 4. COMMISSIONER OF INCOME TAX VS. K.C. FIBRES LTD. HIGH COURT OF DELHI (2010) 187 TAXMAN 53 (DEL) UNEXPLAINED CREDITS UNDER S. 68ASSESSEE COMPANY RE CEIVING SHARE APPLICATION MONEY TOTALLING A SUM OF RS. 39 LAKHS GIVEN BY DPA O AFTER MAKING ENQUIRIES MAKING ADDITION OF RS. 25 LAKHS SUBSCRIBED BY DP AS UNEXPLAINED SOURCENO FINDING IS ARRIVED AT BY THE AO THAT THE TWO COMPAN IES ARE UMBRELLA COMPANIES OR HAVE ANY RELATIONSHIP WITH EACH OTHERAMOUNT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE RECIPIENT ASSESSEE COMPAN Y. HELD : BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 33 INSOFAR AS ASSESSING COMPANY IS CONCERNED, IT IS NO T DISPUTED THAT MONEY WAS PAID TO IT TOWARDS THE AFORESAID SHARE APPLICATION MONEY, BY MEANS OF CHEQUES. IT IS NOT FOR THE ASSESSING COMPANY TO PROBE AS TO THE SOURCE FROM WHERE DP COLLECTED THE AFORESAID MONEY. IT WAS FOR THE AO, I N THESE CIRCUMSTANCES TO INQUIRE INTO THE AFFAIRS OF DP WHICH IS AN INDEPEND ENT COMPANY INASMUCH AS NO FINDING IS ARRIVED AT BY THE AO THAT THE TWO COMPAN IES ARE UMBRELLA COMPANIES OR HAVE ANY RELATIONSHIP WITH EACH OTHER.CIT VS. LOVE LY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 APPLIED . 5. BHAV SHAKTI STEEL MINES (P) LTD. VS. COMMISSIONE R OF INCOME TAX HIGH COURT OF DELHI (2010) 320 ITR 619 INCOMECASH CREDITGENUINENESSCIT(A) NOT ONLY FOUN D THAT THE IDENTITY OF EACH OF THE SHAREHOLDERS STOOD ESTABLIS HED, BUT ALSO EXAMINED THE FACT THAT EACH OF THEM WERE INCOME-TAX ASSESSEE S AND HAD DISCLOSED THE SHARE APPLICATION MONEY IN THEIR ACCOUNTS WHICH WERE DULY REFLECTED IN THEIR IT RETURNS AS WELL AS IN THEIR BALANCE SHEETS TRIBUNAL WAS NOT THEREFORE JUSTIFIED IN COMING TO THE CONCLUSION THA T THE CIT(A) HAD NOT CONSIDERED THE MATTER IN THE RIGHT PERSPECTIVEORDE R PASSED BY TRIBUNAL REMANDING THE MATTER FOR EXAMINING THE SHARE APPLIC ANTS SET ASIDE AND THAT OF CIT(A) RESTORED CIT VS. DIVINE LEASING & FINANCE LTD. (2007) 207 CTR (DEL) 38 : (2008) 299 ITR 268 (DEL) AND CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 RELIED ON. 6. COMMISSIONER OF INCOME TAX VS. GANGOUR INVESTMEN T LTD. HIGH COURT OF DELHI (2011) 335 ITR 359 INCOMECASH CREDITSHARE APPLICATION MONEYASSESSEE COMPANY FILED THE SUBSCRIPTION FORMS OF THE INVESTORS, INCLUDING TT LTD., A GROUP COMPANY, CONTAINING DETAILS AND INFORMATION WITH RE SPECT TO THEIR ADDRESSES AS WELL AS PAN, THEREBY ESTABLISHING THEI R IDENTITYAO WAS ALSO SUPPLIED A COPY OF THE STATEMENT OF BANK ACCOUNTS O F TT LTD.PAYMENT IN QUESTION WAS MADE BY WAY OF A CHEQUESAID TT LTD. I S A WIDELY-HELD COMPANY HAVING PAID UP SHARE CAPITAL AMOUNTING TO R S. 3.4 CRORES THEREFORE, ASSESSEE HAS DISCHARGED ITS ONUS IN RESP ECT OF THE VERACITY OF THE TRANSACTION, AND THE ADDITION MADE BY THE AO IN RESPECT OF THE INVESTMENT MADE BY TT LTD. HAS BEEN RIGHTLY DELETED NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION . BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 34 HELD : THE REVENUE CAN MAKE ADDITION UNDER S. 68 ONLY IF T HE ASSESSEE IS UNABLE TO EXPLAIN THE CREDITS APPEARING IN ITS BOOKS OF ACCOU NTS. IN THE INSTANT CASE THE ASSESSEE HAD FILED THE SUBSCRIPTION FORM OF EACH OF THE INVESTORS, IN PARTICULAR, TT LTD. THE SAID SUBSCRIPTION FORM CONTAINED DETAILS, WHICH SET OUT NOT ONLY THE IDENTITY OF THE SUBSCRIBERS, BUT ALSO GAVE INFORMAT ION, WITH RESPECT TO THEIR ADDRESS, AS WELL AS, PAN. DURING THE COURSE OF SCRU TINY THE AO HAD ALSO ASKED FOR AND WAS SUPPLIED A COPY OF THE STATEMENT OF THE BANK ACCOUNTS OF TT LTD. THE PAYMENT, IN ISSUE, WAS MADE BY WAY OF A CHEQUE. FIN DINGS OF FACT IN RESPECT OF THESE INGREDIENTS HAD BEEN RETURNED BOTH BY THE CIT (A) AS WELL AS THE TRIBUNAL. THE AOS OBSERVATIONS JUSTIFYING THE ADDITION ON TH E OTHER HAND, TO SAY THE LEAST ARE BALD. TT LTD. IS A WIDELY-HELD COMPANY HAVING I TS OWN PAID UP SHARE CAPITAL AMOUNTING TO RS. 3.4 CRORES. THE ASSESSEE, AS NOTED BY THE AUTHORITIES BELOW, IS A MEMBER OF THE NSE AND IS INVOLVED IN SALE AND PUR CHASE OF SHARES. IN THESE CIRCUMSTANCES, THE ASSESSEE HAS BEEN ABLE TO DISCHA RGE ITS ONUS IN RESPECT OF THE VERACITY OF THE TRANSACTIONS. IN THE CIRCUMSTAN CES, NO QUESTION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW HAS ARISEN FOR C ONSIDERATION. CIT VS. DIVINE LEASING & FINANCE LTD. (2007) 207 CTR (DEL) 38 : (2008) 299 ITR 268 (DEL) , CIT VS. SOPHIA FINANCE LTD. (1993) 113 CTR (DEL)(FB) 472 : (1994) 205 ITR 98 (DEL)(FB) AND CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 FOLLOWED. 7. COMMISSIONER OF INCOME TAX VS. SIRI RAM SYAL HYD RO POWER (P) LTD. HIGH COURT OF DELHI (2011) 196 TAXMAN 441 (DEL) INCOMECASH CREDITSHARE APPLICATION MONEYTRIBUNAL UPHELD THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY THE AO IN R ESPECT OF AMOUNT RECEIVED TOWARDS SHARE APPLICATION MONEY FROM THE D IRECTOR AS THE IDENTITY WAS ESTABLISHED AND THE CONFIRMATION WITH PAN WERE FURNISHEDTRIBUNAL JUSTIFIED CIT VS. LOVELY EXPORT S (P) LTD. (2008) 216 CTR (SC) 195 RELIED ON. 8. COMMISSIONER OF INCOME TAX VS. WINSTRAL PETROCHEMICALS (P) LTD. HIGH COURT OF DELHI (2011) 330 ITR 603 INCOMECASE CREDITSHARE APPLICATION MONEYASSESSEE COMPANY WAS FOUND TO HAVE RECEIVED THE MONEY THROUGH BANKING CH ANNELSASSESSEE COMPANY ALSO FURNISHED WRITTEN CONFIRMATIONS FROM T HE APPLICANT COMPANIES, COPIES OF CERTIFICATES OF INCORPORATION, PAN CARDS, PAN DETAILS AND COMPANY DETAILS ETC. OF THE APPLICANTSFINDING OF TRIBUNAL THAT IDENTITY OF THE SUBSCRIBERS STOOD DULY ESTABLISHED FROM THE DOCUMENTS PRODUCED BY THE ASSESSEE, CANNOT BE SAID TO BE PERV ERSETHERE IS NO BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 35 LEGAL BAR TO MORE THAN ONE COMPANY BEING REGISTERED AT THE SAME ADDRESSMERELY BECAUSE THE APPLICANTS DID NOT RESPO ND TO THE NOTICES SENT TO THEM, AO WAS NOT JUSTIFIED IN ADDING THE AM OUNT OF SHARE APPLICATION MONEY TO THE INCOME OF THE ASSESSEE. HELD : IT HAS NOT BEEN DISPUTED THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE COMPANY BY WAY OF ACCOUNT PAYEE CHEQUES, T HROUGH NORMAL BANKING CHANNELS. IT IS NOT THE CASE OF THE REVENUE THAT TH E PAYMENT OF SHARE APPLICATION MONEY WAS NOT MADE FROM THE BANK ACCOUNT OF THE APP LICANT COMPANIES. ADMITTEDLY, COPIES OF APPLICATION FOR ALLOTMENT OF SHARES WERE ALSO PROVIDED TO THE AO. IT IS NOT THE CASE OF THE REVENUE THAT THE SHAR E APPLICATIONS WERE NOT SIGNED ON BEHALF OF THE APPLICANT COMPANIES AND WERE FORGE D DOCUMENTS. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SHARES WERE NOT AC TUALLY ALLOTTED TO THE COMPANIES. THEREFORE, THE CIT(A) AND THE TRIBUNAL W ERE JUSTIFIED IN HOLDING THAT THE GENUINENESS OF THE TRANSACTIONS HAD BEEN DULY E STABLISHED BY THE ASSESSEE. AS REGARDS IDENTITY OF THE SUBSCRIBERS, THE ASSESSE E FILED COPIES OF CERTIFICATE OF INCORPORATION, PAN CARDS, PAN DETAILS AND COMPANY D ETAILS, DOWNLOADED FROM THE SITE OF DEPARTMENT OF COMPANY AFFAIRS BESIDES W RITTEN CONFIRMATION FROM THE APPLICANTS. IT IS NOT THE CASE OF THE REVENUE THAT THE COPIES OF CERTIFICATES OF INCORPORATION, PAN CARDS, PAN DETAILS OR COMPANY DE TAILS SUBMITTED BY THE ASSESSEE WERE FORGED DOCUMENTS. IN FACT, THE AO DID NOT EVEN MAKE AN ATTEMPT TO VERIFY THE GENUINENESS OF THESE DOCUMENTS BY SUM MONING THE RECORD OF ROC OR DEPARTMENT OF COMPANY AFFAIRS. IF HE ENTERTAINED ANY DOUBT ABOUT THE GENUINENESS OF THESE DOCUMENTS, NOTHING PREVENTED H IM FROM SUMMONING THE RECORD FROM THESE AUTHORITIES. IF THE AO SO DESIRED , THE GENUINENESS OF THE PAN CARDS AND PAN DETAILS COULD EASILY HAVE BEEN VERIFI ED BY HIM FROM THE RECORD AVAILABLE WITH THE DEPARTMENT. THE ASSESSEE COMPANY ALSO FURNISHED WRITTEN CONFIRMATIONS FROM THE APPLICANT COMPANIES. ALL THE SHARE APPLICANTS WERE DULY SERVED WITH THE NOTICES UNDER S. 133(6). IN THESE C IRCUMSTANCES, THE FINDING OF CIT(A) AND TRIBUNAL THAT THE IDENTITY OF THE SUBSCR IBERS STOOD DULY ESTABLISHED FROM THE DOCUMENTS PRODUCED BY THE ASSESSEE, CANNOT BE SAID TO BE PERVERSE AND DOES NOT CALL FOR INTERFERENCE BY THIS COURT. 9. COMMISSIONER OF INCOME TAX VS. OASIS HOSPITALITI ES (P) LTD.* HIGH COURT OF DELHI (2011) 333 ITR 119 *ALSO CIT VS. U.P. BONE MILLS INDIA LTD. (IT APPEAL NO. 2094 OF 2010), CIT VS. VIJAY POWER GENERATORS LTD. (IT APPEAL NO. 539 OF 2 008) AND VIJAY POWER GENERATORS LTD. VS. DIRECTOR OF IT & ANR. (IT APPEA L NO. 514 OF 2007) INCOMECASH CREDITSHARE APPLICATION MONEYTHOUGH T HE SHARE APPLICANTS WERE NOT PRODUCED IN SPITE OF SPECIFIC D IRECTION OF THE AO, ASSESSEE COMPANY HAS FILED COPIES OF PAN, ACKNOWLED GEMENT OF RETURNS OF THE SHARE APPLICANTS AND THEIR BANK ACCOUNT STATEME NTS OF THE RELEVANT BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 36 PERIOD WHEN THE CHEQUES WERE CLEAREDTHUS, PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEEASSESSEE WAS NOT CONFRON TED WITH THE INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING OR GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE THE PERSONS WHOSE STAT EMENTS WERE RECORDED BY THE INVESTIGATION WING TO DRAW ADVERSE CONCLUSION AGAINST THE ASSESSEEAS REGARDS DISCREPANCIES IN THE BANK STATE MENTS, THESE STATEMENTS WERE PROVIDED BY THE SHAREHOLDERS AND WE RE PRINTED ON THE BANK STATIONERYASSESSEE WAS NEVER CONFRONTED WITH THESE DISCREPANCIES BY THE AOIN ANY CASE, IT DOES NOT FOLLOW FROM THES E DISCREPANCIES THAT THE AMOUNT OF SHARE CAPITAL WAS UNDISCLOSED INCOME OF THE ASSESSEE EVEN THE CORRECT BANK STATEMENTS AS CLAIMED BY THE AO SHOW THAT THE ASSESSEE HAS RECEIVED CHEQUES FROM THE SHAREHOLDERS THOUGH SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNTS OF SOME SHAREHOL DERS IS QUESTIONABLE, AO HAS NOT FURTHER PROBED THE MATTERTHEREFORE, REM EDY LIES IN REOPENING THE CASE OF THESE INVESTORS AND ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. HELD : THE INITIAL BURDEN IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. I N ORDER TO DISCHARGE THIS BURDEN, THE ASSESSEE IS REQUIRED TO PROVE : (A) IDE NTITY OF SHAREHOLDER; (B) GENUINENESS OF TRANSACTION; AND (C) CREDITWORTHINES S OF SHAREHOLDERS. IN CASE THE INVESTOR/SHAREHOLDER IS AN INDIVIDUAL, SOME DOCUMEN TS WILL HAVE TO BE FILED OR THE SAID SHAREHOLDER WILL HAVE TO BE PRODUCED BEFORE TH E AO TO PROVE HIS IDENTITY. IF THE CREDITOR/SUBSCRIBER IS A COMPANY, THEN THE DETA ILS IN THE FORM OF REGISTERED ADDRESS OR PAN IDENTITY, ETC. CAN BE FURNISHED. GEN UINENESS OF THE TRANSACTION IS TO BE DEMONSTRATED BY SHOWING THAT THE ASSESSEE HAD , IN FACT, RECEIVED MONEY FROM THE SAID SHAREHOLDER AND IT CAME FROM THE COFF ERS FROM THAT VERY SHAREHOLDER. OTHER DOCUMENTS SHOWING THE GENUINENES S OF TRANSACTION COULD BE THE COPIES OF THE SHAREHOLDERS REGISTER, SHARE APPL ICATION FORMS, SHARE TRANSFER REGISTER, ETC. AS FAR AS CREDITWORTHINESS OR FINANC IAL STRENGTH OF THE CREDITOR/SUBSCRIBER IS CONCERNED, THAT CAN BE PROVE D BY PRODUCING THE BANK STATEMENTS OF THE CREDITORS/SUBSCRIBERS SHOWING THA T IT HAD SUFFICIENT BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAPITAL. HOWEVER, TO DISCREDIT THE DOCUMENTS PRODUCED BY THE ASSESSEE ON THE AFORE SAID ASPECTS, THERE HAS TO BE SOME COGENT REASONS AND MATERIALS FOR THE AO AND HE CANNOT GO INTO THE REALM OF SUSPICION.CIT VS. DIVINE LEASING & FINANC E LTD. (2007) 207 CTR (DEL) 38 : (2008) 299 ITR 268 (DEL) AND CIT VS. LOVELY EXPORT S (P) LTD. (2008) 216 CTR (SC) 195 FOLLOWED. 10. COMMISSIONER OF INCOME TAX VS. DWARKADHISH INVE STMENT (P) LTD.* HIGH COURT OF DELHI (2011) 330 ITR 298 INCOMECASH CREDITSHARE APPLICATION MONEYTHOUGH I N S. 68 PROCEEDINGS, THE INITIAL BURDEN OF PROOF LIES ON TH E ASSESSEE YET ONCE HE BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 37 PROVES THE IDENTITY OF THE CREDITORS/SHARE APPLICAN TS BY EITHER FURNISHING THEIR PAN OR INCOME-TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, THEN THE O NUS OF PROOF WOULD SHIFT TO THE REVENUEJUST BECAUSE THE CREDITORS/SHARE APP LICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE THE R EVENUE THE RIGHT TO INVOKE S. 68REVENUE HAS ALL THE POWER AND WHEREWIT HAL TO TRACE ANY PERSONMOREOVER, IT IS SETTLED LAW THAT THE ASSESSE E NEED NOT TO PROVE THE SOURCE OF SOURCEIN THE INSTANT CASE, THE TRIBUNA L HAS CONFIRMED THE ORDER OF THE CIT(A) DELETING THE IMPUGNED ADDITION HOLDING THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE IDENTITY OF THE SHARE APPLICANTS AND THE SHARE APPLICATION MONEY HAS BEEN RECEIVED BY WA Y OF ACCOUNT PAYEE CHEQUESNO QUESTION OF LAW ARISES CIT VS. LOVELY EXPORT S (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308, CIT VS. D IVINE LEASING & FINANCE LTD. (2007) 207 CTR (DEL) 38 : (2008) 299 ITR 268 ( DEL) AND CIT VS. DWARIKADHISH INVESTMENT (P) LTD. (2008) 2 DTR (DEL) 7 : (2008) 167 TAXMAN 321 (DEL) FOLLOWED. 11. COMMISSIONER OF INCOME TAX VS. ORBITAL COMMUNIC ATION (P) LTD. HIGH COURT OF DELHI (2010) 327 ITR 560 (DEL) INCOMECASH CREDITSHARE APPLICATION MONEYTRIBUNAL UPHELD THE ORDER OF CIT(A) DELETING ADDITION MADE BY THE AO ON ACCOU NT OF SHARE APPLICATION MONEY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORT S (P) LTD.(2008) 216 CTR (SC) 195 AS THE ASSESSEE PRODUCED SUBSTANTIAL EVIDENCE TO ESTABLISH THE IDEN TITY AND CREDITWORTHINESS OF SHARE APPLICANTTRIBUNAL JUSTIF IED IN HOLDING THAT THE SHARE APPLICATION MONEY CANNOT BE REGARDED AS UNDIS CLOSED INCOME OF THE ASSESSEE UNDER S. 68. 12. COMMISSIONER OF INCOME TAX & ANR. VS. ARUNANAND A TEXTILES (P) LTD. HIGH COURT OF KARNATAKA (2011) 333 ITR 116 (KAR) INCOMECASH CREDITSHARE APPLICATION MONEYASSESSEE ABLE TO IDENTIFY THE SHAREHOLDERSIT IS NOT FOR THE ASSESSEE-COMPANY TO ESTABLISH BUT IT IS FOR THE DEPARTMENT TO ENQUIRE WITH THE INVESTORS AB OUT THE CAPACITY TO INVEST THE AMOUNT IN THE SHARES CIT VS. LOVELY EXPORT S (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 RELIED ON. 13. COMMISSIONER OF INCOME TAX & ANR. VS. ASK BROTH ERS LTD. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 38 HIGH COURT OF KARNATAKA (2011) 333 ITR 111 SEARCH AND SEIZUREBLOCK ASSESSMENTCOMPUTATION OF UNDISCLOSED INCOMESHARE APPLICATION MONEYCOUNSEL FOR THE REVE NUE IS NOT ABLE TO STATE AS TO WHETHER ANY INVESTIGATION WAS CARRIED O UT WITH REGARD TO THE PERSONS WHO HAD DEPOSITED THE SHARE APPLICATION MON EYEXCEPT THREE PERSONS, ALL OTHER PERSONS HAVE ADMITTED THAT THEY HAD PAID THE AMOUNTS IN RESPECT OF THE SHARES THAT ARE TO BE ALLOTTED TO TH EM PURSUANT TO THE APPLICATIONS MADE BY THEMTHEREFORE, IT CANNOT BE H ELD THAT NO EXPLANATION HAS BEEN OFFERED REGARDING THE AMOUNT R ECEIVED BY THE ASSESSEE COMPANY BY WAY OF SHARE CAPITAL, AND IT CA NNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. HELD : THE COUNSEL FOR THE APPELLANT IS NOT ABLE TO STATE AS TO WHETHER ANY INVESTIGATION WAS CARRIED OUT WITH REGARD TO THE PERSONS WHO HAD SUBMITTED THE SHARE APPLICATION MONEY. IT IS ALSO TO BE NOTED THAT WHEN THE RESPONDENT HAD ISSUED THE SHARES, THE AMOUNTS WERE COLLECTED IN TERMS OF THE ASSESSMENT MADE BY THE RESPONDENT AND EVEN IN THE EVIDENCE WHICH HAD BEEN LET IN, EXCEPT THREE PERSONS, ALL OTHER PERSONS HAD ADMITTED THAT THEY W ERE PROPOSED SHAREHOLDERS WHO HAD PAID THE AMOUNTS ON THE SHARES THAT WERE TO BE ALLOTTED TO THEM PURSUANT TO THE APPLICATION WHICH THEY HAD RECEIVED . EXCEPT THREE PERSONS ALL OTHER PERSONS HAVE ADMITTED THAT THEY HAVE PAID TOW ARDS SUBSCRIPTION OF THE SHARES. IT THEREFORE CANNOT BE HELD THAT THERE HAS BEEN NO EXPLANATION OFFERED WITH REGARD TO THE INVESTMENT RECEIVED BY WAY OF SH ARE CAPITAL TAKING INTO ACCOUNT THE FACT THAT THE PERSONS HAD ADMITTED THE PAYMENT OF THE SHARE SUBSCRIPTION MONEY EXCEPT THREE PERSONS. THEREFORE, THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE SHARE APPLICATION MONEY FOUND DURING SEARCH CAN NOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE.CIT VS. LOVELY EXPORT S (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 AND CIT VS . STELLER INVESTMENT LTD. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC) RELIED ON. 14. ASSISTANT COMMISSIONER OF INCOME TAX VS. VENKAT ESHWAR ISPAT (P) LTD. HIGH COURT OF CHHATTISGARH (2009) 319 ITR 393 INCOMECASH CREDITSHARE APPLICATION MONEYASSESSEE HAD PRODUCED ADDITIONAL EVIDENCE BEFORE THE CIT(A) REGARDING SHA REHOLDERS NAMES, ADDRESSES, ETC.FURTHER, FOR SUBSEQUENT ASSESSMENT YEAR, THE SHAREHOLDERS INVESTMENT WAS CONFIRMED DURING THE AS SESSMENT PROCEEDINGSIN RESPECT OF SHARE APPLICATION MONEY, DEPARTMENT IS FREE TO PROCEED TO REOPEN SHAREHOLDERS INDIVIDUAL ASSESSMEN TS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE- COMPANYTRIBUNAL WAS THEREFORE JUSTIFIED IN DELETIN G ADDITION AND NO BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 39 SUBSTANTIAL QUESTION OF LAW ARISES CIT VS. LOVELY EXPORT S (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 FOLLOWED. 15. COMMISSIONER OF INCOME TAX VS. VICTOR ELECTRODE S LTD. HIGH COURT OF DELHI (2010) 329 ITR 271 INCOMECASH CREDITSHARE APPLICATION MONEYASSESSEE FILED COPIES OF RESOLUTIONS PASSED BY THE BOARD OF DIRECTORS OF APP LICANT COMPANIES, BESIDES THEIR BANK STATEMENTS AND IT RETURNS IN WHI CH ADDRESSES OF THE APPLICANT COMPANIES ARE RECORDEDGENUINENESS OF THESE DOCUMEN TS IS NOT DOUBTEDAO DID NOT MAKE ANY VERIFICATION NOR SUMMON ED THE RECORDS OF THE BANKS ON WHICH CHEQUES ISSUED WERE DRAWNTHERE WAS NO LEGAL OBLIGATION ON THE ASSESSEE TO PRODUCE THE DIRECTOR OR OTHER REPRESENTATIVES OF THE APPLICANT COMPANIES BEFORE THE AOIF THE AO HAD ANY DOUBT ABOUT IDENTITY OF THE SHARE APPLICANTS, HE COULD HAVE SUM MONED THE DIRECTORS OF THE APPLICANT COMPANIESASSESSEE HAD ESTABLISHED TH E IDENTITY OF SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS THEREFORE NO ADDITION COULD BE MADE UNDER S. 68 . HELD : IT HAS NOT BEEN DISPUTED THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE COMPANY BY WAY OF ACCOUNT PAYEE CHEQUES, T HROUGH NORMAL BANKING CHANNELS. IT IS NOT THE CASE OF THE REVENUE THAT TH E SHARE APPLICATIONS WERE NOT SIGNED ON BEHALF OF THE APPLICANT COMPANIES AND WER E FORGED DOCUMENTS. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SHARES WE RE NOT ACTUALLY ALLOTTED TO THE COMPANIES. THE ASSESSEE FILED COPIES OF RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF APPLICANT COMPANIES, BESIDES THEIR BAN K STATEMENTS AND IT RETURNS. THE ADDRESSES OF THE APPLICANT COMPANIES ARE RECORD ED IN THESE DOCUMENTS. IT IS NOT THE CASE OF THE REVENUE THAT THE COPIES OF BOAR D RESOLUTIONS, IT RETURNS AND BANK STATEMENTS WERE NOT GENUINE DOCUMENTS. THE AO DID NOT MAKE ANY VERIFICATION IN THIS REGARD EITHER FROM THE INTERNA L RECORD OF THE DEPARTMENT OR FROM THE CONCERNED BANKS. IF HE SO WANTED, HE COULD HAVE CALLED FOR THE IT RETURNS OF THE SHARE APPLICANTS TO ASCERTAIN WHETHER THE INVES TMENT MADE IN THE ASSESSEE COMPANY WAS REFLECTED IN THEIR BALANCE SHEETS OR NO T. NOTHING PREVENTED THE AO FROM SUMMONING THE RECORD OF THE BANKS ON WHICH CHE QUES ISSUED BY THE APPLICANT COMPANIES WERE DRAWN. NO SUCH COURSE WAS, HOWEVER, ADOPTED BY HIM. THERE WAS NO LEGAL OBLIGATION ON THE ASSESSEE TO PRODUCE SOME DIRECTOR OR OTHER REPRESENTATIVE OF THE APPLICANT COMPANIES BEF ORE THE AO. THEREFORE, FAILURE OF ASSESSEE TO PRODUCE THEM COULD NOT, BY ITSELF, H AVE JUSTIFIED THE ADDITIONS MADE BY THE AO, WHEN THE ASSESSEE HAD FURNISHED DOC UMENTS, ON THE BASIS OF WHICH, THE AO, IF HE SO WANTED, COULD HAVE SUMMONED THEM FOR VERIFICATION. NO ATTEMPT WAS MADE BY THE AO TO SUMMON THE DIRECTORS OF THE APPLICANT COMPANIES. THE ADDRESSES OF THESE COMPANIES MUST BE AVAILABLE ON THE SHARE APPLICATIONS, MEMORANDUM AND ARTICLES OF ASSOCIATIO N AND THEIR IT RETURNS. IF THE AO HAD ANY DOUBT ABOUT IDENTITY OF THE SHARE APPLIC ANTS, HE COULD HAVE BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 40 SUMMONED THE DIRECTORS OF THE APPLICANT COMPANIES. NO SUCH ATTEMPT WAS, HOWEVER, MADE BY HIM. THEREFORE, THE CIT(A) AND THE TRIBUNAL WERE JUSTIFIED IN HOLDING THAT THE IDENTITY OF SHARE APPLICANTS AND T HE GENUINENESS OF THE TRANSACTIONS HAD BEEN ESTABLISHED BY THE ASSESSEE. NO SUBSTANTIAL QUESTION OF LAW ARISES.CIT VS. DIVINE LEASING & FINANCE LTD. ( 2007) 207 CTR (DEL) 38 : (2008) 299 ITR 268 (DEL) AND CIT VS. LOVELY EXPORT S (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 FOLLOWED. 16. COMMISSIONER OF INCOME TAX VS. PRAYAG HOSPITAL & RESEARCH HIGH COURT OF DELHI (2010) 44 DTR (DEL) 94 INCOMECASH CREDITSHARE APPLICATION MONEYOUT OF 4 2 PERSONS WHO HAD INVESTED IN THE SHARE CAPITAL OF THE ASSESSEE-C OMPANY, 39 PERSONS HAD APPEARED BEFORE THE AO AND RECORDED THEIR STATEMENT STHESE SHAREHOLDERS ALSO FURNISHED AFFIDAVITS ALONG WITH S UPPORTING DOCUMENTS LIKE BANK ACCOUNT, KISSAN BAHI, RATION CARD ETC.TH EREFORE, IDENTITY OF THE CREDITORS IS ESTABLISHED AND ADDITION CANNOT BE MAD E IN THE HANDS OF THE ASSESSEE EXCEPT THE SHARE APPLICATION MONEY OF RS. 1 LAKH, PAYMENT WHEREOF IS DENIED BY THE APPLICANTAO CAN PROCEED A GAINST SUCH CREDITORS IN ACCORDANCE WITH LAW CIT VS. LOVELY EXPORT S (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 FOLLOWED. 17. COMMISSIONER OF INCOME TAX VS. ROCK FORT METAL & MINERALS LTD. HIGH COURT OF DELHI (2011) 198 TAXMAN 497 INCOMECASH CREDITSHARE APPLICATION MONEYCONCURRE NT FINDINGS OF FACT ARRIVED AT BY THE CIT(A) AND THE TRIBUNAL THAT THE IDENTITY OF THE SHARE APPLICANTS WAS NOT IN DOUBT AS THEY WERE INCOME-TAX ASSESSEES HOLDING VALID PANS AND THE SHARE APPLICATION MONEY WAS RECE IVED BY WAY OF CHEQUESTHEREFORE, THE SHARE APPLICATION MONEY CANN OT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER S. 68 CIT VS. LOVELY EXPORT S (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 30 8 FOLLOWED. 18. HINDUSTAN INKS & RESINS LTD. VS. DEPUTY COMMISS IONER OF INCOME TAX HIGH COURT OF GUJARAT (2011) 60 DTR (GUJ) 18 BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 41 INCOMECASH CREDITSHARE APPLICATION MONEYNONE OF THE AUTHORITIES HAVE RECORDED ANY FINDINGS TO THE EFFECT THAT THE I DENTITY OF THE DEPOSITORS HAD NOT BEEN ESTABLISHED BY THE ASSESSEECASE OF TH E REVENUE IS THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF SUCH C ASH AS WELL AS CREDITWORTHINESS OF THE DEPOSITORSDEPARTMENT IS FR EE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE W ITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPA NYHOWEVER, UNDER NO CIRCUMSTANCES, CAN THE AMOUNT OF SHARE CAP ITAL BE REGARDED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. HELD : FROM THE CONCURRENT FINDINGS RECORDED BY THE AUTHOR ITIES BELOW, IT IS APPARENT THAT NONE OF THE PARTIES HAVE RECORDED ANY FINDINGS TO T HE EFFECT THAT THE IDENTITY OF THE DEPOSITORS HAD NOT BEEN ESTABLISHED BY THE ASSESSEE . THE CASE OF THE RESPONDENT IS THAT THE ASSESSEE HAS FAILED TO EXPLA IN THE SOURCE OF SUCH CASH AS WELL AS CREDITWORTHINESS OF THE DEPOSITORS. IT IS N OT THE CASE OF THE REVENUE THAT THE SUBSCRIBERS ARE BOGUS. THE CASE OF THE REVENUE IS THAT THE SOURCE OF SUCH CASH AS WELL AS CREDITWORTHINESS OF THE DEPOSITORS HAS NOT BEEN EXPLAINED. IN THE CIRCUMSTANCES, THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF THE DEPOSITORS NAMED BY THE ASSESSEE , HOWEVER, UNDER NO CIRCUMSTANCES, CAN THE AMOUNT OF SHARE CAPITAL BE R EGARDED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. THE TRIBUNAL WAS THEREFORE NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 4,30,760 ON ACCOUNT OF UNEXPLAINED CASH CREDITS IN THE CASE OF THE ASSESSEE.CIT VS. LOVELY EXPORTS (P) LTD. (2008 ) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308; CIT VS. STELLER INVESTMENT L TD. (1991) 99 CTR (DEL) 40 : (1991) 192 ITR 287 (DEL) AND CIT VS. STELLER INVEST MENT LTD. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC) RELIED ON. 19. CIT VS. KAMDHENU STEEL & ALLOYS LTD. & ORS. HIGH COURT OF DELHI (2012) 248 CTR (DEL) 33 INCOMECASH CREDITSHARE APPLICATION MONEYBURDEN O F PROOF AND GENUINENESSTHOUGH INITIAL BURDEN IS UPON THE ASSES SEE, ONCE HE PROVES THE IDENTITY OF CREDITS/SHARE APPLICATIONS BY EITHE R FURNISHING PERMANENT ACCOUNT NUMBERS OR COPIES OF BANK ACCOUNTS AND SHOW S THE GENUINENESS OF THE TRANSACTION BY SHOWING MONEY IN THE BANKS IS BY ACCOUNT PAYEE CHEQUES OR BY DRAFT, ETC., THEN THE ONUS TO PROVE T HE SAME WOULD SHIFT TO THE REVENUEQUESTION WHICH ASSUMES IMPORTANCE AT TH IS STAGE IS TO WHAT THE REVENUE IS SUPPOSED TO DO TO DISLODGE THE INITI AL BURDEN DISCHARGED BY THE ASSESSEE AND TO THROW THE BALL AGAIN IN THE ASS ESSEE'S COURT DEMANDING THE ASSESSEE TO GIVE SOME MORE PROOFS, AS THE DOCUMENTS PRODUCED EARLIER BY THE ASSESSEE EITHER BECOME SUSP ECT OR ARE RENDERED INSUFFICIENT IN VIEW OF THE MATERIAL PRODUCED BY TH E DEPARTMENT REBUTTING THE ASSESSEE'S DOCUMENTARY EVIDENCEWHEN REGISTERED LETTERS ADDRESSED TO COMPANIES RETURNED UNDELIVERED AO PRESUMED THAT THESE COMPANIES DID NOT EXIST AT THE GIVEN ADDRESSBUT, IT HAS TO BE CO NCLUSIVELY ESTABLISHED BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 42 THAT THE COMPANY IS NON-EXISTENCEAO DID NOT BOTHER TO FIND OUT FROM THE OFFICE OF THE REGISTRAR OF COMPANIES THE ADDRESS OF THOSE COMPANIES FROM WHERE THE REGISTERED LETTER RECEIVED BACK UNDELIVER EDNO EFFORT WAS MADE TO EXAMINE AS TO WHETHER THESE COMPANIES WERE FILIN G THE IT RETURN AND IF THEY WERE FILING THE SAME, THEN WHAT KIND OF RETURN S THESE COMPANIES WERE FILINGIF THERE WAS NO RETURN, THIS COULD BE ANOTHE R FACTOR LEADING TOWARDS THE SUSPICION NURTURED BY THE AOLIKEWISE, WHEN THE BANK STATEMENTS WERE FILED, THE AO COULD FIND OUT THE ADDRESS GIVEN BY THOSE APPLICANT COMPANIES IN THE BANK, WHO OPENED THE BANK ACCOUNTS AND ARE THE SIGNATORIES, WHO INTRODUCED THOSE BANK ACCOUNTS AND THE MANNER IN WHICH TRANSACTIONS WERE CARRIED OUT AND THE BANK ACCOUNTS OPERATED THIS KIND OF INQUIRY WOULD HAVE GIVEN SOME MORE MAT ERIAL TO THE AO TO FIND OUT AS TO WHETHER THE ASSESSEE CAN BE CONVICTED WIT H THE TRANSACTIONS WHICH WERE ALLEGEDLY BOGUS AND/OR COMPANIES WERE AL SO BOGUS AND WERE CREATED FOR NAMESAKEMERE FAILURE OF THE CREDITORS TO RESPOND TO DEPARTMENT'S NOTICES COULD NOT BE A BASIS TO CONCLU DE THAT THE ASSESSEE HAS INVESTED ITS UNDISCLOSED INCOME AND INVOKE PROV ISIONS OF S. 68 AGAINST ASSESSEEAO FAILED TO CARRY HIS SUSPICION TO LOGICA L CONCLUSION BY FURTHER INVESTIGATIONMORE STEPS WHICH SHOULD HAVE BEEN TAK EN BY THE REVENUE IN ORDER TO FIND OUT CAUSAL CONNECTION BETWEEN THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THE APPLICANT COMPANIES AND THE AS SESSEE WERE NOT TAKENIT IS NECESSARY TO LINK THE ASSESSEE WITH THE SOURCE WHEN THAT LINK IS MISSING, IT IS DIFFICULT TO FASTEN THE ASSESSEE WIT H SUCH A LIABILITYADDITIONS RIGHTLY DELETEDIN THE PECULIAR FACTS AND CIRCUMSTA NCES OF THE CASE, ORDER OF REMAND WAS NOT CALLED FOR. HELD INITIAL BURDEN LIES ON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. IT IS A LSO CLEAR THAT THE ASSESSEE HAS TO SATISFACTORILY ESTABLISH THE IDENTITY OF THE SHAREHOLDERS, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE SHA REHOLDERS. THE MANNER IN WHICH SUCH A BURDEN IS TO BE DISCHARGED HAS BEEN EX PLAINED IN VARIOUS JUDGMENTS. AT THE SAME TIME, IT IS ALSO WELL ESTABL ISHED PRINCIPLE OF LAW THAT IN ANY MATTER, THE ONUS BROUGHT IS NOT A STATIC ONE. THOUG H INITIAL BURDEN IS UPON THE ASSESSEE, ONCE HE PROVES THE IDENTITY OF CREDITS/SH ARE APPLICATIONS BY EITHER FURNISHING PERMANENT ACCOUNT NUMBERS OR COPIES OF B ANK ACCOUNTS AND SHOWS THE GENUINENESS OF THE TRANSACTION BY SHOWING MONEY IN THE BANKS IS BY ACCOUNT PAYEE CHEQUES OR BY DRAFT, ETC., THEN THE ONUS TO P ROVE THE SAME WOULD SHIFT TO THE REVENUE. THE QUESTION WHICH ASSUMES IMPORTANCE AT THIS STAGE IS TO WHAT THE REVENUE IS SUPPOSED TO DO TO DISLODGE THE INITI AL BURDEN DISCHARGED BY THE ASSESSEE AND TO THROW THE BALL AGAIN IN THE ASSESSE E'S COURT DEMANDING THE ASSESSEE TO GIVE SOME MORE PROOFS, AS THE DOCUMENTS PRODUCED EARLIER BY THE ASSESSEE EITHER BECOME SUSPECT OR ARE RENDERED INSU FFICIENT IN VIEW OF THE MATERIAL PRODUCED BY THE DEPARTMENT REBUTTING THE A SSESSEE'S DOCUMENTARY EVIDENCE. 20. COMMISSIONER OF INCOME TAX VS. JAY DEE SECURITI ES AND FINANCE LTD. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 43 HIGH COURT OF ALLAHABAD (2013) 350 ITR 220 (ALL) INCOMECASH CREDITADDITIONDELETION THEREOFAO MAD E ADDITION U/S 68 ON GROUND THAT DEPOSITS IN SHAPE OF SHARE APPLIC ATION MONEY WERE BOGUS AS SHARE APPLICANT COMPANIES WERE MERELY ENTR Y OPERATORS HENCE, NON-GENUINEHOWEVER, APPELLATE TRIBUNAL DELETED ADD ITION TREATING DEPOSITS AS GENUINEHELD, PRIMARY ONUS OF PROVING E NTRIES FOUND IN BOOKS TO SATISFACTION OF AO LIES ON ASSESSEE-COMPANYASSE SSEE PRODUCED RETURNS FILED BY RELEVANT APPLICANT SHAREHOLDERS AL ONG WITH THEIR CONFIRMATIONBURDEN OF PROVING SOURCE OF SHARE APPL ICATION MONEY DISCHARGED HENCE, ADDITION RIGHTLY DELETEDREVENUE FREE TO PROCEED TO REOPEN INDIVIDUAL ASSESSMENTS OF SHAREHOLDERS WHOSE NAMES AND DETAILS WERE GIVEN TO AOREVENUES APPEAL DISMISSED. HELD: THE TRIBUNAL RECORDED FINDINGS THAT THE ASSESSEE HA D PRODUCED THE RETURN OF INCOME FILED BY THE RELEVANT SHAREHOLDERS WHO HAD P AID SHARE APPLICATION MONEY. THE ASSESSEE HAD ALSO PRODUCED THE CONFIRMATION OF SHAREHOLDERS INDICATING THE DETAILS OF ADDRESSES, PAN AND PARTICULARS OF CHEQUE S THROUGH WHICH THE AMOUNT WAS PAID TOWARDS THE SHARE APPLICATION MONEY. THE T RIBUNAL THEREAFTER RELIED UPON THE JUDGMENT OF THE SUPREME COURT IN CIT VS. L OVELY EXPORT S (P) LTD WHEREIN IT WAS HELD THAT IF THE ASSESSEE PRODUCES T HE NAMES, ADDRESSES, PAN DETAILS OF THE SHAREHOLDERS THEN THE ONUS ON THE AS SESSEE TO PROVE THE SOURCE OF SHARE APPLICATION MONEY STANDS DISCHARGED. IF THE A SSESSING AUTHORITY WAS NOT SATISFIED WITH THE CREDITWORTHINESS OF THE SHAREHOL DERS, IT WAS OPEN TO THE ASSESSING AUTHORITY TO VERIFY THE SAME IN THE HANDS OF THE SHAREHOLDERS CONCERNED. IN VIEW OF THE DECISION OF THE SUPREME C OURT, WE DISMISS THE APPEALS WITH OBSERVATIONS THAT THE DEPARTMENT IS FREE TO PR OCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS OF THE SHAREHOLDERS WHOSE NAMES AND DET AILS WERE GIVEN TO THE AO. CIT VS. LOVELY EXPORT S (P) LTD 216 CTR 195., RELIED. 21. COMMISSIONER OF INCOME TAX VS. MISRA PRESERVERS (P.) LTD. HIGH COURT OF ALLAHABAD (2013) 350 ITR 222 (ALL) INCOME FROM UNDISCLOSED SOURCESUNEXPLAINED INVESTM ENTSASSESSEE- COMPANY BEING A PVT. LTD. COMPANY ALLOTTED SHARES O N PRIVATE PLACEMENT BASIS ASSESSEE FAILED TO PRODUCE SHAREHOLDERS AND SUMMONS ISSUED BY AO AT GIVEN ADDRESSES RETURNED UNSERVEDHENCE ADDIT ION U/S 69 MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTAPPELLATE TRIBUNA L DELETED ADDITIONS MADE BY AO REGARDING UNEXPLAINED SHARE CAPITAL AND UNEXPLAINED SHARE APPLICATION MONEYHELD, ASSESSEE PRODUCED RELEVANT EVIDENCE AND ESTABLISHED THAT ALL SHARE APPLICANTS WERE NOT FICT ITIOUS PERSONSHENCE, ADDITION RIGHTLY DELETEDREVENUES APPEAL DISMISSED . BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 44 HELD: COURT HAD GONE THROUGH THE ORDERS PASSED BY THE AO, CIT (APPEALS) AND THE TRIBUNAL AND FIND THAT THE ASSESSEE HAD PRODUCED RE LEVANT EVIDENCE BEFORE THE CIT (APPEALS) ESTABLISHING THAT ALL THE PERSONS, WH O HAD DEPOSITED THE SHARE APPLICATION, WERE NOT FICTITIOUS PERSONS. MOST OF T HEM WERE IDENTIFIABLE; THEY MADE THE PAYMENT BY CHEQUES AND MOST OF THEM WERE ASSESS ED TO INCOME TAX. THE TRIBUNAL HAS GIVEN FURTHER RELIEF TO THE ASSESSEE A ND HAS NOT ACCEPTED THE ARGUMENT OF THE DEPARTMENT THAT THE EXPLANATION FUR NISHED BY THE ASSESSEE FOR THE ADDITION U/S. 69 ON ACCOUNT OF UNEXPLAINED INVE STMENT WAS NOT TO THE SATISFACTION OF THE AO. COURT DOES NOT PROPOSE TO G O INTO EACH AND EVERY INVESTMENT MADE BY THE PERSONS, AS THE CIT (APPEALS ) IN ITS ORIGINAL ORDER AND THE REVISED ORDER AS WELL AS THE TRIBUNAL HAS CONSI DERED THESE FACTS IN DETAIL AND HAVE RECORDED FINDINGS OF FACT THAT THESE PERSONS A RE NOT FICTITIOUS. CIT VS. JAY DEE SECURITIES & FINANCE (INCOME TAX APPEAL NO. 328 OF 2010 DECIDED ON 11.08.2011) AND CIT VS. LOVELY EXPORTS [216 ITR 195 ]., RELIED. 22. DEPUTY COMMISSIONER OF INCOME TAX VS. RANA GIRD ERS LTD. HIGH COURT OF ALLAHABAD (2013) 84 CCH 128 ALLHC DECISION IN FAVOUR OF: ASSESSEE INCOMECASH CREDITSHARE APPLICATION MONEYADDITION DELETION THEREOFASSESSEE RECEIVED DEPOSITS TOWARDS SHARE AP PLICATION MONEY FOR ALLOTMENT OF SHARES BY INVESTORSAO TOOK VIEW THAT SINCE ASSESSEE HAD FAILED TO DISCHARGE BURDEN AS LAID U/S 68, CREDIT E NTRIES WERE NOT DULY EXPLAINEDAO MADE ADDITIONS IN INCOME OF ASSESSEEO RDER OF AO SET ASIDE BY TRIBUNALHELD, TRIBUNAL HAD FOLLOWED DECIS ION OF APEX COURT IN CASE OF CIT VS. M/S. LOVELY EXPORTS PVT. LTD. (216- CTR-195) WHEREIN IT WAS HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVE D BY ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GI VEN TO AO, THEN DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENTS IN ACCORDANCE WITH LAWFOLLOWING AFORESAID DECISION OF APEX COURT, ADDITION U/S 68 IN SUCH CASES IS NOT CALLED FORAPPEAL DISMI SSED HELD: IT WAS SEEN THAT THE TRIBUNAL HAD FOLLOWED THE DECI SION OF THE APEX COURT IN THE CASE OF CIT VS. M/S. LOVELY EXPORTS PVT. LTD. (216- CTR-195). FOLLOWING THE AFORESAID DECISION OF THE APEX COURT, IT WAS HELD T HAT ADDITION U/S 68 IN SUCH CASES IS NOT CALLED FOR. NO SUBSTANTIAL QUESTION OF LAW WAS FOUND TO BE INVOLVED IN THIS APPEAL. THE APPEAL WAS DISMISSED SUMMARILY 23. COMMISSIONER OF INCOME TAX VS. FAIR FINVEST LTD . BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 45 HIGH COURT OF DELHI (2013) 357 ITR 146 (DELHI) DECISION IN FAVOUR OF: ASSESSEE INCOMECASH CREDITSHARE APPLICATION MONEYACCOMMOD ATION ENTRIESADDITIONDELETION THEREOFADDITION ON ACCOU NT OF SHARE APPLICATION MONEY RECEIVED DURING PREVIOUS YEAR WAS MADE TO INCOME OF ASSESSEE IN REASSESSMENT PROCEEDINGS ON BASIS OF IN VESTIGATION REPORT RECEIVED BY AOITAT UPHELD ORDER OF CIT(A) ALLOWING APPEAL OF ASSESSEEHELD, THE LEAST THAT AO OUGHT TO HAVE DONE WAS TO ENQUIRE INTO MATTER BY, IF NECESSARY, INVOKING HIS POWERS U/S 13 1 SUMMONING SHARE APPLICANTS OR DIRECTORSNO EFFORT WAS MADE IN THAT REGARDIN ABSENCE OF ANY SUCH FINDING THAT MATERIAL DISCLOSED WAS UNTRUS TWORTHY OR LACKED CREDIBILITY, AO MERELY CONCLUDED ON BASIS OF ENQUIR Y REPORT, WHICH COLLECTED CERTAIN FACTS AND STATEMENTS THAT INCOME SOUGHT TO BE ADDED FELL WITHIN DESCRIPTION OF SECTION 68IMPUGNED ORDER UPH ELDAPPEAL DISMISSED HELD: ASSESSEE HAS FILED DOCUMENTS INCLUDING CERTIFIED CO PIES ISSUED BY THE REGISTRAR OF COMPANIES IN RELATION TO THE SHARE APPLICATION, AFFIDAVITS OF THE DIRECTORS, FORM 2 FILED WITH THE ROC BY SUCH APPLICANTS CONFIRMATIO NS BY THE APPLICANT FOR COMPANYS SHARES, CERTIFICATES BY AUDITORS ETC. UNF ORTUNATELY, THE AO CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF THE INVESTIGATION REPORT AND THE STATEMENT OF MR. MAHES H GARG. TO ELEVATE THE INFERENCE WHICH CAN BE DRAWN ON THE BASIS OF READIN G OF SUCH MATERIAL INTO JUDICIAL CONCLUSIONS WOULD BE IMPROPER, MORE SO WHE N THE ASSESSEE PRODUCED MATERIAL. THE LEAST THAT THE AO OUGHT TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY, IF NECESSARY, INVOKING HIS POWERS U/S 131 SUMMO NING THE SHARE APPLICANTS OR DIRECTORS. NO EFFORT WAS MADE IN THAT REGARD. IN TH E ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUSTWORTHY OR LA CKED CREDIBILITY THE AO MERELY CONCLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COL LECTED CERTAIN FACTS AND THE STATEMENTS OF MR. MAHESH GARG THAT THE INCOME SOUGH T TO BE ADDED FELL WITHIN THE DESCRIPTION OF SECTION 68 . (PARA 6) HAVING REGARD TO THE ENTIRETY OF FACTS AND CIRCUMST ANCES, THE COURT IS SATISFIED THAT THE FINDING OF THE TRIBUNAL IN THIS CASE ACCOR DS WITH THE RATIO OF THE DECISION OF THE SUPREME COURT IN LOVELY EXPORTS (SUPRA). THE DECISION IN THIS CASE IS BASED ON THE PECULIAR FACTS WHICH ATTRACT THE RATIO OF LOVELY EXPORTS (SUPRA). WHERE THE ASSESSEE ADDUCES EVIDENCE IN SUPPORT OF T HE SHARE APPLICATION MONIES, IT IS OPEN TO THE AO TO EXAMINE IT AND REJE CT IT ON TENABLE GROUNDS. IN CASE HE WISHES TO RELY ON THE REPORT OF THE INVESTI GATION AUTHORITIES, SOME MEANINGFUL ENQUIRY OUGHT TO BE CONDUCTED BY HIM TO ESTABLISH A LINK BETWEEN THE BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 46 ASSESSEE AND THE ALLEGED HAWALA OPERATORS; SUCH A L INK WAS SHOWN TO BE PRESENT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P) LTD. ( SUPRA) RELIED UPON BY THE REVENUE. IT IS THEREFORE NOT TO BE UNDERSTOOD TO CO NVEY THAT IN ALL CASES OF SHARE CAPITAL ADDED U/S 68 , THE RATIO OF LOVELY EXPORTS (SUPRA) IS ATTRACTED, IRRESPECTIVE OF THE FACTS, EVIDENCE AND MATERIAL. IN VIEW OF THE ABOVE SUBMISSION, FACTS AND CIRCUMST ANCES OF THE CASE, THE ADDITION OF RS.2,92,00,000/- SO MADE BY THE LEARNED AO ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE CAPITAL AND SHARE PREMIUM DESERVE S TO BE DELETED IN TOTO ESPECIALLY CONSIDERING THE FACT THAT THE ADDITION H AS BEEN MADE WITHOUT TAKING RECOURSE TO ANY INCRIMINATING MATERIAL. RELEVANT DOCUMENTS FILED IN THE PAPER BOOK ON WHICH THE APPELLANT IS PLACING RELIANCE FOR THESE GROUNDS PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 97 98 LIST OF SHARE APPLICANT COMPANIES GIVING THE DETAILS OF SHARE APPLICANT COMPANIES 308 1415 SHARE APPLICATION FORMS, MOA/AOA, INCORPORATION CERTIFICATE, BOARD RESOLUTION, AUDITED FINANCIAL STATEMENTS, ITR, BANK CERTIFICATE REGARDING VERIFICATION OF SIGNATURE OF DIRECTOR OF SHARE APPLICANTS, CONFIRMATION LETTERS, MASTER DATA OF SHARE APPLICANTS DOWNLOADED FROM OFFICIAL WEBSITE OF MCA, LIST OF DIRECTORS, PAN, TAN, BANK STATEMENTS, CERTIFICATE OF REGISTRATION GRANTED BY RBI FOR NBFC ESTABLISHING IDENTITY AND CREDITWORTHINESS OF SHARE APPLICANTS ALONG WITH GENUINENESS OF THE TRANSACTIONS 1416 1417 SPECIMEN COPY OF THE LETTER OF REQUEST ADDRESSED TO SHARE APPLICANT COMPANIES SENT THROUGH SPEED POST SHOWING THAT THE LETTERS HAVE BEEN SENT BY THE APPELLANT TO THE SHARE APPLICANT COMPANIES ON THE LATEST ADDRESSES 1418 1430 MONEY RECEIPTS ISSUED BY THE POSTAL AUTHORITIES TO THE APPELLANT/ GROUP COMPANIES UPON RECEIPTS OF ENVELOPES ALONG WITH THE DELIVERY STATUS ESTABLISHING THE DELIVERY OF THE REQUEST LETTERS TO THE SHARE APPLICANT COMPANIES ALONG WITH BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 47 REPORT DULY DOWNLOADED FROM THE OFFICIAL WEBSITE OF THE INDIAN POST OF THE GOVERNMENT OF INDIA, MINISTRY OF COMMUNICATION AND INFORMATION TECHNOLOGY COPIES OK ACKNOWLEDGEMENTS 1431 1442 LETTERS OF CONFIRMATION (DULY SIGNED BY THE DIRECTORS/ AUTHORIZED SIGNATORIES OF THE SHARE APPLICANT COMPANIES) AS RECEIVED IN RESPONSE TO THE REQUEST LETTERS SENT THROUGH SPEED POST ESTABLISHING THE IDENTITY OF SHARE APPLICANT COMPANIES 1443 1448 COPIES OF THE ENVELOPES MARKED WITH THE SEAL OF THE POSTAL AUTHORITIES IN WHICH THE LETTERS OF CONFIRMATION WERE KEPT. SHOWING THAT THE CONFIRMATION LETTERS HAVE BEEN RECEIVED FROM THE SHARE APPLICANT COMPANIES THROUGH INDIAN POST. 1581 1614 COPIES OF THE ACKNOWLEDGEMENTS CONTAINING THE SEAL OF THE POSTAL AUTHORITIES IN PROOF OF DELIVERIES (AS ALSO OF THE ADDRESS) OF LETTERS TO THE CONCERNING SHARE APPLICANT COMPANIES SENT BY THE APPELLANT/ GROUP COMPANIES ON EARLIER OCCASIONS. ---- DO ---- 1615 1615 COPIES OF THE CERTIFICATE OF POSTAL AUTHORITIES [UPC], ENDORSED ON THE PLAIN PAPERS WHILE SENDING THE LETTERS, CONTAINING THE LETTERS OF ALLOTMENT TO THE SHARE APPLICANT COMPANIES IN EARLIER YEARS [ALSO SEIZED AS LPS- 2/23] ---- DO ---- 1616 1626 COPIES OF THE APPLICATION MADE BEFORE THE AO/ CIT(A) FOR PROVIDING COPIES OF THE UN- SERVED NOTICES/ ENVELOPE S COPIES OF THE STATEMENTS RECORDED ETC - BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 48 1449 1563 ASSESSMENT ORDERS PASSED UNDER S. 153C OF THE ACT IN RESPECT OF SOME OF THE SHARE APPLICANT COMPANIES ESTABLISHING THAT THE SHARE APPLICANT COMPANIES HAVE UNDERGONE SCRUTINY ASSESSMENTS UNDER S.153C OF THE ACT 1564 1569 NOTICES ISSUED TO SOME OF THE SHARE APPLICANT COMPANIES BY THE INCOME-TAX DEPARTMENT UNDER S. 153C/148 ESTABLISHING THAT THE SHARE APPLICANT COMPANIES HAVE BEEN ISSUED NOTICES UNDER S.153C/148 BY THE INCOME-TAX DEPARTMENT 1570 1580 CERTIFICATES ISSUED BY REGISTERED COMPANY SECRETARIES CERTIFYING THE RELEVANT DETAILS OF SOME OF THE SHARE APPLICANT COMPANIES SHOWING THE CONFIRMED DETAILS OF THE SHARE APPLICANT COMPANIES 1631 1646 ORDERS OF THE HONBLE ITAT, MUMBAI PASSED IN TWO SHARE APPLICANT COMPANIES ESTABLISHING THAT THE SHARE APPLICANT COMPANIES HAVE UNDERGONE APPELLATE PROCEEDINGS BEFORE HONBLE ITAT 1627 1630 ORDER OF HONBLE CUSTOMS, EXCISE & GOLD TRIBUNAL, BANGALORE BENCH IN ONE SHARE APPLICANT COMPANY ESTABLISHING THAT THE SHARE APPLICANT COMPANIES HAVE UNDERGONE APPELLATE PROCEEDINGS BEFORE HONBLE CEGT 1647 1649 NOTICE OF RECOVERY ISSUED BY THE TAX RECOVERY OFFICER OF ONE OF THE SHARE APPLICANT COMPANIES TO THE APPELLANT COMPANY ESTABLISHING THE STATUTORY IDENTITY OF THE SHARE APPLICANT COMPANY 13. LD. DRS RELIED ON THE ORDERS OF THE REVENUE AUT HORITIES AND SUBMITTED AS UNDER: THE ADDITION OF RS. 49,22,56,000/- HAS BEEN MADE BY THE AO U/S 68 IN VARIOUS CASES OF BHATIA GROUP OF COMPANIES ON THE ISSUE OF BOGUS SHARE CAPITAL AS UNDER:- BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 49 S. NO. NAME OF THE ASSESSEE A.Y. AMOUNT (RS.) 1. BHATIA INTERNATIONAL LTD. 2002-03 29,200000 2. 2003-04 19000000 3. 2004-05 115900000 4. BHATIA COAL SALES LTD. 2002-03 51875000 5. ISHHAR OVERSEAS PVT. LTD. 2003-04 2631000 6. 2005-06 65500000 7. BCC INVESTMENT (INDIA) PVT. LTD. 2005-06 65500000 8. BCC CARGO PVT. LTD. 2005-06 69000000 9. BHATIA COAL TRADING & CONS. PVT. LTD. 2006-07 49200000 10. 2007-08 41550000 TOTAL 492256000 IN ALL TOTAL ADDITION AMOUNTS TO RS. 49.22 CRORES . THE AO HAS MADE SUCH ADDITION AFTER DETAILED INQUIRY WHICH LED HIM TO IN FER THAT THE ASSESSEE GROUP HAD RE-INTRODUCED THEIR OWN UNACCOUNTED MONEY IN THE FO RM OF SHARE CAPITAL. THE AO HAS NOTED THAT THE BHATIA GROUP OF COMPANIES MANAGE D TO GET THE ACCOMMODATION ENTRIES IN THE FORM OF SHARE CAPITAL FROM KALKATA / MUMBAI BASED COMPANIES ON VERY HUGE PREMIUM WHICH WERE ULTIMATEL Y EITHER FORFEITED OR BOUGHT BACK BY THE FAMILY MEMBERS OF BHATIA GROUP. THE CIT(A) HAS CONFIRMED THE ENTIRE ADDITION WITH THE DETAILED FINDINGS GIVEN IN PARA 4.2 OF HIS ORDER IN CASE OF BHATIA I NTERNATIONAL LTD FOR A.Y. 2002-03 ON WHICH I RELIED UPON. IN BRIEF, THE FINDING'S OF AO/CIT(A) ARE AS UNDER:- (I) THE DOCUMENTS RELEVANT TO THE SHARE APPLICATI ON MONEY IN THE NAME OF VARIOUS GROUP COMPANIES AND THEIR POSSIBLE INVOLVEM ENT FOR PROVIDING ACCOMMODATION ENTRY AS A PART OF PREVALENT MODUS OP ERANDI WERE FOUND AND SEIZED DURING THE SEARCH. (II) NOTICE U/S 133(6) WERE ISSUED TO THE NO OF BAN KS AND OBTAINED BANK STATEMENTS OF SECOND LAYER WHERE IN HUGE CASH BEING DEPOSITED AND MONEY HAD FLOWN TO THE ACCOUNTS OF THE SHARE HOLDERS. (III) AFTER PROVIDING ACCOMMODATION ENTRIES MANY OF THE BANK ACCOUNTS WERE DORMAT OR CLOSED. (IV) THERE WERE SOME INSTANCES OF FREQUENT CHANGES OF DIRECTORS TO MISLEAD THE REAL IDENTITY. (V) 47 NOTICES WERE ISSUED TO THE VARIOUS SHARE HOL DERS BUT ONLY FIVE COMPANIES HAD RESPONDED WHILE REMAINING LETTERS WER E RETURNED BACK UNSERVED THE COMPANIES WHICH RESPONDED HAD ALSO NOT GIVEN CO MPLETE INFORMATIONS AS REQUIRED. (VI) THE ASSESSEEE HAS TRY TO PROVE THE GENUINENESS OF THE SHARES CAPITAL ON THE BASIS OF VARIOUS DOCUMENTS. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 50 (VII) COMMISSION U/S 131(1)(D) TO THE ADDL. DIT (I NV.) KOLKATA, WAS ISSUED AND ADD. DIT REPORTED THAT THE SAID COMPANIES AND INDIV IDUALS WERE NOT FOUND ON THE GIVEN ADDRESSES. (VIII) SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON THE OUTCOME OF THESE INQUIRIES. AS REGARDS TO THE VARIOUS LETTERS AND SU MMONS WHICH WERE RETURNED UN SERVED ASSESSEE WAS PLEADED THAT THE ADDRESSES WERE CHANGED BUT SUBSEQUENTLY, NEW ADDRESSES WERE NOT PROVIDED TO AO FOR FURTHER ENQUIRY. (IX) ALL SHARES ALLOTTED TO THEIR KOLKATA BASED COM PANIES WERE SUBSEQUENTLY FORFEITED OR BUY BACK AT VERY NOMINAL PRICES BY GRO UP COMPANIES/FAMILY MEMBERS WITHOUT ANY JUSTIFICATION. IN VIEW OF THE ABOVE, THE IDENTITY, CREDITWORTHINE SS AND GENUINENESS OF SHARE APPLICATION MONEY/ SHARE CAPITAL COULD NOT BE PROVED BY THE ASSESSEE AND THUS, BURDEN OF PROOF COULD NOT BE DISCHARGED. DURING APPEAL PROCEEDING, ASSESSEE FILED NEW EVIDE NCES IN FIVE SHARE HOLDERS WHICH WAS REJECT BY CIT(A) AS PER RULE 46A AND MENTIONED THAT THOSE WERE SELF SERVING DOCUMENTS DOES NOT HAVE ANY EVIDE NTIARY VALUE. FROM THE ABOVE FACTS/ FINDINGS/INQUIRIES/EVIDENCES IT IS CLEARLY ESTABLISHED THAT ACCOMMODATION ENTRY WERE TAKEN BY THE ASSESSEE BY INTRODUCING OWN UNACCOUNTED MONEY THROUGH KOLKATA BASED PAPER COMPA NIES IN THE SHAPE OF SHARE APPLICATION MONEY/ SHARE CAPITAL AT VERY HIGH PREMIUM AND SUBSEQUENTLY ALL SHARES/ SHARE APPLICATION MONEY WERE EITHER FOR FEITED OR BUY BACK BY GROUP OF COMPANIES/FAMILY MEMBERS. THE PRIMARY ONUS WAS ON A SSESSEE WHICH COULD NOT BE DISCHARGED AND THEREFORE, ADDITION MADE U/S 68 B Y AO AND CONFIRMED BY CIT(A) IS FULLY JUSTIFIED. I RELIED UPON THE VARIOU S DECISIONS ON SIMILAR ISSUE IS ENCLOSED HEREWITH IN MY COMPILATION. 14. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALREADY HELD THAT ADDI TION MADE ON UNACCOUNTED UNEXPLAINED SHARE CAPITAL/SHARE PREMIUM WITHOUT ANY INCRIMINATING MATERIAL CANNOT BE UPHELD IN RESPECT OF ASSESSMENT PROCEEDINGS WHERE N O ASSESSMENT WAS PENDING ON THE DATE OF INITIATION OF SEARCH. NON-ABATED ASSESS MENT CAN BE MADE ONLY UPON ANY INCRIMINATING DOCUMENT OR MATERIAL IS FOUND. THEREF ORE, WE ALLOW THIS UNEXPLAINED SHARE APPLICATION MONEY ON THIS GROUND. 15. DURING COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER MADE REFERENCE TO AUDITED BALANCE-SHEET OF SIX COMPANIES OF BCC GROUP PERIOD FROM ASSESSMENT YEAR 2002-03 TO ASSESSMENT YEAR 2008-09. THESE SIX COS. INCLUDING ASSESSEE CO. HAS RAISED SHARE CAPITAL AND SHARE PREMIUM AMOUNTING TO RS.49. 54 CRORES, OUT OF WHICH, RS.30 LACS WERE FOUND TO BE GENUINE AND ASSESSING OFFICER HAS MADE ADDITION OF RS.49.23 BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 51 CRORES AS BOGUS AND UNEXPLAINED. THE ASSESSEE HAS F ILED A COPY OF DETAIL OF SHARE APPLICATION MONEY, SHARE APPLICANTS SUCH AS NAMES, ADDRESSES, PAN AND AMOUNTS WHICH IS PLACED ON PAGE NO.114 TO 116 OF THE PAPER BOOK. ENTIRE PAYMENT IS RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND ORIGINAL SHARE AP PLICATION MONEY ALONG WITH DOCUMENTS LIKE, MEMORANDUM OF ARTICLES OF ASSOCIATI ON, COPY OF BANK STATEMENTS, INCOME-TAX RETURNS ACKNOWLEDGEMENTS, AUDITED FINANC IAL STATEMENTS OF SHARE APPLICATION WERE SEIZED DURING SEARCH OPERATION AS BS-1 TO BS-285. 16. THE ASSESSING OFFICER DID NOT FIND ANY DEFECT O R DISCREPANCY IN THE GENUINENESS OF VARIOUS DOCUMENTS BEING SEIZED DOCUMENTS RELIED BY THE ASSESSEE IN SUPPORT OF EXPLANATION TOWARDS SHARE CAPITAL/SHARE PREMIUM SHO WN IN THE AUDITED BALANCE-SHEET. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE AND OTHER COS. OF BCC GROUP H AD RECEIVED A HUGE SUM OF SHARE CAPITAL AND SHARE APPLICATION FROM VARIOUS CALCUTTA AND MUMBAI BASED COS. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER ASKED ASSESSEE TO PRODUCE SOME OF THE SHARE APPLICANT COS. ON SAMPLE BASE. IN COMPLIANCE TO SUCH REQUIREMENT, THE ASSESSEE HAS PRODUCED TWO PERSONS NAMELY, SANJAY KR. PATNI AND SACHIN JAIN ON BEHALF OF THREE APPLICANT COS. NAMEL Y, M/S. GLADIATOR WIPER P. LTD., BLEURING COMMERCIAL P. LTD. AND WINDSOR COMMERCIAL P. LTD. THE STATEMENTS OF THESE TWO PERSONS WERE RECORDED, WHICH HAS BEEN REPRODUCE D AT PAGES 7 TO 10 OF THE ASSESSMENT ORDER. BOTH THE PERSONS HAVE EXPLAINED W HY THEY HAVE MADE INVESTMENTS IN BCC GROUP COS. BUT ALSO EXPLAINED REASONS FOR MA KING INVESTMENTS IN THESE COS. AFTER RECORDING STATEMENTS OF TWO PERSONS, ASSESSIN G OFFICER DID NOT INSIST FOR PRODUCTION OF ANY FURTHER PERSON FOR RECORDING THE STATEMENT. THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 133(6) OF THE ACT TO NUMBER OF BANKS FROMWHERE THE CHEQUES WERE SHOWN TO HAVE BEEN RECEIVED BY VARIOUS COS. OF BCC GROUP. THE BANKS SENT RELEVANT BANK STATEMENTS OF SHARE APPLICATION COS. DIRECTLY TO THE ASSESSING OFFICER. WE FIND THAT IN ONE OR TWO CASES, THE CASH WAS DEPOSITED PRIOR T O ISSUANCE OF CHEQUE BUT IN REST OF THE CASES, THE MONEY HAS COME BY ROUTED. 17. WE FIND THAT DURING THE COURSE OF THE ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER HAD ALSO ISSUED NOTICED U/S 133(6) OF THE A CT TO AS MANY AS 47 COMPANIES FROM WHOM THE VARIOUS COMPANIES OF BCC GROUP HAD SHOWN T O HAVE RECEIVED SHARE BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 52 CAPITAL/SHARE PREMIUM. ACCORDING TO THE ASSESSING O FFICER, OUT OF THESE 47 COMPANIES, THEN NOTICES COULD BE SERVED ONLY TO 5 COMPANIES AN D NOTICES ISSUED TO 28 COMPANIES GOT RETURNED BACK. WE FIND MERIT IN THE CONTENTION OF THE AR FOR THE ASSESSEE THAT THE ASSESSING OFFICER HAD ISSUED LETTERS TO ALL SUCH CO MPANIES SOMEWHERE IN THE YEAR 2009 WITHOUT THE KNOWLEDGE OF THE ASSESSEE AND ITS GROUP COMPANIES. IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER SENT THE NOTICES ON THE BASIS OF THE ADDRESSES WRITTEN ON THE SHARE APPLICATION FORMS WHICH WERE SIZED DURING THE COURSE OF THE SEARCH. IT WAS SUBMITTED THAT THE TRANSACTIONS OF THE SHARE CAPITA L/SHARE PREMIUM HAD TAKEN PLACE WAY BACK DURING THE FYS 2001-02 TO 2006-07 BUT THE ASSE SSING OFFICER ISSUED THE LETTERS AS LATE AS IN THE YEAR 2009. IT WAS ALSO SUBMITTED THA T BY THE TIME, THE ASSESSING OFFICER ISSUED NOTICES TO THE SHARE APPLICANT COMPANIES, SU CH SHARE APPLICANT COMPANIES HAD CEASED TO BE A SHAREHOLDER OF THE BCC GROUP COMPANI ES FOR THE REASON OF FORFEITURE OF THEIR SHARES/TRANSFER OF SHARES BY THEM TO OTHER SH AREHOLDERS. IT WAS ALSO SUBMITTED THAT BETWEEN THE PERIOD OF ISSUANCE OF SHARES AND THE IS SUANCE OF NOTICES U/S 133(6), MANY SHARE APPLICANT COMPANIES HAD SHIFTED THEIR OFFICES ELSEWHERE IN THE SAME CITY AND, THEREFORE, THE LETTERS ISSUED BY THE ASSESSING OFFI CER TO SUCH COMPANIES GOT RETURNED UNSERVED. IT WAS SUBMITTED THAT FACT REGARDING NON- SERVICING OF NOTICES WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE AND GROUP COMPANIES B Y THE ASSESSING OFFICER ONLY AT THE FAG END OF THE ASSESSMENT PROCEEDINGS BY WAY OF HIS SHOW-CAUSE NOTICE DATED 07.12.2009. IT WAS FURTHER SUBMITTED THAT EVEN IN S UCH LETTER, THE ASSESSEE AND GROUP COMPANIES WERE NOT PROVIDED WITH ANY SPECIFIC INFOR MATION AS REGARD TO THE NAMES OF THE SHARE APPLICANT COMPANIES IN WHOSE CASES THE NO TICES RETURNED UNSERVED. WE FIND THAT THE LIST OF UNSERVED LETTERS WAS PROVIDED TO T HE ASSESSEE BY THE ASSESSING OFFICER VIDE HIS LETTER DATED 19.12.2009 ONLY I.E. JUST BEF ORE 12 DAYS OF THE STATUTORY TIME LIMIT FOR FRAMING THE ASSESSMENT ORDER. A COPY OF SUCH LETTER DATED 19.12.2009 HAS BEEN FILED BY THE ASSESSEE AT PAGE NOS.95 & 96 OF THE PAPER BOOK. WE FIND THAT SUBSEQUENTLY, THE ASSESSEE, VIDE ITS LETTER DATED 24.12.2009, PROVIDE D A LIST OF CORRECT ADDRESSES OF THE SHARE APPLICANTS TO THE ASSESSING OFFICER WHICH IS PLACED AT PAGE NOS. 279 TO 286 OF THE PAPER BOOK. WE FIND THAT ALTHOUGH IN THE WRITTEN SU BMISSION, THE LD. DR HAS CLAIMED THAT THE DETAILS OF NEW CORRECT ADDRESSES WERE NOT PROVI DED TO THE ASSESSING OFFICER FOR FURTHER ENQUIRY BUT DURING THE COURSE OF THE ARGUME NTS BEFORE US, THE LD. AR FOR THE BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 53 ASSESSEE BROUGHT OUR ATTENTION ON THE AFORESAID LET TER SUBMITTED BEFORE THE ASSESSING OFFICER, DURING THE COURSE OF THE ASSESSMENT PROCEE DINGS, ON 24.12.2009. A COPY OF SUCH LETTER IS PLACED AT PAGE NOS. 166 TO 174 OF TH E PAPER BOOK FILED BY THE ASSESSEE. FROM THE COPY OF THE LETTER, AT PAGE NO.168, THE LD . AR DEMONSTRATED BEFORE US THAT THE LIST OF NEW POSTAL ADDRESS OF THE SHARE APPLICANTS WAS DULY FILED BEFORE THE ASSESSING OFFICER. THE LD. AR ALSO DRAWN OUR ATTENTION ON THE LIST SO FURNISHED BEFORE THE ASSESSING OFFICER WHICH IS PLACED AT PAGE NOS. 279 TO 286 OF THE PAPER BOOK. BEFORE US, THE LD. DRS COULD NOT CONTROVERT SUCH ASSERTIONS MA DE BY THE LD. AR OF THE ASSESSEE. WE FIND MERIT IN THE CONTENTION OF THE LD. AR OF TH E ASSESSEE THAT IT IS A SETTLED LAW THAT FOR EXPECTING SERVICING OF ANY NOTICE OR SUMMON TO THE PURPORTED PERSON, IT IS ESSENTIAL THAT SUCH NOTICE/SUMMON IS ADDRESSED CORRECTLY AND IF IT IS NOT SO, NO FAULT CAN BE FOUND EITHER OF THE NOTICEE OR ANYONE ELSE IF THE SAME RE TURNS UNSERVED. PRESUMPTION OF SERVICING CAN BE TAKEN ONLY IF THE ENVELOPE CONTAIN ING THE NOTICE IS PROPERLY ADDRESSED. THUS, PROPER ADDRESSING IS SINE QUO NON FOR EFFECTI NG THE PROPER SERVICING OF ANY NOTICE. FOR SUCH PROPOSITION, RELIANCE IS PLACED BY THE LD. AR ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAJESH KUMA R SHARMA (2009) 311 ITR 235 (DEL). 18. WE FIND THAT DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE ASSESSEE AGAIN THROUGH ITS COUNSELS LETTER DATED 13.9.2011, HAD M ADE A REQUEST TO THE LEARNED CIT(A) FOR EXAMINATION OF THE SHARE APPLICANT BUT, SUCH RE QUEST OF THE ASSESSEE WAS NOT ACCEDED TO BY THE LEARNED CIT(A). 19. WE FIND THAT POST FIRST APPELLATE ORDER, THE AS SESSEE HAD SENT LETTERS FOR CONFIRMATION OF INVESTMENT IN SHARES TO THE SHARE A PPLICANT COMPANIES. SUCH LETTERS WERE DULY SENT BY THE ASSESSEE THROUGH SPEED POST R EGISTERED AD. THE ASSESSEE CO. HAD SENT SUCH LETTERS TO ALL THE SHARE APPLICANT CO MPANIES WHO HAD MADE INVESTMENT WITH IT AND IN RESPECT OF WHOM, THE ASSESSING OFFIC ER HAD CLAIMED THAT NOTICES U/S 133(6) HAD GOT RETURNED UNSERVED. WE FIND THAT IN T HE PRESENT APPEAL, THE ASSESSEE HAD ACCEPTED THE SHARE APPLICATION MONEY FROM AS MANY A S 16 NON-RELATED COMPANIES AND OUT OF WHICH, ACCORDING TO THE ASSESSING OFFICER, N OTICES U/S 133(6) HAD GOT RETURNED IN RESPECT OF 11 COMPANIES. POST APPELLATE ORDER, THE ASSESSEE HAD ISSUED NOTICES OF CONFIRMATION TO ALL SUCH 11 COMPANIES AS PER DETAIL S GIVEN AT PAGE NO.1418 OF THE PAPER BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 54 BOOK. WE FIND THAT POST PASSING OF THE APPELLATE OR DERS, THE SIMILAR EXERCISE WAS ALSO MADE BY THE OTHER COMPANIES OF THE BCC GROUP AND IN ALL THE CASES, THE NOTICES DULY GOT SERVED AND ACKNOWLEDGED TO THE CONCERNING SHARE APPLICANT COMPANIES. 20. WE ALSO FIND THAT NECESSARY ACKNOWLEDGEMENT/CON FIRMATION FROM THE POSTAL AUTHORITIES, EVIDENCING SERVICING OF LETTERS BY THE ASSESSEE/GROUP COMPANIES HAVE ALSO BEEN FILED BY THE ASSESSEE AT PAGE NOS. 1419 TO 144 8 OF THE PAPER BOOK. ACCORDING TO THE LD. AR OF THE ASSESSEE, THE SERVICING OF SUCH N OTICES SPEAK IN VOLUME REGARDING THE PHYSICAL EXISTENCE OF SUCH COMPANIES AND THERE CANN OT BE ANY DOUBT FOR HOLDING ANY ADVERSE VIEW AGAINST THE ASSESSEE CO. AS REGARD TO THE PHYSICAL EXISTENCE OF THE OFFICES OF THE SHARE APPLICANT COMPANIES. WE ALSO FIND THAT THE ASSESSEE GROUP HAD ALSO MADE COMMUNICATION TO THE SHARE APPLICANT COMPANIES BY W AY OF SENDING LETTER THROUGH REGISTERED A.D./U.P.C. AND SUCH LETTERS HAD GOT DUL Y SERVED UPON SUCH SHARE APPLICANT COMPANIES AS PER THE COPIES OF THE ACKNOWLEDGEMENTS SIGNED BY THE RECIPIENT SHARE APPLICANT COMPANIES PLACED AT PAGE NOS. 1581 TO 161 4 OF THE PAPER BOOK. 21. WE FURTHER FIND THAT EVEN IN CASE OF SOME OF TH E SHARE APPLICANT COMPANIES, ASSESSMENT ORDERS HAVE BEEN PASSED BY THE I.T. DEPA RTMENT ITSELF UNDER THE PROVISIONS OF SEC. 153C OF THE ACT AS PER THE COPIES OF THE AS SESSMENT ORDERS PLACED AT PAGE NOS. 1449 TO 1563 OF THE PAPER BOOK AND IN RESPECT OF SO ME OTHER COMPANIES NOTICES ISSUED BY THE I.T. DEPARTMENT U/S 153C AND U/S 148 HAVE GO T DULY SERVED AS IS EVIDENT FROM THE COPIES SUCH NOTICES PLACED AT PAGE NOS. 1564 TO 1569 OF THE PAPER BOOK. IN RESPECT OF SOME OF THE SHARE APPLICANT COMPANIES, EVEN APPE LLATE ORDERS HAVE BEEN PASSED BY THE COORDINATE BENCHES OF THE ITAT AS WELL AS CUSTO M, EXCISE & GOLD TRIBUNAL. COPIES OF SUCH ORDERS HAVE BEEN PLACED AT PAGE NOS.1627 TO 1646 OF THE PAPER BOOK. FURTHER, IN RESPECT OF ONE SHARE APPLICANT CO., THE I.T. DEP ARTMENT HAS BEEN FOUND TO HAVE ISSUED A NOTICE TO THE ASSESSEE CO. FOR MAKING RECO VERIES OF DUES AGAINST SUCH SHARE APPLICANT COMPANY. A COPY OF A RECOVERY LETTER HAS BEEN FILED AT PAGE NO.1649 OF THE PAPER BOOK BY THE ASSESSEE. WE FIND MERIT IN THE CO NTENTION OF THE LD. AR OF THE ASSESSEE THAT HAD THE SHARE APPLICANT COMPANIES NOT BEEN IN EXISTENCE, AS ALLEGED BY THE ASSESSING OFFICER, THERE COULD NOT HAVE BEEN PA SSED ANY ASSESSMENT ORDER OR APPELLATE ORDER OR RECOVERY ORDER AGAINST SUCH COMP ANIES. THE DOCUMENTS EVIDENCING PASSING OF SUCH ORDERS AUTOMATICALLY PROVE THE EXIS TENCE OF SHARE APPLICANT COMPANIES. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 55 22. WE ARE OF THE VIEW THAT ACKNOWLEDGEMENT GIVEN B Y THE POSTAL AUTHORITIES, ASSESSMENT ORDERS ISSUED BY THE I.T. DEPARTMENT IN THE CASE OF THE SHARE APPLICANT COMPANIES, NOTICES ISSUED BY THE I.T. DEPARTMENT IN THE CASE OF THE SHARE APPLICANT COMPANIES, ETC. REQUIRE NO FURTHER DETAILED INVESTI GATION AND EVEN IF SUCH DOCUMENTS ARE NOT TECHNICALLY ADMITTED AS ADDITIONAL EVIDENCE , AT THIS STAGE, THEIR REFERRAL VALUE CANNOT BE BRUSHED ASIDE ALTOGETHER. 23. WE FIND THAT NEITHER THE AUTHORITIES BELOW NOR THE LD. DRS HAVE POINTED OUT ANY DISCREPANCY OR DEFECT IN THE VARIOUS DOCUMENTARY EV IDENCES FILED BY THE ASSESSEE FOR ESTABLISHING THE IDENTITY OF THE SHARE APPLICANT CO MPANIES. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER HAD ASKED THE ASSESSEE TO PRODUCE DIRECTORS OF SOME OF THE SHARE APPLICANT CO MPANIES ON SAMPLE BASIS AND IN COMPLIANCE THEREOF, THE ASSESSEE PRODUCED TWO AUTHO RIZED PERSONS OF THREE SHARE APPLICANT COMPANIES AND THEIR STATEMENTS WERE RECOR DED BY THE ASSESSING OFFICER U/S 131 OF THE ACT AND SUCH PERSONS HAD CONFIRMED THE I NVESTMENT BY THEIR RESPECTIVE COS. IN THE BCC GROUP COMPANIES. WE ALSO FIND THAT THE A SSESSING OFFICER HAD DIRECTLY PROCURED BANK STATEMENTS OF THE SHARE APPLICANT COM PANIES FROM THEIR RESPECTIVE BANKERS. HAD THE COMPANIES NOT BEEN INTO EXISTENCE THERE WOULD NOT HAVE BEEN ANY QUESTION OF EXISTENCE OF EVEN THEIR BANKERS AND, CO NSEQUENTLY, OF THEIR BANK STATEMENTS. WE ALSO FIND THAT OUT OF THE 47 NOTICES ISSUED BY T HE ASSESSING OFFICER U/S 133(6) OF THE ACT, 19 NOTICES HAD GOT SERVED TO VARIOUS SHARE APP LICANT COMPANIES. WE FIND FORCE IN THE CONTENTION OF THE LD. AR OF THE ASSESSEE THAT T HE ONLY REASON FOR NON-SERVICING OF THE REMAINING 28 NOTICES WAS THAT SUCH NOTICES WERE SEN T ON THE OLD ADDRESSES. WE FIND THAT THE FACT REGARDING UNSERVED NOTICES WAS BROUGH T TO THE NOTICE OF THE ASSESSEE AND GROUP COMPANIES ONLY THROUGH THE SHOW-CAUSE NOTICE DATED 19.12.2009 I.E. AT THE FAG END WHEN THE ASSESSMENT PROCEEDINGS WERE GETTING BA RRED BY TIME, ON 31.12.2009. WE FIND THAT DESPITE SUCH THE ASSESSEE FURNISHED CORRE CT ADDRESSES BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 24.12.2009. WE ALSO FIND THAT BEFORE THE FIRST APPELLATE AUTHORITY TOO, THE ASSESSEE AND GROUP COMPANIES HAD MADE A RE QUEST FOR ISSUANCE OF SUMMONS U/S 131/NOTICES U/S 133(6) OF THE ACT AT THE NEW AN D CORRECT ADDRESSES BUT SUCH A REQUEST OF THE ASSESSEE AND GROUP COMPANIES WAS NOT ACCEDED TO. IN SUCH CIRCUMSTANCES, THE ASSESSEE AND GROUP COMPANIES, AT THEIR OWN, VENTURED INTO BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 56 RECONFIRMATION OF ADDRESSES AND TRANSACTIONS OF SHA RE APPLICANT COMPANIES AND COULD SUCCESSFULLY BE ABLE TO PROCURE THEIR CONFIRMATION LETTERS. THE ASSESSEE AND GROUP COMPANIES COULD ALSO BE ABLE TO DEMONSTRATE THE EXI STENCE OF SUCH COMPANIES BY PRODUCING COPIES OF ACKNOWLEDGEMENT DULY SINGED BY THE SHARE APPLICANT COMPANIES AND BEARING THE STAMPS OF POSTAL AUTHORITIES. THE G ENUINENESS OF THESE ACKNOWLEDGEMENTS HAS NOT BEEN DOUBTED BY THE LD. DR S. 24. IN NUTSHELL, IN OUR CONSIDERED VIEW, THE ASSESS EE AND OTHER COMPANIES OF THE BCC GROUP HAVE DISCHARGED THEIR INITIAL BURDEN OF E STABLISHING THE IDENTITY OF THE SHARE APPLICANT COMPANIES BY AMPLE OF EVIDENCES VIZ. (I) THE VARIOUS DOCUMENTARY EVIDENCES SEIZED DURING THE COURSE OF SEARCH ITSELF SUCH AS, COPIES OF MEMORANDUM & ARTICLES OF ASSOCIATION OF SHARE APPLICANT COMPANIES, COPIES OF CERTIFICATE OF INCORPORATION OF SHARE APPLICANT COMPANIES, COPIES OF MASTER DATA OF SHARE APPLICANT COMPANIES DOWNLOADED FROM OFFICIAL WEBSITE OF MCA, COPIES OF BANK STATEM ENTS, COPIES OF CERTIFICATE OF REGISTRATION GRANTED BY R.B.I. TO SOME OF NBFC SHAR E APPLICANT COMPANIES, (II) PRODUCTION OF AUTHORIZED PERSONS OF THREE COMPANIES BEFORE THE ASSESSING OFFICER AND RECORDING OF THEIR STATEMENT BY THE ASSESSING OFFIC ER, (III) PROCUREMENT OF BANK STATEMENTS OF SHARE APPLICANT COMPANIES BY THE ASSE SSING OFFICER DIRECTLY FROM THE BANKERS OF SHARE APPLICANT COMPANIES, (IV) SERVICIN G OF NOTICES U/S 133(6) OF THE ACT TO SOME OF THE SHARE APPLICANT COMPANIES TO WHOM THE N OTICES WERE SENT AT CORRECT ADDRESS, (V) FURNISHING OF NEW ADDRESSES OF THE SHA RE APPLICANT COMPANIES TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, (VI) ACKNOWLEDGEMENT BEARING THE STAMPS OF POSTAL AUTHORITIES IN EVIDENC E OF SERVICING OF LETTERS TO SHARE APPLICANT COMPANIES ALTHOUGH POST FIRST APPEAL, (VI I) COPIES OF ASSESSMENT ORDERS PASSED BY THE I.T. DEPARTMENT ITSELF U/S 153A/153C IN THE CASE OF SOME OF THE SHARE APPLICANT COMPANIES, (VIII) COPIES OF RECOVERY NOTI CES SERVED BY AN I.T. AUTHORITY UPON THE ASSESSEE FOR RECOVERING CERTAIN DUES OUTSTANDIN G AGAINST ONE OF THE SHARE APPLICANT COMPANIES AND (IX) COPIES OF THE APPELLATE ORDERS P ASSED Y THE ITAT/CUSTOM TRIBUNALS. 25. WE ALSO FIND THAT THE ASSESSEE AND GROUP COMPAN IES COULD NOT ONLY BE ABLE TO DISCHARGE THEIR BURDEN FOR ESTABLISHING THE IDENTIT Y OF THE SHARE APPLICANT COMPANIES BEFORE THE ASSESSING OFFICER BUT THEY HAD ALSO DISC HARGED THEIR INITIAL ONUS OF PROVING THE GENUINENESS OF THE TRANSACTIONS OF CAPITAL/SHAR E PREMIUM. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 57 26. WE FURTHER FIND THAT DURING THE COURSE OF SEARC H PROCEEDINGS ITSELF, THE ORIGINAL COPIES OF THE SHARE APPLICATION FORMS DULY SIGNED B Y SUCH SHARE APPLICANT COMPANIES WHERE FOUND AND SEIZED. WE ARE OF THE VIEW THAT FIN DING OF SUCH DOCUMENTS DURING THE COURSE OF SEARCH DISPEL ANY DOUBT AS REGARD TO COOK ING OF THE DOCUMENTS SUBSEQUENTLY FOR EXPLAINING THE CREDITS MADE IN THE REGULAR BOOK S OF ACCOUNTS. WE FIND THAT ALL SUCH APPLICATION FORMS WERE DULY FILLED UP, SIGNED AND S UPPORTED BY THE NECESSARY KYC DOCUMENTS. 27. MOREOVER, WE FIND THAT THE ASSESSEE HAD ACCEPTE D THE SHARE APPLICATION MONEY ONLY FROM THE COMPANIES WHICH ARE DULY REGISTERED U NDER THE COMPANIES ACT, 1956. WE FIND THAT SOME COMPANIES WERE ALSO GRANTED LICENSE BY THE R.B.I. FOR CARRYING OUT THE BUSINESS OF NBFCS. FURTHER, SOME COMPANIES WERE DUL Y LISTED IN THE BSE STOCK EXCHANGE. ALL THESE COS. WERE ALSO HAVING PANS AND THEY WERE FILING THEIR RESPECTIVE I.T. RETURNS. 28. WE FIND THAT THE ASSESSEE HAD ACCEPTED THE ENTI RE SHARE APPLICATION MONEY THROUGH ACCOUNT PAYEE CHEQUES/DRAFTS/RTGS OR OTHER BANKING CHANNELS. WE FIND THAT NO SUM WAS TAKEN BY THE ASSESSEE/GROUP COMPANIES IN FORM OF CASH TOWARDS SHARE APPLICATION MONEY. THE ENTIRE PROCEEDS WERE DULY DE POSITED IN THE BANK ACCOUNTS OF THE ASSESSEE/GROUP COS. THE ASSESSING OFFICER/LEARNED C IT(A) HAS NOT CONTRAVENED SUCH FACT. 29. WE ARE ALSO OF THE VIEW THAT THE GENUINENESS OF THE TRANSACTIONS IS FURTHER FORTIFIED BY THE COPIES OF THE BANKS STATEMENTS OF THE SHARE APPLICANT COMPANIES DIRECTLY PROCURED BY THE ASSESSING OFFICER BY WAY OF ISSUANC E OF NOTICES U/S 133(6) OF THE ACT. WE FIND THAT THE TRANSACTIONS OF SHARE APPLICATION ARE GETTING REFLECTED IN THE BANK ACCOUNTS OF THESE SHARE APPLICANT COMPANIES AS WELL . 30. WE ALSO FIND THAT SOME OF THE SHARE APPLICANT C OMPANIES HAVE DULY CONFIRMED THE TRANSACTIONS OF MAKING INVESTMENT BY THEM IN TH E ASSESSEE CO. EITHER MAKING THEIR PERSONAL APPEARANCE BEFORE THE ASSESSING OFFICER OR BY WAY OF RESPONDING THE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 133(6) OF THE A CT. WE FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY SINGLE CASE ON RECORD IN WHICH ANY OF THE SHARE APPLICANT COMPANIES HAVE MADE DENIAL OF MAKING INVESTMENT IN THE ASSESSEE/BCC GROUP COMPANIES IN CONTRAST TO THE CLAIM OF THE BCC GROUP . BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 58 31. WE ALSO FIND THAT IN THE AUDITED FINANCIAL STAT EMENTS OF MANY OF THE SHARE APPLICANT COMPANIES, THE INVESTMENT BY THEM IN THE ASSESSEE/GROUP COMPANIES, IS GETTING CLEARLY REFLECTED. 32. WE ALSO FIND THAT DURING THE COURSE OF THE ENTI RE SEARCH PROCEEDINGS, NOT EVEN A SINGLE INCRIMINATING PAPER WAS FOUND FROM WHICH IT COULD HAVE BEEN ESTABLISHED THAT THE SHARE CAPITAL TRANSACTIONS CLAIMED BY THE ASSESSEE/ GROUP COMPANIES, ARE NOT GENUINE OR THE FUNDS IN FORM OF SHARE CAPITAL WERE INFUSED BY THE ASSESSEE/GROUP COMPANIES THEMSELVES. THERE IS NO SINGLE EVIDENCE THAT THE AS SESSEE CO. OR ANYONE ELSE PROVIDED FUNDS IN CASH TO THE SHARE APPLICANT COMPANIES FOR MAKING SUBJECT INVESTMENT THROUGH CHEQUES. 33. WE FIND THAT IT HAS BEEN JUDICIALLY PRONOUNCED BY MANY AUTHORITIES AND COURTS THAT WHERE THE ENTRY FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF AN ASSESSEE CO. RELATES TO THE ACCEPTANCE OF SHARE CAPITAL, THE CO. IS REQU IRED ONLY TO EXPLAIN THE IDENTITY OF THE SHARE APPLICANT COMPANIES AND GENUINENESS OF THE TR ANSACTIONS FOR DISCHARGING THE BURDEN LAID DOWN U/S 68 OF THE ACT. HOWEVER, IN THE INSTANT CASE, WE ARE OF THE VIEW THAT THE ASSESSEE AND THE GROUP COS. BESIDES ESTABLISHIN G THE IDENTITY OF THE SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTIONS COUL D ALSO BE ABLE TO DISCHARGE THEIR RESPECTIVE BURDEN OF ESTABLISHING THE CREDIT WORTHI NESS OF THE SHARE APPLICANT COMPANIES. 34. WE FIND THAT IN SOME OF THE CASES, THE CREDIT W ORTHINESS OF THE SHARE APPLICANT COMPANIES IS EVIDENT FROM THE COPIES OF THE AUDITED FINANCIAL STATEMENTS OF THE SHARE APPLICANT COMPANIES AS WERE SEIZED/FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WE FIND THAT EVEN THE ASSESSING OFFICER, AT PAGE NO .10 OF THE ASSESSMENT ORDER, HAS MADE AN ANALYSIS OF THE NET WORTH OF SOME OF THE SH ARE APPLICANT COMPANIES. 35. WE FIND THAT ACCORDING TO THE ASSESSING OFFICER , THE BALANCE-SHEETS OF SOME OF THE COMPANIES WERE NOT PRODUCED. BUT, WE ARE IN THE AGREEMENT OF THE SUBMISSION OF THE LD. AR OF THE ASSESSEE THAT ALL THE SHARE APPLI CANTS BEING COMPANIES, HAD FILED THEIR RESPECTIVE AUDITED BALANCE-SHEETS AND OTHER FINANCI AL STATEMENTS BEFORE THE CONCERNING REGISTRAR OF COMPANIES IN ACCORDANCE WITH THE PROVI SIONS OF THE COMPANIES ACT, 1956 AND THE BALANCE-SHEET OF A CO. IS CONSIDERED TO BE A PUBLIC DOCUMENT WHICH CAN BE ACCESSED BY ANY PERSON. IN SUCH SITUATION, THE BALA NCE-SHEET OF THE SHARE APPLICANT BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 59 COMPANIES, BEING IN THE PUBLIC DOMAIN, COULD HAVE B EEN ACCESSED TO BY THE ASSESSING OFFICER HIMSELF, IF HE WOULD HAVE SO DESIRED. 36. WE FIND THAT ALL THE SHARE APPLICANT COMPANIES ARE REGULARLY ASSESSED TO TAX AND SUCH COMPANIES ARE HAVING THEIR INDEPENDENT SOURCES OF INCOME. SUCH FACT IS EVIDENT FROM THE COPIES OF I.T. RETURNS OF THE SHARE APPLIC ANT COMPANIES FILED IN THE PAPER BOOK. 37. WE FIND FROM THE PERUSAL OF THE COPIES OF THE B ANK STATEMENTS OF THE SHARE APPLICANT COMPANIES THAT ALL THE SHARE APPLICANT CO MPANIES WERE HAVING SUFFICIENT FUNDS IN THEIR RESPECTIVE BANK ACCOUNTS BEFORE ISSUANCE O F CHEQUES TOWARDS SHARE CAP;ITAL TRANSACTIONS IN FAVOUR OF THE ASSESSEE/GROUP COMPAN IES. EXCEPT ONE OR TWO CASES OF A SMALL CASH DEPOSITS, IN NONE OF THE BANK ACCOUNTS O F THE SHARE APPLICANTS, ANY CASH, IMMEDIATELY BEFORE ISSUANCE OF CHEQUE BY THEM IN FA VOUR OF THE ASSESSEE CO., WAS FOUND DEPOSITED. WE FIND FORCE IN THE CONTENTION OF THE LD. AR OF THE ASSESSEE THAT THE FINDING OF THE ASSESSING OFFICER TO THE EFFECT THAT IN SOME OF THE CASES, CASH WAS FOUND DEPOSITED IN THE BANK ACCOUNTS OF THIRD PARTIES WHO ISSUED CHEQUES IN FAVOUR OF THE SHARE APPLICANT COMPANIES COULD NOT BE LOOKED AGAIN ST THE ASSESSEE/GROUP COMPANIES FOR THE REASON THAT (I) FIRST OF ALL THE SO CALLED FINDING OF THE ASSESSING OFFICER WAS NOT FACTUALLY CORRECT (II) IN MANY OF THE CASES, THE TH IRD PARTIES, IN WHOSE BANK ACCOUNTS CASH WAS FOUND DEPOSITED BY THE ASSESSING OFFICER, HAD N OT CARRIED OUT ANY TRANSACTION EITHER WITH THE ASSESSEE OR WITH THE SHARE APPLICANT COMPA NIES (III) IN MANY OF THE CASES, THERE WAS NO CORRELATION OF THE DEPOSIT OF CASH BY THE TH IRD PARTY IN THEIR OWN BANK ACCOUNTS WITH THE CHEQUES ISSUED BY THE SHARE APPLICANT COMP ANIES IN FAVOUR OF THE ASSESSEE. IN SUPPORT OF HIS ARGUMENTS, THE LD. AR OF THE ASSESSE E ALSO RELIED ON THE DECISION IN THE CASE OF ADDL. CIT VS. SUPERTECH DIAMOND TOOLS P. LT D. (2012) 146 TTJ 596 (JD.). 38. WE FIND THAT IN THE ASSESSMENT ORDER, THE ASSES SING OFFICER HAS ALSO MADE REFERENCE OF ISSUANCE OF COMMISSION U/S 131(1)(D) O F THE ACT TO THE ADDL. DIRECTOR OF INCOME TAX (INV.), KOLKATA, TO MAKE ENQUIRY OF TEN INDIVIDUAL PERSONS WHO HAD GIVEN FUNDS TO THE SHARE APPLICANT COMPANIES. THE ADDL. D IT REPORTED THAT OUT OF THESE TEN PERSONS, HE ISSUED SUMMONS TO FIVE PERSONS AND OUT OF THESE FIVE PERSONS, SUMMONS ISSUED IN THE NAMES OF THREE PERSONS GOT UNSERVED. HOWEVER, WE FIND THAT NO COMMISSION WAS ISSUED FOR MAKING ANY ENQUIRY OF ANY SHARE APPLICANT COMPANIES. IN OUR VIEW, EVEN IF SOME OF THE PERSONS WHO MADE AVAI LABLE FUNDS TO THE SHARE APPLICANT BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 60 COMPANIES WERE NOT FOUND, IT CANNOT BE VIEWED ADVER SELY AGAINST THE BCC GROUP COMPANIES AS THE GROUP COMPANIES WERE NOT HAVING CO NTROL OVER THE PERSONS WHO WERE NOT FOUND BY THE AUTHORITIES AT KOLKATA. 39. WE FIND THAT IN THE INSTANT CASE, THE ASSESSING OFFICER AND LEARNED CIT(A) HAVE PLACED HEAVY RELIANCE ON THE FACT THAT THE SHARES W HICH WERE SUBSCRIBED BY THE SHARE APPLICANTS WERE EITHER FORFEITED BY THE BCC GROUP C OMPANIES OR SUBSEQUENTLY PURCHASED BY SOME THIRD PARTIES AT A VERY LOW PRICE AND IN TURN, SUCH THIRD PARTIES HAD SOLD SHARES TO SOME OF THE GROUP ASSESSEES. 40. WE FIND MERIT IN THE CONTENTION OF THE LD. AR O F THE ASSESSEE THAT IN THE INSTANT CASE, THE ADDITIONS HAVE BEEN MADE BY INVOKING THE PROVISIONS OF SEC. 68 OF THE ACT WHICH CONTEMPLATES A DEEMING ADDITION IN THE HANDS OF AN ASSESSEE IN WHOSE BOOKS OF ACCOUNTS ANY SUM IS FOUND CREDITED WHICH REMAINS UN EXPLAINED TO THE SATISFACTION OF THE ASSESSING OFFICER. FROM A PLAIN READING OF THE PROV ISIONS OF THE ACT, IT BECOMES EVIDENT THAT THE ADDITION DEPENDS UPON THE NATURE OF THE CR EDIT ENTRY WHEN IT WAS MADE AND ANY SUBSEQUENT DEVELOPMENT OR TRANSACTION MADE IN RESPE CT OF SUCH ENTRY CANNOT ALTER OR DETERMINE THE TAXABILITY OF SUCH CREDIT. IT WAS FUR THER SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT FIRST OF ALL, THE TRANSACTIONS OF SUB SEQUENT SALE OF SHARES HAD TAKEN PLACE IN OTHER ASSESSMENT YEARS AND, THEREFORE, FOR ADJUD GING THE CORRECTNESS OF ADDITION MADE IN THE ASSESSMENT YEARS UNDER CONSIDERATION, S UCH TRANSACTIONS CANNOT BE TAKEN INTO CONSIDERATION. IT WAS ALSO SUBMITTED THAT SUCH SALE TRANSACTIONS HAD TAKEN PLACED BETWEEN THE SHARE APPLICANTS AND SOME OTHER INDIVID UALS AND THE ASSESSEE CO. WAS NOT A PARTY TO SUCH TRANSACTIONS. IN SUCH EVENT, NO ADV ERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE CO. 41. WE FIND THAT IN THE SIMILAR CIRCUMSTANCES, THIS VERY BENCH IN THE CASE OF M/S. ANANT STEEL LTD. VS. ACIT [IT(SS)A NOS.31,28,29 AND 30/IND/2010, ORDER DATED 18.11.2015] HAS HELD THAT PURCHASE OF SHARES BY THE DIRECTORS AND THEIR FAMILY MEMBERS IN SUBSEQUENT ASSESSMENT YEAR CANNOT BE A YARDSTICK TO ADJUDGE THE GENUINENESS OF THE TRANSACTION IN THE HANDS OF THE ASSESSEE CO. TH E RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUNDER: 7..THE LD CIT(A) WHILE MAINTAINING THE ADDITIO N, HEAVILY RELIED ON THE BUYBACK OF THE SHARES BY THE DIRECTORS AND HIS OTHE R FAMILY MEMBERS ON SINGLE DATE I.E ON 25-08-2005. THE PURCHASE OF SHARES BY T HE DIRECTORS AND HIS OTHER BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 61 FAMILY MEMBERS AND THAT TOO IN THE PREVIOUS YEAR RE LEVANT TO THE AY 2006-07. HERE, IT IS TO BE NOTED THAT THE ASSESSEE COMPANY H AD NOT PURCHASED ANY SHARES. THAT PURCHASE OF THE SHARES BY THE DIFFERENT FAMILY MEMBERS AGAIN PROVED THE IDENTITY OF THE SHAREHOLDERS. HENCE, IN ANY CASE, A DDITION TO THE INCOME OF THE ASSESSEE WAS NOT JUSTIFIED. IF THE LD. CIT(A) WAS O F THE OPINION THAT SHARES WERE PURCHASED AT VERY LOW PRICE IN THAT CASE, NECESSARY ADDITION IS TO BE MADE IN THE HAND OF THE DIRECTORS AND OTHER FAMILY MEMBERS UNDE R THE I.T. ACT BUT NOT IN THE CASE OF THE APPELLANT COMPANY. IN THE PRESENT APPEA L, SINCE THE ASSESSEE HAS DISCHARGED ITS ONUS BY PROVING THE IDENTITY OF SUBS CRIBERS AND EVEN OTHERWISE HAD ANY SUSPICION STILL REMAINED IN HIS MIND, NOTHI NG PREVENTED HIM TO INITIATE ACTION AS PER THE PROVISIONS OF THE ACT... 42. WE FIND THAT IN SOME OF THE CASES, ORIGINAL ASS ESSMENTS U/S 143(3) OF THE I.T. ACT WERE FRAMED UPON THE VARIOUS COMPANIES OF THE BCC G ROUP MUCH PRIOR TO THE SEARCH AND DURING THE COURSE OF SUCH ASSESSMENT PROCEEDING S, NECESSARY ENQUIRIES HAD ALREADY BEEN CONDUCTED IN RESPECT OF SHARE CAPITAL/ SHARE PREMIUM AMOUNT AND NOT ADDITION WAS MADE. COPIES OF THE ASSESSMENT ORDERS FRAMED U/S 143(3) OF THE ACT HAVE BEEN FILED BY THE ASSESSEE/GROUP COMPANIES IN THE P APER BOOK. WE FIND THAT DURING THE COURSE OF SEARCH PROCEEDINGS, NO ADVERSE MATERIAL, FROM WHICH THE FINDINGS GIVEN IN THE ORIGINAL ASSESSMENT PROCEEDINGS COULD HAVE BEEN DIS TURBED, HAVE BEEN FOUND. WE ARE OF THE CONSIDERED OPINION THAT ONCE IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE DEPARTMENT HAD ACCEPTED THE GENUINENESS OF THE SHAR E CAPITAL TRANSACTION, THERE STANDS NO REASON FOR THEM TO CHANGE THEIR VIEW MERE LY ON SURMISES AND EXTRANEOUS CONSIDERATIONS. 43. WE FIND THAT THE HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORTS P. LTD. (2008) 216 CTR 195 (SC) HELD THAT IF THE SHARE APPLICATION IS RECEIVED BY AN ASSESSEE AND SUCH ASSESSEE CO. FURNISHES THE NAME OF THE PERSONS WHO HAVE GIVEN THE SHARE APPLICATION MONEY THEN NO ADDITION CAN BE MADE IN T HE HANDS OF THE ASSESSEE CO. THE HON'BLE APEX COURT HAS WENT TO HOLD THAT EVEN IF TH E MONEY WAS RECEIVED FROM BOGUS SHAREHOLDERS, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE CO. WE FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT OF M.P. IN TH E CASE OF CIT VS. PEOPLES GENERAL HOSPITAL LTD. (2013) 356 ITR 65 (MP) RELYING UPON T HE DECISION OF HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORT (SUPRA) HAS GIVEN THE SAM E FINDINGS. THE HON'BLE JURISDICTIONAL HIGH COURT, AT PARA 16, HAS OBSERVED AS UNDER: BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 62 16. THE AFORESAID JUDGMENT HAS BEEN FOLLOWED BY ALL T HE COURTS AND THE JUDGMENTS RELIED ON BY THE APPELLANTS RELATES TO THE PERIOD PR IOR TO THE JUDGMENT IN LOVELY EXPORTS. AS THE APEX COURT HAS SPECIFICALLY HELD THAT IF THE I DENTITY OF THE PERSON PROVIDING SHARE APPLICATION MONEY IS ESTABLISHED THEN THE BURDEN WAS NO T ON THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE SAID PERSON. HOWEVER, THE DEP ARTMENT CAN PROCEED AGAINST THE SAID COMPANY IN ACCORDANCE WITH LAW. THE POSITION OF THE PRESENT CASE IS IDENTICAL. IT IS NOT THE CASE OF ANY OF THE PARTIES THAT M/S ALLIANCE INDUSTRIES LIMITED, SHARJAH IS A BOGUS COMPANY OR A NON-EXISTENT COMPANY AND THE AMOUNT WHI CH WAS SUBSCRIBED BY THE SAID COMPANY BY WAY OF SHARE SUBSCRIPTION WAS IN FACT THE MO NEY OF THE RESPONDENT ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAD ESTABLISHED T HE IDENTITY OF INVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AND IT WAS ESTABLI SHED THAT THE TRANSACTION WAS GENUINE THOUGH AS PER CONTENTION OF THE RESPONDENT TH E CREDITWORTHINESS OF THE CREDITOR WAS ALSO ESTABLISHED. IN THE PRESENT CASE, IN T HE LIGHT OF THE JUDGMENT OF LOVELY EXPORTS (P) LTD., WE HAVE TO SEE ONLY IN RESPECT OF TH E ESTABLISHMENT OF THE IDENTITY OF THE INVESTOR. THE DELHI HIGH COURT ALSO IN DIVINE LEA SING & FINANCE LTD. (SUPRA), CONSIDERING THE SIMILAR QUESTION HELD THAT THE ASSESSEE COMPANY HAVING RECEIVED SUBSCRIPTIONS TO THE PUBLIC/RIGHTS ISSUE THROUGH BANKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAREHOLDERS, NO ADDITION COUL D BE MADE UNDER SECTION 68 IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDI CATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART OF TH E SHARE CAPITAL REPRESENTED COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. THE SIMIL AR VIEW HAS BEEN TAKEN BY THE OTHER HIGH COURTS. 44. WE, IN THE CASE OF M/S. ANANT STEEL LTD. VS. AC IT [IT(SS)A NO.31, 28, 29 & 30/IND/2010, DATED 18.11.2015], HAVE ALREADY HELD T HAT ONCE THE CONFIRMATION LETTERS OF THE SHARE APPLICANTS ARE FILED, NO ADDITION CAN BE MADE ON ACCOUNT OF SHARE APPLICATION IN THE HANDS OF THE ASSESSEE CO. WE, AT PARA 7 HAVE GIVEN OUR RELEVANT FINDING, WHICH, FOR THE SAKE OF READY REFERENCE, IS REPRODUCED AS U NDER: THE EXISTENCE OF SUBSCRIBER TO SHARE APPLICATION I S NOT IN DOUBT AS THE ASSESSEE DULY FURNISHED THEIR NAMES, AGE, ADDRESS, DATE OF FILING THE APPLICATION, NO. OF SHARES FOR WHICH RESPECTIVE APP LICATION WERE MADE, AMOUNT GIVEN AND THE SOURCE OF INCOME OF THE APPLIC ANT. IN VIEW OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO JUSTIFICATION FOR MAKING THE IMPUGNED ADDITION BECAUSE ONCE THE EXIST ENCE OF THE INVESTORS/SHARE SUBSCRIBERS IS PROVED, ONUS SHIFTS ON THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPLICANTS ARE BOGU S OR THE IMPUGNED MONEY BELONGS TO THE ASSESSEE CO. ITSELF. ONCE THE CONFIRMATION LETTERS ARE FILED, NO ADDITION CAN BE MADE ON ACCOUNT OF SH ARE APPLICATION IN THE HANDS OF THE CO. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 63 45. WE, WHILE REACHING TO THE FINDING IN THE CASE O F ANANT STEEL (SUPRA), HAVE RELIED UPON EARLIER DECISION OF INDORE BENCH IN THE CASE O F STL EXTRUSION P. LTD. IN IT(SS)A NO.259, 260/IND/2008, DATED 10.5.2010. IN THAT CASE , THIS BENCH, AT PARA 7 HELD AS UNDER: IN THE PRESENT APPEAL, SINCE THE ASSESSEE HAS DISC HARGED ITS ONUS BY PROVING THE IDENTITY OF SUBSCRIBERS AND EVEN OTHERW ISE HAD ANY SUSPICION STILL REMAINED IN HIS MIND, NOTHING PREVENTED HIM T O INITIATE ACTION AS PER THE PROVISIONS OF THE ACT. THE EXISTENCE OF SUBSCRI BERS TO SHARE APPLICATION IS NOT IN DOUBT AS THE ASSESSEE DULY FURNISHED THEI R NAMES, AGE, ADDRESS, DATE OF FILING THE APPLICATION, NO. OF SHARES FOR W HICH RESPECTIVE APPLICATIONS WERE MADE, AMOUNT GIVEN AND THE SOURCE OF INCOME OF THE APPLICANT. IN VIEW OF THESE FACTS, WE ARE OF THE CO NSIDERED OPINION THAT THERE IS NO JUSTIFICATION FOR MAKING THE IMPUGNED A DDITION BECAUSE ONCE THE EXISTENCE OF THE INVESTOR/SHARE SUBSCRIBERS IS PROVE, ONUS SHIFTS ON THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPLICAN TS ARE BOGUS OR THE IMPUGNED MONEY BELONGS TO THE ASSESSEE CO. ITSELF. ONCE THE CONFIRMATION LETTERS ARE FILED, NO ADDITION CAN BE MADE ON ACCOUNT OF SHARE APPLICATION MONEY IN THE HANDS OF THE CO. OUR VIEW FINDS SUPPORT FROM THE DECISION IN SHRI BARKHA SYNTHETICS LTD. VS. ACIT, 1 55 TAXMAN 289 (RAJ). THE CASES LIKE CIT VS. G.P. INTERNATIONAL LTD., 229 CTR (P&&) 86, CIT VS. STELLER INVESTMENT LTD., 192 ITR 287 AND SOPHIA FIN ANCE LTD., 205 ITR 98 (DEL) SUPPORTS THE CASE OF THE ASSESSEE. 46. THE ABOVE ORDER OF THE INDORE BENCH HAS ALSO BE EN CONFIRMED BY THE HON'BLE JURISDICTIONAL HIGH COURT OF M.P. IN THE CASE OF CI T VS. STL EXTRUSIONS P. LTD., 53 DTR 97 (2011) (MP). THE HONBLE HIGH COURT WHILE RENDER ING ITS ORDER, HAS ALSO CONSIDERED ITS EARLIER ORDER IN THE CASE OF CIT VS. RATHI FINL EASE LTD., 212 CTR 429 (MP). 47. WE ALSO FIND THAT IN THE PRESENT CASE, THE RATI O LAID DOWN BY THE VARIOUS JUDICIAL AUTHORITIES AS RELIED UPON BY THE LD. AR OF THE ASS ESSEE ALSO APPLY. HOWEVER, FOR THE SAKE OF AVOIDING THE REPETITION, WE ARE NOT DISCUSS ING THOSE CASES HERE. 48. WE HAVE ALSO GONE THROUGH THE VARIOUS CASE-LAWS RELIED UPON BY THE LD. DRS, THE COPIES WHEREOF WERE FILED DURING THE COURSE OF HEAR ING. HOWEVER, WE FIND THAT THE FACTS BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 64 OF THE CASES RELIED UPON BY THE LD. DRS ARE DISTING UISHABLE ON FACTS FROM THAT OF THE ASSESSEE AND THE BCC GROUP COMPANIES. THE VARIOUS C ASE-LAWS RELIED UPON BY THE LD. DRS ARE DISCUSSED IN THE SUBSEQUENT PARAS. 49. WE FIND THAT IN THE CASE OF AGRAWAL COAL CORPN. P. LTD. VS. ADDL. CIT (2012) 19 TAXMAN.COM 209 (ITAT, INDORE), THE ASSESSEE WERE NO T FOUND IN EXISTENCE AT THE GIVEN ADDRESS AND FURTHER, DESPITE GIVEN DIRECTIONS BY TH E BENCH, THE ASSESSEE CO. WAS UNABLE TO PRODUCE THE DIRECTORS OF THE SHARE APPLIC ANT COMPANIES. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE WAS REQUIRED TO PRODUCE THE DIRECTORS OF SOME OF THE SHARE APPLICANT COMPANIES ON SAMPLE BASIS WHICH THE ASSES SEE COMPLIED WITH. 50. IN THE CASE OF ACIT VS. NARMADA EXTRUSION LTD. (2012) 19 ITJ 202 (INDORE TRIBUNAL), THE CASH CREDITS WERE IN THE FORM OF LOA NS AND ADVANCES AND THE LENDER CO. WAS FOUND TO BE INDULGED IN PROVIDING THE ACCOMMODA TION ENTRIES. HOWEVER, IN THE PRESENT CASE, THE CASH CREDIT IS IN THE NATURE OF S HARE CAPITAL AND NONE OF THE SHARE APPLICANT COMPANIES WERE FOUND TO BE INDULGED IN PR OVIDING ACCOMMODATION ENTRIES. 51. IN THE CASE OF SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC), THE ISSUE WAS ALTOGETHER DIFFERENT. IN THIS CASE, THE ISSUE WAS W HETHER THE ASSESSEES CLAIM REGARDING RECEIPT FROM WINNING HORSE RACES BE ACCEPTED OR NOT BASED UPON HUMAN PROBABILITIES. 52. IN THE CASE OF SHANKAR INDUSTRIES VS. CIT (1978 ) 114 ITR 690 (CAL), THE ISSUE WAS RELATING TO ACCEPTANCE OF LOAN AND IN THIS CASE , THE HONBLE HIGH COURT HELD THAT THE ASSESSEE WAS REQUIRED TO ESTABLISH THE IDENTITY OF CREDITOR, GENUINENESS OF THE LOAN TRANSACTION AND CREDIT WORTHINESS OF THE CREDITOR. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE COULD BE ABLE TO DISCHARGE TO MEET ALL THE SE THREE REQUIREMENTS. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 65 53. IN THE CASE OF SHRI BIJU PATNAIK, THE ISSUE WAS RELATED TO GENUINENESS OF THE DONATION BY A POLITICIAN FROM VARIOUS PERSONS. 54. IN THE CASE OF CIT VS. PRECISION FINANCE P. LTD . (1993) 121 CTR 20 (CAL), THE ENQUIRIES CONDUCTED THROUGH INSPECTORS REVEAL THAT INCOME-TAX FILES MENTIONED BY THE ASSESSEE DID NOT EXIST AND THE CREDITORS WERE NOT F OUND ON THE GIVEN ADDRESS. IN THE PRESENT CASE, IN NONE OF THE CASES, INCOME-TAX DETA ILS OF ANY OF THE SHARE APPLICANT COMPANIES WERE NOT DOUBTED. 55. THE CASE RELIED UPON BY THE LD. DRS AS CIT VS. PODAR CEMENT P. LTD., 226 ITR 625 (SC) RELATES TO THE DETERMINATION OF QUESTION O F OWNERSHIP FOR THE PURPOSE OF SEC. 22 OF THE ACT AND HAS NO REMOTEST RELEVANT WITH THE PRESENT GROUP CASES. 56. THE CASE CITED BY THE LD. DRS AS CIT VS. GOLD C OIL HEALTH FOOD P. LTD. (2008) 304 ITR 308 (SC) RELATES TO IMPOSITION OF PENALTY U /S 271(1) OF THE ACT WHICH APPARENTLY IS NOT AN ISSUE IN THE PRESENT APPEAL. 57. IN THE CASE OF CIT VS. NOVA PROMOTERS AND FINVE ST P. LTD. AS REPORTED IN (2012) 342 ITR 169, THE HONBLE DELHI HIGH COURT HAD OBSER VED THAT THE ASSESSING OFFICER HAD RECORDED STATEMENTS OF THE SHARE APPLICANTS. THE CO PIES OF SUCH STATEMENTS WERE PROVIDED TO THE ASSESSEE BUT THE ASSESSEE IN THAT C ASE FAILED TO REBUT THE ADVERSE STATEMENTS MADE BY THE SHARE APPLICANTS. IN THE PRE SENT CASE, WE FIND THAT IN NONE OF THE CASES ANY PERSON HAS DENIED TO HAVE ENTERED INT O SHARE TRANSACTION WITH THE BCC GROUP COMPANIES. 58. THE CASE OF ASHOK MAHENDRU & SONS VS. CIT (2008 ) 173 TAXMAN 178 RELATES TO THE ACCEPTANCE OF GIFT FROM A PERSON WHOSE CREDIT W ORTHINESS WAS DOUBTED. CERTAINLY, SUCH ISSUE IS NOT INVOLVED IN THE PRESENT CASE. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 66 59. IN CASE OF CIT VS. SOPHIA FINANCE LTD. (1994) 2 05 ITR 98 (FB), THE HONBLE DELHI HIGH COURT HAS OBSERVED THAT IF ON ENQUIRY, THE ITO FINDS THAT SHAREHOLDERS DO NOT EXIST SHARE APPLICATION MONEY CAN BE TREATED BY THE ITO A S UNEXPLAINED CASH CREDIT FOR PURPOSE OF ADDITION U/S 68. IN OUR VIEW, THERE IS N O QUARREL TO THE PROPOSITION THAT THE PROVISIONS OF SEC. 68 DO APPLY TO THE SHARE CAPITAL TRANSACTIONS AND AN ASSESSEE IS REQUIRED TO ESTABLISH THE IDENTITY OF THE SHAREHOLD ERS WHICH, IN OUR VIEW, IN THE PRESENT CASES, THE ASSESSEE AND THE GROUP COMPANIES HAVE ES TABLISHED BEYOND DOUBT. 60. FINALLY, IN THE CASE OF DURGA PD. MORE (1973) ( SC), THE ISSUE BEFORE THE HON'BLE APEX COURT WAS RELATED TO UNREALITY OF TRUST AND TH E FACTS ARE ALTOGETHER DIFFERENT FROM THOSE IN THE PRESENT CASE. 61. CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, VARIOUS DOCUMENTARY EVIDENCES PLACED ON THE RECORD, VARIOUS JUDICIAL PR ONOUNCEMENTS RELIED UPON BY BOTH THE SIDES, WE ARE OF THE VIEW THAT THE ASSESSEE AND OTHER COMPANIES OF THE BCC GROUP COULD VERY WELL DISCHARGED THEIR BURDEN OF ESTABLIS HING THE IDENTITY OF THE SHARE APPLICANT COMPANIES AS CONTEMPLATED UNDER THE PROVISIONS OF S EC. 68 OF THE I.T. ACT. WE, THUS FIND NO JUSTIFICATION IN THE ADDITION OF RS.2,92,00,000/ - MADE BY THE ASSESSING OFFICER IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED SHA RE CAPITAL/SHARE PREMIUM AND ON THE MERITS TOO, SUCH ADDITION IS DIRECTED TO BE DEL ETED. THIS GROUND OF APPEAL IS THUS ALLOWED EVEN ON MERIT. GROUND NO.4 62. THIS GROUND OF APPEAL IS DIRECTED AGAINST THE C HARGING OF INTEREST U/S 234A & 234B. WE FIND THAT CHARGING OF INTEREST IS CONSEQUE NTIAL IN NATURE, THEREFORE, SAME DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. SAME IS DISM ISSED. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 67 63. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ASSESSEES APPEAL NO. : IT(SS)A NO.105/IND/2011 A.Y . 2003-04 GROUND NOS. 1.1, 1.2 & 1.3 64. THESE GROUNDS ARE DIRECTED AGAINST THE AOS ACT ION OF MAKING ADDITIONS U/S 153A OF THE I.T. ACT ON THOSE ISSUES IN RESPECT OF WHICH NO INCRIMINATING MATERIAL WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH. 65. SHORT FACTS OF THE CASE ARE THAT THE AO HAS NOT GIVEN ANY SPECIFIC FINDING ON THE ISSUE. IN THE INSTANT CASE, THE AO HAS MADE ONLY ON E ADDITION OF RS.19,00,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE CAPITAL. FOR M AKING THE ADDITION, THE AO HAS TAKEN THE LEAD FROM THE AUDITED BALANCE SHEET OF TH E APPELLANT COMPANY WHICH IS EVIDENT FROM THE FIRST PARA ON PAGE NO.5 OF THE AS SESSMENT ORDER. 66. MATTER CARRIED TO LEARNED CIT(A), WHO HAS HELD THAT ADDITIONS AND DISALLOWANCES IN RESPECT OF VARIOUS ITEMS DULY RECORDED IN THE RE GULAR BOOKS OF ACCOUNT AND DULY DISCLOSED BEFORE THE DEPARTMENT CAN ALSO BE MADE EV EN WHEN NO INCRIMINATING DOCUMENT WAS FOUND OR SEIZED DURING THE COURSE OF T HE SEARCH. THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN WHILE ADJUDICATING THE APPEAL IN THE CASE OF ONE OF THE GROUP ASSESSEES NAMELY, SHRI AMANDEEP SINGH BHATIA, FOR A.Y. 2002-03. 67. THE LD. AR HAS MADE ORAL AND WRITTEN SUBMISSION S AS UNDER: IT IS SUBMITTED THAT FOR THESE GROUNDS, A DETAILED SUBMISSION HAS BEEN MADE IN THE CASE OF APPEAL OF ONE OTHER GROUP ASSES SEE NAMELY OF SHRI AMANDEEP SINGH BHATIA IN APPEAL NO. IT(SS)A-112/IND /2011 FOR A.Y. 2002-03 PENDING FOR ADJUDICATION BEFORE THIS HONBL E BENCH. SINCE, WHILE ADJUDICATING THE GROUNDS OF APPEAL RAISED BEFORE TH E CIT(A), THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN IN THE AFORE SAID CASE OF SHRI AMANDEEP SINGH BHATIA, OUR SUBMISSIONS MADE BEFORE THIS HONBLE BENCH IN THE CASE OF SHRI AMANDEEP SINGH BHATIA MAY KINDLY BE TAKEN INTO CONSIDERATION. 68. LD. DRS HAVE RELIED ON THE ORDERS OF THE REVENU E AUTHORITIES AND SUBMITTED THAT OUR ARGUMENTS ADVANCED IN THE CASE OF AMANDEEP SING H BHATIA ON IDENTICAL FACTS MAY BE TAKEN INTO CONSIDERATION. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 68 69. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED MATERIAL AVAILABLE ON RECORD. THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN IN THE CASE OF SHRI AMANDEEP SINGH BHATIA. WE FIND THAT THIS ISSUE HAS ALREADY BEEN DEALT WITH BY US IN THE CASE OF ONE OF THE GROUP ASSESSEES NAMELY, A MANDEEP SINGH BHATIA IN IT(SS)A NO.112/IND/2011 FOR A.Y. 2002-03, WHEREIN WE HAVE H ELD THAT IN ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITIONS IN NON-ABATED ASSESSMENT ORDERS WHILE PASSING THE ORDERS U/S 153A R.W.S. 143(3) OF THE AC T. THUS, WE QUASH THE PRESENT NON- ABATED ASSESSMENT ORDER FOR THE A.Y. 2003-04. ACCOR DINGLY, THIS ISSUE OF INCRIMINATING MATERIAL IN THE ASSESSEES APPEAL IT(SS)A NOS. 105/ IND/2011 IS ALLOWED. GROUND NO.2 70. THIS GROUND IS DIRECTED AGAINST THE CIT(A)S FI NDING OF UPHOLDING AOS ACTION OF PASSING THE ASSESSMENT ORDER ARBITRARILY WITHOUT GI VING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE LEARNED CIT(A) HAS DEALT WITH THIS GROUND AT PARA 5.2 OF PAGE NO. 64 OF HIS ORDER. ACCORDING TO THE CIT(A), THE ASSESSEE WAS GIVEN DUE OPPORTUNITY BY THE AO. BEFORE US, THE LD. AR FOR TH E ASSESSEE DID NOT PRESS THIS GROUND. THEREFORE, SAME IS DISMISSED BEING NOT PRESSED. GROUND NO. 3 71. THIS GROUND OF APPEAL IS DIRECTED AGAINST UPHOL DING THE ADDITION MADE BY THE AO AT RS.19,00,000/- ON ACCOUNT OF SHARE CAPITAL/SHARE APPLICATION/SHARE PREMIUM. 72. SHORT FACTS OF THE CASE ARE THAT THE AO HAS DEA LT WITH THIS ISSUE AT PAGE NO. 2 TO 74 OF HIS ORDER. THE AO, AT PAGE NO. 74 OF THE ORDE R, HAS HELD THE CAPITAL INTRODUCED BY THE APPELLANT COMPANY THROUGH PARTLY CONVERTIBLE SH ARES WERE NOT GENUINE AS THE APPELLANT COULD NOT ESTABLISH THE IDENTITY AND CRED ITWORTHINESS OF THE SHARE APPLICANT COMPANIES. THE AO MADE THE ADDITION BY INVOKING PRO VISIONS OF SECTION 68 OF THE ACT. THE MAIN GROUNDS TAKEN BY THE AO WERE : (I) HUGE SH ARE CAPITAL AND SHARE PREMIUM MONEY WERE RECEIVED BY THE APPELLANT AND OTHER GROU P COMPANIES DURING THE PERIODS UNDER ASSESSMENT; (II) IN RECENT YEARS, THE FIELD O FFICERS OF THE INCOME-TAX DEPARTMENT HAVE COME ACROSS TO A SITUATION IN WHICH CALCUTTA, MUMBAI AND SURAT BASED COMPANIES BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 69 ARE PROVIDING ACCOMMODATION ENTRIES TO INDORE BASED COMPANIES; (III) SHARE APPLICANT COMPANIES ARE VERY SYSTEMATICALLY ISSUING HUGE AMOU NTS OF CHEQUES TO EACH OTHER WITHOUT ANY COMMERCIAL SENSE; (IV) SHARE APPLICANT COMPANIES WERE INDULGED IN MONEY LAUNDERING ACTIVITIES; (V) BALANCE SHEET OF SOME SH ARE APPLICANT COMPANIES WERE NOT AVAILABLE; (VI) IN THE BANK ACCOUNTS OF THE SHARE A PPLICANT COMPANIES CALLED UNDER S.133(6) OF THE ACT, TRANSFER OF HUGE AMOUNT IN OTH ER ACCOUNTS THROUGH CHEQUES WERE FOUND AND IN SOME CASES, CASH DEPOSITS WERE MADE IN THE ACCOUNT OF THIRD PARTIES FROM WHOM CHEQUES WERE TAKEN; (VII) THE COPIES OF MEMORA NDUM & ARTICLES OF ASSOCIATION, CERTIFICATE OF INCORPORATION, BOARD RESOLUTION OF T HE SHARE APPLICANT COMPANIES WERE FOUND IN THE PREMISES OF THE GROUP; (VIII) MOST OF THE NOTICES ISSUED UNDER S.133(6) RETURNED UNSERVED; AND (IX) THE SHARES WERE ULTIMAT ELY REPURCHASED FROM THE SHARE APPLICANT COMPANIES BY THIRD PARTIES/ GROUP ASSESSE ES AT THE NOMINAL PRICE. 73. MATTER CARRIED TO LEARNED CIT(A), WHO HAS DEALT WITH THE ISSUE AT PARA 2.4.1, PAGE NO. 8 OF THE ORDER. THE CIT(A), AT PARA 2.4.1, HAS GIVEN A TABLE SHOWING VARIOUS GROUNDS RAISED BY THE ASSESSEE, THE ISSUE INVOLVED AND THE APPEAL OF THE ASSESSEE/GROUP ASSESSEE WHERE THE SUBJECT ISSUE HAS BEEN DISCUSSED BY HIM. ACCORDINGLY, THE CIT(A) DISMISSED THE LEGAL GROUND RAISED BY THE APPELLANT FOLLOWING HIS OWN FINDINGS GIVEN IN THE CASE OF M/S. BHATIA INTER NATIONAL LTD. FOR THE A.Y. 2002-03 IN APPEAL NO. IT-262/09-10. 74. THE LD. AR HAS MADE ORAL AND WRITTEN SUBMISSION S AS UNDER: IT IS SUBMITTED THAT FOR THIS GROUND, A DETAILED S UBMISSION HAS BEEN MADE IN THE CASE OF APPEAL OF ONE OTHER GROUP ASSESSEE N AMELY OF M/S. BHATIA INTERNATIONAL LTD. IN APPEAL NO. IT(SS)A-104/IND/20 11 FOR A.Y. 2002-03 PENDING FOR ADJUDICATION BEFORE THIS HONBLE BENCH. SINCE, WHILE ADJUDICATING THE GROUND OF APPEAL RAISED BEFORE THE CIT(A), THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN IN THE AFORESAID CASE OF M/S. BHATIA INTERNATIONAL LTD., OUR SUBMISSIONS MADE BEFORE THI S HONBLE BENCH IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. MAY KINDLY B E TAKEN INTO CONSIDERATION. RELEVANT DOCUMENTS FILED IN THE PAPER BOOK ON WHICH THE APPELLANT IS PLACING RELIANCE FOR THESE GROUNDS BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 70 PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 66 66 LIST OF SHARE APPLICANT COMPANIES GIVING THE DETAILS OF SHARE APPLICANT COMPANIES 138 255 SHARE APPLICATION FORMS, MOA/AOA, INCORPORATION CERTIFICATE, BOARD RESOLUTION, AUDITED FINANCIAL STATEMENTS, ITR, BANK CERTIFICATE REGARDING VERIFICATION OF SIGNATURE OF DIRECTOR OF SHARE APPLICANTS, CONFIRMATION LETTERS, MASTER DATA OF SHARE APPLICANTS DOWNLOADED FROM OFFICIAL WEBSITE OF MCA, LIST OF DIRECTORS, PAN, TAN, BANK STATEMENTS, CERTIFICATE OF REGISTRATION GRANTED BY RBI FOR NBFC ESTABLISHING IDENTITY AND CREDITWORTHINESS OF SHARE APPLICANTS ALONG WITH GENUINENESS OF THE TRANSACTIONS 75. LD. DRS RELIED ON THE ORDERS OF THE REVENUE AUT HORITIES AND SUBMITTED THAT OUR ARGUMENTS FOR THE ASSESSMENT YEAR 2002-03 MAY BE CO NSIDERED. 76. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WHILE ADJUDICATING THE ISSUE I N IT(SS)A NO.104/IND/2011 FOR THE ASSESSMENT YEAR 2002-03, WE HAVE HELD THAT THE ASSE SSEE COULD BE ABLE TO DISCHARGE THE BURDEN OF PROVING THE CASH CREDIT AS CONTEMPLAT ED U/S 68 OF THE ACT AND HAVE DIRECTED TO DELETE THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL/SHARE PREMIUM/ SHARE APPLICATION MONEY. WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL OF THE ASSESSEE ARE THE SAME WITH THAT OF THE BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 71 APPEAL FOR ASSESSMENT YEAR 2002-03 (SUPRA). THE ARG UMENT OF BOTH THE PARTIES ARE ALSO THE SAME AND THEREFORE, FOLLOWING OUR OWN FINDING G IVEN IN THE CASE OF ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 (SUPRA), WE DIRECT TO DELET E THE ADDITION OF RS.19,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE C APITAL/SHARE PREMIUM/ SHARE APPLICATION MONEY AND ALLOW THE GROUND NO.3 OF THE APPEAL OF THE ASSESSEE. GROUND NO. 4 77. THIS GROUND OF APPEAL IS DIRECTED AGAINST CHARG ING OF INTEREST UNDER S. 234A AND 234B. WE FIND THAT CHARGING OF INTEREST IS CONSEQUE NTIAL IN NATURE, THEREFORE, SAME DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. SAME IS DISM ISSED. 78. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ASSESSEES APPEAL IT(SS)A NO.106/IND/2011 A.Y. 2004 -05 GROUND NOS. 1.1, 1.2 & 1.3 79. THESE GROUNDS ARE DIRECTED AGAINST THE AOS ACT ION OF MAKING ADDITIONS ON THOSE ISSUES IN RESPECT OF WHICH NO INCRIMINATING M ATERIAL WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH. 80. SHORT FACTS OF THE CASE ARE THAT THE AO HAS NOT GIVEN ANY SPECIFIC FINDING ON THE ISSUE. IN THE INSTANT CASE, THE AO HAS MADE ONLY ON E ADDITION OF RS.11,59,00,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE CAPITAL. FOR M AKING THE ADDITION, THE AO HAS TAKEN THE LEAD FROM THE AUDITED BALANCE SHEET OF TH E APPELLANT COMPANY WHICH IS EVIDENT FROM THE FIRST PARA ON PAGE NO.5 OF THE ASS ESSMENT ORDER. 81. MATTER CARRIED TO LEARNED CIT(A), WHO HELD THAT ADDITIONS AND DISALLOWANCES IN RESPECT OF VARIOUS ITEMS DULY RECORDED IN THE REGUL AR BOOKS OF ACCOUNT AND DULY DISCLOSED BEFORE THE DEPARTMENT CAN ALSO BE MADE EV EN WHEN NO INCRIMINATING DOCUMENT WAS FOUND OR SEIZED DURING THE COURSE OF T HE SEARCH. THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN WHILE ADJUDICATING THE APPEAL IN THE CASE OF ONE OF THE GROUP ASSESSEES NAMELY, SHRI AMANDEEP SINGH BHATIA, FOR A.Y. 2002-03. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 72 82. THE LD. AR HAS MADE ORAL AND WRITTEN SUBMISSION S AS UNDER: IT IS SUBMITTED THAT FOR THESE GROUNDS, A DETAILED SUBMISSION HAS BEEN MADE IN THE CASE OF APPEAL OF ONE OTHER GROUP ASSES SEE NAMELY OF SHRI AMANDEEP SINGH BHATIA IN APPEAL NO. IT(SS)A-112/IND /2011 FOR A.Y. 2002-03 PENDING FOR ADJUDICATION BEFORE THIS HONBL E BENCH. SINCE, WHILE ADJUDICATING THE GROUNDS OF APPEAL RAISED BEFORE TH E CIT(A), THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN IN THE AFORE SAID CASE OF SHRI AMANDEEP SINGH BHATIA, OUR SUBMISSIONS MADE BEFORE THIS HONBLE BENCH IN THE CASE OF SHRI AMANDEEP SINGH BHATIA MAY KINDLY BE TAKEN INTO CONSIDERATION. 83. LD. DRS HAVE RELIED ON THE ORDERS OF THE REVENU E AUTHORITIES AND SUBMITTED THAT OUR ARGUMENTS ADVANCED IN THE CASE OF AMANDEEP SING H BHATIA ON IDENTICAL FACTS MAY BE TAKEN INTO CONSIDERATION. 84. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED MATERIAL AVAILABLE ON RECORD. THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN IN THE CASE OF SHRI AMANDEEP SINGH BHATIA. WE FIND THAT THIS ISSUE HAS ALREADY BEEN DEALT WITH BY US IN THE CASE OF ONE OF THE GROUP ASSESSEES NAMELY, A MANDEEP SINGH BHATIA IN IT(SS)A NO.112/IND/2011 FOR A.Y. 2002-03, WHEREIN WE HAVE H ELD THAT IN ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITIONS IN NON-ABATED ASSESSMENT ORDERS WHILE PASSING THE ORDERS U/S 153A R.W.S. 143(3) OF THE AC T. THUS, WE QUASH THE PRESENT NON- ABATED ASSESSMENT ORDER FOR THE A.Y. 2004-05. ACCOR DINGLY, THIS ISSUE OF INCRIMINATING MATERIAL IN THE ASSESSEES APPEAL IT(SS)A NO. 106/I ND/2011 IS ALLOWED. GROUND NO.2 85. THIS GROUND IS DIRECTED AGAINST THE CIT(A)S FI NDING OF UPHOLDING AOS ACTION OF PASSING THE ASSESSMENT ORDER ARBITRARILY WITHOUT GI VING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE LEARNED CIT(A) HAS DEALT WITH THIS GROUND AT PARA 5.2 OF PAGE NO. 64 OF HIS ORDER. ACCORDING TO THE CIT(A), THE ASSESSEE WAS GIVEN DUE OPPORTUNITY BY THE AO. BEFORE US, THE LD. AR FOR TH E ASSESSEE DID NOT PRESS THIS GROUND. THEREFORE, SAME IS DISMISSED BEING NOT PRESSED. GROUND NO. 3 BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 73 86. THIS GROUND OF APPEAL IS DIRECTED AGAINST UPHOL DING THE ADDITION MADE BY THE AO AT RS.11,59,00,000/- ON ACCOUNT OF SHARE CAPITAL/SH ARE APPLICATION/SHARE PREMIUM. 87. SHORT FACTS OF THE CASE ARE THAT THE AO HAS DEA LT WITH THIS ISSUE AT PAGE NO. 2 TO 94 OF HIS ORDER. THE AO, AT PAGE NO. 94 OF THE ORDE R, HAS HELD THE CAPITAL INTRODUCED BY THE APPELLANT COMPANY THROUGH PARTLY CONVERTIBLE SH ARES WERE NOT GENUINE AS THE APPELLANT COULD NOT ESTABLISH THE IDENTITY AND CRED ITWORTHINESS OF THE SHARE APPLICANT COMPANIES. THE AO MADE THE ADDITION BY INVOKING PRO VISIONS OF SECTION 68 OF THE ACT. THE MAIN GROUNDS TAKEN BY THE AO WERE : (I) HUGE SH ARE CAPITAL AND SHARE PREMIUM MONEY WERE RECEIVED BY THE APPELLANT AND OTHER GROU P COMPANIES DURING THE PERIODS UNDER ASSESSMENT; (II) IN RECENT YEARS, THE FIELD O FFICERS OF THE INCOME-TAX DEPARTMENT HAVE COME ACROSS TO A SITUATION IN WHICH CALCUTTA, MUMBAI AND SURAT BASED COMPANIES ARE PROVIDING ACCOMMODATION ENTRIES TO INDORE BASED COMPANIES; (III) SHARE APPLICANT COMPANIES ARE VERY SYSTEMATICALLY ISSUING HUGE AMOU NTS OF CHEQUES TO EACH OTHER WITHOUT ANY COMMERCIAL SENSE; (IV) SHARE APPLICANT COMPANIES WERE INDULGED IN MONEY LAUNDERING ACTIVITIES; (V) BALANCE SHEET OF SOME SH ARE APPLICANT COMPANIES WERE NOT AVAILABLE; (VI) IN THE BANK ACCOUNTS OF THE SHARE A PPLICANT COMPANIES CALLED UNDER S.133(6) OF THE ACT, TRANSFER OF HUGE AMOUNT IN OTH ER ACCOUNTS THROUGH CHEQUES WERE FOUND AND IN SOME CASES, CASH DEPOSITS WERE MADE IN THE ACCOUNT OF THIRD PARTIES FROM WHOM CHEQUES WERE TAKEN; (VII) THE COPIES OF MEMORA NDUM & ARTICLES OF ASSOCIATION, CERTIFICATE OF INCORPORATION, BOARD RESOLUTION OF T HE SHARE APPLICANT COMPANIES WERE FOUND IN THE PREMISES OF THE GROUP; (VIII) MOST OF THE NOTICES ISSUED UNDER S.133(6) RETURNED UNSERVED; AND (IX) THE SHARES WERE ULTIMAT ELY REPURCHASED FROM THE SHARE APPLICANT COMPANIES BY THIRD PARTIES/ GROUP ASSESSE ES AT THE NOMINAL PRICE. 88. MATTER CARRIED TO LEARNED CIT(A), WHO HAS DEALT WITH THE ISSUE AT PARA 2.4.1, PAGE NO. 8 OF THE ORDER. THE CIT(A), AT PARA 2.4.1, HAS GIVEN A TABLE SHOWING VARIOUS GROUNDS RAISED BY THE APPELLANT, THE ISSUE INVOLVED AND THE APPEAL OF THE APPELLANT/GROUP ASSESSEE WHERE THE SUBJECT ISSUE HA S BEEN DISCUSSED BY HIM. ACCORDINGLY, THE CIT(A) DISMISSED THE LEGAL GROUND RAISED BY THE APPELLANT FOLLOWING HIS OWN FINDINGS GIVEN IN THE CASE OF M/S. BHATIA INTER NATIONAL LTD. FOR THE A.Y. 2002-03 IN APPEAL NO. IT-262/09-10. BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 74 89. THE LD. AR HAS MADE ORAL AND WRITTEN SUBMISSION S AS UNDER: IT IS SUBMITTED THAT FOR THIS GROUND, A DETAILED S UBMISSION HAS BEEN MADE IN THE CASE OF APPEAL OF ONE OTHER GROUP ASSESSEE N AMELY OF M/S. BHATIA INTERNATIONAL LTD. IN APPEAL NO. IT(SS)A-104/IND/20 11 FOR A.Y. 2002-03 PENDING FOR ADJUDICATION BEFORE THIS HONBLE BENCH. SINCE, WHILE ADJUDICATING THE GROUND OF APPEAL RAISED BEFORE THE CIT(A), THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN IN THE AFORESAID CASE OF M/S. BHATIA INTERNATIONAL LTD., OUR SUBMISSIONS MADE BEFORE THI S HONBLE BENCH IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. MAY KINDLY B E TAKEN INTO CONSIDERATION. RELEVANT DOCUMENTS FILED IN THE PAPER BOOK ON WHICH THE APPELLANT IS PLACING RELIANCE FOR THESE GROUNDS PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 78 79 LIST OF SHARE APPLICANT COMPANIES GIVING THE DETAILS OF SHARE APPLICANT COMPANIES 157 938 SHARE APPLICATION FORMS, MOA/AOA, INCORPORATION CERTIFICATE, BOARD RESOLUTION, AUDITED FINANCIAL STATEMENTS, ITR, BANK CERTIFICATE REGARDING VERIFICATION OF SIGNATURE OF DIRECTOR OF SHARE APPLICANTS, CONFIRMATION LETTERS, MASTER DATA OF SHARE APPLICANTS DOWNLOADED FROM OFFICIAL WEBSITE OF MCA, LIST OF DIRECTORS, PAN, TAN, BANK STATEMENTS, CERTIFICATE OF REGISTRATION GRANTED BY RBI FOR NBFC ESTABLISHING IDENTITY AND CREDITWORTHINESS OF SHARE APPLICANTS ALONG WITH GENUINENESS OF THE TRANSACTIONS BHATIA INTERNATIONAL LTD. (SS)104 TO 106 OF 2011 75 90. LD. DRS RELIED ON THE ORDERS OF THE REVENUE AUT HORITIES AND SUBMITTED THAT OUR ARGUMENTS FOR THE ASSESSMENT YEAR 2002-03 MAY BE CO NSIDERED. 91. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WHILE ADJUDICATING THE ISSUE I N IT(SS)A NO.104/IND/2011 FOR THE ASSESSMENT YEAR 2002-03, WE HAVE HELD THAT THE ASSE SSEE COULD BE ABLE TO DISCHARGE THE BURDEN OF PROVING THE CASH CREDIT AS CONTEMPLAT ED U/S 68 OF THE ACT AND HAVE DIRECTED TO DELETE THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL/SHARE PREMIUM/ SHARE APPLICATION MONEY. WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL OF THE ASSESSEE ARE THE SAME WITH THAT OF THE APPEAL FOR ASSESSMENT YEAR 2002-03 (SUPRA). THE ARG UMENT OF BOTH THE PARTIES ARE ALSO THE SAME AND THEREFORE, FOLLOWING OUR OWN FINDING G IVEN IN THE CASE OF ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 (SUPRA), WE DIRECT TO DELET E THE ADDITION OF RS.11,59,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE C APITAL/SHARE PREMIUM/ SHARE APPLICATION MONEY AND ALLOW THE GROUND NO.3 OF THE APPEAL OF THE ASSESSEE. GROUND NO. 4 92. THIS GROUND OF APPEAL IS DIRECTED AGAINST CHARG ING OF INTEREST UNDER S. 234A AND 234B. WE FIND THAT CHARGING OF INTEREST IS CONSEQUE NTIAL IN NATURE, THEREFORE, SAME DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. SAME IS DISM ISSED. 93. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18.5.2016 . SD/- SD/- (B.C. MEENA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17.8.2016 COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR, INDORE