The DCIT, 5(1), Indore V. M/s. Anant Steel Pvt. Ltd., Indore

ITSSA 146/IND/2013

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1349 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N AGRAWAL
• Assessee Lawyers: RAJEEV VARSHNEY
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Loose papers; Share purchase agreement; Principle of natural justice; Question of law; Difference of opinion; Validity of assessment; Accommodation entries; Change of opinion; Reassessment proceedings
• Section: 143(3); 153A; 234B; 68; 148; 6; 132

Judgement Text

(SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 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 NO. 133/IND/2013 A.Y. 2006-07 M/S. ANANT STEEL PVT. LTD., INDORE PAN AACCA 1283 E :: APPELLANT VS ACIT-5(1), INDORE :: RESPONDENT IT(SS)A NO. 146/IND/2013 A.Y. 2006-07 ACIT-5(1), INDORE :: APPELLANT VS M/S. ANANT STEEL PVT. LTD., INDORE PAN AACCA 1283 E :: RESPONDENT IT(SS)A NO. 134/IND/2013 A.Y. 2006-07 M/S. SHIVANGI ROLLING MILLS P. LTD., INDORE PAN AAGCA 8004B :: APPELLANT (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 2 VS ACIT-5(1), INDORE :: RESPONDENT IT(SS)A NO. 147/IND/2013 A.Y. 2006-07 ACIT-5(1), INDORE :: APPELLANT VS M/S. SHIVANGI ROLLING MILLS P. LTD., INDORE PAN AAGCA 8004 B :: RESPONDENT ASSESSEES BY SHRI S.N. AGRAWAL AND SHRI PANKAJ MOGRA RESPONDENT BY SHRI RAJEEV VARSHNEY DATE OF HEARING 23.09.2015 DATE OF PRONOUNCEMENT 1.12.2015 O R D E R PER SHRI D.T. GARASIA, JM THESE APPEALS ARE FILED BY THE ABOVE ASSESSESAND T HE REVENUE CHALLENGING THE ORDERS OF LD. CIT(A)-II, INDORE, DA TED 08.03.2013& 25.03.2013. FIRST, WE SHALL TAKE UP THE APPEALS IN CASE OF ANAN T STEELP. LTD. 2. GROUND NO.2 OF THE ASSESSEES APPEAL READS AS UN DER: (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 3 2.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN MAINTAINING ADDITION U/S 68 OF RS.1,70,00,000 IN RESPECT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE COMPANY FROM THE FOLLOWING COMPANIES WITHOUT PROPER LY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HI M: S.NO. NAME OF THE COMPANY AMOUNT (RS.) 1 CENTRAL REGION INFRASTRUCTURE & CONSTRUCTION P. LTD. 5,00,000 2 M/S. NEEMA INVESTMENT P. LTD. 1,05,00,000 3 M/S. MONEY PENNY FINCOM P. LTD. 60,00,000 1,70,00,000 2.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) HAS ERRED IN MAINTAINING ADDITION OF RS.1,05 ,00,000 IN RESPECT OF SHARE APPLICATION MONEY AS RECEIVED FROM M/S. NE EMA INVESTMENT P. LTD. EVEN WHEN RS.40 LACS WAS RECEIVED DURING TH E PREVIOUS YEAR RELEVANT TO THE AY 2005-06 AND BALANCE AMOUNT OF RS .65 LACS ONLY IN THE YEAR UNDER APPEAL. 3. SHORT FACTS OF THE CASE ARE AS UNDER: A SEARCH U/S 132 OF THE I.T. ACT WAS EXECUTED ON 2 1.11.2006 ON THE OFFICE AND FACTORY PREMISES OF THE ASSESSEE. A NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE ON 5.10.2007 WHICH SERVED TO THE ASSESSEE ON 8.10.2 007. IN RESPONSE TO THE NOTICE ISSUED U/S 153C, THE ASSESSEE HAD FILED ITS RETURN OF TOTAL INCOME ON 8.11.2008 DECLARING TOTAL INCOME AT NIL. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 4 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE FILED COPY OF CONFIRMATION LETTER DULY SINGED BY ALL THE ABOVE APPLICANT ALONG -WITH SHARE APPLICATION FORM. HOWEVER, THE ASSESSEE WAS ALSO ASKED TO JUSTIFY THE AMOUNT O F SHARE APPLICATION AS RECEIVED BY IT DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEES VIDE ITS REPLY SUBMITTED AS UNDER:- 1] THAT YOU HAVE ASKED FROM THE ASSESSEE TO JUSTIFY THE AMOUNT OF SHARE APPLICATION MONEY OF RS 4,90,00,000/- ( RUPEES FOUR CRORES NINE TY LACS ONLY) 2.1] DETAILS OF SHARE APPLICATION MONEY OF RS 49000 000/- AS RECEIVED BY THE ASSESSEE IS AS UNDER:- S.N O NAME OF THE APPLICANT ADDRESS PA NO ADDITION 1 SANDROP SECURITY P. LTD. 34/35, GANESH PATH ,GOVIND HALWANI CHOWK, PUNE(M.H.) AACCS5419C 8500000 2 RIFCA COST. P. LTD. 2, JOGENDRA KAVIRAJ ROAD , KOLKATA, 700007 AABCR2220B 4000000 3 PRAMILA INVESTMENT & FINANCE 40, MOTI MAHAL ,SIR HUKUMCHAND MARG INDORE(M.P) AABCP8031A 2500000 4 NEEMA INVESTMENT P LIMITED 308,SHREYANS NATH APARTMENT ,3/2 DR R.S. BHANDARI MARG, INDORE(M.P) AABCN5299 10500000 5 MONEY PENNY FINCOM PVT. LTD. 308,SHREYANS NATH APARTMENT ,3/2 DR R.S. BHANDARI MARG, INDORE(M.P) AADCM5417F 6000000 6 PERSUIT SECURITY P. LTD. 16-A,AMITA APARTMENT FIRST FLOOR ,KASTOORBA ROAD NO.5 BORIBVALI MUMBAI AAACP3800E 16500000 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 5 7 MAX TOUCH SECURITY LTD. H NO. 357,SECT B SCH NO. 71,INDORE(M.P.) AADCM4409R 500000 8 CENTRAL REGION INFRASTRUCTURE & CONT. PVT. LTD. 500000 49000000 2.2] THE ASSESSEE HAD FILED CONFIRMATION LETTERS IN RESPECT OF SHARE APPLICATION MONEY OF RS 4900000/- AS RECEIVED IT FROM ALL THE ABOVE C OMPANY. 2.3] THAT COPY OF SHARE APPLICATION MONEY AND BOARD RESOLUTION HAS ALSO BEEN FILED WHERE EVER APPLICABLE. 2.4] THAT IDENTITY OF THE SHARE HOLDERS AND GENUINE NESS OF THE TRANSACTIONS HAVE DULY EXPLAINED. 2.5.1] THAT IN THE CASE OF M/S SUNDROP SECURITIES P LIMITED, PRAMILA INVESTMENT & FINANCE LIMITED, NEEMA INVESTMENT P LIMITED, MONEY PENNY FINCOM P LIMITED, PURSUIT SECURITIES P LIMITED AND MAX TOUCH SECURITY P LIMIT ED, ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 WAS COMPLETED UNDER SCRUTINY U/S 143(3 ) OF THE INCOME TAX ACT BY YOUR OFFICE AND BY THE OFFICE OF ITO 5(1) AND ITO 5(2), INDORE. 2.5.2] THAT IN THE ASSESSMENT OF ALL THESE COMPANIE S AMOUNT RECEIVED BY THEM ON ACCOUNT OF SHARE APPLICATION MONEY, SHARE CAPITAL A ND SUNDRY CREDITORS NOT EXPLAINED PROPERLY ADDED U/S 68 OF THE INCOME TAX ACT. ACCORD INGLY, INVESTMENT MADE BY ALL THESE COMPANIES ACCEPTED AS GENUINE. 2.5.3] THAT ONCE THE AMOUNT OF SHARE APPLICATION MO NEY, SHARE CAPITAL AND SUNDRY CREDITORS ADDED TO THE INCOME OF THE SHARE HOLDERS. IN THAT CASE THERE IS NO JUSTIFICATION TO DISBELIEVE THE CREDITWORTHINESS OF ALL THESE COM PANIES. 2.5.4] THAT INCOME TAX ASSESSMENT FOR THE ASSESSMEN T YEAR 2005-06 WAS PASSED UNDER SCRUTINY U/S 143(3) OF THE INCOME TAX ACT. HE NCE, IDENTITY OF THE SHARE HOLDERS (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 6 STAND PROVED. SINCE, ENTIRE AMOUNT OF CREDITS IN TH EIR BOOKS OF ACCOUNT HAS ALREADY BEEN ADDED TO THE INCOME OF THE SHARE HOLDERS. IN THAT C ASE SOURCE OF INVESTMENT MADE BY THEM IN THE CASE OF THE ASSESSEE COMPANY STAND PROV ED. 2.6] THAT FROM THE ABOVE DOCUMENTS IT IS VERY CLEAR THAT THE ASSESSEE HAS PROPERLY DISCHARGED ONUS LYING ON HIM. THE ASSESSEE HAS PROV ED IDENTITY AND GENUINENESS OF THE INVESTMENT MADE BY ALL THE SHARE HOLDERS IN THE SHARE APPLICATION MONEY OF THE ASSESSEE COMPANY. HENCE, THERE IS NO REASON FOR MAK ING ANY ADDITION IN RESPECT OF SHARE APPLICATION MONEY IN THE CASE OF THE ASSESSEE . 2.7.16] THAT IN VIEW OF THE ABOVE, WHEN THE ASSESSE E HAS PROPERLY DISCHARGED ONUS LYING ON IT BY PROVING THE IDENTITY OF THE SHARE HO LDERS AND GENUINENESS OF THE TRANSACTION. IN THE PRESENT CASE THE ASSESSEE HAD F ILED COMPLETE DETAILS OF SHARE HOLDERS AND ALSO FILED CONFIRMATIONS AS RECEIVED FR OM ALL THESE SHARE HOLDERS BEFORE THE ASSESSING OFFICER. ALL ARE REGULARLY ASSESSED TO TA X AND THE AMOUNTS WERE ALSO RECEIVED THROUGH AN ACCOUNT PAYEE CHEQUE. IN THAT CASE THERE IS NO JUSTIFICATION FOR MAKING ANY ADDITION ON ACCOUNT OF SHARE APPLICATION OF RS 4,90 ,00,000/-. 2.8] THAT IN VIEW OF THE ABOVE, IT IS SUBMITTED THA T THE AMOUNT OF SHARE APPLICATION MONEY OF RS 49000000/- AS RECEIVED BY THE ASSESSEE IS GENUINE. THE SAME REQUIRES TO BE ACCEPTED AS GENUINE. THE ASSESSEE VIDE HIS LETTER FURTHER SUBMITTED THA T:- 1] THAT YOU HAVE ASKED THE ASSESSEE TO JUSTIFY TH E AMOUNT OF SHARE APPLICATION MONEY RECEIVED FROM THE FOLLOWING COMPA NIES:- S.NO. NAME OF THE COMPANY AMOUNT (RS) 1 SANDROP SECURITY P. LTD. 8500000 2 RIFCA COST. P. LTD. 4000000 3 PRAMILA INVESTMENT & FINANCE 2500000 4 NEEMA INVESTMENT P LIMITED 10500000 5 MONEY PENNY FINCOM PVT. LTD. 6000000 6 PERSUIT SECURITY P. LTD. 16500000 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 7 7 MAX TOUCH SECURITY LTD. 500000 8 CENTRAL REGION INFRASTRUCTURE & CONT. PVT. LTD. 500000 TOTAL 49000000 2.1] COPY OF CONFIRMATIONS LETTER ALONGWITH SHARE A PPLICATION FORMS AND FOLLOWING DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH LI STED AS PAGE NOS 1 TO 322 OF LPS- 15. LIST OF SUCH DOCUMENTS ARE AS UNDER:- I] MEMORANDUM AND ARTICLE OF ASSOCIATION II] COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN F ILED III] COPY OF PAN CARD IV] COPY OF AUDITED FINAL ACCOUNT V] COPY OF SHARE APPLICATION FORM 2.2] THAT FROM THE ABOVE PAPERS AS FOUND DURING THE COURSE OF SEARCH, EXISTENCE, IDENTITY AND CAPACITY OF THE SHARE APPLICATION MONE Y STAND PROVED. 2.3] THAT ADDITIONAL PAPERS AS OBTAINED BY THE ASSE SSEE FROM THE REGISTRAR OF COMPANIES ARE ENCLOSED. 2.4] THAT ENTIRE AMOUNT OF SHARE APPLICATION MONEY WERE RECEIVED BY THE ASSESSEE THROUGH AN ACCOUNT PAYEE CHEQUE. CONFIRMATION LETTE R HAS ALSO BEEN FILED. SHARE APPLICATION FORM WERE ALSO FOUND. IN THAT CASE THER E IS NO REASON TO DISBELIEVE ON THE AMOUNT OF SHARE APPLICATION MONEY AS RECEIVED BY TH E ASSESSEE. 2.5] THAT IN THE CASE OF THE ABOVE COMPANIES SCRUTI NY ORDER U/S 143(3) HAS ALSO BEEN PASSED BY THE OFFICE OF THE ACIT 5(1), ITO 5(1) AND ITO 5(2), INDORE. SINCE, INCOME TAX ASSESSMENT ORDER HAS ALREADY BEEN PASSED IN THE CAS E OF THE ABOVE COMPANIES. THERE IS NO JUSTIFICATION FOR MAKING SEPARATE ADDITIONS I N THE CASE OF THE ASSESSEE AGAIN. 3] THAT THE ASSESSEE HAD PROPERLY DISCHARGED ONOUS LUING ON HIM BY PROVING THE IDENTITY, CAPACITY AND GENUINENESS OF THE SHARE APP LICATION/SHARE CAPITAL. HEMCE, THE AMOUNT OF SHARE APPLICATION /SHARE CAPITAL AS RECEI VED BY THE ASSESSEE BE TREATED AS (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 8 GENUINE. THAT ALL THE ABOVE COMPANIES ARE FILING TH ERE INCOME TAX RETURN REGULARLY WITH THE DEPARTMENT AND ALSO REGISTERED WITH THE REGISTR AR OF COMPANIES. HENCE THERE IS NO REASON TO DISBELIEVE ON THE IDENTITY OF THESE COMPA NIES. 4] THAT IN VIEW OF THE ABOVE AND AS SUBMITTED IN OU R EARLIER SUBMISSIONS IT IS SUBMITTED THAT SHARE APPLICATION MONEY OF RS. 4,90, 00,000/-AS RECEIVED BY THE ASSESSEE BE TREATED AS GENUINE. THE ASSESSEES CONTENTION IS NOT ACCEPTABLE. DECIS ION QUOTED AND RELIED BY THE ASSESSEE IN ITS SUBMISSIONS ARE DISTINGUISHABLE ON THE FACTS WHICH ARE NOT IDENTICAL WITH THE FACTS OF THE PRESENT CASE. IT IS NOT A SIMPLE C ASE OF TAXING OF SHARE APPLICATION MONEY U/S 68 OF THE I.T. ACT, AS THE ASSESSEE HAS T RIED TO PROJECT. IT IS A CASE OF UNACCOUNTED MONEY BROUGHT BACK INTO THE BOOKS OF AC COUNTS OF THE ASSESSEE COMPANY IN A SYSTEMATIC AND ORGANIZED MANNER WHICH CAN BE E VIDENCED FROM THE PATTERN OF CASH DEPOSITS IN THE BANK ACCOUNTS OF THE COMPANIES DISC USSED ABOVE IN DETAIL FROM WHOM SHARE APPLICATION MONEY WERE RECEIVED BY THE ASSESS EE. THESE COMPANIES HAD BEEN USED AS MERE CONDUIT COMPANIES FOR ROUTING OF UNACC OUNTED MONEY INTO THE BUSINESS IN THE GRAB OF SHARE APPLICATION MONEY. DURING THE ASS ESSMENT PROCEEDING IN A.Y. 2005- 06 IN THE CASE OF THE COMPANIES FROM WHOME THE ASSE SSEE COMPANY RECEIVED SHARE APPLICATION MONEY, IT WAS REVEAL THAT CASH DEPOSITS WERE FOUND IN THEIR BANK ACCOUNTS BUT SOURCE OF CASH DEPOSIT WERE NOT PROPERLY EXPLAI NED BY THE ABOVE COMPANIES. HENCE, THE SOURCE OF SHARE APPLICATION MONEY AS REC EIVED BY THE ASSESSEE COMPANY CANNOT BE TREATED AS PROPERLY EXPLAINED. IN FACT THESE COMPANIES HAVE BECAME QUITE NOTORIOU S FOR GIVING SHARE APPLICATION MONEY TO VARIOUS ENTITIES IN AND AROUND INDORE. THE RE MODUS OPERANDI IS TO GET THE CASH DEPOSIT IN THEIR BANK ACCOUNTS AND THEN PROVID E ENTRY FOR SHARE APPLICATION MONEY BY CHEQUE. IN FACT THERE COMPANIES HAVE NO BUSINESS WHAT SO EVER AND WHICH COMPANIES HAVE BEEN OPENED ONLY FOR PROVIDING ENTRI ES FOR SHARE APPLICATION MONEY. THESE COMPANIES ARE NOTHING BUT DUMMY COMPANIES CLO SELY HELD AND ACTING ON BEHALF OF CERTAIN INDIVIDUALS, WHO ARE ENGAGED IN THE BUSI NESS OF PROVIDING ENTRIES FOR SHARE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 9 APPLICATION MONEY TO VARIOUS PARTIES. RELIANCE IS P LACED ON THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF COMMISSION ER OF INCOME TAX V/S RATHI FINLEASE LTD. REPORTED IN (2008) 2015 CTR 249 AND D ECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V/S NIVIDEN VANIJYA NIYOJAN LTD. REPORTED IN (2003) 182 CTR(CAL) 605 . CONSIDERING THE FACTS OF THE CASE AS DISCUSSED ABO VE, SHARE APPLICATION MONEY OF RS. 4,90,00,000/- (RUPEES FOUR CRORES NINETY LAC S ONLY) AS RECEIVED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION BE ADDED T O THE INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT. 4. MATTER CARRIED TO LD. CIT(A) AND LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL BY OBSERVING AS UNDER: 4.2.1) IN GROUND NO 2 THE PRESENT APPEAL, THE APPE LLANT HAS CHALLENGED THE ADDITION OF RS 4,90,00,000/- MADE TO THE INCOME OF THE APPELLAN T IN RESPECT OF SHARE APPLICATION MONEY AS RECEIVED FROM THE 8 (EIGHT) PARTIES. THE A O WHILE MAKING THE ADDITION IN RESPECT OF SHARE APPLICATION MONEY HAS OBSERVED THA T SUBSTANTIAL AMOUNT OF CASH WERE DEPOSITED IN THE BANK ACCOUNT OF THE SHARE HOLDERS IN THE ASST YEAR 2005-06. THE AO ALSO RELIED ON THE DECISION OF THE HONBLE JURISDIC TION HIGH COURT IN THE CASE OF RATHI FINLEASE LTD AS REPORTED IN 215 CTR 249 AND HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S NIVIDEN VANIJYA NIYJAN LTD AS REPORTED IN 182 C TR 605. IT WAS CLAIMED BY THE APPELLANT THAT FOLLOWING DOCUMENTS WERE FILED BY IT DURING THE COURSE OF ASSESSMENT AND APPELLATE PROCEEDINGS:- S.NO. PARTICULARS 1 SHARE APPLICATION MONEY FORM 2 MEMORANDUM AND ARTICLE OF ASSOCIATION 3 MASTER RECORD FROM THE MCA SITE 4 MEMORANDUM AND ARTICLE OF ASSOCIATION (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 10 5 COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETUN 6 COPY OF PAN CARD 7 COPY OF AUDITED FINAL ACCOUNT OF THE SHAREHOLDERS 8 CONFIRMATION LETTER DULY SIGNED WITH PA NO 9 COPY OF BOARD RESOLUTION DULY AUTHORIZED TO SIGN THE SHARE APPLICATION FORM 10 COPY OF AFFIDAVIT OF THE SHAREHOLDERS ACCEPTING THE INVESTMENT MADE IN THE SHARE APPLICATION MONEY/SHARE CAPITAL 11 COPY OF BANK STATEMENTS 4.2.2) IN THE APPELLATE PROCEEDING THE APPELLANT HA D FILED COPY OF BALANCE SHEET OF SHAREHOLDERS AS ON 31.03.2006 COPY OF ACKNOWLEDGEME NT OF INCOME TAX RETURN AS FILED BY THEM FOR THE AY 2006-07, COPY OF BANK STATEMENT OF FIVE OF THESE COMPANIES FROM WHOM SHARE APPLICATION MONEY WERE RECEIVED, COPY OF AFFIDAVIT OF THE DIRECTORS OF FIVE COMPANIES AS TO JUSTIFY THEIR INVESTMENT IN THE SHA RE OF THE APPELLANT COMPANY. IT WAS ALSO CLAIMED BY THE APPELLANT THAT CONFIRMATION LET TER AND SHARE APPLICATION FORMS WERE DULY FOUND AND SEIZED DURING THE COURSE OF SEARCH I TSELF AT THE PREMISES OF APPELLANT. IT WAS ALSO CLARIFIED THAT MOST OF THE SHARE HOLDERS W ERE DULY ASSESSED TO TAX BY THE ITO 5 (1), ITO 5 (2) AND ACIT 5 (1), INDORE. HENCE THERE WAS NO REASON FOR DOUBTING THE IDENTITY OF THE SHARE APPLICANTS. 4.2.3) THE APPELLANT HAD FILED THE COPIES OF THE BA NK STATEMENTS IN RESPECT OF FIVE COMPANIES. THE APPELLANT ALSO PROVIDED THE COMPLETE DETAILS OF BANK ACCOUNT OF THE SHARE HOLDERS AND REQUESTED TO THE UNDERSIGNED TO C ALL COPIES OF THEIR BANK STATEMENT DIRECTLY. IT WAS ALSO CLAIMED THAT IN THESE ACCOUNT S NO CASH WERE DEPOSITED PRIOR TO ISSUANCE OF THE CHEQUE TO THE APPELLANT THAT UNSECU RED LOANS WERE RECEIVED FROM M/S MONEY PENNY FINCOM P LIMITED AND M/S PRAMILA INVEST MENT & FINANCE LIMITED IN THE ASST YEAR 2004-05 AND FROM M/S NEEMA INVESTMENT P L IMITED M/S SUNDROP SECURITIES P LIMITED AND M/S PURSUIT SECURITIES LIMITED IN THE ASST YEAR 2005-06 AND ENTIRE AMOUNTS OF LOANS WERE ACCEPTED AS GENUINE IN THESE YEARS BY THE AO. COPIES OF (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 11 RELEVANT ASSESSMENT ORDERS AS PASSED FOR THE ASSESS MENT YEAR 2004-05 AND 2005-06 WERE ALSO FILED DURING THE COURSE OF APPELLATE PROC EEDING AS TO JUSTIFY THE CLAIM OF THE APPELLANT. 4.2.4) OUT OF AMOUNT OF RS. 4.90 CRORE ADDED, RS. 7 5 LAKH WERE RECEIVED IN AY 05-06 AS UNSECURED LOANS. IN AY 06-07, APPELLANT RECEIVED BA LANCE AMOUNT OF RS. 4.15 CRORE AS SHARE APPLICATION MONEY AND LOAN OF RS. 75 LAKH TAK EN IN AY 05-06 WAS ALSO TRANSFERRED IN ACCOUNT OF SHARE APPLICATION MONEY. OUT OF THIS, SHARE APPLICATION MONEY OF RS. 1,65,00,000/- WAS REFUNDED BACK TO THREE COMPANIES, RS. 90 LAKH REFUNDED BACK TO PURSUIT SECURITY P. LTD., RS. 50 LAKH REFUNDED TO N EEMA INVESTMENT P. LTD. AND RS. 25 LAKH REFUNDED TO MONEY PENNY FINCOM P. LTD. IN AY 07-08. FOR THE BALANCE AMOUNT OF RS. 3,25,00,000/- SHARES WERE ALLOTTED TO THESE 8 C OMPANIES IN AY 2007-08 AND SUCH SHARES OF THE APPELLANT COMPANY ARE STILL HELD BY T HEM AS PER SUBMISSION OF APPELLANT DATRED 29-11-2012 IN WHICH THEY SUBMITTED SHARE HOL DING PATTERN DATED 31.03.12 AND CONFIRMED THAT SUCH SHARE HOLDING PATTERN REMAINS S AME EVEN TODAY. 4.2.5) IN EARLIER YEARS ALSO ADDITION WAS MADE IN H ANDS OF APPELLANTS FOR SHARE APPLICATION MONEY U/S 68 OF THE I.T. ACT. BUT IN TH OSE YEARS SHARE APPLICATION MONEY WAS RECEIVED FROM DIFFERENT COMPANIES AND IN THOSE YEARS IT WAS CONFIRMED BY LD CIT (A) MAINLY BECAUSE WHILE SUCH COMPANIES INVESTED I N SHARE APPLICATION OF APPELLANT AT A PREMIUM BUT SUCH SHARES WERE BOUGHT BACK BY DIREC TORS OR SISTER CONCERNS OF APPELLANT BELOW FACE VALUE ONLY WITHIN NEXT FEW YEA RS, WHICH RAISES SERIOUS DOUBTS ON GENUINENESS OF ENTIRE TRANSACTION. BUT IN PRESENT Y EAR UNDER CONSIDERATION THE COMPANIES WHO INVESTED IN SHARE APPLICATION OF APPE LLANT ARE DIFFERENT THAN COMPANIES OF EARLIER YEAR AND THEY ARE STILL HOLDING THE SHAR ES ALLOTTED TO THEM AS PER DETAILS FROM ROC. THEREFORE THAT DECISION WOULD HAVE NO BEARING IN PRESENT CASE, AS THE FACTS ARE DIFFERENT, EXCEPT FOR THE SHARE APPLICATION MONEY R ECEIVED FROM M/S NEEMA INVEST. P. LTD. AND M/S. MONEY PENNY FINCOM P. LTD. FOR THE RE ASONS DISCUSSED IN SUBSEQUENT PARAS. 4.2.6) I HAVE CONSIDERED THE WRITTEN SUBMISSION AND VERBAL ARGUMENTS AS PUT FORTH BY THE APPELLANT AND GONE THROUGHT THE ASSESSMENT ORDE R AS PASSED BY THE AO. THE AO IN THE ASSESSMENT ORDER ADDED AN AMOUNT OF RS. 4,90,00 ,000/- ON ACCOUNT OF SHARE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 12 APPLICATION MONEY AS RECEIVED BY THE APPELLANT FROM EIGHT SHARE HOLDERS FOR THE REASON THAT HUGE AMOUNT OF CASH WERE DEPOSITED IN THE BANK ACCOUNT OF THE SHAREHOLDERS COMPANIES IN THE ASST YEAR 2005-06. IT WAS CLARIFIE D BY THE APPELLANT THAT THE SHARE APPLICATION MONEY WAS RECEIVED IN THE PREVIOUS YEAR RELEVANT TO THE ASST YEAR 2006-07 AND NOT IN THE ASST YEAR 2005-06 AS DISCUSSED BY TH E AO. THE APPELLANT COMPANY HAD FILED COPY OF BANK STATEMENT OF FIVE OF THE SHARE H OLDER COMPANIES AND ALSO HIGHLIGHTED THE AMOUNT AS RECEIVED BY IT FROM THAT SHARE HOLDER S IN THE BANK ACCOUNT. THE BANK ACCOUNT OF OTHER TWO COMPANIES RIFCA CONSTRUCTION P . LTD. AND MAX TOUCH SECURITIES P. LTD. WERE CALLED BY THIS OFFICE. THE COPY OF BANK A CCOUNT OF LAST COMPANY CENTRAL REGION INFRASTRUCTURE AND CONSTRUCTION P. LTD. WER E NOT FURNISHED BY APPELLANT. I HAVE EXAMINED THE BANK ACCOUNT OF THE SHARE HOLDERS COMP ANIES AS TO EXAMINE THE VERSION OF THE AO WHILE MAKING ADDITION IN RESPECT OF SHARE APPLICATION MONEY BUT IT WAS FOUND THAT ONLY IN THE BANK ACCOUNT OF MAX TOUCH SECURITI ES P LIMITED HUGE CASH WAS FOUND DEPOSITED IN THE BANK ACCOUNT OF THAT SHARE HOLDER PRIOR TO ISSUANCE OF CHEQUE TO APPELLANT COMPANY AND BANK ACCOUNT OF CENTRAL REGIO N INFRASTRUCTURE & CONSTRUCTION P LIMITED WAS NEITHER FILED BY THE APPELLANT NOR RECE IVED BY THE UNDERSIGNED FROM THE BANK. HENCE, ADVERSE VIEW CAN BE TAKEN IN RESPECT O F THESE TWO COMPANIES FROM WHOM SHARE APPLICATION MONEY OF RS. 5,00,000/- EACH TOTA LING TO RS. 10,00,000/- WERE RECEIVED BY THE APPELLANT COMPANY. IN RESPECT OF AL L OTHER COMPANIES SMALL AMOUNT OF CASH WAS FOUND DEPOSITED IN THEIR BANK ACCOUNTS WHI CH IS APPARENTLY NOT LINKED TO ISSUANCE OF CHEQUES TO APPELLANT IN VIEW OF DEPOSIT S BY CHEQUES OBSERVED IN THESE ACCOUNTS. 4.2.7) THE AO HAS FURTHER STATED THAT SUCH COMPANIE S PROVIDED ENTRIES FOR SHARE APPLICATION MONEY BUT NO BASIS OF SUCH ALLEGATION W AS GIVEN. THIS OFFICE DURING APPELLANTE PROCCEDINGS RAISED A QUERRY BEFORE APPEL LANT THROUGH NOTICE DATED 16/07/2010 THROUGH WHICH COPY OF STATEMENT RECORDED BY INVESTIGATION WING DURING A SEARCH ACTION ON 16/04/2009 OF SHRI RAMESHCHAND KAT HOD DIRECTOR OF M/S NEEMA INVESTMENT P. LTD. AND MONEY PENNY FINCOM P. LTD. W AS PROVIDED TO APPELLANT. IN THIS STATEMENT SHRI RAMESHCHAND KATHOD ADMITTED THAT THE SE TWO COMPANIES PROVIDED (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 13 ACCOMMODATION ENTRY OF SHARE APPLICATION MONEY. THE RELEVANT QUESTIONS AND ANSWERS FROM HIS STATEMENT ARE REPRODUCED BELOW:- 4.28) WHEN APPELLANT WAS CONFRONTED WITH THESE FACT S THEIR ONLY DEFENCE AS FURNISHED IN REPLY DT. 06/11/2002 WAS THAT SUCH STATEMENT OF SHRI RAMESHCHAND KATHOD WAS IN REGARD TO INVESTIGATION CARRIED OUT AGAINST KALANI GROUP OF INDORE AND EVEN NAME OF APPELLANT DOES NOT APPEAR IN THE ENTIRE STATEMENT. THEN THEY STATED THAT SINCE STATEMENT IS TAKEN ON THE BACK OF APPELLANT AND THEREFORE IT CANNOT BE USED AGAINST THEM. THEY ALSO REFERRED TO REPLY OF Q.NO. 25 REGARDING DEPOSI T OF CASH IN BANK ACCOUNT OF THESE TWO SHARE APPLICANTS AND STATES THAT NO SUCH CASH W AS SEEN DEPOSITED IN BANK ACCOUNT OF THESE TWO COMPANIES IN AY 2006-07. THEY ALSO REF ERRED TO Q.NO. 29 OF SUCH STATEMENT WHICH STATE BUY BACK OF SUCH SHARES AND S UBMITTED THAT SHARES ALLOTTED TO THESE TWO COMPANIES WERE STILL OWNED BY THEM. 4.2.9) I HAVE CONSIDERED THE REPLY OF APPELLANT. WH ILE IT IS TRUE THAT INVESTIGATION WAS REGARDING M/S FLEXITUFF INVT. LTD, A COMPANY OF KAL ANI GROUP, BUT DURING EXAMINATION SHRI RAMESHCHAND KATHOD HAS SUBMITTED ENTIRE MODUS OPERANDI OF THESE TWO COMPANIES NAMELY M/S NEEMA INVST. P. LTD. AND M/S M ONEY PENNY FINCOM P. LTD. IN REPLY TO Q. NO. 25 TO Q. NO. 30. BUT ANSWER TO Q. N O. 30 CLINCHES THE WHOLE ISSUE WHEREIN SHRI R.KATHOD STATED THAT ALL THE CHEQUES T O ALL THE PARTIES ISSUED BY HIS TWO COMPANIES ARE ACCOMMODATION CHEQUES AGAINST RECEI PT OF CASH . AS THE STATEMENT OF SHRI RAMESHCHAND KATHOD IS DETAILED AND SELF EXPLAN ATORY, A COPY OF WHICH IS PROVIDED TO APPELLANT, HENCE PRINCIPLES OF NATURAL JUSTICE A RE FULFILLED. IT IS BECAUSE STATEMENT IS SUPPORTED BY LACK OF CREDITWORTHINESS OF THESE TWO COMPANIES ARISING FROM NEGLIGIBLE INCOME EARNED BY THEM IN LAST SEVERAL YEARS AND ALS O SUPPORTED BY DEPOSIT OF CASH DIRECTLY IN BANK ACCOUNT OF SUCH TWO COMPANIES OR A S EXPLAINED BY SHRI R. KATHOD THAT CASH IS DEPOSITED IN SOME OTHER COMPANIES AND THERE AFTER BROUGHT IN THESE TWO COMPANIES THROUGH TRANSFER. BESIDES REPLIES TO Q. N O. 18, 19 & 20 IN THE STATEMENT PROVES THAT NO BOOKS OF ACCOUNTS WERE MAINTAINED BY THESE TWO COMPANIES AND THEIR AUDIT WAS DONE ON THE BASIC OF LOOSE PAPERS WHICH M AKES THEM PAPER COMPANIES MEANT TO PROVIDE ACCOMMODATION ENTRIES. IN SUCH CIR CUMSTANCES WHEN STATEMENT OF (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 14 WITNESS IS ONLY SECONDARY EVIDENCE THERE IS NO DENI AL OF NATURAL JUSTICE IF WITNESS WERE NOT ALLOWED TO BE CROSS EXAMINED AS HELD IN CASE OF G.T.C. INDUSTRIES LTD. (ITAT BOM.) 65 ITD 380. THIS ALSO EXPLAINS THAT BESIDES SMALL C ASH DEPOSITS IN THESE TWO BANK ACCOUNTS, THE CASH WAS ALSO DEPOSITED IN OTHER BANK ACCOUNTS EITHER IN THE UNREPORTED BANK ACCOUNT OF SUCH ENTRY PROVIDER COMPANIES AS AD MITTED IN REPLY TO Q.NO. 5 OR DEPOSITED IN BANK ACCOUNT OF FRIENDS AND FROM THEIR BROUGHT IN ACCOUNTS OF THESE TWO COMPANIES AS ADMITTED IN ANSWER TO Q.NO. 24 SO FAR AS BUY BACK OF SUCH SHARES IS CONCERNED IN SHRI R. KATHOD HAS CATEGORICALLY ADMIT TED IN REPLY TO Q.NO. 28 THAT THEY DO NOT HOLD SUCH SHARE CERTIFICATES. IN REPLY TO Q.NO. 29 HE ADMITTED THAT SINCE SUCH SHARE APPLICATION MONEY WAS PROVIDED BY SUCH COMPANIES TH EMSELVES, HENCE SUCH COMPANIES NEVER GAVE SUCH SHARE CERTIFICATE TO THEM . 4.2.10) IN THIS REGARD IN ORDER TO OVERCOME SUCH SP ECIFIC STATEMENT OF SHRI R. KATHOD EXPOSING ENTIRE MODUS OPERANDI OF THE ACCOM MODATION ENTRY FOR SHARE APPLICATION, MERELY FILING A SELF SERVING AFFIDAVIT OF SUCH PERSON, AT A SUBSEQUENT DATE WOULD BE OF NO HELP UNLESS ALL ISSUES EXPOSED IN TH E STATEMENT ARE SUCCESSFULLY EXPLAINED BY APPELLANT AS HELD IN CASE OF GARIBDAS CHANDRIKAPRASAD (1998) 147 CTR 373 (MP) AND SMT. GUNWANTIBAI RATILAL (1984) 146 IT R 140 (MP). APPELLANT HAS TO ESTABLISH CREDITWORTHINESS OF THESE TWO COMPANIES I N VIEW OF MEAGER INCOME OF SUCH COMPANIES IN THEIR RETURNS FOR LAST 5 YEARS, FURNIS H COPY OF BANK ACCOUNT OF NOT ONLY THESE TWO COMPANIES BUT ALSO OF THOSE COMPANIES/PER SONS WHO TRANSFERRED FUNDS IN THESE TWO ACCOUNTS AND ALSO FURNISH A VALID PROOF O F HANDLING OVER OF SUCH SHARES TO THESE TWO COMPANIES. TILL SUCH POINTS ARE EXPLAINED AND SUCH DETAILS ARE FILED THE ONUS REMAIN FASTENED ON APPELLANT, WHICH WAS NOT DISCHAR GED AS HELD IN CASE OF NIVEDAN VANIJYA NIYOJAN LTD (2003) 263 ITR 623 (CAL) AND HI NDUSTAN TEA TRADING CO. LTD. (2003) 129 TAXMAN 601 (CAL). WHEN ONUS REMAINS FASTENED ON APPELLANT FOR THE SPECIFIC FACTS OF THE PRESENT CASE THE CASE LAW REFERRED BY APPELL ANT LIKE GANGESHWARI METAL P. LTD. AND OTHER WILL NOT HELP THEIR CASE . IN VIEW OF THE AFORESAID DISCUSSION, I HOLD THAT THESE TWO COMPANIES NAMELY M/S NEEMA INVESTEMENT P. LTD. & M/S MONEY PENY FINCOM P. LTD. HAVE MERELY PROVIDED ACCOMMODATION ENTRIES OF SHARE APPLICATION MONEY TO (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 15 APPELLANT AND THEREFORE ADDITION OF AMOUNTS CREDITE D IN NAME OF THESE TWO COMPANIES OF RS. 1,05,00,000/- & RS. 60,00,000/- U/S 68 OF THE I .T. ACT IS UPHELD. 4.211) NO ADVERSE STATEMENT / MATERIAL WAS THERE FO R OTHER SHARE APPLICANT COMPANIES. THE AO DID NOT CARRY OUT ANY VERIFICATION OR ENQUIR Y INTO THE MATERIAL PLACED BY APPELLANT BEFORE HIM. NEITHER ANY ENQUIRY LETTER NOR ANY SUMM ONS WERE ISSUED TO SUCH SHARES HOLDERS. IN THIS REGARD THE APPELLANT HAS RIGHTLY P LACED RELIANCE ON FOLLOWING CASE LAWS :- (I) HONBLE ITAT INDORE BENCH IN THE CASE OF STL EX TRUSION (P) LIMITED VIDE ORDER DATED 10.05.2010 BEING ITA NO. (SS) 259. 260/ IND/2008 AFTER CONSIDERING THE JUDGEMENT OF HONBLE MP HIGH COURT IN THE CASE OF RATHI FINLEASE LTD. REPORTED IN 215 CTR 429 (MP) HELD AS UNDER :- PAGE 7 IN THE PRESENT APPEAL, SINCE THE ASSESSEE HAS DISCHARGED ITS ONUS BY PROVING THE IDENTITY OF SUBSCRIBERS AND EVEN OTHERWISE HAD ANY SUSPICION STILL REMAINED IN HIS MIND, NOTHING PREVENTD HIM TO INITIATE ACTION AS PE R THE PREVISIONS OF THE ACT. THE EXISTENCE OF SUBSCRIBER TO SHARE APPLICATION IS NOT IN DOUBT AS THE ASSESSEE DULY FURNISHED THEIR NAMES, AGE, ADDRESS, DATE OF FILING THE APPLICATION, NUMBER OF SHARES FOR WHICH RESPECTIVE APPLICATIONS WERE MADE, AMOUNT GIV EN AND THE SOURCE OF INCOME OF THE APPLICANT. IN VIEW OF THESE FACTS, WE ARE OF TH E CONSIDERED OPINION THAT THERE IS NO JUSTIFICATION FOR MAKING THE IMPUGNED ADDITION BECAUSE ONCE THE EXISTENCE OF THE INVESTOR/SHARE SUBSCRIBERS IS PROVED, ONUS SHIFTS O N THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPLICANTS AR BOGUS OR THE IMPUGNE D MONEY BELONGS TO THE ASSESSEE COMPANY ITSELF. (II) THAT THE ABOVE ORDER OF ITAT INDORE BENCH HAS ALSO BEEN CONFIRMED BY THE HONBLE M.P. HIGH COURT IN THE CASE OF CIT V/S STL EXTRUSION (P) LTD. REPORTED IN 53 DTR 97(2011) AFTER REFERRING ITS EARLIER ORDER I N THE CASE OF CIT V/S RATHI FINLEASE LTD. REPORTED. IN 215 CTR 429 HAS DECIDED IN FAVOUR OF THE ASSESSEE WHEREIN HONBLE JURISDICTIONAL HIGH COURT ALSO RELI ED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS P LIMITED. (III) HONBLE APEX COURT IN THE CASE OF LOVELY EXPO RTS P LIMITED AS REPORTED IN 216 CTR 195 HAS DISMISSED THA SLR AS FILED BY THE D EPARTMENT. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 16 IN THIS CASE THE DELHI HIGH COURT OBSERVED THAT WH EN DETAILS WHERE FURNISHED BY ASSESSEE, THE BURDEN SHIFTED TO THE ASSESSING OFFIC ER TO INVESTIGATE INTO THE CREDITWORTHINESS OF THE SHARE APPLICANTS WHICH HE W AS UNABLE TO DISCHARGE. (IV) HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS NOVA PROMOTERS & FINLEASE (P) LTD REPORTED IN 342 ITR 169 HAS HELD T HAT (REFER PARA 38) 38. THE RATIO OF A DECISION IS TO BE UNDERSTOOD AN D APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE S EEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADD RESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSI NG OFFICER AND THE ASSESSING OFFICE HAS NOT CONDUCTED ANY ENQUIRTY INTO THE SAME OR HAS NOT MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FLASE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC. 68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE W ITH LAW (V) HONBLE DELHI HIGH COURT VIDE ITS ORDER DT 11.0 4.2012 IN THE CASE OF GOEL SONS GOLDEN ESTATES PVT LTD. HAS HELD (COPY OF THE DECISION IS REPRODUCED IN THE CASE OF M/S EXCELLANCE TOWN PLANNER P LIMITED (APPE AL NO. ITA NO. 871 / DEL/2010 DT 25-05 2012 (REFER PARA 3 OF THAT ORDER):- 3 WE HAVE EXAMINED THE SAID CONTENTION AND FIND TH AT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS FILED CONFIRMATION LE TTERS FROM THE COMPANIES, THEIR PAN NUMBER, COPY OF BANK STATEMENTS, AFFIDAVITS AND BAL ANCE SHEET. THEREAFTER THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO PRODUCE THE SAID DIRECTORS/PARTIES. ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE THEM TH E ASSESSING OFFICE DID NOT CONSEQUENT THERETO CONDUCT ANY INQUIRTY AND CLOSED THE PROCEEDINGS. THIS IS A CASE WHERE THE AESSESSING OFFICE HAS FAILED TO CONDUCT N ECESSARY INQUIRY VERIFICATION AND DEAL WITH THE MATTER IN DEPTH SPECIALLY AFTER THE A FFIDAVIT/CONFIRMATION ALONG WITH THE BANK STATEMENT ETC. WERE FILED . IN CASE THE ASSESSING OFFICER HAD CONDUCTED THE S AID ENQUIRIES AND INVESTIGATION PROBABLY THE CHALLENGE MADE BY THE REVENUE WOULD BE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 17 JUSTIFIED. IN THE ABSENCE OF THESE INQUIRIES AND NO N-VERIFICATION OF THE DETAILS AT THE TIME OF ASSESSMENT PROCEEDINGS, THE FACTUAL FINDINGS REC ORDED BY THE ASSESSING OFFICER WERE INCOMPLETE AND SPARSE. THE IMPUGNED ORDER PASSED CA NNOT BE TREATED AND REGARDED AS PERVERSE. THE APPEAL IS DISMISSED AS NO SUBSTANTIAL QUESTION OF LAW ARISES. (VIII) HONBLE DELHI HIGH COURT VIDE ORDER DT 21-01-2013 I N THE CASE OF GANGESHWARI METAL PVT LTD. (APPEAL NO ITA NO 597/20 12) HAS DISCUSSED THE SIMILAR ISSUE IN DETAIL AND AFTER CONSIDERING THE D ECISION IN THE CASE OF NOVA PROMOTERS P LIMITED HAS HELD THAT :- THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LTD. ( SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT DECIDED IN FAVO UR OF THE REVENUE IN THAT CASE. HOWEVER THE FACTS OF THE PRESENT CASE ARE CLEARLY D ISTINGUISHABLE AND FALL IN THE SECOND CATEGORY AND ARE MORE IN LINE WITH FACTS OF LOVELY EXPORTS (P) LTD. (SUPRA). THERE WAS A CLEAR LACK OF INQUIRY ON THE P ART OF THE ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED ALL THE MATERIAL WHICH W E HAVE ALREADY REFFERED TO ABOVE. IN SUCH AN EVENTUALITY NO ADDITION CAN BE MA DE UNDER SECTION 68 OF THE ACT CONSEQUENTLY, THE QUESTION IS ANSWERED IN THE N EGATIVE. THE DECISION OF THE TRIBUNAL IS CORRECT IN LAW. THE APPEAL IS DISMISSED. 4.2.12) IN VIEW OF THE AFORESAID DISCUSSION, I AM O F THE CONSIDERED VIEW THAT APPELLANT HAS FAILED TO EXPLAIN GENUINENESS AND CRE DITWORTHINESS OF THE CREDITS SHOWN AS RECEIVED FROM FOUR SHARE APPLICANTS NAMELY MAX T OUCH SECURITIES P. LTD. (SHARE APPL. MONEY OF RS. 5 LAKH) BECAUSE OF HUGE UNEXPLAINED CA SH DEPOSITS IN ITS BANK ACCOUNT DIRECTELY LINKED TO SUCH ISSUE OF CHEQUE TO APPELLA NT, CENTRAL REGION INF. & CONST. P. LTD. (SHARE APPL. MONEY OF RS. 5 LAKH) BECAUSE ITS BANK ACCOUNT WAS NOT FURNISHED, MONEY PENNY FINCOM P LTD. (SHARE APPLICATION MONEY OF RS. 60,00,000/-) AND NEEMA INVEST. P. LTD. (SHARE APPL. MONEY RS. 1,05,00,000/ -) BECAUSE THEY HAVE PROVIDED ACCOMMODATION ENTRY OF SHARE APPLICATION AND ALSO B ECAUE IT WAS OBSERVED THAT THESE 4 COMPANIES HAVE MEAGER INCOME IN LAST 5 YEARS RAISIN G SERIOUS QUESTION MARK ON THEIR CREDITWORTHINESS AND THEIR BALANCE SHEETS ARE TYPIC AL OF THE PERSONS PROVIDING ACCOMMODATION ENTRIES. HENCE OUT OF TOTAL ADDITION OF RS. 4,90,00,000/- AS MADE BY AO U/S 68 OF THE I.T. ACT, ADDITION OF RS. 1,75,00,000 /- IS HEREBY CONFIRMED, WHILE BALANCE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 18 ADDITION OF RS. 3,15,00,000/- IS HEREBY DELETED BEC AUSE IN RESPECT OF REMAINING 4 SHARE APPLICANTS SUFFICIENT EVIDENCES WERE ADDUCED BY APP ELLANT WHICH COULD NOT BE DISLODGED BY THE AO. AS A RESULT THIS GROUND OF APPEAL IS PAR TLY ALLOWED. 4. ASSESSEE HAS FILED THE APPEAL AGAINST THE ADDITI ON SUSTAINED BY THE LD. CIT(A) AND DEPARTMENT IS IN APPEAL AGAINST DELE TING THE ADDITION. THE AR HAS FILED THE WRITTEN SUBMISSION WHICH READS AS UNDER: 2.1] THE ASSESSEE IN THE GROUND NO 2 OF ITS APPEAL HAS CHALLENGED THE ADDITION OF RS 1,70,00,000/- ASMAINTAINED BY THE LD CIT[A] AND DEP ARTMENT HAS CHALLENGED THE DELETION OF THE ADDITION OF RS 3,15,00,000/- 2.2.1] THE ASSESSEE COMPANY HAS RECEIVED SHARE APPL ICATION MONEY FROM THE FOLLOWING SHARE APPLICANT. DETAIL OF THE SAME IS AS UNDER:- S.N O NAME OF THE APPLICANT PA NO OPENING BALANCE AS ON 01- 04-2005 RECEIVED DURING THE YEAR TOTAL AS ON 31.03.2006 1 SUNDROP SECURITY P. LTD. AACCS5419C 15,00,000 70, 00,000 85,00,000 2 RIFCA COST. P. LTD.[ NOW KNOWN AS SAUMYA INFRAVENTURES P LIMITED ] AABCR2220B NIL 40,00,000 40,00,000 3 PRAMILA INVESTMENT & FINANCE P LTD AABCP8031A NIL 25,00,000 25,00,000 4 NEEMA INVESTMENT P LIMITED AABCN5299 40,00,000 65,00,000 1,05,00,000 5 MONEY PENNY FINCOM PVT. LTD. AADCM5417F NIL 60,00,000 60,00,000 6 PERSUIT SECURITY P. LTD. AAACP3800E 20,00,000 1,4 5,00,000 1,65,00,000 7 MAX TOUCH SECURITY LTD. AADCM4409R NIL 5,00,000 5,00,000 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 19 8 CENTRAL REGION INFRASTRUCTURE & CONT. PVT. LTD. AACCC5101D NIL 5,00,000 5,00,000 75,00,000 4,15,00,000 4,90,00,000 2.2.2] THAT THE ASSESSEE HAD RECEIVED SHARE APPLICA TION MONEY OF RS 4,15,00,000/- ONLY IN THE YEAR UNDER CONSIDERATION. HOWEVER, THE ASSESSING OF FICER HAS ADDED AN AMOUNT OF RS 4,90,00,000/- TO THE INCOME OF THE ASSESSEE IN PLAC E OF RS 4,15,00,000/-. 2.2.3] THE LD CIT APPEAL MAINTAINED ADDITION TO THE EXTENT OF RS 1,75,00,000/- IN RESPECT OF THE FOLLOWING COMPANIES:- S.N O NAME OF THE APPLICANT PA NO TOTAL AS ON 31.03.2006 RELIEF ALLOWED ADDITION MAINTAINED 1 SUNDROP SECURITY P. LTD. AACCS5419C 85,00,000 85,00,000 NIL 2 RIFCA COST. P. LTD.[ NOW KNOWN AS SAUMYA INFRAVENTURES P LIMITED ] AABCR2220B 40,00,000 40,00,000 NIL 3 PRAMILA INVESTMENT & FINANCE P LTD AABCP8031A 25,00,000 25,00,000 NIL 4 NEEMA INVESTMENT P LIMITED AABCN5299 1,05,00,000 NIL 1,05,00,000 5 MONEY PENNY FINCOM PVT. LTD. AADCM5417F 60,00,000 NIL 60,00,000 6 PERSUIT SECURITY P. LTD. AAACP3800E 1,65,00,000 1 ,65,00,000 NIL 7 MAX TOUCH SECURITY LTD. AADCM4409R 5,00,000 NIL 5,00,000 8 CENTRAL REGION INFRASTRUCTURE & CONT. PVT. LTD. AACCC5101D 5,00,000 NIL 5,00,000 4,90,00,000 3,15,00,000 1,75,00,000 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 20 2.2.4] THE LD CIT[A] GROSSLY ERRED IN MAINTAINING ADDITION OF RS 1,05,00,000/- IN RESPECT OF AMOUNT RECEIVED FROM M/S NEEMA INVESTMENT P LIMITED EVEN WHEN IN THE YEAR UNDER CONSIDERATION THE APPELLANT HAD RECEIVED SHARE APPL ICATION MONEY OF RS 65,00,000/- AND BALANCE AMOUNT OF RS 40,00,000/- WAS RECEIVED IN TH E ASST YEAR 2005-06. 2.2.5] THE APPELLANT HAD NOT ALLOTTED SHARES IN RES PECT OF THE ENTIRE AMOUNT OF SHARE APPLICATION MONEY BUT AN AMOUNT OF RS 1,65,00,000/- WAS REFUNDE D BY THE APPELLANT:- S.N O NAME OF THE APPLICANT PA NO SHARE APPLICATION AS ON 31-03- 2006 AMOUNT REFUNDED DURING 01- 04-2006 TO 31-03-2007 SHARE ALLOTTED AS ON 31.03.2007 1 SUNDROP SECURITY P. LTD. AACCS5419C 85,00,000 NIL 85,00,000 2 RIFCA COST. P. LTD.[ NOW KNOWN AS SAUMYA INFRAVENTURES P LIMITED ] AABCR2220B 40,00,000 NIL 40,00,000 3 PRAMILA INVESTMENT & FINANCE P LTD AABCP8031A 25,00,000 NIL 25,00,000 4 NEEMA INVESTMENT P LIMITED AABCN5299 1,05,00,000 50,00,000 55,00,000 5 MONEY PENNY FINCOM PVT. LTD. AADCM5417F 60,00,000 25,00,000 35,00,000 6 PERSUIT SECURITY P. LTD. AAACP3800E 1,65,00,000 90,00,000 75,00,000 7 MAX TOUCH SECURITY LTD. AADCM4409R 5,00,000 NIL 5,00,000 8 CENTRAL REGION INFRASTRUCTURE & CONT. PVT. LTD. AACCC5101D 5,00,000 NIL 5,00,000 4,90,00,000 1,65,00,000 3,25,00,000 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 21 2.3.1] THE ASSESSING OFFICER IN THE CONCLUDING PARA OF THE ASSESSMENT ORDER AS PASSED U/S 143(3) OF THE INCOME TAX ACT ON 31-12-2008, MENTIO NED THAT THE SHARE HOLDER COMPANIES WERE DEPOSITED HUGE AMOUNT OF CASH IN THEIR BANK ACCOUNT PRIOR TO ISSUANCE OF THE CHEQUE TO THE ASSESSEE COMPANY TOWARDS SHARE APPLICATION MONEY. T HE SAID OBSERVATION OF THE ASSESSING OFFICER WAS GENERAL IN NATURE AND THE SAM E IS FACTUALLY INCORRECT. THE SAID OBSERVATION WAS BASED ON ASSESSMENT PROCEEDING OF THE SOME OF T HE SHARE HOLDERS IN THE ASSESSMENT YEAR 2005-06. HOWEVER, THE ASSESSING OFFICER HAS NOT PRO VIDED THE NAME OF THE SHARE HOLDERS IN WHOSE ACCOUNT CASH WERE DEPOSITED. THE INCOME TAX A SSESSMENTS IN RESPECT OF THE FOLLOWING SHAREHOLDERS WERE FINALIZED FOR THE ASSESSMENT YEAR 2005-06:- S.NO NAME OF THE COMPANY PAN NO 1 PRAMILA INVESTMENT & FINANCE AABCP8031A 2 NEEMA INVESTMENT P LIMITED AABCN5299 3 MONEY PENNY FINCOM PVT. LTD. AADCM5417F 2.3.2] THE ASSESSEE HAD FILED COPY OF BANK STATEMEN TS IN RESPECT OF THE FOLLOWING COMPANIES:- S.NO NAME OF THE APPLICANT PA NO ADDITION PAGE NOS 1 SUNDROP SECURITY P. LTD. AACCS5419C 85,00,000 120-129 2 RIFCA COST. P. LTD.[ NOW KNOWN AS SAUMYA INFRAVENTURES P LIMITED ] AABCR2220B 40,00,000 155-164 3 PRAMILA INVESTMENT & FINANCE AABCP8031A 25,00, 000 186-189 4 NEEMA INVESTMENT P LIMITED AABCN5299 1,05,00,000 219-225 5 MONEY PENNY FINCOM PVT. LTD. AADCM5417F 60,00, 000 262-264 6 PERSUIT SECURITY P. LTD. AAACP3800E 1,65,00,000 3 10-328 2.3.3] THAT ON PERUSAL OF THE BANK STATEMENT AS FI LED ABOVE, YOUR HONOUR WILL FIND THAT NO CASH WERE DEPOSITED IN THE BANK ACCOUNT OF ALL THE ABOVE SHAREHOLDERS. THUS, FACTUALLY THE AO WAS NOT CORRECT IN OBSERVING THAT CASH WERE DEPOSITED I N THE BANK ACCOUNT OF THE SHARE HOLDERS PRIOR TO ISSUANCE OF THE CHEQUES. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 22 2.3.4] THE COMPANIES IN WHICH ALLEGED CASH WERE DEP OSITED ASSESSED BY THE SAME AO I.E. BY THE ACIT 5(1), INDORE AND ALSO BY ITO 5(1), INDORE. THUS, THE ASSESSING OFFICER WAS WELL IN ITS JURISDICTION TO EXAMINE THE CORRECT SOURCE OF CASH DEPOSITED BY THE ALLEGED SHARE APPLICANT BUT THE SAID EXERCISE WAS NOT DONE BY THE ASSESSING OFF ICER.THE ASSESSING OFFICER HIMSELF HAS NOT BROUGHT OUT ANY SINGLE INSTANCE OF CASH DEPOSIT AGA INST ISSUE OF CHEQUE TO THE ASSESSEE COMPANY. 2.3.5] THAT FROM THE BANK ACCOUNT IT IS CLEAR THAT CASH AS DEPOSITED IN THE BANK ACCOUNT WAS VERY SMALL AND NOT DIRECTLY LINKED WITH THE CHEQUES ISSUED TO THE ASSESSEE COMPANY. COPY OF BANK ACCOUNT HIGHLIGHTING THE CASH DEPOSIT AND WITH DRAWAL HAS ALSO BEEN FILED IN YOUR HONOUR OFFICE. 2.4.1] THE ASSESSEE FROM THE FOLLOWING SHARE APPLI CANT RECEIVED UNSECURED LOANS IN THE ASSTYEARS 2004-05 AND 2005-06 DETAIL OF THE SAME IS AS UNDER:- S.NO NAME OF THE COMPANIES PAN NO 2004-05 [ RS] 2005-06 [RS] 1 MONEY PENNY FINCOM P LIMITED AABCM5417F 20,00,000 2 PRAMILA INVESTMENT & FINANCE LIMITED AABCP8031A 20,00,000 3 NEEMA INVESTMENTS (P) LTD AABCN5299A 40,00,000 4 SUNDROP SECURITIES PRIVATE LIMITED AACCS5419C 1 5,00,000 5 PURSUIT SECURITIES LIMITED AAACP3800E 20,00,000 40,00,000 75,00,000 2.4.2] CONFIRMATIONS OF UNSECURED LOANS WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDING AND THE SAME WAS ALSO ACCEPTED BY THE AS SESSING OFFICER IN THOSE YEARS. THAT WHEN THE IDENTITY , GENUINENESS IN RESPECT OF LOAN CREDI TORS WERE ACCEPTED BY THE ASSESSING OFFICER IN THAT CASE THERE WAS NO REASON TO DISBELIEVE REGARDI NG THE IDENTITY OF THE SHARE APPLICANT. 2.5] THE SUMMARY OF PAPERS AS FILED BY THE ASSESSEE IN RESPECT OF THE ABOVE COMPANIES AS FILED BY THE ASSESSEE BEFORE THE AO AND DURING THE COURSE OF APPEAL PROCEEDING ARE AS UNDER:- (I) SUNDROP SECURITIES P LIMITED- SHARE APPLICATION MON EY OF RS 8500000/- S.NO DESCRIPTION PG NO OF (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 23 COMPILATION 1 COPY OF A/C OF SUNDROP SECURITIES P. LTD IN THE B OOKS OF THE ASSESSEE 99 2 COPY OF MINUTES OF THE MEETING OF THE BOARD OF DI RECTOR OF THE SHARE APPLICANT AUTHORIZING SHRI PARAS JAIN FOR INVESTMEN T IN THE SHARES OF THE ASSESSEE COMPANY 100 3 COPY OF COVERING LETTER ATTACHED WITH THE CHEQUES FOR INVESTMENT IN THE SHARE APPLICATION OF THE ASSESSEE COMPANY. 101-108 4 COPY OF SHARE APPLICATION MONEY FORM DULY SIGNED AND FILED BY THE SHARE APPLICANT 109-115 5 COPY OF CONFIRMATION OF SHARE APPLICATION MONEY O F RS 8500000/- DULY SIGNED WITH PAN NO 116 6 COPY OF ACK OF INCOME TAX RETURN AS FILED FOR THE ASSESSMENT YEAR 2006-07. 117 7 COPY OF AFFIDAVIT OF THE DIRECTOR SHRI SHAILENDRA S CHOUHAN DT 11-06- 2009 SWORN BEFORE NOTARY PUBLIC ACCEPTING THE INVES TMENT IN THE SHARE APPLICATION MONEY IN THE ASSESSEE COMPANY. 118 8 COPY OF BANK STATEMENT OF THE SHARE HOLDERS WITH THE BANK OF RAJASTHAN LIMITED FROM WHICH INVESTMENT IN THE SHAR E APPLICATION MONEY WAS MADE IN THE ASSESSEE COMPANY. 120-129 9 COPY OF AUDITED BALANCE SHEET OF THE SHARE HOLDER FOR THE YEAR ENDED ON 31.03.2005. 130-140 10 COPY OF CONFIRMATION LETTER DULY SIGNED BY THE S HARE HOLDER WITH ITS PAN NO IN THE A.Y. 05-06 WHICH WAS ACCEPTED AS GENU INE IN THAT YEAR. 141-142 11 COPY OF NOTICE AS RECEIVED FROM TAX RECOVERY OFF ICER-4, INDORE DT 21.06.2013 REGARDING THE OUTSTANDING DEMAND OF THE SHARE HOLDERS IN THE NAME OF THE ASSESSEE COMPANY. 143 12 COPY OF LETTER DT 24-06-2013 AS FILED IN RESPONS E TO THE NOTICE AS RECEIVED FROM THE TRO-4, INDORE DT.24.06.2013 144-145 (II) RIFCA CONSTRUCTION P LIMITED- [ NOW KNOWN AS SAUMYA INFRAVENTURES P LIMITED] SHARE APPLICATION MONEY OF RS 4000000/- S.NO DESCRIPOTION PG NO OF COMPILATION 1 COPY OF A/C OF RIFCA CONSTRUCTION P. LTD IN THE B OOKS OF THE ASSESSEE 146 2 COPY OF RESOLUTION OF THE MINUTE OF MEETING OF BO ARD OF DIRECTORS OF THE SHARE APPLICANT COMPANY, AUTHORIZING SHRI AMIT JHA FOR INVESTMENT IN THE SHARE OF THE ASSESSEE COMPANY 147 3 COVERING LETTER OF THE SHARE APPLICANT AS ADDRESS ED TO THE ASSESSEE 148-149 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 24 COMPANY ALONG WITH THE CHEQUE AS RECEIVED FOR SHARE APPLICATION MONEY 4 COPY OF SHARE APPLICATION MONEY FORM DULY FILLED AND SIGNED BY THE SHARE APPLICANT 150-151 5 COPY OF CONFIRMATION OF SHARE APPLICATION MONEY OF RS 4000000/- DULY SIGNED WITH PAN NO 152 6 COPY OF LETTER DT. 29-11-2012 AS WRITTEN BY THE C IT (A) TO THE BRANCH MANAGER OF IDBI BANK FOR FURNISHING BANK STATEMENTS OF THE SHARE APPLICANT FOR THE PERIOD FROM 01-04-2005 TO 31-07-2 005. 153 7 COPY OF LETTER DT 20-12-2012 AS RECEIVED FROM THE CIT(A) ALONG WITH BANK STATEMENT 154 8 COPY OF BANK STATEMENT OF THE SHARE HOLDERS WITH THE IDBI BANK FROM WHICH INVESTMENT IN THE SHARE APPLICATION MONE Y WAS MADE IN THE ASSESSEE COMPANY. 155-164 9 COPY OF MASTER RECORD AS DOWNLOADED FROM THE SITE OF THE REGISTRAR OF COMPANIES. 165-166 10 COPY OF AUDITED BALANCE SHEET OF THE SHARE HOLDE R COMPANY FOR THE YEAR ENDED ON 31.03.2005 167-175 (III) PRAMILA INVESTMENT & FINANCE P LIMITED- SHARE APPLICATION MONEY OF RS 2500000/- S.NO DESCRIPTION PG NO OF COMPILATION 1 COPY OF A/C OF PRAMILA INVESTMENT & FINANCE P. L TD IN THE BOOKS OF THE ASSESSEE 176 2 COPY OF EXTRACT OF MINUTES OF THE BOARD MEETING O F THE DIRECTOR OF THE SHARE APPLICANT COMPANY AUTHORIZING SHRI K C PANDYA FOR INVESTMENT IN THE SHARES OF THE ASSESSEE COMPANY 177 3 COPY OF COVERING LETTER OF SHARE APPLICANT COMPAN Y DULY ADDRESSED TO THE ASSESSEE COMPANY WITH CHEQUES TOWARDS INVEST MENT IN THE SHARE APPLICATION MONEY OF THE ASSESSEE COMPANY 178-179 4 COPY OF SHARE APPLICATION MONEY FORM DULY FILLED AND SIGNED ON BEHALF OF THE SHARE HOLDER 180-181 5 CONFIRMATION OF SHARE APPLICATION MONEY OF RS 250 0000/- AS RECEIVED FROM THE SHARE APPLICANT DULY SIGNED WITH PAN NO DULY CONFIRMING THE INVESTMENT MADE IN THE SHARE OF THE ASSESSEE COMPANY. 182 6 COPY OF ACK OF INCOME TAX RETURN OF THE SHARE APP LICANT AS FILED FOR THE ASSESSMENT YEAR 2006-07 183 7 COPY OF AFFIDAVIT OF SHRI MANOJ PANDYA DT 11-06-2 009, DIRECTOR OF THE ASSESSEE COMPANY SWORN BEFORE THE NOTARY DULY ACCEP TING THE INVESTMENT MADE IN THE SHARE APPLICATION MONEY IN T HE ASSESSEE 184-185 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 25 COMPANY. 8 COPY OF BANK STATEMENT OF THE SHARE HOLDER WITH T HE UTI BANK LIMITED FROM WHICH INVESTMENT IN THE SHARE APPLICAT ION MONEY WAS MADE IN THE ASSESSEE COMPANY. 186-189 9 COPY OF MASTER RECORD AS DOWNLOADED FROM THE SITE OF THE REGISTRAR OF COMPANIES. 190-191 10 CONFIRMATION OF LOAN DULY SIGNED WITH PAN NO. IN TH E A.Y. 05 - 06 DULY ACCEPTED AS GENUINE 192-193 11 COPY OF AUDITED BALANCE SHEET OF SHARE HOLDER AS ON 31.03.2006 194-204 (IV) NEEMA INVESTMENT P LIMITED SHARE APPLICATION MONEY OF RS 1,05,00,000/- S.NO DESCRIPOTION PG NO OF COMPILATION 1 COPY OF EXTRACT OF MINUTES OF THE BOARD MEETING O F THE DIRECTOR AUTHORIZING SHRI V K JAIN FOR INVESTMENT IN THE SHA RES OF THE ASSESSEE COMPANY 205 2 COPY OF SHARE APPLICATION FORM DULY FILLED AND SI GNED ON BEHALF OF THE SHARE HOLDER 206-211 3 COPY OF CONFIRMATION LETTER DULY SIGNED WITH PAN NO IN RESPECT OF SHARE APPLICATION MONEY OF RS 10500000/- [ RS 40000 00/- RECEIVED ON IN THE PREVIOUS YEAR RELEVANT TO THE ASST YE AR 2005-06] 212 4 COPY OF ACK OF INCOME TAX RETURN AS FILED FOR THE ASSESSMENT YEAR 2006-07 213 5 COPY OF AFFIDAVIT OF DIRECTOR OF COMPANY SHRI RAM ESH CHAND KHATOD DULY SWORN BEFORE THE NOTARY ON 03-09-2010 A CCEPTING THE INVESTMENT IN THE SHARE APPLICATION OF THE ASSESSEE COMPANY 214-215 6 COPY OF AFFIDAVIT OF DIRECTOR OF CO MPANY SHRI RAMESH CHAND KHATOD DULY SWORN BEFORE THE NOTARY ON 31-03-2012 I N THE CASE OF M/S SHIVANGI ESTATE LIMITED [NOW KNOWN AS M/S SH IVANGI ROLLING MILLS LIMITED] ACCEPTING THE INVESTMENT IN THE SHARE APPLICATION EVEN AFTER SEARCH IN HIS PREMISES. 216-218 7 COPY OF BANK STATEMENT OF THE SHARE HOLDER WITH T HE BANK OF RAJASTHAN LIMITED FROM WHICH INVESTMENT IN THE SHAR E APPLICATION MONEY OF THE ASSESSEE WAS MADE 219-225 8 COPY OF MASTER RECORD AS DOWNLOADED FROM THE SITE OF THE REGISTRAR OF COMPANIES 226-227 9 CONFIRMATION OF SHARE APPLICATION MONEY / LOANS DUL Y SIGNED WITH PAN NO. FOR PREVIOUS A.Y. 05-06 ACCEPTED AS G ENUINE IN THAT YEAR 228-229 10 COPY OF AUDITED BALANCE SHEET OF SHARE HOLDER AS ON 31.03.2006 230-240 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 26 (V) MONEY PENNY FINCOM P LIMITED SHARE APPLICATI ON MONEY OF RS 6000000/- S.NO DESCRIPOTION PG NO OF COMPILATION 1 COPY OF A/C OF MONEY PENNY P. LTD IN THE BOOKS OF THE ASSESSEE. 241 2 COPY OF EXTRACT OF MINUTES OF THE BOARD MEETING O F THE DIRECTOR OF THE SHARE APPLICANT COMPANY DULY AUTHORIZING SHRI GIRIS H SURANA FOR INVESTMENT IN THE SHARES OF THE ASSESSEE COMPANY. 242 3 COPY OF COVERING LETTER OF SHARE APPLICANT COMPAN Y DULY ADDRESSED TO THE ASSESSEE COMPANY WITH CHEQUES TOWARDS INVEST MENT IN THE SHARE APPLICATION MONEY OF THE ASSESSEE COMPANY. 243-248 4 COPY OF SHARE APPLICATION FORM DULY FILLED AND SI GNED ON BEHALF OF THE SHARE HOLDER. 249-254 5 CONFIRMATION OF SHARE APPLICATION MONEY OF RS 600 0000/- DULY SIGNED WITH PAN NO. FOR A.Y. 06-07. 255 6 COPY OF ACK OF INCOME TAX RETURN AS FILED FOR THE ASSESSMENT YEAR 2006-07. 256 7 COPY OF AFFIDAVIT OF SHRI RAMESH CHAND KHATOD DIR ECTOR OF SHARE APPLICANT COMPANY DULY SWORN BEFORE THE NOTARY ON 0 3-09-2010 ACCEPTING THE INVESTMENT IN THE SHARE APPLICATION O F THE ASSESSEE COMPANY 257-258 8 COPY OF AFFIDAVIT OF DIRECTOR OF COMPANY SHRI RAMES H CHAND KHATOD DULY SWORN BEFORE THE NOTARY ON 31-03-2012 I N THE CASE OF M/S SHIVANGI ESTATE LIMITED [NOW KNOWN AS M/S SH IVANGI ROLLING MILLS LIMITED] ACCEPTING THE INVESTMENT IN THE SHARE APPLICATION EVEN AFTER SEARCH IN HIS PREMISES. 259-261 9 COPY OF BANK STATEMENT OF THE SHAREHOLDER WITH SH UBH LAXMI MAHILA CO-OP BANK LIMITED FROM WHICH INVESTMENT IN THE SHA RE APPLICATION MONEY OF THE ASSESSEE COMPANY WAS MADE 262-264 10 COPY OF MASTER RECORD AS DOWNLOADED FROM THE SIT E OF THE REGISTRAR OF COMPANIES 265-266 11 CONFIRMATION OF UNSECURED LOAN AS RECEIVED FROM THE SHARE APPLICANT DULY SIGNED WITH PAN NO IN THE ASST YEAR 2004-05 DU LY ACCEPTED AS GENUINE 267-268 12 COPY OF AUDITED BALANCE SHEET OF SHARE HOLDER AS ON 31.03.2006 269-279 (VI ) PURSUIT SECURITIES P LIMITED SHARE APPLICAT ION MONEY OF RS 16500000/- S.NO DESCRIPTION PG NO OF (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 27 COMPILATION 1 COPY OF COVERING LETTER AS ADDRESSED TO THE ASSES SEE COMPANY WITH CHEQUE TOWARDS INVESTMENT IN THE SHARE APPLICATION MONEY 280-293 2 COPY OF SHARE APPLICATION FORM DULY FILLED AND SI GNED ON BEHALF OF THE SHARE HOLDER 294-305 3 COPY OF CONFIRMATION OF SHARE APPLICATION MONEY O F RS 16500000/- DULY SIGNED WITH PAN NO WHICH INCLUDE OPENING BALAN CE OF RS 2000000/-. 306 4 COPY OF ACK OF INCOME TAX RETURN AS FILED FOR THE ASSESSMENT YEAR 2006-07 307 5 COPY OF AFFIDAVIT OF DIRECTOR OF COMPANY SHRI VIV EK KUMAR DWIVEDI DULY SWORN BEFORE THE NOTARY ON 22-06-2009 ACCEPTIN G THE INVESTMENT IN THE SHARE APPLICATION OF THE ASSESSEE COMPANY 308-309 6 COPY OF BANK STATEMENT OF THE SHARE HOLDERS WITH THE BANK OF RAJASTHAN LIMITED FROM WHICH THE INVESTMENT IN THE SHARE APPLICATION MONEY IN THE ASSESSEE COMPANY WAS MADE 310-328 7 CONFIRMATION OF UNSECURED LOAN AS RECEIVED FROM THE SHARE APPLICANT IN THE ASST YEAR 2005-06 DULY SIGNED WITH PAN NO ACCEPTED AS GENUINE 329-330 8 COPY OF AUDITED BALANCE SHEET OF THE SHARE APPLIC ANT FOR THE YEAR ENDED ON 31.03.2005 331-341 9 COPY OF NO TICE AS RECEIVED FROM TAX RECOVERY OFFICER - 4, INDORE DT 21.06.2013 IN THE NAME OF THE ASSESSEE COMPANY R EGARDING THE OUTSTANDING DEMAND OF THE SHARE APPLICANT M/S P ERSUIT SECURITIES P LIMITED 342 10 COPY OF LETTER DT 24-06-2013 AS FILED BEFORE THE TAX RECOVERY OFFICER IN RESPONSE TO THE NOTICE AS RECEIVED FROM THE TRO- 4, INDORE DT. 21.06.2013. 343-344 (VII) MAX TOUCH SECURITIES P LIMITED- SHARE APPLIC ATION MONEY OF RS 500000/- S.NO DESCRIPOTION PG NO OF COMPILATION 1 COPY OF SHARE APPLICATION MONEY FORM DULY FILLED AND SIGNED 345 2 COPY OF CERTIFICATE OF INCORPORATION 346 3 ARTICLE OF ASSOCIATION OF THE SHARE HOLDER COMPAN Y 347-354 4 MEMORANDUM OF ASSOCIATION OF THE SHARE HOLDER COM PANY 355-360 5 FORM NO 18 AS FILED WITH THE REGISTRAR OF COMPANI ES I.E. AN INTIMATION FOR CHANGE OF ADDRESS 361-363 6 COPY OF AUDITED BALANCE SHEET OF THE SHARE APPLIC ANT COMPANY FOR 364-375 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 28 THE YEAR ENDED ON 31.03.2005 7 COPY OF ANNUAL RETURN OF THE SHARE HOLDER AS FILE D FOR THE YEAR ENDED ON 31.03.2006 376-382 8 COPY OF CONFIRMATION LETTER DULY SIGNED WITH PAN NO IN RESPECT OF SHARE APPLICATION MONEY OF RS 500000/- AS RECEIVED BY THE ASSESSEE 383 9 COPY OF NOTICE U/S 226(3) AS RECEIVED BY THE APPE LLANT COMPANY FROM TAX RECOVERY OFFICER-4(1), INDORE DT 13.06.201 3 AGAINST THE OUTSTANDING DEMAND OF THE SHARE APPLICANT COMPANY M /S MAXTOUCH SECURITIES P LIMITED 384 10 COPY OF REPLY DT 18-06-2013 TO THE NOTICE AS REC EIVED U/S 226(3) TO THE TAX RECOVERY OFFICER-4(1), INDORE FOR THE OUTST ANDING DEMAND OF THE SHARE HOLDER COMPANY 385 11 COPY OF CERTIFICATE PROCEEDINGS RULES, 1962 AS RECEIVED FROM TAX RECOVERY OFFICER-4, INDORE DT 21.06.2013 BY THE APP ELLANT REGARDING THE OUTSTANDING DEMAND OF THE SHARE HOLDER COMPANY 386 12 COPY OF LETTER DT 24-06-2013, AS FILED BEFORE TH E TAX RECOVERY OFFICER-4, INDORE IN RESPONSE TO THE NOTICE AS RECE IVED FROM THE TRO- 4, INDORE DT.21.06.2013 387-388 (VIII) CENTRAL REGION & INFRASTRUCTURE & CONSTRUCTI ON P LIMITED SHARE APPLICATION MONEY OF RS 500000/- S.NO DESCRIPTION PG NO OF COMPILATION 1 COPY OF ANNUAL RETURN OF THE SHARE HOLDER AS FILE D FOR THE YEAR ENDED ON 31.03.2005 389-402 2 CERTIFICATE OF INCORPORATION 403 3 COPY OF ARTICLES OF ASSOCIATION OF THE SHARE HOLD ER COMPANY 404-410 4 COPY OF FORM NO 18 AS FILED BY THE SHARE APPLICAN T IN RESPECT OF AN INTIMATION FOR CHANGE OF ADDRESS 411 5 COPY OF FORM 32 AS FILED BY THE SHARE HOLDER COMP ANY REGARDING CHANGE IN DIRECTORS 412-413 6 COPY OF CONFIRMATION OF SHARE APPLICATION MONEY O F RS 500000/- DULY SIGNED WITH PAN NO 414 2.6] THE ASSESSEE AS TO JUSTIFY THE IDENTITY OF TH E SHARE HOLDERS FILED AMPLE DOCUMENTS AS MENTIONED ABOVE WHICH ALSO INCLUDES COPY OF BALANCE SHEET, INCOME TAX RETURN, AFFIDAVIT OF THE DIRECTORS, BANK STATEMENT. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 29 2.7.1]THAT IN THE CASE OF THE ABOVE COMPANIES SCRUT INY ORDER U/S 143(3) HAS ALSO BEEN PASSED BY THE OFFICE OF THE ACIT 5(1), ITO 5(1) AND ITO 5( 2), INDORE. SINCE, INCOME TAX ASSESSMENT ORDER HAS ALREADY BEEN PASSED IN THE CASE OF THE AB OVE COMPANIES. THERE IS NO JUSTIFICATION FOR MAKING SEPARATE ADDITIONS IN THE CASE OF THE ASSES SEE AGAIN. MORE SO WHEN IDENTITY OF THE ABOVE COMPANIES WERE PROVED BEYOND DOUBT. 2.7.2]THAT IN THE ASSESSMENT OF ALL THE SHAREHOLDER S COMPANIES THE AMOUNT RECEIVED BY THEM ON ACCOUNT OF SHARE APPLICATION MONEY, SHARE CAPITA L AND SUNDRY CREDITORS WHICH THEY FAILED TO EXPLAIN HAS ALREADY BEEN ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT. ACCORDINGLY, INVESTMENT MADE BY ALL THESE COMPANIES REQUIRES TO BE ACCEPTED AS GENUINE. 2.7.3]THAT ONCE THE AMOUNT OF SHARE APPLICATION MON EY, SHARE CAPITAL AND SUNDRY CREDITORS ADDED TO THE INCOME OF THE SHAREHOLDERS. IN THAT CA SE THERE IS NO JUSTIFICATION TO DISBELIEVE THE CREDITWORTHINESS OF ALL THESE COMPANIES. 2.7.4]THAT INCOME TAX ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 IN THE CASE OF SHAREHOLDERS WAS PASSED UNDER SCRUTINY U/S 143(3) O F THE INCOME TAX ACT. HENCE, IDENTITIES OF THE SHAREHOLDERS STAND PROVED. SINCE, ENTIRE AMOUNT OF CREDITS IN THEIR BOOKS OF ACCOUNT HAS ALREADY BEEN ADDED TO THE INCOME OF THE SHAREHOLDER S. IN THAT CASE SOURCE OF INVESTMENT MADE BY THEM IN THE CASE OF THE ASSESSEE COMPANY STAND P ROVED. 2.8.1] THE LD CIT[A] ON THE BASIS OF STATEMENT OF S HRI RAMESH CHAND KHATOD AS RECORDED DURING THE COURSE OF HIS SEARCH ON 16-04-2009 HAS M AINTAINED THE ADDITION IN RESPECT OF AMOUNT RECEIVED FROM M/S NEEMA INVESTMENT P LIMITED AND AL SO FROM M/S MONEY PENNY FINCOM P LIMITED. THE LD CIT[A] ALSO MAINTAINED ADDITION IN RESPECT OF CENTRAL REGION INFRASTRUCTURE & CONSTRUCITON P LIMITED FOR NON- SUBMISSION OF THE B ANK ACCOUNT AND IN RESPECT OF M/.S MAX TOUCH SECURITIES P LIMITED FOR CASH DEPOSIT IN ITS ACCOUNT PRIOR TO ISSUANCE OF THE CHEQUE TO THE ASSESSEE COMPANY. 2.8.2] THE STATEMENT OF SHRI RAMESH CHAND KHATOD AS RELIED BY THE LD CIT[A] WAS NOT RECORDED IN THE CASE OF THE ASSESSEE AND ALSO IN THAT STATEM ENT HE HAS NOT MENTIONED THE NAME OF THE ASSESSEE COMPANY. THE ASSESSEE ALSO OBTAINED AFFIDA VIT IN THE CASE OF ITS GROUP COMPANY M/S SHIVANGI ESTATE P LIMITED IN THE YEAR 2012 AFTER TH E STATEMENT AS REFERRED BY THE LD CIT[A]. IT IS ALSO SETTLED POSITION OF LAW THAT ANY STATEMENT REC ORDED BEHIND AND BACK OF THE ASSESSEE CANNOT BE RELIED AGAINST THE ASSESSEE. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 30 5. ON THE OTHER HAND, LD. DR SUBMITTED THAT THERE W AS SEARCH U/S 132 OF THE ACT AND DURING THE SEARCH PROCEEDING, THE ASSES SEE HAS RECEIVED MONEY FROM VARIOUS COMPANIES AS SHARE APPLICATION M ONEY AS PER ASSESSMENT ORDERS. THE LD. DR SUBMITTED THAT AS PER THE DECISION OF MP HIGH COURT IN THE CASE OF CIT VS. RATHI FINLEASE LT D. 215 CTR 429 (MP) WHEREIN CONSIDERING THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. STELLER INVESTMENT AND THE JUDGMENT OF HON' BLE SUPREME COURT IN THE CASE OF LOVELY EXPORT LTD., 11 ITJ 357, HONBLE HIGH COURT HAS HELD THAT EACH AND EVERY TRANSACTION OF SHARE APPLICATIO N MONEY INVOLVING APPLICATION OF PROVISIONS OF SEC. 68 IN MATTER OF C ONTRIBUTION OF SHARE APPLICATION/SHARE CAPITAL AND WHETHER THIS ONUS ON THE ASSESSEE HAS BEEN DISCHARGED OR NOT HAS TO BE APPRECIATED ON TOTALITY OF EVIDENCES AVAILABLE ON RECORD AND SURROUNDING FACTS AND CIRCUMSTANCES O F THE CASE. LD. DR ALSO RELIED ON FOLLOWING DECISIONS: S.NO REFERENCE OF DECISION CITATION OF THE DECISIO N 1 CIT VS KORLAY TRADINGN CO LTD 232 ITR 820 [ CALCU TTA] 2 N TARIKA PROPERTY INVEST (P) LTD 51 TAXMANN.COM 387 [SC] 3 CIT VS N R PORTFOLIO (P) LTD 42 TAXMANN.COM 339 [ DELHI] 4 GAYATHRI ASSOCIATES 41 TAXMANN.COM 526 [ AP 5 CIT VS FOCUS EXPORTS (P) LTD 51 TAXMANN.COM 46 [ DELHI] 6 CIT VS P MOHANKALA 291 ITR 278 [SC] 7 CIT VS MAF ACADEMY (P) LTD 42 TAXMANN.COM 377 [D ELHI] (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 31 8 SUBHLAKSHMI VANIJYA (P) LTD 60 TAXMANN.COM 60 [ KOLKATA] 9 AGRAWAL COAL CORPORATION (P) LTD 19 TAXMANN.COM 209 [ INDORE] 10 CIT VS NOVA PROMOTERS & FINLEASE [P] LTD 342 ITR 169 [DELHI] 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH PART IES. THE ASSESSEE CO. HAS RECEIVED SHARES FROM FOLLOWING COMPANIES, W HICH READS AS UNDER: S.NO NAME OF THE APPLICANT PA NO OPENING BALANCE AS ON 01-04-2005 RECEIVED DURING THE YEAR TOTAL AS ON 31.03.2006 1 SUNDROP SECURITY P. LTD. AACCS5419C 15,00,000 70, 00,000 85,00,000 2 RIFCA COST. P. LTD.[ NOW KNOWN AS SAUMYA INFRAVENTURES P LIMITED ] AABCR2220B NIL 40,00,000 40,00,000 3 PRAMILA INVESTMENT & FINANCE P LTD AABCP8031A NIL 25,00,000 25,00,000 4 NEEMA INVESTMENT P LIMITED AABCN5299 40,00,000 65 ,00,000 1,05,00,000 5 MONEY PENNY FINCOM PVT. LTD. AADCM5417F NIL 60,00,0 00 60,00,000 6 PERSUIT SECURITY P. LTD. AAACP3800E 20,00,000 1,4 5,00,000 1,65,00,000 7 MAX TOUCH SECURITY LTD. AADCM4409R NIL 5,00,000 5,00,000 8 CENTRAL REGION INFRASTRUCTURE & CONT. PVT. LTD. AACCC5101D NIL 5,00,000 5,00,000 75,00,000 4,15,00,000 4,90,00,000 7. LD. CIT(A) HAS MAINTAINED THE ADDITION OF RS.1,7 5,00,000 IN RESPECT OF EIGHT COMPANIES. THE LD. CIT(A) HAS ALSO MAINTAI NED THE ADDITION IN RESPECT OF RS.1,05,00,000 IN RESPECT OF THE AMOUNT RECEIVED FROM NEEMA INVESTMENT LTD. THE ASSESSEE HAS NOT ALLOTTED THE S HARES IN RESPECT OF RS.1,65,00,000 BUT IT WAS REFUNDED BY THE ASSESSEE. THE ASSESSING OFFICER (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 32 IN THE CONCLUDING PARA OF THE ASSESSMENT ORDER AS P ASSED U/S 143(3) OF THE INCOME TAX ACT ON 31-12-2008 MENTIONED THAT THE SHA REHOLDER COMPANIES WERE DEPOSITED HUGE AMOUNT OF CASH IN THEIR BANK AC COUNT PRIOR TO ISSUANCE OF THE CHEQUE TO THE ASSESSEE COMPANY TOWA RDS SHARE APPLICATION MONEY. THE SAID OBSERVATION OF THE ASSE SSING OFFICER WAS GENERAL IN NATURE AND THE SAME IS FACTUALLY INCORRE CT. THE SAID OBSERVATION WAS BASED ON ASSESSMENT PROCEEDING OF THE SOME OF T HE SHAREHOLDERS IN THE ASSESSMENT YEAR 2005-06. HOWEVER, THE ASSESSING OFFICER HAS NOT PROVIDED THE NAME OF THE SHAREHOLDERS IN WHOSE ACCO UNT CASH WERE DEPOSITED. THE INCOME TAX ASSESSMENTS IN RESPECT OF THE FOLLOWING SHAREHOLDERS WERE FINALIZED FOR THE ASSESSMENT YEAR 2005-06:- S.NO NAME OF THE COMPANY PAN NO 1 PRAMILA INVESTMENT & FINANCE AABCP8031A 2 NEEMA INVESTMENT P LIMITED AABCN5299 3 MONEY PENNY FINCOM PVT. LTD. AADCM5417F THE ASSESSEE HAD FILED COPY OF BANK STATEMENTS IN R ESPECT OF THE FOLLOWING COMPANIES:- S.NO NAME OF THE APPLICANT PA NO ADDITION PAGE NOS 1 SUNDROP SECURITY P. LTD. AACCS5419C 85,00,000 120 - 129 2 RIFCA COST. P. LTD.[ NOW KNOWN AS SAUMYA INFRAVENTURES P LIMITED ] AABCR2220B 40,00,000 155 - 164 3 PRAMILA INVESTMENT & FINANCE AABCP8031A 25,00,000 186 - 189 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 33 4 NEEMA INVESTMENT P LIMITED AABCN5299 1,05,00,000 219 - 225 5 MONEY PENNY FINCOM PVT. LTD. AADCM5417F 60,00,000 262 - 264 6 PERSUIT SECURITY P. LTD. AAACP3800E 1,65,00,000 310 - 328 ON PERUSAL OF THE BANK STATEMENT AS FILED ABOVE, WE FIND THAT NO CASH WERE DEPOSITED IN THE BANK ACCOUNT OF ALL THE ABOVE SHAR EHOLDERS. THUS, FACTUALLY THE AO WAS NOT CORRECT IN OBSERVING THAT CASH WERE DEPOSITED IN THE BANK ACCOUNT OF THE SHAREHOLDERS PRIOR TO ISSUANCE OF TH E CHEQUES.THE COMPANIES IN WHICH ALLEGED CASH WERE DEPOSITED ASSE SSED BY THE SAME AO I.E. BY THE ACIT 5(1), INDORE AND ALSO BY ITO 5( 1), INDORE. THUS, THE ASSESSING OFFICER WAS WELL IN ITS JURISDICTION TO E XAMINE THE CORRECT SOURCE OF CASH DEPOSITED BY THE ALLEGED SHARE APPLICANT BUT T HE SAID EXERCISE WAS NOT DONE BY THE ASSESSING OFFICER.THE ASSESSING OFF ICER HIMSELF HAS NOT BROUGHT OUT ANY SINGLE INSTANCE OF CASH DEPOSIT AGA INST ISSUE OF CHEQUE TO THE ASSESSEE COMPANY.FROM THE BANK ACCOUNT IT IS CL EAR THAT CASH AS DEPOSITED IN THE BANK ACCOUNT WAS VERY SMALL AND NO T DIRECTLY LINKED WITH THE CHEQUES ISSUED TO THE ASSESSEE COMPANY. COPY OF BANK ACCOUNT HIGHLIGHTING THE CASH DEPOSIT AND WITHDRAWAL HAS AL SO BEEN FILED. THE ASSESSEE FROM THE FOLLOWING SHARE APPLICANTS RE CEIVED UNSECURED LOANS IN THE AYS 2004-05 AND 2005-06, DETAIL OF THE SAME IS AS UNDER:- (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 34 S.NO NAME OF THE COMPANIES PAN NO 2004-05 [ RS] 200 5-06 [RS] 1 MONEY PENNY FINCOM P LIMITED AABCM5417F 20,00,000 2 PRAMILA INVESTMENT & FINANCE LIMITED AABCP8031A 2 0,00,000 3 NEEMA INVESTMENTS (P) LTD AABCN5299A 40,00,000 4 SUNDROP SECURITIES PRIVATE LIMITED AACCS5419C 1 5,00,000 5 PURSUIT SECURITIES LIMITED AAACP3800E 20,00,000 40,00,000 75,00,000 CONFIRMATIONS OF UNSECURED LOANS WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME WAS ALSO ACCEPT ED BY THE ASSESSING OFFICER IN THOSE YEARS. WHEN THE IDENTITY , GENUINENESS IN RESPECT OF LOAN CREDITORS WERE ACCEPTED BY THE ASSESSING OF FICER IN THAT CASE, THERE WAS NO REASON TO DISBELIEVE REGARDING THE IDENTITY OF THE SHARE APPLICANT.THE SUMMARY OF PAPERS AS FILED BY THE ASS ESSEE IN RESPECT OF THE ABOVE COMPANIES AS FILED BY THE ASSESSEE BEFORE THE AO AND DURING THE COURSE OF APPEAL PROCEEDING ARE AS UNDER:- (I) SUNDROP SECURITIES P LIMITED- SHARE APPLICATION MONEY OF RS 8500000/- S.NO DESCRIPTION PG NO OF COMPILATION 1 COPY OF A/C OF SUNDROP SECURITIES P. LTD IN THE B OOKS OF THE ASSESSEE 99 2 COPY OF MINUTES OF THE MEETING OF THE BOARD OF DI RECTOR OF THE SHARE APPLICANT AUTHORIZING SHRI PARAS JAIN FOR INVESTMEN T IN THE SHARES OF THE ASSESSEE COMPANY 100 3 COPY OF COVERING LETTER ATTACHED WITH THE CHEQUES FOR INVESTMENT IN THE SHARE APPLICATION OF THE ASSESSEE COMPANY. 101-108 4 COPY OF SHARE APPLICATION MONEY FORM DULY SIGNED AND FILED BY THE SHARE APPLICANT 109-115 5 COPY OF CONFIRMATION OF SHARE APPLICATION MONEY O F RS 8500000/- DULY 116 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 35 SIGNED WITH PAN NO 6 COPY OF ACK OF INCOME TAX RETURN AS FILED FOR THE ASSESSMENT YEAR 2006-07. 117 7 COPY OF AFFIDAVIT OF THE DIRECTOR SHRI SHAILENDRA S CHOUHAN DT 11-06- 2009 SWORN BEFORE NOTARY PUBLIC ACCEPTING THE INVES TMENT IN THE SHARE APPLICATION MONEY IN THE ASSESSEE COMPANY. 118 8 COPY OF BANK STATEMENT OF THE SHARE HOLDERS WITH THE BANK OF RAJASTHAN LIMITED FROM WHICH INVESTMENT IN THE SHAR E APPLICATION MONEY WAS MADE IN THE ASSESSEE COMPANY. 120-129 9 COPY OF AUDITED BALANCE SHEET OF THE SHARE HOLDER FOR THE YEAR ENDED ON 31.03.2005. 130-140 10 COPY OF CONFIRMATION LETTER DULY SIGNED BY THE S HARE HOLDER WITH ITS PAN NO IN THE A.Y. 05-06 WHICH WAS ACCEPTED AS GENU INE IN THAT YEAR. 141-142 11 COPY OF NOTICE AS RECEIVED FROM TAX RECOVERY OFF ICER-4, INDORE DT 21.06.2013 REGARDING THE OUTSTANDING DEMAND OF THE SHARE HOLDERS IN THE NAME OF THE ASSESSEE COMPANY. 143 12 COPY OF LETTER DT 24-06-2013 AS FILED IN RESPONS E TO THE NOTICE AS RECEIVED FROM THE TRO-4, INDORE DT.24.06.2013 144-145 (II) RIFCA CONSTRUCTION P LIMITED- [ NOW KNOWN AS SAUMYA INFRAVENTURES P LIMITED] SHARE APPLICATION MONEY OF RS 4000000/- (III) PRAMILA INVESTMENT & FINANCE P LIMITED- SHARE APPLICATION MONEY OF RS 2500000/- (IV) NEEMA INVESTMENT P LIMITED SHARE APPLICATION MONEY OF RS 1,05,00,000/- (V) MONEY PENNY FINCOM P LIMITED SHARE APPLICATI ON MONEY OF RS 6000000/- (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 36 (VI ) PURSUIT SECURITIES P LIMITED SHARE APPLICAT ION MONEY OF RS 16500000/- (VII) MAX TOUCH SECURITIES P LIMITED- SHARE APPLIC ATION MONEY OF RS 500000/- (VIII) CENTRAL REGION & INFRASTRUCTURE & CONSTRUCTI ON P LIMITED SHARE APPLICATION MONEY OF RS 500000/- IN RESPECT OF ALL THE ABOVE COMPANIES, ASSESSEE HAS FILED THE DETAILS REGARDING ABOVE COMPANIES SHARE APPLICATION MONEY, MEMORANDUM OF ARTICLES ETC. IN THE PAPER BOOK PAGES146 TO 415. WE HAVE GONE THROUGH THE ABOVE PAPERS AND WE AREOF THE VIEW THAT THE ASSESSE E HAS SUBMITTED ALL THE DOCUMENTS LIKE, COPY OF ACCOUNTS OF COMPANIES, BOOKS, COPY OF RESOLUTION, COPY OF SHARE APPLICATION MONEY, COPY O F CONFIRMATION OF SHARE APPLICATION MONEY, COPY OF BANK STATEMENT, COPY OF RECORDS DOWNLOADED FROM REGISTRAR OF COMPANY AND COPY OF AUDITED BALAN CE-SHEET OF SHAREHOLDERS COMPANY FOR THE YEAR ENDED ON 31.3.200 5 FOR ALL THE COMPANIES. THE ASSESSEE AS TO JUSTIFY THE IDENTITY OF THE SHAR EHOLDERS FILED AMPLE DOCUMENTS AS MENTIONED ABOVE WHICH ALSO INCLUDES CO PY OF BALANCE SHEET, INCOME TAX RETURN, AFFIDAVIT OF THE DIRECTOR S, BANK STATEMENT. IN THE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 37 CASE OF THE ABOVE COMPANIES SCRUTINY ORDER U/S 143( 3) HAS ALSO BEEN PASSED BY THE OFFICE OF THE ACIT 5(1), ITO 5(1) AND ITO 5(2), INDORE. SINCE, INCOME TAX ASSESSMENT ORDER HAS ALREADY BEEN PASSED IN THE CASE OF THE ABOVE COMPANIES, THERE IS NO JUSTIFICATION FOR MAKI NG SEPARATE ADDITIONS IN THE CASE OF THE ASSESSEE AGAIN. MORESO WHEN IDENTIT Y OF THE ABOVE COMPANIES WERE PROVED BEYOND DOUBT. IN THE ASSESSME NT OF ALL THE SHAREHOLDERS COMPANIES THE AMOUNT RECEIVED BY THEM ON ACCOUNT OF SHARE APPLICATION MONEY, SHARE CAPITAL AND SUNDRY CREDITO RS WHICH THEY FAILED TO EXPLAIN HAS ALREADY BEEN ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT. ACCORDINGLY, INVESTMENT MADE BY ALL THESE COMPANIES REQUIRES TO BE ACCEPTED AS GENUINE. ONCE THE AMOUNT OF SHARE APPLICATION MONEY, SHARE CAPITAL AND SUNDRY CREDITORS ADDED TO THE INCOME OF THE SHAREHOLDERS. IN THAT CASE THERE IS NO JUSTIFICATIO N TO DISBELIEVE THE CREDITWORTHINESS OF ALL THESE COMPANIES.INCOME TAX ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 IN THE CASE OF SHAREHOLDERS WAS PASSED UNDER SCRUTINY U/S 143(3) OF THE INCOME TAX ACT. HENCE, I DENTITIES OF THE SHAREHOLDERS STAND PROVED. SINCE, ENTIRE AMOUNT OF CREDITS IN THEIR BOOKS OF ACCOUNT HAS ALREADY BEEN ADDED TO THE INCOME OF THE SHAREHOLDERS, THE SOURCE OF INVESTMENT MADE BY THEM IN THE CASE OF TH E ASSESSEE COMPANY STAND PROVED.THE LD CIT[A] ON THE BASIS OF STATEMEN T OF SHRI RAMESH (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 38 CHAND KHATOD AS RECORDED DURING THE COURSE OF HIS S EARCH ON 16-04-2009 HAS MAINTAINED THE ADDITION IN RESPECT OF AMOUNT RE CEIVED FROM M/S NEEMA INVESTMENT P LIMITED AND ALSO FROM M/S MONEY PENNY FINCOM P LIMITED. THE LD CIT[A] ALSO MAINTAINED ADDITION IN RESPECT O F CENTRAL REGION INFRASTRUCTURE &CONSTRUCTION P LIMITED FOR NON- SUB MISSION OF THE BANK ACCOUNT AND IN RESPECT OF M/.S MAX TOUCH SECURITIES P LIMITED FOR CASH DEPOSIT IN ITS ACCOUNT PRIOR TO ISSUANCE OF THE CHE QUE TO THE ASSESSEE COMPANY.THE STATEMENT OF SHRI RAMESH CHAND KHATOD A S RELIED BY THE LD CIT[A] WAS NOT RECORDED IN THE CASE OF THE ASSESSEE AND ALSO IN THAT STATEMENT HE HAS NOT MENTIONED THE NAME OF THE ASSE SSEE COMPANY. THE ASSESSEE ALSO OBTAINED AFFIDAVIT IN THE CASE OF ITS GROUP COMPANY M/S SHIVANGI ESTATE P LIMITED IN THE YEAR 2012 AFTER TH E STATEMENT AS REFERRED BY THE LD CIT[A]. IT IS ALSO SETTLED POSITION OF LA W THAT ANY STATEMENT RECORDED BEHIND AND BACK OF THE ASSESSEE CANNOT BE RELIED AGAINST THE ASSESSEE. WE ALSO GET SUPPORT FROM THE DECISION OF ITAT, INDO RE BENCH IN THE CASE OF STL EXTRUSION (P) LIMITED VIDE ORDER DATED 10.05.20 10 BEING ITA NO.(SS) 259, 260/IND/2008 AFTER CONSIDERING THE JUDGEMENT O F HONBLE MP HIGH COURT IN THE CASE OF RATHI FINLEASE LTD. REPORTED I N 215 CTR 429 (MP) HELD AS UNDER:- (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 39 PAGE 7 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 P REVENTED HIM TO INITIATE ACTION AS PER THE PROVISIONS OF THE ACT. T HE EXISTENCE OF SUBSCRIBER TO SHARE APPLICATION IS NOT IN DOUBT AS THE ASSESSEE DULY FURNISHED THEIR NAMES, AGE, ADDRESS, DATE OF FILING THE APPLICATION, NUMBER OF SHARES FOR WHICH RESPECTIVE APPLICATIONS 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 BECA USE ONCE THE EXISTENCE OF THE INVESTOR/SHARE SUBSCRIBERS IS PROV ED, ONUS SHIFTS ON THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPL ICANTS 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. O UR VIEW FINDS SUPPORT FROM THE DECISION IN SHRI BARKHA SYNTHETICS LTD. V/S ACIT 155 TAXMAN 289 (RAJ). THE CASES LIKE CIT V/S GP INTERNA TIONAL LTD.229 CTR (P&H) 86, CIT V STELLER INVESTMENT LIMITED 192 ITR 287 AND SOPHIA FINANCE LIMITED 205 ITR 98 (DEL) SUPPORT THE CASE OF THE ASSESSEE. THE ABOVE ORDER OF ITAT INDORE BENCH HAS ALSO BEEN CONFIRMED BY THE HONBLE M.P. HIGH COURT IN THE CASE OF CIT V/S STL EXTRUSION (P) LTD REPORTED IN 53 DTR 97(2011) AFTER REFERRING ITS EARLIER ORDER IN THE CASE OF CIT V/S RATHI FINLEASE LTD. REPORTED IN 215 CTR 429 HAS DECIDED IN FAVOUR OF THE ASSESSEE WHEREIN HONBLE J URISDICTIONAL HIGH (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 40 COURT ALSO RELIED ON THE DECISION OF THE HONBLE AP EX COURT IN THE CASE OF LOVELY EXPORTS P LIMITED. HONBLE JURISDICITONAL HIGH COURT IN THE CASE OF CI T VS PEOPLE GENERAL HOSPITAL LTD [ APPEAL NO M.A.I.T NO 27/ 200 8 DT 27-06-2013] HAS HELD THAT [ REFER PARA 16] :- 16. THE AFORESAID JUDGMENT HAS BEEN FOLLOWED BY A LL THE COURTS AND THE JUDGMENTS RELIED ON BY THE APPELLANTS RELATES T O THE PERIOD PRIOR TO THE JUDGMENT IN LOVELY EXPORTS. AS THE APEX COURT H AS SPECIFICALLY HELD THAT IF THE IDENTITY OF THE PERSON PROVIDING S HARE APPLICATION MONEY IS ESTABLISHED THEN THE BURDEN WAS NOT ON THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE SAID PERSON. HOWE VER, THE DEPARTMENT CAN PROCEED AGAINST THE SAID COMPANY IN ACCORDANCE WITH LAW. THE POSITION OF THE PRESENT CASE IS IDENT ICAL. IT IS NOT THE CASE OF ANY OF THE PARTIES THAT M/S ALLIANCE INDUST RIES LIMITED, SHARJAH IS A BOGUS COMPANY OR A NON-EXISTENT COMPAN Y AND THE AMOUNT WHICH WAS SUBSCRIBED BY THE SAID COMPANY BY WAY OF SHARE SUBSCRIPTION WAS IN FACT THE MONEY OF THE RESPONDEN T ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF INVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AN D IT WAS ESTABLISHED THAT THE TRANSACTION WAS GENUINE THOUGH AS PER CONTENTION OF THE RESPONDENT THE CREDITWORTHINESS O F THE CREDITOR WAS ALSO ESTABLISHED. IN THE PRESENT CASE, IN THE LIGHT OF THE JUDGMENT OF LOVELY EXPORTS (P) LTD., WE HAVE TO SEE ONLY IN RES PECT OF THE ESTABLISHMENT OF THE IDENTITY OF THE INVESTOR. THE DELHI HIGH COURT ALSO IN DIVINE LEASING & FINANCE LTD. (SUPRA), CONS IDERING THE SIMILAR QUESTION HELD THAT THE ASSESSEE COMPANY HAVING RECE IVED (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 41 SUBSCRIPTIONS TO THE PUBLIC/RIGHTS ISSUE THROUGH BA NKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAREHOLDERS, NO ADDITION COULD BE MADE UNDER SECTION 68 IN THE ABSENCE OF ANY POSITIV E MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BEN AMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CA PITAL REPRESENTED COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. THE SIMILAR VIEW HAS BEEN TAKEN BY THE OTHER HIGH COURTS. 17. AS THE APEX COURT HAS CONSIDERED THE LAW IN LOV ELY EXPORTS (SUPRA) AND IN VIEW OF LAW LAID DOWN BY THE APEX CO URT, WE FIND THAT THE SUBSTANTIAL QUESTIONS FRAMED IN THESE APPEALS D O NOT ARISE FOR OUR CONSIDERATION. ACCORDINGLY, ALL THESE APPEALS ARE D ISMISSED WITH NO ORDER AS TO COSTS. HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS P LIMITED AS REPORTED IN 11 ITJ 357 HAS HELD THAT:- '2. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UN DISCLOSED INCOME UNDER S. 68 OF IT ACT, 1961? WE FIND NO MERI T IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SH ARE 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 INDIV IDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT.' ITAT, INDORE BENCH IN THE CASE OF M/S RAJSHREE FINS EC P LTD [APPEAL NO 545/ IND/2010 DT 06-02-2012 FOR THE ASST YEAR 20 07-08 ] HAD AN OCCASIONED TO DISCUSSED THE DECISION IN THE CASE OF M/S AGRAWAL COAL CORPORATION AND HELD THAT :- (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 42 5. DURING HEARING THE LEARNED SENIOR DR CONTENDED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S AGRAWAL COAL CORPORATION DECIDED BY THIS BENCH ON 31ST OCTOBER, 2011 IN ITA NOS. 151/IND/2009,283,136AND34/IND/2010,190/IND/09,158/I ND/2010 ETC. WE ARE NOT AGREEING WITH THIS PROPOSITION BECA USE IN THAT CASE THE IDENTITY OF SUCH SHARE APPLICANTS WAS NOT PROVED AND EVEN THE ADDRESSES OF SUCH SHARE APPLICANTS WERE FO UND NON- EXISTENT/BOGUS. IN VIEW OF THOSE FACTS, THIS BENCH CONCLUDED THAT THE DECISION FROM HON'BLE APEX COURT PRONOUNCE D IN LOVELY EXPORTS PRIVATE LIMITED IS NOT APPLICABLE AND THE A DDITION WAS CONFIRMED IN THE HANDS OF THE ASSESSEE. HOWEVER, IN THE PRESENT APPEAL, SINCE THE IDENTITY OF SUCH SHARE SU BSCRIBERS, AS WE HAVE DISCUSSED ABOVE, WAS ESTABLISHED, THEREFORE , NO ADDITION U/S 68 IS WARRANTED IN THE CASE OF THE ASS ESSEE COMPANY. SO FAR AS THE DECISION FROM HON'BLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS. RATHI FINLEASE LIMITED (2008) 215 CTR (MP) 249 IS CONCERNED, IN THAT CASE, DESPITE SE VERAL OPPORTUNITIES, THE ASSESSEE WAS UNABLE TO PROVIDED CONFIRMATIONS FROM THE CONCERNED PARTIES, THEREFORE , THE HON'BLE COURT REACHED TO A PARTICULAR CONCLUSION, WHEREAS I N THE PRESENT APPEALS, THE IDENTITY OF SHARE APPLICANTS, NAMELY, M/S. SHRILAL TRADERS PRIVATE LIMITED, M/S LAKEVIEW VINIM AY PRIVATE LIMITED, M/S SAHARSH SUPPLIERS PRIVATE LIMITED AND M/S AMBITIONS TIE UP PRIVATE LIMITED WAS ESTABLISHED, T HEREFORE, IN (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 43 VIEW OF THE DECISION FROM HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORTS PRIVATE LIMITED (SUPRA), THIS JUDICI AL DECISION FROM HON'BLE HIGH COURT MAY NOT HELP THE REVENUE. 6.SO FAR AS THE ARGUMENT OF THE LEARNED SR. DR AND THE OBJECTIONS / OBSERVATIONS OF THE LEARNED ASSESSING OFFICER/LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) THAT THESE ARE PAPER COMPANIES ONLY, THE CONTENTION RAIS ED ON BEHALF OF THE ASSESSEE IS THAT THE NET WORTH (AS ON 31.3.2007) OF SUCH SHARE SUBSCRIBERS IS RS. 317.31 LACS, RS. 424. 58 LACS, RS. 385.71 LACS AND RS. 289.01 LACS. WE ARE NOT GOING O N THE ISSUE OF WORTH OF THESE SHARE APPLICANTS BECAUSE THE HON' BLE APEX COURT IN THE CASE OF LOVELY EXPORTS PRIVATE LIMITED (SUPRA) HELD THAT EVEN IF SUCH SHARE APPLICANTS ARE BOGUS, BUT T HEIR IDENTITY IS PROVED, THEN NO ADDITION IS WARRANTED IN THE CASE O F THE ASSESSEE. SO FAR AS THE DECISIONS CITED IN THE IMPU GNED ORDER ARE CONCERNED, IN VIEW OF THE DECISION FROM HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORTS (SUPRA), HAS REMAINED FOR ACADEMIC INTEREST ONLY, BEING ON DIFFERENT FACTS, T HEREFORE, WE ARE REFRAINING OURSELVES IN DEALING WITH EACH AND E VERY CASE INDIVIDUALLY, ESPECIALLY IN THE LIGHT OF THE EVIDEN CES, FILED BY THE ASSESSEE, EVIDENCING THAT THE IDENTITY OF SUCH SHAR E APPLICANTS WAS VERY MUCH PROVED BY FURTHER FILING OF CONFIRMAT ION BY THEM. 7. IN VIEW OF THESE FACTS, THE DECISION FROM HON'BL E APEX COURT IN LOVELY EXPORTS (SUPRA) AND UNCONTROVERTED FACT T HAT THE SUMMONS ISSUED TO THE IMPUGNED SHARE APPLICANTS WER E DULY RECEIVED BY THEM WITH FURTHER FILING OF CONFIRMATIO N BY SUCH (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 44 SHARE APPLICANTS, AT LEAST THEIR IDENTITY IS PROVED , THEREFORE, THIS APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. OAS IS HOSPITALITIES (P) LTD REPORTED IN 333 ITR 119 (2011) HAS HELD AS UNDER:- (I) SECTION 68 PROVIDES THAT IF THE ASSESSEE IS NOT ABLE TO GIVE SATISFACTORY EXPLANATION AS TO THE NATURE AND SOURCE OF A SUM FOUND CREDITED IN HIS BOOKS, THE SUM MAY BE TREATED AS THE UNDISCLOSED I NCOME OF THE ASSESSEE. THE INITIAL BURDEN IS ON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE CREDIT AND TO DO SO, THE ASSESSEE IS REQUI RED TO PROVE (A) IDENTITY OF THE SHAREHOLDER (B) GENUINENESS OF TRANSACTION AND (C) CREDIT WORTHINESS OF SHAREHOLDERS ; (A) THE IDENTITY OF THE SHAREHOLDER CAN BE PROVED BY EITHER (IF INDIVIDUAL) PRODUCING HIM BEFORE THE AO OR BY WAY OF DOCUMENTS, REGISTERED ADDRESS, PAN ETC; (B) THE GENUINENESS OF THE TRANSACTION CAN BE SHOW N FROM THE FACT THAT THE MONEY HAS BEEN RECEIVED FROM THE SHAREHOLDER. IF THE MONEY IS RECEIVED BY CHEQUE AND IS TRANSMITTED THROUGH BANKI NG OR OTHER INDISPUTABLE CHANNELS, THE GENUINENESS OF TRANSACTI ON WOULD BE PROVED . (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 45 OTHER DOCUMENTS SHOWING THE GENUINENESS OF TRANSACT ION COULD BE THE COPIES OF THE SHAREHOLDERS REGISTER, SHARE APPLICAT ION FORMS, SHARE TRANSFER REGISTER, ETC; (C) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER CAN BE PROVED BY PRODUCING THE BANK STATEMENT OF TH E CREDITORS/SUBSCRIBERS SHOWING THAT IT HAD SUFFICIENT BALANCE IN ITS ACCOU NTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAPITAL. ONCE THESE DOCUMENT S ARE PRODUCED, THE ASSESSEE WOULD HAVE SATISFACTORILY DISCHARGE THE ON US CAST UPON HIM. THE AO CAN DISCREDIT THE DOCUMENTS PRODUCED BY THE ASSE SSEE WITH COGENT REASONS AND MATERIALS BUT NOT ON THE REALM OF SUSPI CION; (II)IF THE ASSESSEE HAS PRODUCED DOCUMENTS LIKE PAN CARD, BANK ACCOUNT DETAILS OR DETAILS FROM THE BANKERS THE ONUS SHIFTS UPON THE AO AND IT IS FOR HIM TO REACH THE SHAREHOLDERS AND THE AO CANNOT BUR DEN THE ASSESSEE MERELY ON THE GROUND THAT SUMMONS ISSUED TO THE INV ESTORS WERE RETURNED BACK WITH THE ENDORSEMENT NOT TRACEABLE (V) THERE IS AN ADDITIONAL BURDEN ON THE DEPARTME NT TO SHOW THAT EVEN IF SHARE APPLICANTS DID NOT HAVE THE MEANS TO MAKE INV ESTMENT, THE INVESTMENT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UN DISCLOSED INCOME OF THE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 46 ASSESSEE. IN THE ABSENCE OF SUCH FINDING, ADDITION CANNOT BE MADE U/S 68 IN THE HANDS THE ASSESSEE. (VI) THE DEPARTMENT IS FREE TO REOPEN THE INDIVIDU AL ASSESSMENT IN CASE OF ALLEGED BOGUS SHAREHOLDERS IN ACCORDANCE WITH LA W AND, THUS, NOT REMEDY-LESS. HONBLE DELHI HIGH COURT VIDE ORDER DT 21-01-2013 I N THE CASE OF GANGESHWARI METAL PVT LTD [ APPEAL NO ITA NO 597/20 12] HAS DISCUSSED THE SIMILAR ISSUE IN DETAIL AND AFTER CON SIDERING THE DECISION IN THE CASE OF NOVA PROMOTERS P LIMITED HAS HELD THAT :- MR. SABHARWAL, APPEARING ON BEHALF OF THE REVENUE/ APPELLANT SOUGHT TO PLACE RELIANCE ON A DIVISION BENCH DECISION OF THIS COURT IN CIT V. NOVA PROMOTERS AND FINLEASE (P) LTD. : (2012) 342 ITR 169 (DEL.). HOWEVER, ON GOING THROUGH THE SAID DECISION IN NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) WE FIND THAT THE FACTS ARE CLEARLY DISTINGUISHABLE. IN FACT, IN NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) ITSELF THIS COURT HAS OBSERVED, IN THE CONTEXT OF LOVELY EXPORTS (P) LTD. (SUPRA) , AS UNDER: - THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND AP PRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD , IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICA NTS SUCH AS THEIR NAMES (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 47 AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDI TWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSE SSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATER IAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UN DER SEC.68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT A PPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHE S THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF- CONFESSED ACCOMMODATION ENTRY PROVIDERS, WHOSE BU SINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR U NACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE A SSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT O NE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE ASSESSING OFFI CER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITI ES INTO THE ACTIVITIES OF SUCH ENTRY PROVIDERS. THE EXISTENCE WITH THE ASSE SSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE- (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 48 MEDITATED PLAN - A SMOKESCREEN - CONCEIVED AND EXEC UTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHAR GED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE ID ENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GEN UINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVI DENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT T HE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE M ATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGOR Y AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES OF CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARRI ES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSES SING OFFICER SITS BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MAT ERIAL IN HIS POSSESSION AND THEN COMES FORWARD TO MERELY REJECT THE SAME ON THE PRESUMPTIONS. THE PRESENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER, AFTER NOTING THE FACTS, MERELY R EJECTED THE SAME. THIS (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 49 WOULD BE APPARENT FROM THE OBSERVATIONS OF THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER TO THE FOLLOWING EFFECT: - INVESTIGATION MADE BY THE INVESTIGATION WING OF TH E DEPARTMENT CLEARLY SHOWED THAT THIS WAS NOTHING BUT A SHAM TRANSACTION OF ACCOMMODATION ENTRY. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAID AMOUNT OF `1,11,50,000/- MAY NOT BE ADDED TO ITS INCOME. IN R ESPONSE, THE ASSESSEE HAS SUBMITTED THAT THERE IS NO SUCH CREDIT IN THE B OOKS OF THE ASSESSEE. RATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARE. IT WAS STATED THAT THE ACTUAL AMOUNT RECEIVED WAS `55,50,000/- AND NOT `1,11,50,000/- AS MENTIONED IN THE NOTICE. THE ASSESSEE HAS FURNISHED DETAILS OF SUCH RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE AMOUNT IS FOUND CORRECT. AS SUCH THE UNEXPLAINED AMOUNT IS TO BE TAKEN AT `55,50,000/-. THE ASSESSEE HAS FURTHER TRIED TO EXPLAIN THE SOURCE OF THIS AMOUNT OF `55,50,000/- BY FURNISHING COPIES OF SHARE APPLICATION MONEY, BALAN CE SHEET, ETC. OF THE PARTIES MENTIONED ABOVE AND ASSERTED THAT THE QUEST ION OF ADDITION IN THE INCOME OF THE ASSESSEE DOES NOT ARISE. THIS EXPLANA TION OF THE ASSESSEE HAS BEEN DULY CONSIDERED AND FOUND NOT ACCEPTABLE. THIS ENTRY REMAINS UNEXPLAINED IN THE HANDS OF THE ASSESSEE AS HAS BEE N ARRIVED BY THE INVESTIGATION WING OF THE DEPARTMENT. AS SUCH ENTRI ES OF `55,50,000/- (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 50 RECEIVED BY THE ASSESSEE ARE TREATED AS AN UNEXPLAI NED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO ITS INCOME. SINC E I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F ITS INCOME, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE BEING INITI ATED SEPARATELY. THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT DECIDED IN FAVO UR OF THE REVENUE IN THAT CASE. HOWEVER, THE FACTS OF THE PRESENT CASE ARE CL EARLY DISTINGUISHABLE AND FALL IN THE SECOND CATEGORY AND ARE MORE IN LIN E WITH FACTS OF LOVELY EXPORTS (P) LTD. (SUPRA) . THERE WAS A CLEAR LACK OF INQUIRY ON THE PART OF THE ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED A LL THE MATERIAL WHICH WE HAVE ALREADY REFERRED TO ABOVE. IN SUCH AN EVENT UALITY NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT. CONSEQUENTLY, THE QUESTION IS ANSWERED IN THE NEGATIVE. THE DECISION OF THE TRIBU NAL IS CORRECT IN LAW. THE APPEAL IS DISMISSED. HONBLE DELHI HIGH COURT IN THE CASE OF CIT (CENTRA L)-III VS ANSHIKA CONSULTANTS P LIMITED [ APPEAL NO ITA 467/ 2014 DT 16-04-2015 ] HAS HELD THAT:- 6. WHETHER THE ASSESSEE COMPANY CHARGED A HIGHER PREMIUM OR NOT, SHOULD NOT HAVE BEEN THE SUBJECT MATTER OF THE ENQUIRY IN THE FIRST (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 51 INSTANCE. INSTEAD, THE ISSUE WAS WHETHER THE AMOUNT INVESTED BY THE SHARE APPLICANTS WERE FROM LEGITIMATE SOURCES. THE OBJECT IVE OF SECTION 68 IS TO AVOID INCLUSION OF AMOUNT WHICH ARE SUSPECT. THEREF ORE, THE EMPHASIS ON GENUINENESS OF ALL THE THREE ASPECTS, IDENTITY, CRE DITWORTHINESS AND THE TRANSACTION. WHAT IS DISQUIETING IN THE PRESENT CAS E IS WHEN THE ASSESSMENT WAS COMPLETED ON 31.12.2007, THE INVESTI GATION REPORT WHICH WAS SPECIFICALLY CALLED FROM THE CONCERNED DEPARTME NT IN KOLKATA WAS AVAILABLE BUT NOT DISCUSSED BY THE AO. HAD HE CARED TO DO SO, THE IDENTITY OF THE INVESTORS, THE GENUINENESS OF THE TRANSACTIO N AND THE CREDITWORTHINESS OF THE SHARE APPLICANTS WOULD HAVE BEEN APPARENT. EVEN OTHERWISE, THE SHARE APPLICANTS PARTICULARS WERE A VAILABLE WITH THE AO IN THE FORM OF BALANCE SHEETS INCOME TAX RETURNS, PAN DETAILS ETC. WHILE ARRIVING AT THE CONCLUSION THAT HE DID, THE AO DID NOT CONSIDER IT WORTHWHILE TO MAKE ANY FURTHER ENQUIRY BUT BASED HIS ORDER ON THE HIGH NATURE OF THE PREMIUM AND CERTAIN FEATURES WHICH APPEARED TO BE S USPECT, TO DETERMINE THAT THE AMOUNT HAD BEEN ROUTED FROM THE ASSESSEES ACCOUNT TO THE SHARE APPLICANTS ACCOUNT. AS HELD CONCURRENTLY BY THE CI T (APPEALS) AND THE ITAT, THESE CONCLUSIONS WERE CLEARLY BASELESS AND F ALSE. THIS COURT IS CONSTRAINED TO OBSERVE THAT THE AO UTTERLY FAILED T O COMPLY WITH HIS DUTY CONSIDERS ALL THE MATERIALS ON RECORD, IGNORING SPE CIFICALLY THE MOST CRUCIAL (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 52 DOCUMENTS. WE PLACE THESE OBSERVATIONS ON THE RECOR D AND DIRECT A COPY OF THE JUDGMENT TO BE FURNISHED TO THE CONCERNED IN COME TAX AUTHORITIES FOR APPROPRIATE ACTION TOWARDS REFLECTING THESE OBSERVA TIONS SUITABLY IN SERVICE RECORD OF THE CONCERNED AO TO AVOID SUCH INSTANCES IN THE FUTURE. 7. FOR THE ABOVE REASONS, THIS COURT IS OF THE OPIN ION THAT THE CONCURRENT FINDINGS OF FACT, AS TO THE TRUE IDENTITY OF THE SH ARE APPLICANTS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION , ARE BASED ON SOUND REASONING AND DO NOT CALL FOR INTERFERENCE. NO SUBS TANTIAL QUESTION OF LAW ARISES. THE APPEALS ARE DISMISSED. IN THE CASE OF ACIT VS M/S KRISHNA SHEET PROCESSORS P LIMITED [ APPEAL NO ITA NO 546/ MUM/ 2013 DT 30-06-2015] THE AMOUNT OF SHARE PREMIUM OF RS 1000/- WAS DULY ACCEPTED AS GENUINE. IN VIEW OF THE ABOVE, ONCE THE ASSESSEE HAS ESTABLI SHED THE IDENTITY OF THE SHARE HOLDER IN THAT CASE THE AMOUNT OF SHARE PREMI UM IS NOT AN ISSUE. IF THE ASSESSING OFFICER HAS NOT SATISFIED WITH THE EX PLANATION OF THE SHARE APPLICANT, NECESSARY ADDITION IS TO BE MADE IN THE HAND OF THE SHARE APPLICANT BUT NOT IN THE CASE OF THE ASSESSEE. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 53 IN THE CASE OF CIT VS KORLAY TRADING CO LIMITED AS REPORTED IN 232 ITR 820, HONBLE CALCUTTA HIGH COURT OBSERVED THAT IN C ASE OF UNSECURED LOAN MERE PROVIDING OF PA NO WAS NOT SUFFICIENT. IN THAT CASE THE ASSESSEE UTTERLY FAILED TO FURNISH EVEN CONFIRMATION LETTER. IN THE PRESENT APPEAL, THE MATTER IN DISPUTE IS NOT UNSECURED LOAN BUT SHARE CAPITAL AND IT WAS CATEGORICALLY HELD THAT THE ASSE SSEE NEED TO PROVE THE IDENTITY OF THE SHARE HOLDERS ONLY. THE ASSESSEE IN PRESENT CASE NOT ONLY FILED CONFIRMATION LETTER BUT AMPLE DOCUMENTS AS TO DISCHARGED THE ONUS LYING ON THE ASSESSEE. HENCE, DECISION OF THE HONB LE CALCUTTA HIGH COURT ARE DISTINGUISHABLE ON THE FACT OF THE PRESENT CAS E. IN CASE OF N TARIKA PROPERTY INVESTMENT (P) LTD , H ONBLE DELHI HIGH COURT AS REPORTED IN 40 TAXMANN.COM 525 AND BY THE HONBL E APEX COURT AS REPORTED IN 51 TAXMANN.COM 387 HAS OBSERVED THAT TH E BANK ACCOUNT AS PROVIDED WAS FORGED AND FABRICATED BANK ACCOUNT. IN THE PRESENT APPEAL IN HAND THE ASSESSEE HAS PROV IDED COPY OF BANK STATEMENT, PA NO AND VARIOUS OTHER DOCUMENTS AND TH E ASSESSING OFFICER FAILED TO POINTED OUT ANY DEFECTS IN THESE DOCUMENT S. HENCE, THE FACTS OF THE CASE OF N TARIKA PROPERTY INVESTMENT [P] LTD IS DISTINGUISHABLE WITH THE FACTS OF THE PRESENT APPEAL IN HAND. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 54 IN CASE OF CIT VS N R PORTOFLIO (P ) LIMITED AS REP ORTED IN 42 TAXMANN.COM 339, HONBLE HIGH COURT HAS OBSERVED THAT MERE PROV IDING THE PA NO BY THE APPELLANT AND NOT CO-OPERATED WITH THE ASSESSIN G OFFICER IN THE ASSESSMENT PROCEEDING. IN THE PRESENT APPEAL, THE ASSESSEE COMPANY NOT ONL Y PROVIDE THE PA NO BUT ALSO PROVIDE AMPLE DOCUMENTS TO SUBSTANTIATE IT S CLAIM OF SHARE APPLICATION MONEY. THERE WAS NO ALLEGATION WHAT SO EVER OF THE ASSESSING OFFICER ABOUT NON- CO-OPERATION OF THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT OR APPELLATE PROCEEDING. HENCE, THE FACT OF THE PRESENT CASE IS DISTINGUISHABLE WITH THE FACT OF N R PORTFOLIO (P) LIMITED. IN CASE OF GAYATHRI ASSOCIATES AS REPORTED IN 41 TA XMANN.COM 526, HONBLE ANDHRA PRADESH HIGH COURT HAS OBSERVED THAT EXCEPT BANK ACCOUNT NO OTHER DOCUMENTS WERE FILED BEFORE THE ASSESSING OFFICER EVEN NO AFFIDAVIT WAS FILED. IN THE PRESENT APPEAL IN HAND THE ASSESSEE NOT ONLY THE BANK ACCOUNT BUT ALSO THE AFFIDAVIT AND VARIOUS OTHER DOCUMENTS WERE FILED. HENCE, ONUS LYING ON THE ASSESSEE HAS PROPERLY BEEN DISCHARGED. THUS, FACT OF THE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 55 PRESENT CASE IS DISTINGUISHABLE WITH THE FACT OF TH E CASE OF M/S GAYATHRI ASSOCIATES. IN CASE OF CIT VS FOCUS EXPORTS (P) LTD AS REPORTE D IN 51 TAXMANN.COM 46, HONBLE DELHI HIGH COURT HAS OBSERVED THAT ADDR ESS AND PA NO OF THE SHARE APPLICANT WAS NOT PROVIDED. IN THE PRESENT APPEAL IN HAND THE APPELLANT COMPANY HAS PROVIDED THE COMPLETE ADDRESS , PA NO AND VARIOUS OTHER DOCUMENT S AS TO DISCHARGED ONUS LYING ON IT. HENCE, FACT OF THE PRESENT APPEAL IS DISTINGUISHABLE WITH THE FACT OF FOCUS EXPORTS (P) LTD. IN CASE OF CIT VS P MOHANKALA AS REPORTED IN 291 IT R 278, HONBLE APEX COURT HAS ANALYSIS THE PROVISION OF SECTION 68 OF T HE INCOME TAX ACT AND OBSERVED THAT EXPLANATION OF THE ASSESSEE NOT ACCEP TED BY THE ASSESSING DOES NOT TANTAMOUNT TO INCOME OF THE ASSESSEE. IN T HAT CASE THE LD CIT[A] AND HONBLE ITAT ALSO APPROVED THE ORDER OF THE ASS ESSING OFFICER. IN THE PRESENT APPEAL IN HAND, THE ASSESSEE COMPANY HAS EXPLAINED THE CORRECT NATURE OF TRANSACTIONS THOUGH THE SAME WAS NOT ACCEPTED BY THE ASSESSING OFFICER BUT BY THE LD CIT[A]. SINCE, THE ASSESSEE COMPANY HAS (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 56 FILED AMPLE DOCUMENTS TO SUPPORT ITS CLAIM. HENCE, RATHER DECISION OF THE HONBLE APEX COURT SUPPORTS THE CASE OF THE ASSESSE E COMPANY. IN THE CASE OF MAF ACADEMY (P) LIMITED AS REPORTED IN 42 TAXMANN.COM 377, HONBLE DELHI HIGH COURT ON THE BASIS OF ITS F INDING IN THE CASE OF N R PORTFOLIO [P] LIMITED [ SUPRA] REACHED TO A CONCLUS ION THAT THE ASSESSEE HAS FAILED TO PROVIDE THE IDENTITY, GENUINENESS AND CRE DITWORTHINESS OF THE SHARE APPLICATION MONEY . IN THE PRESENT CASE AS STATED THE ASSESSEE HAS EXTE ND ITS FULL CO-OPERATION AND ALSO FILED AMPLE DOCUMENTS AS TO PROVE THE INGR EDIENTS OF PROVISION OF SECTION 68 OF THE ACT. THE SHARE OF THE ASSESSEE CO MPANY WAS NOT BUY BACK BY THE ASSESSEE COMPANY BUT THE TRANSACTIONS W ERE EXECUTED BETWEEN THE SHARE HOLDERS IN THE PREVIOUS YEAR RELE VANT TO THE ASST YEAR 2006-07. HENCE, FACT OF THE CASE OF MAF ACADEMY (P) LIMITED WAS DISTINGUISHABLE WITH THE FACT OF THE PRESENT CASE O F THE ASSESSEE. IN THE CASE OF SUBHLAKSHMI VANIJYA ( P) LTD AS REPO RTED IN 60 TAXMANN.COM 60 , HONBLE KOLKATA BENCH OBSERVED THAT INSERTION OF THE PROVISO TO SECTION 68 WAS RETROSPECTIVE IN NATURE. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 57 THAT PROVISO TO SECTION 68 OF THE INCOME TAX ACT WA S INSERTED BY THE FINANCE ACT 2012 W.E.F 01-04-2013. SINCE, THE DATE OF APPLICABILITY WAS CLEARLY MENTIONED WITH THIS AMENDMENT, HENCE, THE S AID INSERTION OF THE PROVISO HAVE PROSPECTIVE APPLICABILITY. THAT HONBL E MUMBAI BENCH OF ITAT IN THE CASE OF VEEDHATA TOWER P LIMITED [ ITA NO 70 70/ MUM/ 2014 ] DT 21- 01-2015 HAS DISCUSSED THE ISSUE OF SHARE APPLICATIO N MONEY IN DETAIL AND HELD THAT THE ASSESSEE PRIOR TO THE AMENDMENT BY TH E FINANCE ACT, 2012 NEED TO PROVE ONLY IDENTITY OF THE SHARE HOLDERS AN D THE ASSESSEE ALSO NEED NOT REQUIRES TO BE PROVED SOURCE OF SOURCE. IN THE CASE OF AGRAWAL COAL CORPORATION (P) LIMITED AS REPORTED IN 19 TAXMANN.COM 209, HONBLE INDORE BENCH OF ITAT HAS C ATEGORICALLY HELD THAT THE ASSESSEE NEEDS TO PROVE THE IDENTITY OF TH E SHARE HOLDER ONLY.IN THE PRESENT APPEAL IN HAND THE ASSESSEE HAS PROVED THE IDENTITY OF THE SHARE APPLICANT WITH THE AMPLE DOCUMENTS. HENCE, RATHER T HE SAID DECISION SUPPORTS THE CASE OF THE ASSESSEE COMPANY. IN CASE OF CIT VS NOVA PROMOTERS & FINLEASE (P) LIM ITED AS REPORTED IN 342 ITR 169, HONBLE DELHI HIGH COURT HAS OBSERVED THAT THE ASSESSING OFFICER (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 58 HAS RECORDED STATEMENT OF THE SHARE APPLICANT IN TH AT CASE AND CONFRONTED WITH THE ASSESSEE BUT THE ASSESSEE FAILED TO SUBSTA NTIATE ITS CONTENTION. IN THE PRESENT APPEAL THE ASSESSING OFFICER DID NOT MAKE ANY INQUIRY. HENCE, RATHER DECISIONS OF THE HONBLE DELHI HIGH C OURT IN THE CASE OF CIT VS NOVA PROMOTERS & FINLEASE (P) LIMITED [SUPRA] SU PPORT THE CASE OF THEASSESSEE. 10. ON CONSIDERATION OF ABOVE AND RESPECTFULLY FOLL OWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS . STL EXTRUSION, 53 DTR 97 AND JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PEOPLES GENERAL HOSPITAL (APPEAL NO.27/2008) (SUPRA) AND THE DECISI ON OF HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORT (SUPRA), 11 TTJ 357 AND OTHER DECISIONS AS REPRODUCED ABOVE, WE ARE OF THE VIEW THAT LD. CI T(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 3,15,00,000/- AND LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1,75,00,000/-, THEREF ORE, WE DELETE THE SAME.ACCORDINGLY, GROUND TAKEN BY DEPARTMENT IS DIS MISSED WHEREAS GROUND TAKEN BY THE ASSESSEE IS ALLOWED. 11. SO FAR AS ASSESSEES APPEAL GROUND NO.1 IS CONC ERNED, SAME RELATES TO MAINTAINING THE ADDITION IN RESPECT OF SHARE APP LICATION MONEY WHILE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 59 PASSING ORDER U/S 153A/143(3) EVEN NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH AS TO JUSTIFY THE SAID ADDITION. 12. THE ASSESSEE HAS CHALLENGED THE ADDITION MADE I N RESPECT OF SHARE CAPITAL IN THE SEARCH ASSESSMENT ORDER PASSED U/S 1 53A OF THE I.T. ACT. IN THE PRESENT CASE, SEARCH U/S 132 OF THE I.T. ACT WA S EXECUTED ON 21.11.2006 DURING THE PREVIOUS YEAR RELEVANT TO AY 2007-08. THE AMOUNT OF SHARE APPLICATION MONEY AS RECEIVED BY THE ASSES SEE WAS RECORDED IN THE BOOKS OF ACCOUNT PRIOR TO THE DATE OF SEARCH. T HE ASSESSEE CLAIMED THAT ON THE DATE OF SEARCH, NO NOTICE WAS ISSUED U/S 143 (2) OF THE I.T. ACT. HOWEVER, THE RETURN OF INCOME WAS FILED BY ASSESSEE THAT NO NOTICE U/S 142 WAS ISSUED TILL 30.11.2007. SINCE ON THE DATE OF SE ARCH, NO PROCEEDINGS WAS PENDING AFTER FILING THE RETURN OF INCOME, NO N OTICE ISSUED U/S 143(2) OF THE I.T. ACT. HENCE, IT WAS CLAIMED BY THE ASSESSEE THAT AS PER SECOND PROVISO TO SEC. 153A(1)(B) OF THE I.T. ACT R.W.S. S UB-SEC. 2 OF SEC. 153 OF THE ACT, NO PROCEEDING WAS PENDING AS TO ABATE AS PER S ECOND PROVISION OF CLAUSE B OF SEC. 1 OF SEC. 153 OF THE I.T. ACT. 12.1 MATTER CARRIED TO LD. CIT(A) AND LD. CIT(A) HA S DISMISSED THE APPEAL ON THIS ISSUE, THEREFORE, ASSESSEE IS IN APPEAL BEF ORE US. 12.2 LD. AR HAS FILED WRITTEN SUBMISSION WHICH READ S AS UNDER: 1.1] THE ASSESSEE HAD FILED THE PRESENT APPEAL AGA INST THE ORDER OF THE LD CIT[A] DT 08-03-2013. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 60 1.2] THE ASSESSING OFFICER ADDED AN AMOUNT OF RS 4 ,90,00,000/- TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF SHARE APPLICATION MONEY AS RECEIVED BY T HE ASSESSEE FROM 8[ EIGHT] SHARE HOLDERS AND THAT TOO IN THE SEARCH ASSESSMENT AS PASSED U/S 153A R.W .S 143[3] OF THE ACT. 1.3] CHART OF DATE WISE EVENT AS TO UNDERSTAND APP LICABILITY OF THE PROVISION OF SECTION 153A OF THE INCOME TAX ACT IS AS UNDER:- S.NO EVENT DATE 1 INCOME TAX SEARCH U/S 132 OF THE ACT WAS EXECUTED O N THE PREMISES OF THE APPELLANT ON 21 - 11 - 2006 2 THE APPELLANT HAD FILED ITS RETURN OF TOTAL INCOME I.E AFTER THE EXECUTION OF THE SEARCH 29 - 11 - 2006 3 TIME LIMIT FOR ISSUANCE OF THE NOTICE U/S 143[2] WAS TILL 30 - 11 - 2007 4 NOTICE U/S 153A OF THE ACT WAS ISSUED ON 05 - 10 - 2007 5 RETURN IN RESPONSE TO THE NOTICE AS ISSUED U/S 153 A WAS FILED ON 17 - 12 - 2007 6 NOTICE U/S 143[2] WAS ISSUED ON 10 - 06 - 2008 1.4.1] THAT AS PER SECOND PROVISO TO SECTION 153A(1 )(B) OF THE INCOME TAX ACT, THE ASSESSMENT PENDING AS ON THE DATE OF SEARCH SHALL BE ABATE. TH E SAID PROVISO READ AS UNDER:- PROVIDED FURTHER THAT ASSESSMENT OR RE-ASSESSMENT , IF ANY , RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SUB-SECTION PENDING ON THE DATE OF INITI ATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUIS ITION UNDER SECTION 132A, AS THE CASE MAY, SHALL ABATE. 1.4.2] THAT AS PER SUB- SECTION (2) OF SECTION 153 A OF THE INCOME TAX ACT, THE SAID SUBSECTION READ AS UNDER:- (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF AS SESSMENT OR REASSESSMENT MADE UNDER SUB- SECTION (1) HAS BEEN ANNULLED IN APPEAL OR ANY OTHE R LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB- SECTION (1) OR SECTION 1 53, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE S ECOND PROVISO TO SUB- SECTION (1), SHALL (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 61 STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER 1.4.3] THAT ON COLLECTIVE READING OF 2ND PROVISO T O SUB-CLAUSE (B) OF SUB-SECTION (1) OF SECTION 153A OF THE INCOME TAX ACT WITH SUB- SECTION (2) O F SECTION 153A OF THE INCOME TAX ACT. IF NO NOTICE U/S 143(2) OF THE INCOME TAX ACT WAS ISSUED IN THE ASST YEAR 2006-07 WITHIN THE TIME AS ALLOWED U/S 143(2) OF THE INCOME TAX ACT. IN THAT C ASE, THE PRESENT ASSESSMENT YEAR IS NOT FALLS UNDER THE DEFINITION OF THE PENDING ASSESSMENT FOR ABATEMENT AS PER 2ND PROVISO TO CLAUSE (B) OF SUB-SECTION (1) OF SECTION 153A OF THE INCOME TA X ACT. THAT IN THE PRESENT CASE,NOTICE U/S 143(2) WAS ISSUED ON 10-06-2008 FIRST TIME. HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIEDIN MAKING THE ADDITION IN RESPECT OF SHARE APPLICATION MONEY IN ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH. 1.4.4] THAT PROVISION OF SECTION 153A IS SPECIAL AN D INDEPENDENT CODE, PRIOR TO MAKING THE ADDITION TO THE INCOME OF THE ASSESSEE IT IS TO BE SEEN WHETHER THE ADDITION WAS BASED ON THE BASIS OF INCRIMINATI NG MATERIAL FOUND DURING THE COURSE OF SEARCH OR NOT. 1.4.5] THAT IN THE PRESENT CASE, NOTHING INCRIMINAT ING WAS FOUND FROM THE POSSESSION OF THE PERSON SEARCHED. THAT FROM THE ASSESSMENT ORDER IT SEEMS T HAT THE ASSESSING OFFICER WAS ISSUED NOTICE U/S 153 A JUST TO ADD THE AMOUNT OF SHARE APPLICATION MONEY A S RECEIVED BY IT BY TREATING THE SAME AS NON- GENUINE EVEN WHEN THE AMOUNT OF SHARE APPLICATION M ONEY WAS DULY DISCLOSED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH AND PROPERLY RECORDED IN THE REG ULAR BOOKS OF ACCOUNT OF THE ASSESSEE. THE DOCUMENTS AS FOUND DURING THE COURSE OF SEARCH WERE PROPERLY RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE. HENCE, THE AMOUNT OF SHARE APPLICA TION IS NOT CONSIDERED AS INCRIMINATING IN NATURE. 1.4.6] THAT IN THE CASE OF SHARE APPLICATION MONEY/ SHARE CAPITAL, THE ASSESSEE NEED TO PROVE THE IDENTITY OF THE SHAREHOLDERS ONLY. 1.4.7] THAT IN THE PRESENT CASE, THE ASSESSING OFFI CER WAS NOT JUSTIFIED IN ADDING THE AMOUNT OF SHARE APPLICATION MONEY/ SHARE CAPITAL AS RECEIVED BY IT FROM ITS SHAREHOLDERS AND THAT TOO IN THE 153A PROCEEDING. THE ADDITION SO MADE THEREFORE REQUIRES TO BE QUASHED. 1.5] LIST OF DECISION AS RELIED BY THE ASSESSEE IS ENCLOSED WITH THIS SYNOPSIS. THAT IN THE FOLLOWING DECISIONS ALSO IT WAS HELD THAT IN ABSENCE OF ANY I NCRIMINATING DOCUMENTS NO ADDITION CAN BE MADE:- S.NO REFERENCE CITATION (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 62 1 ACIT VS M/S CHIRCHIND HYDRO LTD 17 ITJ 197(INDORE BENCH) 2 SMT CHINTA JAIN AND OTHERS VS ACIT 18 ITJ 89 (INDORE BENCH) 3 ACIT VS VIJAY TRADERS ( ITA NO 6/JAB/2008) DATED 31 - 05 - 2011. 4 SHRI ANUPAM KEDIA VS ACIT 19 ITJ 54 ( BILASPUR) 5 ACIT VS AMIT PANDE 19 ITJ 129 ( INDORE BENCH) 6 S.K.JAIN VS ACIT 14 ITJ 434 ( INDORE BENCH) 1.6] THAT IN OUR CONSIDERED OPINION, THE ASSESSIN G OFFICER PRIOR TO ISSUANCE OF NOTICE U/S 153A OF T HE INCOME TAX ACT MUST HAVE ISSUED NOTICE U/S 143(2) O F THE INCOME TAX ACT AS TO TAKE VALID JURISDICTION ON THE CASE. HOWEVER, IN THE PRESENT CASE, NO NOTICE W AS ISSUED U/S 143(2) OF THE INCOME TAX ACT PRIOR TO ISSUANCE OF THE NOTICE U/S 153A OF THE INCOME TAX A CT. 1.7] THAT IN THIS GROUND OF APPEAL, THE ASSESSEE HAS CHA LLENGED THE ADDITION OF RS 4,90,00,000/- IN RESPECT OF SHARE APPLICATION MONEY RECEIVED BY IT P RIOR TO THE DATE OF SEARCH AND PROPERLY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND THAT TOO IN THE PR OCEEDING U/S 153A OF THE INCOME TAX ACT. 12.3 ON THE OTHER HAND, LD. DR RELIED UPON THE ORDE R OF THE REVENUE AUTHORITIES AND RELIED UPON THE DECISION OF SPECIAL BENCH IN THE CASE OF AL CARGO LOGISTICS LTD. VS. DCIT, 20 ITJ 45 (MUM) (SB) AND DECISION OF HON'BLE ALLAHABAD HIGH COURT IN CASE OF SHAILA AGRA WAL, 346 ITR 130. 12.4 WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PA RTIES. WE FIND THAT IN THE PRESENT CASE, THE FACT REMAINS THAT BEFORE SEAR CH ASSESSMENT, NO SCRUTINY WAS CARRIED OUT EVEN THE RETURN WAS FILED LATER AFTER ISSUE OF NOTICE AND INTIMATION WAS ISSUED U/S 143(1) AFTER THE SEAR CH. WE ARE OF THE VIEW THAT DEPARTMENT HAD NO OCCASION TO EXAMINE THOSE IS SUES WHICH ARISE FROM RETURN OF INCOME AS BOOKS OF ACCOUNT WERE NEITHER W ERE CALLED NOR (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 63 PRODUCED. IN THIS CASE, A SEARCH TOOK PLACE ON 21.1 1.2006 AND RETURN FOR AY 2006-07 WAS PROCESSED U/S 143(1) AFTER THE SEARC H. THE ASSESSMENT HAS TO BE CONSIDERED AS ABATED AND JURISDICTION TO CONDUCT THE SCRUTINY IN SUCH CASES ARISES FROM SEC. 153A OF THE I.T. ACT. I N THE PRESENT CASE, THE SHARE APPLICATION MONEY WAS NOT SCRUTINISED BY THE ASSESSING OFFICER BECAUSE PRIOR TO SEARCH, RETURN WAS NOT FILED EVEN PROCESSING U/S 143(1) WAS DONE AFTER THE SEARCH AND PROCESSING IS NOT AN ASSESSMENT BECAUSE U/S 143(1), THERE ARE NO POWERS OF SCRUTINY. IN THI S CASE, AS PER SEC. 153A, THE ASSESSING OFFICER HAS ALL THE POWERS TO ASSESS AND REASSESS THE ASSESSMENT U/S 153A OF THE ACT. WE FIND THAT ISSUE IN CONTROVERSY IS COVERED BY THE DECISION OF ALCARGO GLOBAL LOGISTICS LTD. VS. DCIT, 20 ITJ 45 (MUM) (SB) AND ALSO BY DECISION OF INDORE BENCH IN CASES OF SUDHIR MAHESHWARI, MOTILAL DASHRATH SONI AND NARENDRA INDU STRIES. IN AL CARGO GLOBAL LOGISTICS LTD., IT WAS ALSO HELD THAT IN CAS ES WHERE ONLY 143(1) PROCESSING IS DONE AND THE ASSESSMENT ABATE, THERE IS NO REQUIREMENT OF SEIZED BOOKS OF ACCOUNT OR SEIZED MATERIAL TO INVOK E PROVISIONS OF SEC. 153A. WE FIND THAT THE ISSUE IS ALSO COVERED BY THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF SHAILA AGRAWAL, 346 ITR 1 30 WHEREIN IT IS HELD THAT SEC. 153A OF THE I.T. ACT PROVIDES THAT WHERE NOTICE UNDER THIS SEC. IS ISSUED AS A RESULT OF ANY SEARCH U/S 132, ASSESSMEN T OR REASSESSMENT, IF (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 64 ANY, RELATING TO ANY AY FALLING WITHIN THE PERIOD O F SIX AYS REFERRED TO U/S 153, PENDING ON THE DATE OF INITIATION OF SEARCH U/ S 132 OR REQUISITION U/S 132A SHALL ABATE. THE WORDS PENDING ON THE DATE O F INITIATION OF SEARCH U/S 132 OR MAKING OF REQUISITION U/S 132A, AS THE C ASE MAY BE, HAVE TO BE ASSIGNED THEIR SIMPLE AND PLAIN MEANING. WHERE THE ASSESSMENT OR REASSESSMENT IS FINALISED, THERE ARE NO PENDING PRO CEEDINGS TO ABATE AND BE RESTORED TO THE FILE OF THE ASSESSING OFFICER. T HE WORD ABATE-MENT IS REFERABLE TO SOMETHING WHICH IS PENDING, ALIVE, OR IS SUBJECT TO DEDUCTION. ABATEMENT REFERS TO SUSPENSION OR TERMINATION OF PR OCEEDINGS EITHER OF THE MAIN ACTION, OR PROCEEDINGS ANCILLARY OR COLLATERAL TO IT. PROCEEDINGS WHICH HAVE ALREADY TERMINATED ARE NOT LIABLE FOR ABATEMEN T UNLESS THE STATUTE EXPRESSLY PROVIDES FOR IT. THE WORD PENDINGOCCURR ING IN THE SECOND PROVISO TO SEC. 153A OF THE ACT IS QUALIFIED BY THE WORDS ON THE DATE OF INITIATION OF THE SEARCH, AND MAKES IT ABUNDANTLY CLEAR THAT ONLY SUCH ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE LIABLE T O ABATE. 13. WE, RESPECTFULLY FOLLOWING THE SAME, DISMISS TH E GROUND NO.1 OF THE APPEAL OF THE ASSESSEE. 14. GROUND NO.3 OF THE ASSESSEES APPEAL IS REGARDING DISALLOWANCE OF INCOME OF RS.4731772 U/S 40(IA) OF THE I.T. ACT. WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED FRIGHT PAYMENT OF RS.4731772 ON THE GROUND THAT NO (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 65 TDS WAS DEDUCTED, THEREFORE, ASSESSING OFFICER AND LD. CIT(A) HAVE DISMISSED THE APPEAL OF THE ASSESSEE. 14.1 WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PA RTIES. THE ASSESSEE HAS TAKEN THE GROUND THAT BY VIRTUE OF FINANCE ACT, 2008 W.E.F. 1.4.2005, THE SAID SEC. WAS AMENDED. AS PER AMENDED SEC., IF THE AMOUNT SO DEDUCTED IS DEPOSITED BY THE ASSESSEE TILL DUE DATE OF FILING OF RETURN IS ALLOWABLE DEDUCTION PRIOR TO MARCH IN THAT CASE. IN THIS CASE, TDS WAS DEDUCTED AND PAYMENT WAS MADE PRIOR TO MARCH, HENCE , ASSESSEE HAS PAID THE TAX ON TIME, THEREFORE, HE REQUESTED THE B ENCH TO ALLOW THIS ADDITIONAL GROUND. IT IS THE LEGAL CLAIM OF THE ASS ESSEE, THEREFORE, IT MAY BE ALLOWED. WE FIND THAT THIS CLAIM IS A LEGAL CLAIM O F THE ASSESSEE, WHICH IS ALLOWABLE CLAIM, THEREFORE, IN THE INTEREST OF JUST ICE AND FAIR PLAY, WE ALLOW THE CLAIM OF THE ASSESSEE AND RESTORE THIS MATTER T O THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO THE ASSESSING O FFICER TO DECIDE THE ISSUE AS PER AMENDED SECTION AS PER LAW. THUS, GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 15. GROUND NO.4 OF THE APPEAL OF THE ASSESSEE RELATES TO CHARGING OF INTEREST U/S 234B OF THE I.T. ACT. WE HAVE ALREADY HELD THAT CHARGEABILITY OF INTEREST U/S 234B IS MANDATORY, THEREFORE, DISMISSE D ON MERIT. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 66 IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED WHE REAS GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. GROUND NO.2 IS ALLOWED. GROUND NO.3 IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO.4 IS DISMISSED. IN THE CASE OF SHIVANGI ROLLING MILLS P. LTD. 16 IN IT(SS)A NO.134/IND/2013, THE ASSESSEE HAS TAK EN THE FOLLOWING GROUNDS OF APPEAL: 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD. CIT(A) HAS ERRED IN MAINTAINING THE ISSUANCE OF NOTICE U/S 153C AS LEGAL AND PROPER EVEN NOTHING INCRIMINATING WAS FOUND AND SEI ZED DURING THE COURSE OF SEARCH FROM THE PREMISES OF THE PERSON SE ARCH. 1.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN MAINTAINING ADDITION IN RESPECT OF SHA RE APPLICATION MONEY WHILE PASSING ORDER U/S 153C R.W.S. 143(3) EV EN WHEN NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED DURIN G THE COURSE OF SEARCH AS TO JUSTIFY THE SAID ADDITION. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , LD. CIT(A) HAS ERRED IN MAINTAINING ADDITION U/S 68 OF RS.80 L ACS IN RESPECT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE CO MPANY FROM THE FOLLOWING COMPANIES WITHOUT PROPERLY APPRECIATING T HE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM: (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 67 S.NO. NAME OF THE COMPANY AMOUNT (RS.) 1 M/S. NEEMA INVESTMENT P. LTD. 50,00,000 2 M/S. MONEY PENNY FINCOM P. LTD. 30,00,000 80,00,000 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED IN MAINTAINING THE CHARGING OF INTEREST U /S 234B AS MANDATORY IN NATURE EVEN WHEN NO SUCH INTEREST WAS CHARGEABLE ON THE AMOUNT OF INCOME RETURNED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE AMOUNT AS DISALLOWED BY THE APPELLANT IN THE COMPUTATION O F INCOME OF RS.4731772 U/S 40(IA) OF THE I.T. ACT IS AN ALLOWAB LE DEDUCTION IN VIEW OF THE AMENDMENT MADE IN THE PROVISION OF SECTION 4 0(IA) OF THE ACT. 17 IN RESPECT OF GROUND NO.1.1&1.2, WE FIND FROM TH E LD. CIT(A) THAT LD. CIT(A) IN HIS ORDER HAS HELD THAT THERE IS NO DENIA L FACT THAT SHARE APPLICATION FORMS AND OTHER DOCUMENTS BELONGING TO ASSESSEE FIRM WERE FOUND AND SEIZED FROM, THE PREMISES OF ANANT STEEL P. LTD. AND THEREAFTER A VALID AND TIMELY NOTICE U/S 153C WAS ISSUED AND SER VED ON THE ASSESSING OFFICER. THERE IS NO REQUIREMENT U/S 153C THAT ASSE SSING OFFICER SHOULD BE SATISFIED THAT SUCH VALUABLE ARTICLES OR BOOKS OF A CCOUNT OR DOCUMENTS BELONGING TO OTHER PERSON MUST CONCLUSIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME. WE FIND THAT AS PER THE DECISIO N OF THIS TRIBUNAL IN THE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 68 CASE OF MUKESH SANGLA HUF, WHEREIN THE SIMILAR ISSU E HAS COME UP, WHEREIN ONE OF US HAS DELIVERED THE JUDGMENT AND WE HAVE HELD THAT ASSESSING OFFICER IS REQUIRED TO RECORD THE SATISFA CTION BEFORE ISSUING THE NOTICE U/S 153C OF THE I.T. ACT. WE HAVE HELD IN TH AT CASE WHICH READS AS UNDER: 37. BEFORE US, IT IS SUBMITTED BY THE LEARNED CO UNSEL FOR THE ASSESSEE THAT SATISFACTION OF A.O. U/S.153C NECESSARY FOR AS SUMING JURISDICTION. IN THE ASSESSEES CASE, NOTICE U/S.153C WERE ISSUED BY THE A.O. WHICH REQUIRES RECORDING OF HIS SATISFACTION. RELIANCE IS PLACED O N THE DECISION OF THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF C.I.T. VS. MECHMEN [I.T.A.NO.44/2011 DT.10.07.2015] WHEREIN IT IS HELD THAT SATISFACTION OF A.O. IS ESSENTIAL TO ASSUME JURISDICTION. THE RELEVANT PARAS OF THE JUDGMENT AR E AS FOLLOWS : 15. WE MAY NOW TURN TO SECTION 153C. NO DOUBT, THE FORM OF SECTION 153C IS DISSIMILAR TO THAT OF SECTION 158BD. IT IS ALSO TRU E THAT THE TWO PROVISIONS ARE EMBEDDED UNDER DIFFERENT CHAPTERS. FOR, SECTION 153 C IS IN CHAPTER XIV PROVIDING FOR PROCEDURE FOR ASSESSMENT, WHEREAS SEC TION 158BD IS FOUND IN CHAPTER XIV-B PROVIDING FOR SPECIAL PROCEDURE FOR A SSESSMENT OF SEARCH CASES. FURTHER, SECTION 153C OPENS WITH NON-OBSTANTE CLAUS E. HOWEVER, THE NON- OBSTANTE CLAUSE IN SECTION 153C IS NECESSITATED TO GIVE POWER TO THE ASSESSING OFFICER HAVING JURISDICTION TO PROCEED AGAINST THE PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, INSPITE OF THE ACTION UNDER SECTION 139, 147, 148, 149, 151 AND 153 OF THE I.T. ACT. HOWEVER, ON CLOSE R SCRUTINY OF THE TWO PROVISIONS, IT IS INDISPUTABLE THAT, THESE PROVISIO NS ARE MACHINERY PROVISIONS AND HAVE BEEN PROVIDED FOR IN THE STATUTE BOOK FOR THE PURPOSE OF CARRYING OUT ASSESSMENT OF A PERSON OTHER THAN THE SEARCHED PERS ON UNDER SECTION 132 OR 132A OF THE I.T. ACT IN RELATION TO SECTION 158BD; AND SECTION 153A IN RELATION TO SECTION 153C. NOTABLY, THE PURPOSE UNDERLYING BOTH THESE PROVISIONS IS SIMILAR, EVEN THOUGH SECTION 153C DOES NOT SPECIFICALLY REFE R TO THE EXPRESSION (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 69 UNDISCLOSED INCOME. HOWEVER, IN BOTH THE SITUATIO NS, THE ASSESSING OFFICER ENGAGED IN CARRYING ON SEARCH OF THE ASSESSEE WITHI N HIS JURISDICTION, IF SEIZES OR REQUISITIONS THE ITEMS (BOOKS OF ACCOUNT OR OTHER D OCUMENTS OR ANY ASSETS FOR SECTION 158BD; AND MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS FOR SECTION 153C), IS EXPECTED TO HANDOVER THOSE ITEMS TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THEREAFTER THE ASSESSING OFFICER HAVING JURISDICTIO N HAS TO PROCEED AGAINST SUCH OTHER PERSON WITHIN HIS JURISDICTION. EVEN FOR THE PURPOSE OF SECTION 153C, THE ASSESSING OFFICER BEFORE HANDING OVER THE ITEMS TO THE ASSESSING OFFICER HAVING JURISDICTION MUST BE SATISFIED THAT THE ITEMS BEL ONGS OR BELONG TO THE PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A. THAT SATISFACTION OF THE CONCERNED ASSESSING OFFICER IS A SINE QUA NON. THE CONSEQUENCES FLOWING FROM THE ACTION TO BE TAKEN ON THE BASIS OF SUCH INFORMA TION HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION, FOR THE ASSE SSE, WHO IS A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, IS DRASTIC OF ASSESSMENT OR REASSESSMENT OF HIS INCOME FALLING WITHIN SIX ASSES SMENT YEARS. 16. SUFFICE IT TO OBSERVE THAT THE DISSIMILARITY OF THE FORM OF TWO PROVISIONS WOULD MAKE NO DIFFERENCE TO THE PURPOSE UNDERLYING. THE P OWER BESTOWED ON THE ASSESSING OFFICER HAVING JURISDICTION BE IT UNDER SECTION 153C OR SECTION 158BD IS IDENTICAL. 17. WE ARE NOT INCLINED TO ACCEPT THE ARGUMENT OF T HE DEPARTMENT THAT THE PURPOSE UNDERLYING THE TWO PROVISIONS IS DIFFERENT. WE ALSO FIND THAT EVEN THE PROCEDURE IS NOT DIFFERENT. THE SUBJECT MATTER OF T HE ACTION WOULD DIFFER IN THE CONTEXT OF THE MACHINERY PROVISION INVOKED, IN THE GIVEN CASE. THAT, HOWEVER, CANNOT BE THE BASIS TO EXTRICATE THE ASSESSING OFFI CER, WHO RESORTS TO POWER UNDER SECTION 153C OF HANDING OVER THE ITEMS REFERR ED TO IN SECTION 153C TO THE ASSESSING OFFICER HAVING JURISDICTION, OF HIS DUTY TO BE SATISFIED ABOUT THE JURISDICTIONAL FACT THAT THE ITEMS BELONGS OR BELON G TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 70 18. THE CONCOMITANT OF THIS CONCLUSION, IS THAT, TH E LEGAL POSITION AS APPLICABLE TO SECTION 158BD REGARDING SATISFACTION IN THE FIRST I NSTANCE OF THE FIRST ASSESSING OFFICER FORWARDING THE ITEMS TO THE ASSESSING OFFIC ER HAVING JURISDICTION; AND IN THE SECOND INSTANCE OF THE ASSESSING OFFICER HAVING JURISDICTION WHILST SENDING NOTICE TO SUCH OTHER PERSON (OTHER THAN THE PERSON REFERRED TO IN SECTION 153A), MUST APPLY PROPRIOVIGORE. THE FACT THAT INCIDENTALL Y THE ASSESSING OFFICER IS COMMON AT BOTH THE STAGES WOULD NOT EXTRICATE HIM F ROM RECORDING SATISFACTION AT THE RESPECTIVE STAGES. IN THAT, THE ASSESSING OFFIC ER IS SATISFIED THAT THE ITEMS REFERRED TO IN SECTION 153C BELONGS OR BELONG TO A PERSON (OTHER THAN THE PERSON REFERRED TO IN SECTION 153A), BEING SINE QUA NON. H E CANNOT ASSUME JURISDICTION TO TRANSMIT THOSE ITEMS TO ANOTHER FILE WHICH INCID ENTALLY IS PENDING BEFORE HIM CONCERNING OTHER PERSON (PERSON OTHER THAN THE PERS ON REFERRED TO IN SECTION 153A). THE QUESTION AS TO WHETHER THAT MAY INFLUENC E THE OPINION OF THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON, ALSO CANNOT BE THE BASIS TO TAKE ANY OTHER VIEW. AS A MATTER OF FACT, THE OTHER ASSESSING OFFICER TO WHOM THE ITEMS ARE HANDED OVER, BEFORE ISSUING NOTI CE MUST HIMSELF BE SATISFIED AFTER DUE VERIFICATION OF THE ITEMS RECEIVED AND TH E DISCLOSURES MADE BY THE OTHER PERSON IN THE RETURNS FOR THE RELEVANT PERIOD ALREA DY FILED BY THE OTHER PERSON BEFORE HIM. FOR THE SAME REASON, WE MUST REJECT THE ARGUMENT OF THE DEPARTMENT THAT THE DISCRETION OF THE ASSESSING OFFICER HAVING JURISDICTION WILL BE IMPAIRED IN ANY MANNER, IF HE WERE TO HOLD A DIFFERENT VIEW. SI MILARLY, AS THERE IS NO PROVISION EITHER EXPRESS OR IMPLIED (IN THE ACT) TO DISPENSE WITH THE REQUIREMENT OF SATISFACTION, IF THE ASSESSING OFFICER HAPPENS TO B E THE SAME, AS IN THIS CASE, THE ARGUMENT OF THE DEPARTMENT MUST BE NEGATIVED. 19. AFTER RECEIPT OF THE MATERIALS, THE ASSESSING O FFICER HAVING JURISDICTION IS EXPECTED TO CONDUCT ENQUIRY AND DUE VERIFICATION OF THE RELEVANT FACTS; BEFORE FORMING HIS PRIMA FACIE SATISFACTION. THE ASSESSING OFFICER HAVING JURISDICTION WILL BE WELL WITHIN HIS RIGHTS TO FORM AN INDEPENDENT VI EW BEFORE ISSUING NOTICE TO THE OTHER PERSON (PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A) UNDER HIS JURISDICTION ON THE BASIS OF HIS OWN ENQUIRY. IN OU R OPINION, THE VIEW FORMED BY THE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 71 ASSESSING OFFICER AFTER HIS OWN ENQUIRY DOES NOT EN TAIL IN SEATING IN APPEAL OVER THE SATISFACTION OF THE FIRST ASSESSING OFFICER, WH O HAD HANDED OVER THE ITEMS TO HIM. 20. AS A RESULT, WE HOLD THAT THERE IS NO INFIRMITY IN THE VIEW TAKEN BY THE TRIBUNAL ON THE QUESTIONS UNDER CONSIDERATION. THE VIEW TAKE N BY US IS REINFORCED FROM THE DECISIONS OF OTHER HIGH COURTS IN THE CASES OF COMMISSIONER OF INCOME TAX (CENTRAL) VS. GOPI APARTMENT (SUPRA), PEPSI FOODS P . LTD. (SUPRA), PEPSICO INDIA HOLDINGS P. LTD. (SUPRA) AND LASTLY CIT VS. MADHIKE SHWANI (SUPRA). THE OBSERVATIONS OF THE DELHI HIGH COURT IN THE CASE OF SSP AVIATION LTD. (SUPRA) HAVE BEEN EXPLAINED IN THE SUBSEQUENT CASE OF PEPSI CO INDIA HOLDINGS P. LTD. (SUPRA). 21. WE CONCLUDE THAT THE CONDITION PRECEDENT FOR RE SORTING TO ACTION UNDER SECTION 158BD DELINEATED BY THE SUPREME COURT IN TH E CASE OF MANISH MAHESHWARI (SUPRA) AND IN THE RECENT CASE OF COMMIS SIONER OF INCOME TAX-III VS. CALCUTTA KNITWEARS (SUPRA), WOULD APPLY ON ALL FOURS MANDATING SATISFACTION OF THE ASSESSING OFFICER(S) DEALING WITH THE CASE AT T HE RESPECTIVE STAGES REFERRED TO IN SECTION 153C. 22. REVERTING TO THE SUBSTANTIAL QUESTIONS OF LAW A RTICULATED WHILE ADMITTING THESE APPEALS, WE HOLD THAT THE SAME WILL BE OF NO AVAIL TO THE DEPARTMENT CONSIDERING THE FACT SITUATION OF THE PRESENT CASE AND FOR THE REASONS MENTIONED HITHERTO. IN THAT, WE HAVE REJECTED THE ARGUMENT THAT EVEN IN CA SES, UNDER SECTION 153C THE ASSESSING OFFICER(S) NEED NOT RECORD SATISFACTION A ND IN PARTICULAR AT BOTH THE STAGES BE IT ASSESSING OFFICER OF SEARCHED PERSON OR ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. NOTABLY, THE R EQUIREMENT OF RECORDING SATISFACTION IS NOT FOR THE BENEFIT OF THE ASSESSIN G OFFICER(S), BUT LENDING CREDENCE TO HIS SATISFACTION AND ON WHICH MATTERS THE ASSESS EE CAN GIVE MEANINGFUL EXPLANATION AND REASON IT OUT AS AND WHEN OPPORTUNI TY IS GIVEN TO THE CONCERNED ASSESSEE. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 72 23. IN THE PRESENT CASE, THE CONCURRENT FINDING OF FACT RECORDED BY THE APPELLATE FORUMS IS THAT, NO SATISFACTION HAS BEEN RECORDED B Y THE ASSESSING OFFICER BEFORE ISSUING OF NOTICE UNDER SECTION 153C. FURTHE R, NONE OF THE PAPERS SEIZED BELONGS OR BELONG TO THE ASSESSEE (NOTICEE). THE AP PELLATE FORUMS HAVE FURTHER FOUND THAT NO ADDITION OR EVEN OBSERVATIONS HAVE BE EN MADE BY THE ASSESSING OFFICER IN ANY OF THE ORDERS FOR THE RELEVANT ASSES SMENT YEARS IN CONNECTION WITH ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. EVE N FOR THAT REASON NO ACTION UNDER SECTION 153C, IS JUSTIFIED. THESE FINDINGS OF FACT NEED NO INTERFERENCE AND HAVE NOT BEEN QUESTIONED BEFORE US. CONSIDERING THE ABOVE, THESE APPEALS MUST FAIL. 24. ACCORDINGLY, THESE APPEALS ARE DISMISSED WITH N O ORDER AS TO COSTS . 38. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE ASSESSEES CASE, THERE IS NOTHING IN THE ASSESSMENT ORDER OR O THERWISE TO SHOW THAT THE SATISFACTION AS ENVISAGED U/S.153C WAS EVER RECORDE D BY THE A.O. CONSIDERING IT, THE A.O. DID NOT ASSUME JURISDICTION TO COMPLETE AS SESSMENT U/S.153A AND THEREFORE, THE ASSESSMENT ORDER PASSED BY HIM IS IN VALID. HE PLEADED THAT EVEN WHEN THERE IS SAME ASSESSING OFFICER FOR SEARCHED P ERSON AND WHERE 153C ACTION IS TAKEN THEN ALSO RECORDING OF SATISACTION IN BOTH THE CASES IS NECESSARY IN VIEW OF DECISION OF THE HON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF MECHMAN (SUPRA). HE FURTHER SUBMITTED THAT NO ADDIT ION CAN BE MADE IN NON- ABATED ASSESSMENTS SANS INCRIMINATING MATERIAL. THE ASSESSMENT U/S.153A IS MADE ONLY IN CASES WHERE A SEARCH IS INITIATED U/S. 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED U/S.132A AFTER 31.05.2003. THEREFORE, SECTION 153A OF THE ACT CANNOT BE READ IN ISOLATION . THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT OF TOTAL INCOME UNDER TH E SAID SECTION HAS TO BE READ IN THE CONTEXT OF SECTIONS 132 OR 132A OF THE ACT. ONCE NOTICE U/S.153A IS ISSUED, THE ASSESSEE IS COMPULSORILY REQUIRED TO FI LE RETURN OF INCOME FOR SIX ASSESSMENT YEARS NOTWITHSTANDING DISCOVERY OR OTHER WISE OF ANY INCRIMINATING MATERIAL. ALL THE ASSESSMENT PROCEEDINGS WHICH ARE PENDING ON THE DATE OF SEARCH ABATE IN TERMS OF SECOND PROVISO TO SEC.153A . AS A COROLLARY, ALTHOUGH BUT (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 73 NOT EXPRESSLY PROVIDED IN SECTION, THE ASSESSMENT P ROCEEDINGS WHICH ARE NOT PENDING DO NOT ABATE. IF NOTHING INCRIMINATING IS F OUND ON ACCOUNT OF SUCH SEARCH OR REQUISITION IN RELATION TO UNABATED ASSESSMENTS I.E. COMPLETED OR CONCLUDED ASSESSMENTS, ONLY ASSESSED INCOME SHOULD BE REITERA TED. THE HARMONIOUS CONSTRUCTION OF ENTIRE PROVISION WOULD LEAD TO AN I RRESISTIBLE CONCLUSION THAT THE TERM ASSESSMENT HAS TO BE READ IN THE CONTEXT OF ABATED ASSESSMENTS AND THE TERM REASSESSMENT HAS BEEN USED IN THE CONTEXT OF UNABATED ASSESSMENTS. IN THE CASE OF COMPLETED ASSESSMENTS, INCOME HAS TO BE RE-ASSESSED IN TERMS OF SEC.153A. THE RE-ASSESSMENT REQUIRES BELIEF OF ASSE SSING OFFICER REGARDING ESCAPEMENT OF INCOME FROM ASSESSMENT. THE BELIEF SH OULD BE FOUNDED ON EXISTENCE OF APPROPRIATE MATERIAL OR INFORMATION. I T SHOULD BE RATIONAL BELIEF HELD IN GOOD FAITH AND NOT ARBITRARY, SUBJECTIVE OR A ME RE PRETENCE. THE MATERIAL OR INFORMATION IN HIS POSSESSION SHOULD HAVE DIRECT NE XUS WITH HIS BELIEF REGARDING ESCAPEMENT OF INCOME. THE ABSENCE OF SUCH NEXUS SHA LL RENDER THE RE- ASSESSMENT PROCEEDINGS INVALID. THUS, THE RE-ASSESS MENT OF INCOME U/S.153A CANNOT BE MADE SANS ANY INCRIMINATING MATERIAL OR MERELY ON CHANGE OF OPINION IN RELATION TO MATERIAL ALREADY CONSIDERED. [INDIAN & EASTERN NEWSPAPER SOCIETY VS. C.I.T. (119 ITR 996 SC); CALCUTTA DISCOUNT CO. LTD. VS. I.T.O (41 ITR 191 SC)] THE CONTENTION OF THE REVENUE TO THE EFFECT TH AT ONCE A NOTICE UNDER SECTION 153A OF THE ACT IS ISSUED, THE ASSESSMENTS FOR ALL THE SIX YEARS ARE AT LARGE FOR THE AO HAS NO WARRANT IN LAW. THE LEARNED COUNSEL F OR THE ASSESSEE PLACED RELIANCE WAS PLACED UPON THE FOLLOWING JUDGMENTS: 1. JAI STEEL (INDIA) VS. A.C.I.T. (2013) 259 CTR 28 1 (RAJ ) 19 . THE UNDERLINE PURPOSE OF MAKING ASSESSMENT OF TOTA L INCOME UNDER SECTION 153A OF THE ACT IS, THEREFORE, TO ASSESS INCOME WHI CH WAS NOT DISCLOSED OR WOULD NOT HAVE BEEN DISCLOSED. THE PURPOSE OF SECOND PROV ISO IS ALSO VERY CLEAR, INASMUCH AS, ONCE A ASSESSMENT OR REASSESSMENT IS ' PENDING' ON THE DATE OF INITIATION OF SEARCH OR REQUISITION AND IN TERMS OF SECTION 153A A RETURN IS FILED AND THE AO IS REQUIRED TO ASSESS THE SAME, THERE CANNOT BE TWO ASSESSMENT ORDERS DETERMINING THE TOTAL INCOME OF THE ASSESSEE FOR TH E SAID ASSESSMENT YEAR AND, THEREFORE, THE PROVISO PROVIDES FOR ABATEMENT OF SU CH PENDING ASSESSMENT AND (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 74 REASSESSMENT PROCEEDINGS AND IT IS ONLY THE ASSESSM ENT MADE UNDER SECTION 153A OF THE ACT WOULD BE THE ASSESSMENT FOR THE SAI D YEAR. 20 . THE NECESSARY COROLLARY OF THE ABOVE SECOND PROVIS O IS THAT THE ASSESSMENT OR REASSESSMENT PROCEEDINGS, WHICH HAVE ALREADY BEE N 'COMPLETED' AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND, SUCH ORDERS ARE SUBSISTING AT THE TIME WHEN TH E SEARCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY ABATEMENT SINCE N O PROCEEDINGS ARE PENDING. IN SUCH CASES, WHERE THE ASSESSMENTS ALREADY STANDS COMPLETED, THE AO CAN REOPEN THE ASSESSMENTS OR REASSESSMENTS ALREADY MAD E WITHOUT FOLLOWING THE PROVISIONS OF SECTIONS 147, 148 AND 151 OF THE ACT AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. 21. THE ARGUMENT RAISED BY THE COUNSEL FOR THE APPE LLANT TO THE EFFECT THAT ONCE A NOTICE UNDER SECTION 153A OF THE ACT IS ISSUED, THE ASSESSMENTS FOR SIX YEARS ARE AT LARGE BOTH FOR THE AO AND ASSESSEE HAS NO WARRAN T IN LAW. 22 . IN THE FIRM OPINION OF THIS COURT FROM A PLAIN REA DING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROVISION, WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISITION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS APPARENT THAT: (A) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND ABATED IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; (B) REGARDING OTHER CASES, THE ADDITION TO THE INCOME T HAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND (C) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 75 ASSESSMENT OR REASSESSMENT CAN BE MADE. THOUGH SUCH A CLAIM BY THE ASSESSEE FOR THE FIRST T IME UNDER SECTION 153A OF THE ACT IS NOT COMPLETED, THE CASE IN HAND, HAS TO BE C ONSIDERED AT BEST SIMILAR TO A CASE WHERE IN SPITE OF A SEARCH AND/OR REQUISITION, NOTHING INCRIMINATING IS FOUND. IN SUCH A CASE THOUGH SECTION 153A OF THE ACT WOULD BE TRIGGERED AND ASSESSMENT OR REASSESSMENT TO ASCERTAIN THE TOTAL I NCOME OF THE PERSON IS REQUIRED TO BE DONE, HOWEVER, THE SAME WOULD IN THA T CASE NOT RESULT IN ANY ADDITION AND THE ASSESSMENTS PASSED EARLIER MAY HAV E TO BE REITERATED. ............ 26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT Y EARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION W OULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLETE D ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION A ND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED A SSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL F OUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. 2. C.I.T. VS. KABUL CHAWLA [I.T.A.NO.707/2014 DT.28 .08.2015 (DEL)(HC)] 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOSTHERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREM ENTIONEDDECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICEUNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TOTHE PERSON SEARCHED REQUIRING HIM (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 76 TO FILE RETURNS FOR SIX AYSIMMEDIATELY PRECEDING TH E PREVIOUS YEAR RELEVANT TO THE AY INWHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THESEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TOBE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OFTHE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCHTAKE S PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE'TOTAL INCOME' OF T HE AFOREMENTIONED SIX YEARS IN SEPARATEASSESSMENT ORDERS FOR EACH OF THE SIX YE ARS. IN OTHER WORDS THEREWILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIXAYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOMEWOULD BE BROUGH T TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BESTRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THESEA RCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLEWITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOESNOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUTANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASISOF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETEDASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT ORREASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 AIS RELATABLE TO ABATED PRO CEEDINGS (I.E. THOSE PENDING ON THE DATEOF SEARCH) AND THE WORD 'REASSESS' TO COMPL ETED ASSESSMENTPROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTIONTO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDERSECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BEMADE SEPARATELY FOR EAC H AY ON THE BASIS OF THE FINDINGS OF THESEARCH AND ANY OTHER MATERIAL EXISTI NG OR BROUGHT ON THE RECORDOF THE AO. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 77 VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILEMAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASISOF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OFSEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME ORPROPERTY DISCOVERED IN THE COURSE OF SEARC H WHICH WERE NOTPRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSEOF ORIGINAL ASSESSMENT. 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005- 06 AND 2006-07.ONTHE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STO OD COMPLETED. SINCENO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEA RCH, NO ADDITIONSCOULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 39. THE QUESTION FRAMED BY THE COURT IS ANSWERED IN FAVOUR OF THE ASSESSEEAND AGAINST THE REVENUE. 40. THE APPEALS ARE ACCORDINGLY DISMISSED BUT IN TH E CIRCUMSTANCES NOORDERS AS TO COSTS. 3. C.I.T. VS. MURLIAGRO PRODUCTS LTD. [(2014) 49 TA XMANN.COM 172 (BOM)][KINDLY REFER TO PARA 8 TO 10] 4. C.I.T VS. CONTINENTAL WAREHOUSING CORPORATION [5 8 TAXMANN.COM 78 (BOM)] [KINDLY REFER TO PARA 28 TO 37] 5. ALL CARGO GLOBAL LOGISTICS LTD. VS. D.I.T. [137 ITD 287 (MUM-SB)] [KINDLY REFER TO PARA 48 TO 53; 53 CONCLUDE THE ISSUE] 6. GOVIND AGARWAL [ITA NO.3389 & 3390/M/2011 DT.10. 01.2014 (MUM.TRIB.)] 7. A.C.I.T. VS. PRATIBHA INDUSTRIES LTD. [28 TAXMAN N.COM 246 (MUM. TRIB)] 8. GURINDER SINGH BAWA VS. D.C.I.T.[28 TAXMANN.COM 328 (MUM. TRIB)] 9. DINESH TOBACCO INDUSTRIES VS. D.C.I.T. [148 ITD 118 (JODH. TRIB)] 39. AS REGARDS JUDGMENTS RELIED UPON BY THE C.I.T. (A), THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME WERE DISTI NGUISHABLE ON FACTS INASMUCH AS RECOVERY OF INCRIMINATING MATERIAL EITHER DURING SEARCH OR POST SEARCH INQUIRIES. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 78 40. ON THE ISSUE OF ADDITION SANS INCRIMINATING MAT ERIAL, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE ARE TWO VIEWS OF VARIOUS JUDICIAL AUTHORITIES. IT IS A SETTLED LEGAL POSITION THAT IF TWO VIEWS AR E POSSIBLE ON A PARTICULAR ISSUE, THE VIEW WHICH ISFAVOURABLETO THE ASSESSEE SHOULD BE FO LLOWED. [C.I.T. VS. VEGETABLE PRODUCTS LTD. 88 ITR 192 (SC)]. 41. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER S UBMITTED THAT IN THE ASSESSEES CASE, THERE ARE NO INCRIMINATING MATERIA L WHATSOEVER IN RELATION TO INVESTMENT IN SHARES OF ADROIT INDUSTRIES (INDIA) L TD. IN ASSESSMENT YEAR 2007-08, TRANSFER OF THESE SHARES IN ASSESSMENT YEAR 2008-09 AND THEIR RE-ACQUISITION SUBSEQUENTLY IN ASSESSMENT YEAR 2010-11. NO PROCEED INGS IN RELATION TO ASSESSMENTS FOR THESE ASSESSMENT YEARS WERE PENDING AND THEREFORE NO ADDITION COULD HAVE BEEN MADE IN ASSESSMENT COMPLET ED U/S.153A R.W.S. 143(3) OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATE RIAL ON ACCOUNT OF UNEXPLAINED CASH CREDITS IN ASSESSMENT YEAR 2008-09 AND UNEXPLA INED INVESTMENT IN ASSESSMENT YEAR 2010-11.THE ADDITION MADE BY THE AS SESSING OFFICER BY WAY OF REASSESSMENT IN RELATION TO IMPUGNED CONCLUDED ASSE SSMENTS AMOUNTED TO CHANGE IN OPINION ON THE SAME SET OF FACTS WHICH IS NOT PERMISSIBLE U/S.153A. 42. ON THE OTHER HAND, ON THE ISSUE OF VALIDITY OF ASSESSMENT U/S 153A AND 153C OF THE ACT, THE LD. DR SUBMITTED THAT THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE IN ALMOST IN ALL THE APPEALS FILED IN THIS GROUP AND THE LEARNED CIT(A) HAS DEALT WITH THE SAME IN DETAIL AND REJECTED THE ASSESSEES CONTENTION WITH DETAILED FINDINGS. THE LEARNED DR PLACED RELIANCE O N THE FINDING OF THE LEARNED CIT(A) AND ALSO PLACED RELIANCE ON THE SET OF CASE LAWS OF WHICH HE HAS PROVIDED A COMPILATION BEFORE US. THE CASE LAWS RELIED ON BY THE LD. DR ARE AS UNDER :- S. NO. CASE LAW REMARKS 1 CIT V/S RAJKUMAR ARORA 367 ITR 517, HIGH COURT. A LLAHABAD VALIDITY OF (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 79 43. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO GONE THROUGH THE CASE LAWS RELIED UPON BY BOTH THE SIDES. WE HAVE ALSO CO NSIDERED VARIOUS RELEVANT FACTS OF THE CASE. IT IS A SETTLED LEGAL POSITION T HAT ONCE A SEARCH AND SEIZURE ACTION HAS TAKEN PLACE U/S 132 OF THE ACT OR A REQU ISITION HAS BEEN MADE U/S 132A, THE PROVISIONS OF SECTION 153A TRIGGED AND AS SESSING OFFICER IS BOUND TO ISSUE NOTICE U/S 153A OF THE ACT. ONCE NOTICES ARE ISSUED U/S 153A OF THE ACT THEN ASSESSEE IS LEGALLY OBLIGED TO FILE RETURN OF INCOME FOR SIX YEARS. THE SEARCH ASSESSMENT U/S 153-A/C 2 NANDINI DELUX V/S ACIT, 37 ITR (TRB) 52, ITAT BANGL ORE, C BENCH, - DO- 3 SHIVNATH RAI HARNARAIN INDIA LTD. VS/ DCIT, 117 ITD 74, ITAT, DELHI D BENCH - DO- 4 HARVAY HEART HOSPITAL LTD. V/S ACIT 130 TTJ 700, ITAT CHENNAI A BENCH - DO- 5 DR. MANSUKH KANJIBHAI SHAH V/S ACIT, 129 ITD 376, ITAT AHMADABAD D BENCH - DO- 6 RAJAT TRADECOM INDIA (P) LTD V/S DCIT, 120 ITD 48, ITAT INDORE BENCH - DO- 7 CANARA HOUSING DEVELOPMENT CO. V/S DCIT, 49 TAXMANN .COM 98 HIGH COURT, KARNATAKA. - DO- 8 MADUGULA VENU V/S DIT, 29 TAXMANN.COM HIGH COURT, DELHI. - DO- 9 CIT V/S CHETANDAS LAXMANDAS 25 TAXMANN.COM 227, DEL HI HIGH COURT - DO- 10 CIT V/S ANIL KUMAR BHATIA, 25 TAXMANN.COM 98, DELHI HIGH COURT - DO- 11 MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINA NCE BILL 2003 - DO- (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 80 ASSESSMENT AND REASSESSMENT FOR SIX YEARS SHALL BE FINALISED BY THE ASSESSING OFFICER. IT IS ALSO HELD BY VARIOUS COURTS THAT ON CE NOTICE U/S 153A OF THE ACT ISSUED, THEN ASSESSMENT FOR SIX YEARS SHALL BE AT L ARGE BOTH FOR ASSESSING OFFICER AND ASSESSEE HAVE NO WARRANT OF LAW. IT HAS BEEN AL SO HELD THAT IN THE ASSESSMENT YEARS WHERE ASSESSMENTS HAVE BEEN ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A THEN ASSESSING OFFICER ACTS UNDER ORIGINAL JURISDICTION AND ONE ASSESSMENT IS MADE FOR TOTAL INCOME INCLUDI NG THE ADDITION MADE ON THE BASIS OF SEIZED MATERIAL. BUT WHERE THERE IS NO ABA TEMENT OF ASSESSMENTS AND ASSESSMENTS WERE COMPLETED ON THE DATE OF SEARCH TH EN ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS OR UND ISCLOSED ASSETS, ETC. IN THESE CASES THERE WAS NO INCRIMINATING DOCUMENT FOUND AND SEIZED IN RELATION TO SALE AND REPURCHASE OF SHARES OF ADROIT INDIA LTD. NO AS SESSMENT PROCEEDINGS WERE ABATED IN THESE ASSESSMENT YEARS OF THESE ASSESSEES . THUS ASSESSMENTS FOR THESE ASSESSMENT YEARS WERE COMPLETED ON THE DATE O F SEARCH. THE ASSESSMENTS WERE COMPLETED U/S 143(3) OF THE ACT RE AD WITH SECTION 153A/153C OF THE ACT AFTER THE SEARCH. IT IS AN UNDISPUTED FA CT THAT NO INCRIMINATING MATERIAL IN RELATION TO THE INVESTMENT BY THESE ASSESSEES IN SHARES OF ADROIT INDIA LIMITED DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMEN T YEAR 2007-08 AND TRANSFER OF SHARES DURING THE FINANCIAL YEAR RELEVANT TO THE AS SESSMENT YEAR 2008-09 AND REACQUISITION OF SOME SHARES IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2010-11 WERE FOUND AND SEIZED. THERE WAS NO A BATEMENT OF ANY PROCEEDINGS IN THESE CASES FOR THESE ASSESSMENT YEA RS IN TERMS OF SECOND PROVISO TO SECTION 153A OF THE ACT. IN THE CASE OF MUKESH SANGLA HUF, THE PROCEEDINGS WERE INITIATED U/S 153C OF THE ACT. THE HON'BLE JURISDICTIONAL HIGH COURT IN A RECENT DECISION IN THE CASE OF CIT VS. M ECHMAN WHILE DECIDING THE ISSUE RELATING TO ASSESSMENTS MADE BY ISSUING THE N OTICE U/S 153C OF THE ACT HAS HELD THAT THE ASSESSING OFFICER BEFORE ISSUING NOTI CE U/S 153C OF THE ACT HAS TO RECORD SATISFACTION. HON'BLE HIGH COURT HELD THAT T HE ASSESSING OFFICER HAVING JURISDICTION WHILST GIVING NOTICE TO SUCH OTHER PER SON (OTHER THAN THE PERSON REFERRED TO IN SECTION 153A) MUST APPLY PROPRIO VIG ORE. AFTER RECEIPT OF THE MATERIALS, THE ASSESSING OFFICER HAVING JURISDICTIO N IS EXPECTED TO CONDUCT INQUIRY (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 81 AND DUE VERIFICATION OF THE RELEVANT FACTS BEFORE F ORMING HIS PRIMA FACIE SATISFACTION. THE ASSESSING OFFICER MUST FORM HIS I NDEPENDENT VIEW BEFORE ISSUE OF NOTICE. THERE IS NO SEIZED MATERIAL BELONGING TO THE ASSESSEE WHICH WAS FOUND AND SEIZED IN RELATION TO ADDITIONS MADE. IN VIEW OF THIS FACT, THERE IS NO JUSTIFICATION FOR ACTION U/S 153C OF THE ACT THAT T OO WITHOUT RECORDING SATISFACTION. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER MUST HAVE SOME MATERIAL TO PRIMA FACIE SATISFY HIMSELF TO RECORD THE SATISFACTION PR IOR TO ISSUE OF NOTICE U/S 153C OF THE ACT. HON'BLE JURISDICTIONAL HIGH COURT HELD THA T WHERE NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER BEFORE ISSUI NG NOTICE U/S 153C OF THE ACT AND NO PAPERS/DOCUMENTS/ASSETS WERE SEIZED BELONGIN G TO THE ASSESSEE THEN NO PROCEEDINGS U/S 153C OF THE ACT CAN BE INITIATED. W ITH REGARD TO THE ASSESSMENT MADE ON THE BASIS OF NOTICES ISSUED U/S 153A OF THE ACT, WE WOULD LIKE TO HOLD THAT IN A RECENT DECISION HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) HAS HELD THAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING ASSESSMENT U/S 1 53A OF THE ACT, ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURI NG THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WAS NOT PRODUCED OR NOT ALRE ADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. IN ALL THESE CASES NO ASSESSMENTS WERE PENDING ON THE DATE OF SEARCH FOR BOTH THE ASS ESSMENT YEARS 2008-09 AND 2010-11. NO ASSESSMENTS WERE ABATED IN TERMS OF SEC OND PROVISO TO SECTION 153A OF THE ACT. HON'BLE DELHI HIGH COURT IN THE C ASE OF CIT VS. KABUL CHAWLA (SUPRA) HAS CONSIDERED VARIOUS HIGH COURT DECISIONS RELIED UPON BY THE LEARNED DR. THE HON'BLE DELHI HIGH COURT HAS CONSIDERED THE CASES OF CANARA HOUSING DEVELOPMENT CO. VS. DCIT; MADUGULA VS. DCIT; CIT VS . CHETANDAS LAXMANDAS AND CIT VS. ANIL KUMAR BHATIA (SUPRA). THE ONLY DE CISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAJ KUM AR ARORA; 367 ITR 517 RELIED ON BY THE LEARNED DR WAS NOT CONSIDERED BY HON'BLE DELHI HIGH COURT WHILE DECIDING THE ISSUE IN THE CASE OF KABUL CHAWLA. THE HON'BLE ALLAHABAD HIGH COURT HAS REVERSED THE ORDER OF THE TRIBUNAL AND RE MANDED THE ISSUE TO THE TRIBUNAL TO CONSIDER THE APPEAL OF THE DEPARTMENT O N MERITS. IT IS A SETTLED LEGAL (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 82 POSITION THAT WHEN TWO VIEWS ARE POSSIBLE ON A PART ICULAR ISSUE THEN THE VIEW FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED AS HE LD BY THE HON'BLE APEX COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS; 88 ITR 1 92. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE APEX COURT, WE ALLOW TH ESE GROUNDS OF APPEAL OF THE ASSESSEE. 18 WE, RESPECTFULLY FOLLOWING THE SAME, ALLOW THE G ROUND 1.1 & 1.2 OF APPEAL OF THE ASSESSEE. 19 GROUND NO.2 AND GROUND NO.1 OF THE DEPARTMENTAL RELATE TO SHARE APPLICATION MONEY. THE SHORT FACTS OF THE CASE ARE AS UNDER: DURING THE COURSE OF ASSEESSMENT PROCEEDINGS THE AS SESSEE HAD FILED COPY OF CONFIRMATION LETTER DULY SIGNED BY ALL THE ABOVE AP PLICANT ALONG WITH SHARE APPLICATION FORM. HOWEVER, THE ASSESSEE WAS ALSO AS KED TO JUSTIFY THE AMOUNT OF SHARE APPLICATION AS RECEIVED BY IT DURING THE YEAR UNDER CONSIDERATION. THE LETTER VIDE ITS REPLY SUBMITTED AS UNDER: 1] THAT YOU HAVE ASKED FROM THE ASSESSEE TO JUSTIFY THE AMOUNT OF SHARE APPLICATION MONEY OF RS 1,90,00,000/- ( RUPEES ONE CRORES NINETY LACS ONLY) 2.1] DETAILS OF SHARE APPLICATION MONEY OF RS 49000 000/- AS RECEIVED BY THE ASSESSEE IS AS UNDER:- S.NO NAME OF THE APPLICANT ADDRESS PA NO ADDITION 1 SANDROP SECURITY P. LTD. 34/35, GANESH PATH ,GOVIND HALWANI CHOWK, PUNE(M.H.) AACCS5419C 3000000 2 PRAMILA INVESTMENT & FINANCE 40, MOTI MAHAL ,SIR HUKUMCHAND MARG INDORE(M.P) AABCP8031A 3000000 3 NEEMA 308,SHREYANS NATH AABCN5299 5000000 (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 83 INVESTMENT P LIMITED APARTMENT ,3/2 DR R.S. BHANDARI MARG, INDORE(M.P) 4 MONEY PENNY FINCOM PVT. LTD. 308,SHREYANS NATH APARTMENT ,3/2 DR R.S. BHANDARI MARG, INDORE(M.P) AADCM5417F 3000000 5 PERSUIT SECURITY P. LTD. 16-A,AMITA APARTMENT FIRST FLOOR ,KASTOORBA ROAD NO.5 BORIBVALI MUMBAI AAACP3800E 5000000 19000000 2.2] THE ASSESSEE HAD FILED CONFIRMATION LETTERS IN RESPECT OF SHARE APPLICATION MONEY OF RS 1900000/- AS RECEIVED IT FROM ALL THE A BOVE COMPANY. 2.3] THAT COPY OF SHARE APPLICATION MONEY AND BOARD RESOLUTION HAS ALSO BEEN FILED WHERE EVER APPLICABLE. 2.4] THAT IDENTITY OF THE SHARE HOLDERS AND GENUINE NESS OF THE TRANSACTIONS HAVE DULY EXPLAINED. 2.5.1] THAT IN THE CASE OF M/S SUNDROP SECURITIES P LIMITED, PRAMILA INVESTMENT & FINANCE LIMITED, NEEMA INVESTMENT P LI MITED, MONEY PENNY FINCOM P LIMITED AND PURSUIT SECURITIES P LIMITED A SSESSMENT FOR THE ASSESSMENT YEAR 2005-06 WAS COMPLETED UNDER SCRUTIN Y U/S 143(3) OF THE INCOME TAX ACT BY YOUR OFFICE AND BY THE OFFICE OF ITO 5(1) AND ITO 5(2), INDORE. 2.5.2] THAT IN THE ASSESSMENT OF ALL THESE COMPANIE S AMOUNT RECEIVED BY THEM ON ACCOUNT OF SHARE APPLICATION MONEY, SHARE CAPITA L AND SUNDRY CREDITORS NOT EXPLAINED PROPERLY ADDED U/S 68 OF THE INCOME TAX A CT. ACCORDINGLY, INVESTMENT MADE BY ALL THESE COMPANIES ACCEPTED AS GENUINE. 2.5.3] THAT ONCE THE AMOUNT OF SHARE APPLICATION MO NEY, SHARE CAPITAL AND SUNDRY CREDITORS ADDED TO THE INCOME OF THE SHARE H OLDERS. IN THAT CASE THERE IS NO JUSTIFICATION TO DISBELIEVE THE CREDITWORTHINESS OF ALL THESE COMPANIES. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 84 2.5.4] THAT INCOME TAX ASSESSMENT FOR THE ASSESSMEN T YEAR 2005-06 WAS PASSED UNDER SCRUTINY U/S 143(3) OF THE INCOME TAX ACT. HENCE, IDENTITY OF THE SHARE HOLDERS STAND PROVED. SINCE, ENTIRE AMOUNT OF CREDITS IN THEIR BOOKS OF ACCOUNT HAS ALREADY BEEN ADDED TO THE INCOME OF THE SHARE HOLDERS. IN THAT CASE SOURCE OF INVESTMENT MADE BY THEM IN THE CASE OF TH E ASSESSEE COMPANY STAND PROVED. 2.6] THAT FROM THE ABOVE DOCUMENTS IT IS VERY CLEAR THAT THE ASSESSEE HAS PROPERLY DISCHARGED ONUS LYING ON HIM. THE ASSESSEE HAS PROVED IDENTITY AND GENUINENESS OF THE INVESTMENT MADE BY ALL THE SHARE HOLDERS IN THE SHARE APPLICATION MONEY OF THE ASSESSEE COMPANY. HENCE, T HERE IS NO REASON FOR MAKING ANY ADDITION IN RESPECT OF SHARE APPLICATION MONEY IN THE CASE OF THE ASSESSEE. . 2.7.16] THAT IN VIEW OF THE ABOVE, WHEN THE ASSESSE E HAS PROPERLY DISCHARGED ONUS LYING ON IT BY PROVING THE IDENTITY OF THE SHA RE HOLDERS AND GENUINENESS OF THE TRANSACTION. IN THE PRESENT CASE THE ASSESSEE H AD FILED COMPLETE DETAILS OF SHARE HOLDERS AND ALSO FILED CONFIRMATIONS AS RECEI VED FROM ALL THESE SHARE HOLDERS BEFORE THE ASSESSING OFFICER. ALL ARE REGUL ARLY ASSESSED TO TAX AND THE AMOUNTS WERE ALSO RECEIVED THROUGH AN ACCOUNT PAYEE CHEQUE. IN THAT CASE THERE IS NO JUSTIFICATION FOR MAKING ANY ADDITION O N ACCOUNT OF SHARE APPLICATION OF RS 1,90,00,000/-. 2.8] THAT IN VIEW OF THE ABOVE, IT IS SUBMITTED THA T THE AMOUNT OF SHARE APPLICATION MONEY OF RS 19000000/- AS RECEIVED BY T HE ASSESSEE IS GENUINE. THE SAME REQUIRES TO BE ACCEPTED AS GENUINE. THE ASSESSEE VIDE HIS LETTER FURTHER SUBMITTED THAT :- 1] THAT YOU HAVE ASKED THE ASSESSEE TO JUSTIFY TH E AMOUNT OF SHARE APPLICATION MONEY RECEIVED FROM THE FOLLOWING COMPA NIES:- (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 85 S.NO. NAME OF THE COMPANY AMOUNT (RS) 1 SANDROP SECURITY P. LTD. 3000000 2 PRAMILA INVESTMENT & FINANCE 3000000 3 NEEMA INVESTMENT P LIMITED 5000000 4 MONEY PENNY FINCOM PVT. LTD. 3000000 5 PERSUIT SECURITY P. LTD. 5000000 TOTAL 19000000 2.1] COPY OF CONFIRMATIONS LETTER ALONGWITH SHARE A PPLICATION FORMS AND FOLLOWING DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH LISTED AS PAGE NOS 127 TO 322 OF LPS- 15. LIST OF SUCH DOCUMENTS ARE A S UNDER:- I] MEMORANDUM AND ARTICLE OF ASSOCIATION II] COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN F ILED III] COPY OF PAN CARD IV] COPY OF AUDITED FINAL ACCOUNT V] COPY OF SHARE APPLICATION FORM VI] COPY OF BOARD RESOLUTION 2.2] THAT FROM THE ABOVE PAPERS AS FOUND DURING THE COURSE OF SEARCH, EXISTENCE, IDENTITY AND CAPACITY OF THE SHARE APPLI CATION MONEY STAND PROVED. 2.3] THAT ADDITIONAL PAPERS AS OBTAINED BY THE ASSE SSEE FROM THE REGISTRAR OF COMPANIES ARE ENCLOSED. 2.4] THAT ENTIRE AMOUNT OF SHARE APPLICATION MONEY WERE RECEIVED BY THE ASSESSEE THROUGH AN ACCOUNT PAYEE CHEQUE. CONFIRMAT ION LETTER HAS ALSO BEEN FILED. SHARE APPLICATION FORM WERE ALSO FOUND. IN T HAT CASE THERE IS NO REASON TO DISBELIEVE ON THE AMOUNT OF SHARE APPLICATION MONEY AS RECEIVED BY THE ASSESSEE. 2.5] THAT IN THE CASE OF THE ABOVE COMPANIES SCRUTI NY ORDER U/S 143(3) HAS ALSO BEEN PASSED BY THE OFFICE OF THE ACIT 5(1), IT O 5(1) AND ITO 5(2), INDORE. SINCE, INCOME TAX ASSESSMENT ORDER HAS ALREADY BEEN PASSED IN THE CASE OF THE (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 86 ABOVE COMPANIES. THERE IS NO JUSTIFICATION FOR MAKI NG SEPARATE ADDITIONS IN THE CASE OF THE ASSESSEE AGAIN. 3] THAT THE ASSESSEE HAD PROPERLY DISCHARGED ONUS L YING ON HIM BY PROVING THE IDENTITY, CAPACITY AND GENUINENESS OF THE SHARE APPLICATION/SHARE CAPITAL. HENCE, THE AMOUNT OF SHARE APPLICATION /SHARE CAPIT AL AS RECEIVED BY THE ASSESSEE BE TREATED AS GENUINE. THAT ALL THE ABOVE COMPANIES ARE FILING THERE INCOME TAX RETURN REGULARLY WITH THE DEPARTMENT AND ALSO REGISTERED WITH THE REGISTRAR OF COMPANIES. HENCE THERE IS NO REASON TO DISBELIEVE ON THE IDENTITY OF THESE COMPANIES. 4] THAT IN VIEW OF THE ABOVE AND AS SUBMITTED IN OU R EARLIER SUBMISSIONS IT IS SUBMITTED THAT SHARE APPLICATION MONEY OF RS. 1, 90,00,000/-AS RECEIVED BY THE ASSESSEE BE TREATED AS GENUINE. THE ASSESSEES CONTENTION IS NOT ACCEPTABLE. DECIS ION QUOTED AND RELIED BY THE ASSESSEE IN ITS SUBMISSION ARE DISTINGUISHAB LE ON THE FACTS WHICH ARE NOT IDENTICAL WITH THE FACTS OF THE PRESENT CASE. IT IS NOT A SIMLPE CASE OF TAXING OF SHARE APPLICATION MONY UNDER SECTION U/S 68 OF THE I.T. ACT AS THE ASSESSEE HAS TRIED TO PROJECT. IT IS A CASE OF UNACCOUNTED INCOM E BROUGHT BACK INTO THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY IN A SYSTEMATIC & ORGANIZED MANNER WHICH CAN BE EVIDENCED FROM THE PATTERN OF CASH DEPOSITS IN THE BANK ACCOUNTS OF THE COMPANIES DISCUSSED ABOVE IN DETAIL FROM WHOM SHARE APPLICATION MONEY WERE RECEIVED BY THE ASSESSEE. THESE COMPANIES HAVE BEEN USED AS MERE CONDUIT COMPANIES FOR ROUTING OF UNACCOUNTED MONEY INTO THE BUSINESS IN THE GRAB OF SHARE APPLICATION MONEY. DURING THE ASSESSMENT PROC EEDING IN ASST.YEAR 2005- 06 IN THE CASE OF THE COMPANIES FROM WHOM THE ASSES SEE COMPANIES RECEIVED SHARE APPLICATION MONEY, IT WAS REVEAL THAT CASH DE POSITS WERE FOUND IN THEIR BANK ACCOUNTS BUT SOURCE OF CASH DEPOSITED WERE NOT PROPERLY EXPLAINED BY THE ABOVE COMPANIES. HENCE, THE SOURCE OF SHARE APPLICA TION MONEY AS RECEIVED BY THE ASSESSEE COMPANY CAN NOT BE TREATED AS PROPERLY EXPLAINED. IN FACT THESE COMPANIES HAVE BECAME QUITE NOTORIOU S FOR GIVING SHARE APPLICATION MONEY TO VARIOUS ENTITIES IN AND AROUND INDORE. THERE MODUS (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 87 OPERANDI IS TO GET THE CASH DEPOSIT IN THEIR BANK A CCOUNTS AND THEN PROVIDE ENTRY FOR SHARE APPLICATION MONEY BY CHEQUE. IN FAC T THERE COMPANIES HAVE NO BUSINESS WHAT SO EVER AND WHICH COMPANIES HAVE BEEN OPENED ONLY FOR PROVIDING ENTRIES FOR SHARE APPLICATION MONEY. THES E COMPANIES ARE NOTHING BUT DUMMY COMPANIES CLOSELY HELD AND ACTING ON BEHALF O F CERTAIN INDIVIDUALS, WHO ARE ENGAGED IN THE BUSINESS OF PROVIDING ENTRIES FO R SHARE APPLICATION MONEY TO VARIOUS PARTIES. RELIANCE IS PLACED ON THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF COMMISSIONER OF I NCOME TAX V/S RATHI FINLEASE LTD. REPORTED IN (2008) 215 CTR (MP) 249 A ND DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V/S NIVIDEN VANIJYA NIYOJAN LTD. REPORTED IN (2003) 182 CTR (CA L) 605. CONSIDERING THE FACTS OF THE CASE AS DISCUSSED ABO VE, SHARE APPLICATION MONEY OF RS. 1,90,00,000/- (RUPEES ONE CRORE NINETY LACS ONLY) AS RECEIVED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION BE ADD ED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT. 20 MATTER CARRIED TO LD. CIT(A) AND LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL. 21 THE FACTS OF THIS CASE ARE SIMILAR TO ANANT STEE L (SUPRA), THEREFORE, WE RESPECTFULLY FOLLOWING THE ABOVE DECISION IN THE IS SUE, WE DISMISS THE DEPARTMENTAL APPEAL ON THIS ISSUE AND ALLOW THE APP EAL OF THE ASSESSEE ON THIS ISSUE. 22 GROUND NO.3 OF THE APPEAL OF THE ASSESSEE RELATES TO CHARGING O F INTEREST U/S 234B OF THE I.T. ACT. WE HAVE ALREADY HELD THAT CHARGEABILITY OF INTEREST U/S 234B IS MANDATORY, THEREFORE, DISMISSE D ON MERIT. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 88 23 GROUND NO.4 OF THE ASSESSEES APPEAL IS REGARDING DISALLOWANCE OF INCOME OF RS.4731772 U/S 40(IA) OF THE I.T. ACT. WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED FRIGHT PAYMENT OF RS.4731772 ON THE GROUND THAT NO TDS WAS DEDUCTED, THEREFORE, ASSESSING OFFICER AND LD. CIT(A) HAVE DISMISSED THE APPEAL OF THE ASSESSEE. 24 WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES. THE ASSESSEE HAS TAKEN THE GROUND THAT BY VIRTUE OF FINANCE ACT, 2008 W.E.F. 1.4.2005, THE SAID SECTION WAS AMENDED. AS PER AMENDED SEC., IF THE AMOUNT SO DEDUCTED IS DEPOSITED BY THE ASSESSEE TILL DUE DATE OF FILING OF RETURN IS ALLOWABLE DEDUCTION PRIOR TO MARCH IN THAT CASE. IN THIS CASE, TDS WAS DEDUCTED AND PAYMENT WAS MADE PRIOR TO MARCH, HENCE , ASSESSEE HAS PAID THE TAX ON TIME, THEREFORE, HE REQUESTED THE B ENCH TO ALLOW THIS ADDITIONAL GROUND. IT IS THE LEGAL CLAIM OF THE ASS ESSEE, THEREFORE, IT MAY BE ALLOWED. WE FIND THAT THIS CLAIM IS A LEGAL CLAIM O F THE ASSESSEE, WHICH IS ALLOWABLE CLAIM, THEREFORE, IN THE INTEREST OF JUST ICE AND FAIR PLAY, WE ALLOW THE GROUND OF THE ASSESSEE AND RESTORE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO THE ASSESSING O FFICER TO DECIDE THE ISSUE AS PER AMENDED SECTION AS PER LAW. THUS, GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. (SS)133,134,146 & 147 OF 2013 ANANT STEEL AND SHIVANGI ROLLING 89 25 IN THE RESULT, GROUND NO.1 OF THE ASSESSEE IS AL LOWED. GROUND NO.2 IS ALLOWED. DEPARTMENTAL APPEAL IS DISMISSED. GROUND N O.3 IS CONSEQUENTIAL AND GROUND NO.4 IS ALLOWED FOR STATISTICAL PURPOSES . THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1.12.2015. SD/- SD/- (B.C. MEENA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1.12.2015 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), CIT/DR , GUARD FILE