THE DCIT, (CENTRAL), Indore V. M/S. KATARIA INDUSTRIES PVT. LTD., Mumbai

ITSSA 295/IND/2014

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1491 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA; RAJIV VARSHNAY
• Assessee Lawyers: P D NAGAR
• Keywords: Capital asset; Depreciation; Share purchase agreement; Validity of assessment; Accommodation entries; Onus to prove; Documents seized
• Section: 143(3); 153A; 133(6); 131; 68; 132

Judgement Text

KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER IT(SS)A NO. 281/IND/2014 A.Y.2006-07 M/S KATARIA INDUSTRIES PVT. LTD MUMBAI PAN AACCK 4830H ::: APPELLANT VS DY ASSTT.COMMR. OF INCOME TAX CENTRAL CIRCLE, INDORE ::: RESPONDENT IT(SS) A NOS.293 TO 297/IND/2014 A.YS. 2006-07,2008-09,2009-10,2010-11&2011-12 DY ASSTT.COMMR. OF INCOME TAX (CENTRAL), INDORE ::: APPELLANT VS M/S KATARIA INDUSTRIES PVT. LTD. MUMBAI ::: RESPONDENT KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 2 CO NOS.10 TO 14/IND/2015 ASRISING OUT OF IT(SS)A NOS.293 TO 297/IND/2014 M/S KATARIA INDUSTRIES PVT. LTD MUMBAI ::: OBJECTOR VS DY ASSTT.COMMR. OF INCOME TAX (CENTRAL), INDORE ::: RESPONDENT REVENUE BY SHRI RAJIV VARSHNAY & SHRI R.A.VERMA ASSESSEE BY SHRI P.D. NAGAR DATE OF HEARING 9.12.2015 DATE OF PRONOUNCEMENT 1 1 .1.2016 O R D E R PER BENCH ALL THESE APPEALS FILED BY THE REVENUE AND THE CROSS OBJECTIONS AND APPEALS FILED BY THE ASSESSEE EMANAT E FROM DIFFERENT ORDERS OF THE LEARNED CIT(A)-II, INDO RE, DATED 30.10.2014 FOR THESE ASSESSMENT YEARS. KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 3 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF STEEL WIRE, PLASTIC, CABLES, CONDUCTORS AND ALSO GENERATION OF WING POWER ENERGY THROUGH WIND MILLS AND SALE THEREOF. IN SOME OF THE REVENUES APPEALS ONE OF THE ISSUES INVOLVED I S DEPRECIATION ON WIND MILL. THE ASSESSEE COMPANY HAS PURCHASED 2 WIND MILLS IN THE ASSESSMENT YEAR 2008-09 FROM M/S ENERCON INDIA LIMITED BY ENTERING INTO TURN -KEY CONTRACTS. THE ASSESSING OFFICER DID NOT ALLOW DEPREC IATION. HOWEVER, THE LEARNED CIT(A) GRANTED RELIEF TO THE ASS ESSEE BY HOLDING AS UNDER :- 5 .1 I HAVE GONE THROUGH THE RELEVANT PARAS OF ASSESSMENT ORDER WHEREIN THE A.O. HAS GIVEN REASONS FOR DISALLOWING THE DEPRECIATION CLAIMED @80% ON WI ND MILL PLANT. I HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSIONS OF THE APPELLANT WHICH ARE REPRODUCED ABOVE. THE VARIOUS DOCUMENTS FILED IN SUPPORT OF CL AIM KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 4 FILED IN THE FORM OF PAPER BOOK HAVING 430 PAGES HA VE ALSO BEEN GONE THROUGH. 5.2 THE ORDER PLACED BY THE APPELLANT TO PURCHASE T HE WIND MILLRELEVANS THAT IT IS A TURNKEY CONTRACT FOR TRANSPORTATION, INSTALLATION, ERECTION, COMMISSIONI NG AND MAINTENANCE OF THE PLANT. THE PURCHASE AND OWNERSHI P OF PLANT HAVE BEEN EVIDENCED THROUGH VARIOUS DOCUMENTS VIZ. I.E PURCHASSER ORDER FOR THE WIND MI LL, II NATURE OF CONTACT WHICH IS FOUND TO BE ASED ON TURN KEY, III. SALE INVOICES RAISED BY M/S ENERCON INDIA LTD. , IV. TRIPARTITE AGREEMENT AMONGST APPELLANT, M/S RAJASTH AN RENEWAL ENERGY CORPORATION LTD. ANDM/S ENERCON IND IA ISSUED BY M/S AJMER VIDYUT VITARAN NIGAM LTD. VI. C OPY OF SUBLEASE OF LAND, ON WHICH WIND MILL WAS INSTALL ED, EXECUTED IN FAVOUR OF APPELLANT, VII. INSURANCE POL ICY ON THE PLANT IN FAVOUR OF APPELLANT, VIII. CERTIFICATE OF GENERATION OF POWER ISSUED BY RESPECTIVE ELECTRICIT Y KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 5 BOARDS, IX. COPIES OF DEBIT NOTES RAISED TOWARDS SA LE OF ENERGY, X. COPIES OF BANK STATEMENTS IN WHICH THE S ALE PROCEEDS OF ELECTRICITY RECEIVED FROM ELECTRICITY B OARDS, HAVE BEEN CREDITED, XI. PHOTOGRAPHS OF PLANT HAVING NAME OF APPELLANT INSCRIBED ON THE WIND MIL.IT IS A LSO NOT DISPUTED THAT THE APPELLANT HAS REFLECTED THE INCOM E ON ACCOUNT OF SALE OF ELECTRICITY TO GOVERNMENT OWNED ELECTRICITY BOARDS. THE A.O. HAS DISCUSSED THE CONT ENTS OF PURCHASE AGREEMENT AMONGST THE APPELLANT AS POWWER PRODUCER, M/S ENERCON INDIA LTD. AS DEVELOPE R AND M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD. IT HAAS BEEN NOTICED BY THE A.O.THAT PERMISSION TO SET THER WIND ENERGY HAS BEEN GIVEN TO M/S ENERCON INDIA LTD . AND FURTHER IT IS ALSO BROUGHT OUT THAT M/S ENERCON INDIA LTD. HAS FACILITATED THE APPELLANT TO INJECT AND TR ANSMIT THE ENERGY SO GENERATED IN THE STATE GRADE. THESE A RE THE OPERATIONAL FACILITIES PROVIDED BY M/S ENERCON INDIA KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 6 LTD. HAVING TECHNICAL KNOWHOW TO THE PURCHASER OF A LL THE WIND MILL WHICH CANNOT VITIATE THE OWNERSHIP OF THE PLANT AND THE FACT THAT THE APPELLANT HAS MADE HUGE INVESTMENT AND RECEIVED THE SALE PROCEEDS OF ELECTR ICITY. FURTHER AT PARA 10.9 OF THE ASSESSMENT ORDER THE A. O. HAS BROUGHT OUT AND DISCUSSED VARIOUS DOCUMENTS SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS WHIC H ARE USED AS INDICATORS THAT THE APPELLANT IS NOT TH E REAL OWNER OF THE WIND MILL. IHAVE GONE THROUGH THESE PA PERS AND FOUND THAT NONE OF THE PAPERS AS DSICUSSED UNDE R PARA10.9 ESTABLISH THAT THE APPELLANT IS NOT THE RE AL OWNER OF THE WIND MILL. THE PAPER LISTED AT SERIAL NO. II. I.E. LPS-A1/35, PAGE 98 IS A LETTER WRITTEN BY SR.MANAGER, PROJECT CO-ORDINATION, ENERCON INDIA LT D. WHICH IS ADDRESSED TO M/S P.D. POWER I.E. THE APPEL LANT AND ENCLOSES ORIGINAL POWER PURCHASE AGREEMENT BETWEEN D.P.AND GUJARAT URJA VIKAS NIGAM. THE PAPER KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 7 LISTED AT SERIAL NO. III O.E. LPS-A1/35 PAGE 46 IS A LSO A LETTER WRITTEN BY M/S ENERCON INDIA LTD. TO THE APP ELLANT WHEREBY COMMISSIONING CERTIFICATE FROM GEDA HAS BEE N FORWARDED. SIMILARLY THE PAPER LISTED AT SERIAL NO. IV, I.E. LPS-A1/35 PAGE 42 IS A LETTER FROM M/S ENERCON INDIA LTD. TOD.. POWER INTIMATING THE DATE FOR REGISTRATI ON OF LAND LEASE AGREEMENT WITH THE APPELLANT IN THE OFFI CE OF SUB-REGISTRAR, KALYANPUR, DISTRICT JAMNAGAR, GUJARA T. THE PAPER LISTED AT SERIAL NO. V, LPS A1/12 IS ALSO A LETTER WRITTEN BY G.M. (MARKETING), M/S ENERCON IND IA LTD. WRONGLY WRITTEN BY A.O. AS SR. MANAGER, PROJEC T CO- ORDINATION REGARDING REALISATION TOWARDS THE SALE O F WERS AFTER ADJUSTMENT OF PROCESSING CHARGES PERTAIN ING TOD.P. POWER. SIMILARLY, THE PAPER LISTED AT SERIAL NO. VI IE. LPS-A1/19 PAGE 56 WRONGLY WRITTEN AS PAGE NO. 52 AND CLARIFIED BY A.O. DURING THE COURSE OF APPEAL PROCEEDINGS AS IS ALSO A LETTER FROM D.P. POWER, TH E KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 8 APPELLANT TO M/S ENERCON INDIA LTD. WHEREBY A CHEQU E OF RS.1.01 CRORES HAS BEEN FORWARDED FOR PURCHASE O F VARIOUS MACHINERY RELEVANT TO WIND MILL. THE PAPER LISTED AT SERIAL NO. VII. I.E. LPS-A1/12, PAGE 49 IS ALSO FOUND TO BE THE LETTER WRITTEN BY SR. MANAGER,PROJE CT COORDINATION TO D.P. POWER REGARDING GEDA FORM AND SUB LEASE DEED. ALL THESE DOCUMENTS ARE IN THE NATR UE OF FACILITATION GIVEN BY THE M/S ENERCON INDIA LTD. WH O WAS FOUND ENGAGED FOR LOOKING AFTER THE AFFAIRS OF THE APPELLANT. I DO NOT SEE ANY CONTENT IN THESE LETTER S TO PROVE THAT EITHER THE APPELLANT WAS NOT THE OWNER/POSSESSOR OF THE WIND MILL OR THE REALISATION ON ACCOUNT OF SALE OF ELECTRICITY WERE NOT RECEIVED BY THE APPELLANT COMPANY. 5.3 IT IS ALSO SEEN THAT M/S ENERCON INDIA LTD. IS A MULTI-NATIONAL COMPANY WHICH HAS PAID ITS PART OF T AXES ON THE INCOME EARNED ON SALE OF WIND MILLS. ACCORDI NG TO KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 9 INDIAN WIND FARM DICTIONARY AS MANY AS 5000 WIND MILLS HAVE BEEN SOLD AND COMMISSIONED BY IT IN THE SAME MANNER AS HAS BEEN DONE FOR THE APPELLANT. THE OWNERSHIP OF WIND MILL CAN BE SAID TO HAVE PASSED I N FAVOUR OF APPELLANT ON THE DATE OF INVOICE RAISED B Y THE SUPPLIER. M/S ENERCON INDIA LTD. HAS NOT CLAIMED DEPRECIATION ON THE MACHINE AT ANY STAGE AS AN OWNE R. IT IS OBSERVED THAT THE APPELLANT BESIDES INVESTING ITS CAPITAL HAS RAISED LOAN FROM SBI AGAINST HYPOTHECAT ION OF WIND MILL. THIS FACT IS FOUND EVIDENCED THROUGH A SANCTION LETTERDATED 14.9.2007. THEREFORE, INVESTME NT MADE FOR ACQUIRING A PLOT WITH MOTIVE OF EARNING PR OFIT CANNOT BE CONSTRUED AS SIMPLE FINANCIAL TRANSACTION . 5.4 DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A OF IT ACT, 1961 SPECIFIC INQUIRIES HAVE BEEN F OUND MADE FROM THE SUPPLIER OF MACHINE REGARDING TRANSFE R OF OWNERSHIP AND FROM GUJARAT ELECTRICITY BOARD AND M. P. KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 10 ELECTRICITY BOARD REGARDING PURCHASE OF ELECTRICITY GENERATED BY THE WIND MILL UNDER CONSIDERATION. BOT H THE COMPANY AND ELECTRICITY BOARDS HAVE CONFIRMED T HE GENUINENESS OF TRANSACTIONS AND QUERIES RAISED BY T HE AUTHORITIES HAD BEEN APPROPRIATELY REPLIED TO. THE A.O. IS FOUND TO HAVE VISITED PERSONALLY OR THROUGH STAFF T O SEE THE INSTATLLATION AND OWNERWHIP OF THE WIND MILL . THE TECHNICAL ISSUES RELATED TO INSTALLATION OF PLANT, BILLING ETC. ARE STATED TO HAVE BEEN DISCUSSED WITH THE STA FF AT SITE. A FEW PHOTOGRAPHS OF SUCH VISITES HAVE BEEN F ILED BY APPELLANT WHICH ARE PLACED ON RECORD. THEREFORE, THE EXISTENCE AND INSTALLATION OF WIND MILLS WITHIN SPE CIFIED PERIOD ARE NOT DISPUTED. 5.5 THE CONTENTION OF THE A.O. THAT M/S ENERCON IND IA LTD. HAS SOLD WIND MILL TO FACILITATE THE APPELLANT TO CLAIM THE DEPRECIATION HAS NOT BEEN BORNE OUT OF THE FACT S AND CIRCUMSTANCES OF THE CASE. IF THE OWNERSHIP OF MILL IS NOT KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 11 TRANSFERRED WHY SHOULD THE COMPANY PAY THE TAXES ON THE INCOME EARNED ON SUCH TRANSACTION AND LOSE THE BENEFIT OF DEPRECIATION. THE A.O. HAS ALSO NOT DISP UTED THE INCOME EARNED AND OFFERED BY APPELLANT COMPANY ON ACCOUNT OF SALE OF POWER GENERATED THROUGH THESE WI ND MILLS FOR TAXATION PURPOSE. THEN THERE IS NO REASON WHY THE OWNERSHIP AND CLAIM OF DEPRECIATION ON WIND MIL L COULD BE DOUBTED. THE INSTALLATION AND MAINTENANCE OF PLANT BY M/S ENERCON INDIA LTD. IS A NORMAL FEATURE IN TURNKEY PROJECTS PARTICULARLY WHEN THE COMPANY IS SPECIALISED IN THE FILED OF OPERATION, TRANSMISSION AND MAINTENANCE OF SUCH PLANT. MOREOVER, IT IS OBSERVED THAT THE COMPANY HASA RECOVERED RECURRING CHARGES ON SUC H SERVICES FROM THE APPELLANT. THEREFORE, IS MY OPINI ON, THE OPERATION AND MAINTENANCE OF PLANT BY THE SUPPLIER COMPANY BEING IN POSSESSION OF TECHNICAL KNOWHOW, KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 12 DOES NOT TAKE AWAY THE RIGHT OF OWNERSHIP OF WINDMI LL FROM THE APPELLANT. 5.6 TRANSFER AND SALE ARE DEFINED IN RESPECTIVE A CTS I.E. TRANSFER OF PROPERTY ACT AND SALE OF GOODS AC T. ACCORDING TO THESE STATUTES, THE SALE BECOMES COMPL ETE ONCE THE INVOICE IS RAISED IN FAVOUR OF BUYER FOR T HE PRICE PAID BY IT UNDER A CONTRACT OF SALE. THEREFORE, TRA NSFER OF OWNERSHIP IS COMPLETE ONCE THE SALE IS COMPLETE. TH E SECTION 2(47) OF INCOME TAX ACT DEFINES THE WORD TR ANSFER IN RELATION TO A CAPITAL ASSET WHICH INCLUDES SALE OR EXTINGUISHMENT OF RIGHTS THEREIN. THE SUBSECTION IV OF SECTION 2(47) INCLUDED ANY TRANSACTION INVOLVING OWNERSHIP OR ANY IMMOVABLE PROPERTY IN A PART PERFORMANCE OF CONTRACTS IN THE NATURE AS REFERRED IN SECTION 53(A) OF TRANSFER OF PROPERTY ACT. KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 13 5.7 IN THE INSTANT CASE, TRANSFER OF ASSET IS NOT O NLY COMPLETE IN TERMS OF TRANSFER OF PROPERTY ACT BY TH E BENEFITS OUT OF THE SAID ASSET HAVE ALSO BEEN DERIV ED BY THE APPELLANT IN THE FORM OF INCOME ON ACCOUNT OF S ALE OF ELECTRICITY TO VARIOUS PARTIES. MOREOVER, THERE IN NO DISPUTE THAT THE APPELLANT HAS MADE A HUGE INVESTME NT RUNNING INTO CRORES FOR INSTALLATION OF WIND MILLS PARTLY BY OBTAINING LOAN FROM THE FINANCIAL INSTITUTIONS. THESE FACTS HAVE EEN EXAMINED BY A.O. FROM BOOKS OF ACCOU NTS OF APPELLANT AND ASCERTAINED FROM INDEPENDENT INQUR IES CONDUCTED BY THE A.O. FROM ELECTRICITY BOARDS REMIT TING THE PRICE OF ELECTRICITY DIRECTLY TO APPELLANT. TH E HON'BLE SUPREME COURT IN THE CASE OF MYSORE MINERALAS LTD. VS. CIT, 239 ITR 775 (SC) HAS HELD THAT THE BENEFIT OF DEPRECIATION HAS TO GO TO THE PERSON WHO MAKES THE CAPITAL INVESTMENT WHICH GRADUALLY REDUCES THE VALU E OF KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 14 INVESTMENT. THE RELEVANT PART OF JUDGMENT IS REPROD UCED HEREUNDER :- IN OUR OPINION, THE TERM OWNED AS OCCURRING IN SECTION 32(1) OF THE INCOME TAX ACT, 1961 MUST BE ASSIGNED A WIDER MEANING. ANYONE IN POSSDSSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH DOMINATION OVER THE PROPE RTY AS WOULD ENABLE OTHERS BEING EXCLUDED THEREFROM AND HAVING THE RIGHT TO USE AND OCCUPY THE PROPERTY AND /OR TO ENJOY ITS USEFRUCT IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDINGS THOUGH A FORMAL DEED OF TITLE MAY NOT HAVE BEEN EXECUTED AND REGISTYERED AS CONTEMPLATED BY THE TRANSFER OF PROPERTY ACT, THE REGISTRATION ACT, ETC. BUILDING OWNED BY THE ASSESSEE THE EXPRESSION AS OCCURING IN SECTION 32(1) OF THE INCOME TAX ACT MEA NS THE PERSON WHO HAVING ACQUIRED POSSESSION OVER THE BUILDING IN HIS OWN RIGHT USES THE SAME FOR THE PUR POSES OF THE BUSIENSS OR PROFESSION THOUGH A LEGAL TITLE HAS NOT KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 15 BEEN CONVEYED TO HIM CONSISTENTLY WITH THE REQUIREM ENTS OF LAWS SUCH AS THE TRANSFER OF PROPERTY ACT AND TH E REGISTRATION ACT, ETC. BUT NEVERTHELESS IS ENTITLED TO HOLD THE PROPERTY TO THE EXCLUSION OF OTHERS. ..THE VERY CONCEPT OF DEPRECIATION SUGGESTS THAT THE TAX BENEFIT ON ACCOUNT OF DEPRECIATION LEGITIMATELY BELONGS TO ONE WHO HAS INVESTED IN THE CAPITAL ASSE T IS UTILISING THE CAPITAL ASSWET AND THEREBY LOSING GRA DUALLY INVESTMENT CAUSED BY WEAR AND TEAR AND WOULD NEED T O REPLACE THE SAME BY HAVING LOST VALUE FULLY OVER A PERIOD OF TIME. 5.8 IN THE SAME CASE OF MYSORE MINERALS LTD. HON'BL E SUPREME COURT HAS HELD THAT KEEPING IN VIEW THE OB JECT AND SCHEME OF INCOME TAX ACT IN TAXING THE INCOME T HE REAL OWNER IS THER ONE WHO IS ENTITLED TO RECEIVE I NCOME KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 16 FROM SUCH PROPERTY. THE RELEVANT PART OF DECISION I S REPRODUCED HEREUNDER :- WE ARE CONSCIOUS OF THE SETTLED POSITION THAT UNDE R THE COMMON LAW, OWNER MEANS A PERSON WHO HAS GOT VALI D TITLE LEGALLY CONVEYED TO HIM AFTER COMPLYING WITH THE REQUIREMENTS OF LAW SUCH AS THE TRANSFER OF PROPERT Y ACT, REGISTRATION ACT, ETC. BUT IN THE CONTEXT OF SECTION 22 OF THE INCOME TAX ACT, GHAVING REGARD TO THE GRO UND REALITIES AND FURTHER HAVING REGARD TO THE OBJECT O F THE INCOME TAX ACT, NAMELY, TO TAX THE INCOME, WE ARE OF THE VIEW OWNER IS A PERSON WHO IS ENTITLED TO REC EIVED INCOME FROM THE PROPERTY IN HIS OWN RIGHT. 5.9 IN THE CASE OF MYSORE MINERALS LTD. THE DEPRECIATION WAS DISALLOWED ON THE GROUND THAT THE CAPITAL ASSET WAS NOT REGISTERED IN THE NAME OF ASSESSEE. WHEREAS IN THE CASE OF APPELLANT THE TRA NSFER KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 17 OF WIND MILL HAS DULY TAKEN PLACE AS SOON AS THE SA LE BILL OF THE MACHINERY HAS BEEN RAISED AND CONSIDERATION FOR THE SAME HAS BEEN PAID. THEREFORE IN VIEW OF THE AB OVE, I DO NOT FIND ANY REASON TO DOUBT THE OWNERSHIP AND POSSESSION OF THE WIND MILL FOR CLAIMING DEPRECIATI ON AT HIGHER RATE. THE PURPOSE OF GIVING HIGHER RATE OF DEPRECIATION ON INSTALLATION OF WIND MILL IS TO HAR NESS AND ENCOURAGE GENERATION OF NON-CONVENTIONAL SOURCE OF ENERGY. DENIAL OF SAME SHALL MEAN THE DEFEAT OF PURPOSE. IT HAS ALSO BEEN BROUGHT TO MY NOTICE THAT CIT(A) IN THE CASE OF APPELLANT HAVE ALLOWED SUCH DEPRECIATION ON GHIGHER RATE AND THE DEPARTMENT HAD NOT PREFERRED FURTHER APPEALS AGAINST SUCH DECISIONS. I N THE INSTANT CASE, THE OWNERSHIP HAS BEEN FURTHER POVED BY DIRECT INQUIRIES FROM THE SUPLIER/ELECTRICITY BOARD AND PHYSICAL VERIFICATION OF EXISTENCE OF SAME THROUGH SPOT VISITS. THEREFORE, I DO NOT FIND ANY ADVERSE MATERI AL KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 18 BROUGHT OUT BY THE A.O. TO CONTROVERT THE FINDINGS OF THEN CSIT(A) IN THE CASE OF M/S P.D. POWER, AN ASSOCIATE CONCERN OF THE APPELLANT. 5.10 IN VIEW OF THE ABOVE DISCUSSION, IT IS APPAREN T THAT THE APPELLANT HAS OWNED AND POSSESSIOED THE WIND MI LL MADE HUGE INVESTMENT SOLD ELECTRICITY TO VARIOUS ELECTRICITY BOARDS, REFLECTED THE SALE PROCEEDS OF ELECTRICITY IN BOOKS OF ACCOUNTS DURING THE PERIOD UNDER CONSIDERATION. THEREFORE, THE ACTION OF A.O. DENYIN G THE DEPRECIATION CANNOT BE SUSTAINED. ACC A.O. IS DIREC TED TO ALLOW THE DEPRECIATION @ 80% IN THE RELEVANT A.YS. FROM A.Y. 2006-07 TO A.Y. 2012-13 AS PER PROVISIONS OF INCOME TAX ACT, 1961. THESE GROUNDS OF APPEAL ARE ALLOWED. KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 19 3. THE LEARNED DR RELIED UPON THE ORDER OF THE ASSES SING OFFICER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT(A). 4. WE HAVE HEARD BOTH THE SIDES. AFTER HEARING WE ARE O F THE VIEW THAT THE ASSESSEE WAS ABLE TO ESTABLISH THE OWNERSHIP OF THE WIND MILL BY WAY OF FILING FOLLOWI NG DOCUMENTS :- A) PURCHASE ORDERS FOR WIND TURBINE (WIND MILL) PLACED TO M/S. ENERCON INDIA LTD AS PER TURN-KEY CONTRACT I.E. FOR SUPPLY OF WIND MILL, TRANSFORMERS & TOWER, ERECTION AND COMMISSIONING OF THE WIND MILL AT SITE. B) COPIES OF INVOICES RAISED BY THE SUPPLIER O F WIND MILLS I.E. M/S. ENERCON INDIA LTD. DURING A.Y. 2003- 04 & 2007-08 C) THE SUB - LEASE DEED OF LAND BY M/S. ENERCON INDIA LTD IN THE FAVOUR OF APPELLANT FOR SETTING UP THE WIND MILL. D) COPY OF SANCTION LETTERS ISSUED BY HDFC BANK LTD WHO SANCTIONED TERM LOAN AGAINST HYPOTHECATION OF WIND MILLS. E) TRI - PARTY AGREEMENTS EXECUTED ON VARIOUS DATES KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 20 BETWEEN M/S. RAJSTHAN RAJYA VIDYUT PRASARAN NIGAM LIMITED (RVPN), M/S. ENERCON INDIA LTD AND THE APPELLANT WHEREBY AFTER INSTALLATION, ERECTION AND COMMISSIONING, RVPN HAD AGREED TO PURCHASE POWER GENERATED IN THE WIND MILL. F) COMMISSIONING CERTIFICATES ISSUED BY JVVNL AND GEDA G) CERTIFICATE OF GENERATION OF POWER ISSUED BY RESPECTIVE JVVNL. H) INSURANCE POLICY IN FAVOUR OF OWNER OF THE WIND MILLS I.E. APPELLANT ISSUED BY INSURANCE COMPANY. I) SPECIMEN COPIES OF DEBIT NOTES RAISED BY THE APPELLANT TO STATE ELECTRICITY BOARDS BASED ON ELECTRICITY UNITS GENERATED AND TRANSMITTED IN POWER GRID AND COPIES OF BANK STATEMENTS OF HDFC IN SUPPORT OF PAYMENT RECEIVED. WE ALSO FIND THAT THE ASSESSEES NAME ALSO FIGURES IN TH E LIST OF WIND FARM OWNERS OF INDIA. M/S ENERCON INDIA L TD. HAS RECORDED SALES OF WIND MILLS TURBINE TO THE ASSESS EE. THE ASSESSEE HAS ALSO GOT TERM LOAN SANCTIONED FROM THE BANK AND ALSO THE INSURANCE POLICIES IN ITS NAME. ALL T HESE PROVE THE OWNERSHIP BEYOND ANY DOUBT. WE WOULD LIKE TO KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 21 STATE THAT DURING THE SEARCH OPERATION CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 7.11.2011. NO INCRIMINATI NG DOCUMENT PERTAINING TO PURCHASES OF THE WIND MILL TUR BINES WERE FOUND AND SEIZED. ONLY REGULAR PAPERS AND CORRESPONDENCE RELATING TO M/S D.P. POWER WERE FOUND AND SEIZED. THESE DOCUMENTS WERE ONLY PURCHASE INVOICES OF THE WIND MILLS, COMMISSIONING CERTIFICATE, LAND LEASE AGREEMENT WITH ENERCON INDIA LIMITED AND LETTERS ISSUE D BY ELECTRICITY BOARD REGARDING FORWARDING OF CHEQUES IN FAVOUR OF THE FIRM, THEREFORE, THESE PAPERS CANNOT BE SAID TO BE INCRIMINATING DOCUMENTS. THE ASSESSING OFFICER HAS PHYSICALLY VERIFIED THE LOCATION OF DIFFERENT WIND MI LLS, THEREFORE, WE ARE NOT ONLY UPHOLDING THE ORDER OF TH E LEARNED CIT(A) ON THIS ISSUE BUT WE ALSO TEND TO ALLOW THE GROUNDS REGARDING VALIDITY OF ASSESSMENT RAISED IN THE CROSS OBJECTION OF THE ASSESSEE IN THE ASSESSMENT YEAR S WHERE NO ASSESSMENT WAS ABATED. IN THE CASE OF M/S KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 22 MUKESH SANGLA HUF, IT(SS)A NOS. 94 & 95/IND/2015 AND OTHERS THE INDORE BENCH OF ITAT, INDORE, VIDE ITS O RDER DATED 5 TH NOVEMBER, 2015 HAS DECIDED AS UNDER :- 43. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALS O GONE THROUGH THE CASE LAWS RELIED UPON BY BOTH THE SIDES . WE HAVE ALSO CONSIDERED VARIOUS RELEVANT FACTS OF THE CASE. IT IS A SETTLED LEGAL POSITION THAT ONCE A SEARCH AND SEI ZURE ACTION HAS TAKEN PLACE U/S 132 OF THE ACT OR A REQUISITION HAS BEEN MADE U/S 132A, THE PROVISIONS OF SECTION 153A TRIGG ED AND ASSESSING OFFICER IS BOUND TO ISSUE NOTICE U/S 153A OF THE ACT. ONCE NOTICES ARE ISSUED U/S 153A OF THE ACT TH EN ASSESSEE IS LEGALLY OBLIGED TO FILE RETURN OF INCOM E FOR SIX YEARS. THE ASSESSMENT AND REASSESSMENT FOR SIX YEAR S SHALL BE FINALISED BY THE ASSESSING OFFICER. IT IS ALSO HELD BY VARIOUS COURTS THAT ONCE NOTICE U/S 153A OF THE ACT ISSUED, THEN ASSESSMENT FOR SIX YEARS SHALL BE AT LARGE BOT H FOR ASSESSING OFFICER AND ASSESSEE HAVE NO WARRANT OF L AW. IT KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 23 HAS BEEN ALSO HELD THAT IN THE ASSESSMENT YEARS WHE RE ASSESSMENTS HAVE BEEN ABATED IN TERMS OF SECOND PRO VISO TO SECTION 153A THEN ASSESSING OFFICER ACTS UNDER ORIG INAL JURISDICTION AND ONE ASSESSMENT IS MADE FOR TOTAL I NCOME INCLUDING THE ADDITION MADE ON THE BASIS OF SEIZED MATERIAL. BUT WHERE THERE IS NO ABATEMENT OF ASSESSMENTS AND ASSESSMENTS WERE COMPLETED ON THE DATE OF SEARCH TH EN ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINA TING DOCUMENTS OR UNDISCLOSED ASSETS, ETC. IN THESE CASE S THERE WAS NO INCRIMINATING DOCUMENT FOUND AND SEIZED IN R ELATION TO SALE AND REPURCHASE OF SHARES OF ADROIT INDIA LT D. NO ASSESSMENT PROCEEDINGS WERE ABATED IN THESE ASSESSM ENT YEARS OF THESE ASSESSEES. THUS ASSESSMENTS FOR THE SE ASSESSMENT YEARS WERE COMPLETED ON THE DATE OF SEAR CH. THE ASSESSMENTS WERE COMPLETED U/S 143(3) OF THE ACT RE AD WITH SECTION 153A/153C OF THE ACT AFTER THE SEARCH. IT I S AN UNDISPUTED FACT THAT NO INCRIMINATING MATERIAL IN R ELATION TO KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 24 THE INVESTMENT BY THESE ASSESSEES IN SHARES OF ADRO IT INDIA LIMITED DURING THE FINANCIAL YEAR RELEVANT TO THE A SSESSMENT YEAR 2007-08 AND TRANSFER OF SHARES DURING THE FINA NCIAL YEAR RELEVANT TO THE ASSESSMENT 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 ABATEMENT OF ANY PROCEEDINGS IN THESE CASES FOR THESE ASSESSMENT YEARS IN TERMS OF SECOND PROVISO T O 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 T HE CASE OF CIT VS. MECHMAN WHILE DECIDING THE ISSUE RELATING T O ASSESSMENTS MADE BY ISSUING THE NOTICE U/S 153C OF THE ACT HAS HELD THAT THE ASSESSING OFFICER BEFORE ISSUING NOTICE U/S 153C OF THE ACT HAS TO RECORD SATISFACTION. HON'BLE HIGH COURT HELD THAT THE ASSESSING OFFICER HAVING JURISD ICTION WHILST GIVING NOTICE TO SUCH OTHER PERSON (OTHER TH AN THE KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 25 PERSON REFERRED TO IN SECTION 153A) MUST APPLY PROP RIO VIGORE. AFTER RECEIPT OF THE MATERIALS, THE ASSESS ING OFFICER HAVING JURISDICTION IS EXPECTED TO CONDUCT INQUIRY AND DUE VERIFICATION OF THE RELEVANT FACTS BEFORE FORMING H IS PRIMA FACIE SATISFACTION. THE ASSESSING OFFICER MUST FORM HIS INDEPENDENT VIEW BEFORE ISSUE OF NOTICE. THERE IS N O SEIZED MATERIAL BELONGING TO THE ASSESSEE WHICH WAS FOUND AND SEIZED IN RELATION TO ADDITIONS MADE. IN VIEW OF T HIS FACT, THERE IS NO JUSTIFICATION FOR ACTION U/S 153C OF TH E ACT THAT TOO WITHOUT RECORDING SATISFACTION. IN OUR CONSIDER ED VIEW, THE ASSESSING OFFICER MUST HAVE SOME MATERIAL TO PR IMA FACIE SATISFY HIMSELF TO RECORD THE SATISFACTION PR IOR TO ISSUE OF NOTICE U/S 153C OF THE ACT. HON'BLE JURISDICTION AL HIGH COURT HELD THAT WHERE NO SATISFACTION HAS BEEN RECO RDED BY THE ASSESSING OFFICER BEFORE ISSUING NOTICE U/S 153 C OF THE ACT AND NO PAPERS/DOCUMENTS/ASSETS WERE SEIZED BELO NGING TO THE ASSESSEE THEN NO PROCEEDINGS U/S 153C OF THE ACT CAN KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 26 BE INITIATED. WITH REGARD TO THE ASSESSMENT MADE ON THE BASIS OF NOTICES ISSUED U/S 153A OF THE ACT, WE WOU LD LIKE TO HOLD THAT IN A RECENT DECISION HON'BLE DELHI HIGH C OURT 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 153A OF THE ACT, ONLY ON THE BASIS OF SOME INCRIMINATING MATERI AL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVE RED IN THE COURSE OF SEARCH WHICH WAS NOT PRODUCED OR NOT ALREADY 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 ASSESSME NT YEARS 2008-09 AND 2010-11. NO ASSESSMENTS WERE ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A OF THE ACT. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWL A (SUPRA) HAS CONSIDERED VARIOUS HIGH COURT DECISIONS RELIED UPON BY KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 27 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). T HE ONLY DECISION OF THE HON'BLE ALLAHABAD HIGH COURT I N THE CASE OF CIT VS. RAJ KUMAR 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 O RDER OF THE TRIBUNAL AND REMANDED THE ISSUE TO THE TRIBUNAL TO CONSIDER THE APPEAL OF THE DEPARTMENT ON MERITS. IT IS A SETTLED LEGAL POSITION THAT WHEN TWO VIEWS ARE POSS IBLE ON A PARTICULAR ISSUE THEN THE VIEW FAVOURABLE TO THE AS SESSEE SHOULD BE FOLLOWED AS HELD BY THE HON'BLE APEX COUR T IN THE CASE OF CIT VS. VEGETABLE PRODUCTS; 88 ITR 192. RE SPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE APEX COURT, W E ALLOW THESE GROUNDS OF APPEAL OF THE ASSESSEE. KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 28 5. THE OTHER ISSUE IN THE APPEAL FOR THE ASSESSMENT YE AR 2011-12 IS WITH REGARD TO DELETION OF ADDITION OF RS.30,30,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. 6. THE GROUND WITH REGARD TO THE CASH CREDIT IN THE APPEAL READS AS UNDER :- ASSESSEES APPEAL FOR A.Y. 2006-07 02. DURING THE YEAR THE APPELLANT HAD ACCEPTED SHAR E APPLICATION MONEY OF RS.40 LACS FROM FOLOWING TWO INTER CORPORATES VIZ. : A) M/S ANI ANU DEVELOPERS PVT. LTD. PAN AACCA5917B B) M/S SAMARPAN TEXTILE PVT. LTD. AND PANN : THE SHARE APPLICATION MONEY WAS RECEIVED BY A/C PAYEE CHEQUES AND THE INVESTMENT IN SHARES OF ASSESSEE COMPANY WAS APPROVED BY THE BOARD OF DIRECTORS OF APPLICANT COMPANY. KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 29 REVENUES APPEAL FOR A.Y. 2006-07 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.4,79,81,000/- MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY. REVENUES APPEAL FOR A.Y. 2008-09 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.6,72,00,000/- MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY. REVENUES APPEAL FOR A.Y. 2011-12 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.37,40,000/- MADE UNDER SECTION 68 OF THE KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 30 INCOME TAX ACT, 1961 ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY. 7. THE LEARNED CIT(A) GRANTED RELIEF TO THE ASSESSEE I N THE CASE OF SHARE APPLICATION MONEY RECEIVED FROM SONIC BIOCHEM EXTRACTION PVT. LTD., INDORE. THE RELEVANT PARAGRAPH IS REPRODUCED HEREUNDER :- I. SHARE SUBSCRIPTION FROM SONIC BIOCHEM EXTRACTION PVT. LTD, INDORE THIS COMPANY, AS DISCUSSED ABOVE HAD SUBSCRIBED TO TH E SHARE CAPITAL OF APPELLANT COMPANY FOR THREE ASSESS MENT YEARS I.E A.Y. 2006-07, 08-09 & 2011-12. IT IS OBSE RVED THAT THE APPELLANT HAS FILED COPIES OF RETURN OF INCOME O F ABOVE COMPANY FOR ALL THE RELEVANT YEARS ALONG WITH THE COMPUTATIONS OF INCOME. THE COPIES OF BALANCE SHEET AND P & L ACCOUNT ALONG WITH THE SCHEDULES HAVE ALSO BEEN FI LED BEFORE THE AO. FURTHER, THE COPIES OF INCORPORATION CERTIFICATE, CONFIRMATION CERTIFICATES REGARDING INVESTMENT MADE BY THE SUBSCRIBING COMPANY AND THE COPIES OF SHARE APPLICAT ION FORM DULY FILLED IN AND SIGNED BY THE APPLICANT HAVE ALSO BE EN FILED BEFORE THE AO TO PROVE THE IDENTITY, GENUINENESS AND KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 31 CREDITWORTHINESS OF THE SUBSCRIBING COMPANY I.E. SON IC BIOCHEM EXTRACTION PVT. LTD. IT HAS ALSO BEEN BROUGH T TO MY NOTICE AND OBSERVED THAT IN COMPLIANCE TO THE INQUIR Y LETTERS ISSUED U/S 133(6) OF INCOME TAX ACT, 1961, THE REPRESENTATIVES OF THE SAID COMPANY APPEARED BEFORE AO AND SUBMITTED VARIOUS DOCUMENT ALONG WITH AUDITED ACCOUNTS OF THE SAID COMPANY AND CONFIRMED THE GENUINENESS OF TRANSACTIONS. IT IS ALSO OBSERVED THAT THE SAID COMPA NY IS REGULARLY ASSESSED TO INCOME TAX AND ITS TURNOVER H AS BEEN FOUND TO BE RANGING BETWEEN RS. 129.61 CRORES TO RS. 286.72 CRORES DURING THE PERIOD RELEVANT TO THE ASSESSMENT Y EARS UNDER CONSIDERATION WHICH IS EVIDENT FROM THE DETAIL ED CHART FURNISHED BY THE APPELLANT AS REPRODUCED IN PRE-PAG ES OF THIS ORDER. I HAVE ALSO OBSERVED FROM THE REPLY FILED B Y THE SHARE SUBSCRIBING COMPANY IN COMPLIANCE TO INQUIRIES U/S 133(6) OF INCOME TAX ACT, 1961 THAT THEY HAVE DULY CONFIRMED TH E TRANSACTIONS AND HAVING SUBSCRIBED THE SHARE CAPITAL OF THE APPELLANT AND NECESSARY EVIDENCE TO PROVE THE GENUIN ENESS AND SOURCE OF INVESTMENT HAVE ALSO BEEN FURNISHED B EFORE THE AO. THEREFORE, THE APPELLANT HAS DISCHARGED THE BURDE N KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 32 CASTED UPON THE APPELLANT U/S 68 OF THE I.T. ACT RE GARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSA CTIONS. IT HAS ALSO BEEN BROUGHT TO MY NOTICE THAT THE CASE OF APPELLANT FOR THE A.Y. 2008-09 WAS ALSO TAKEN UP FO R SCRUTINY BY THE DCIT6(2), MUMBAI AND THE ASSESSMENT HAS BEEN PASSED U/S 143(3) OF THE I.T. ACT, AFTER CONSIDERIN G THE ISSUE OF RECEIPT OF SHARE SUBSCRIPTION AMOUNT FROM SONIC BIOCHEM EXTRACTION PVT. LTD. A COPY OF THE RELEVANT QUESTION NAIRE ISSUED BY THE AO HAS ALSO BEEN FILED AS EVIDENCE TO SHOW THAT THE ISSUE WAS DULY CONSIDERED AND INQUIRED INTO BY THE AO. IN VIEW OF THE ABOVE DISCUSSION, IT HAS OBSERVE D THAT THE APPELLANT HAS NOT ONLY PROVED THE IDENTITY OF THE SU BSCRIBER OF THE SHARES BUT HAS ALSO PROVED THE GENUINENESS OF TH E TRANSACTIONS AND CREDITWORTHINESS OF THE SUBSCRIBER WITHIN THE MEANING OF SECTION 68 OF THE I.T. ACT, 1961. IN THIS WAY, I FIND THAT THE APPELLANT HAS DISCHARGED THE BURDEN OF PROOF CASTED UPON IT. IN A NUMBER OF DECISIONS BY HONBLE SUPREME COURT, HIGH COURTS AND ITATS, IT HAS BEEN HELD THAT ONCE THE IDENTITY OF THE SUBSCRIBER IS ESTABLISHED AND ACCEPT ED BY THE AO, THE ADDITION ON ACCOUNT OF SHARE SUBSCRIPTION A MOUNT IF AT ALL NOT FOUND PROVED U/S 68 OF THE I.T. ACT, HAS TO B E MADE IN KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 33 THE HANDS OF THE SUBSCRIBER. IN THE CASE OF RAJAT CA PITAL MARKET PVT. LTD VS. ACIT 24 ITJ 219 (IND.), INDORE B ENCH OF ITAT RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S LOVELY EXPORTS PVT. LTD. (2008), 11 ITJ 357 (SC), HAS HELD THAT THE ADDITION CAN BE MADE ONLY IN THE HA NDS OF SUBSCRIBER TO SHARE CAPITAL AND NOT IN THE HANDS OF THE ASSESSEE COMPANY IF THE IDENTITY HAS NOT BEEN DISPU TED BY THE AO. IN THE CASE OF APPELLANT COMPANY, NOT ONLY THE IDENTITY BUT GENUINENESS OF TRANSACTION AND CREDITWO RTHINESS OF THE SUBSCRIBING COMPANY HAVE ALSO BEEN PROVED TH ROUGH VARIOUS DOCUMENTARY EVIDENCES FILED DURING THE COURSE OF ASSESSMENT AND APPELLATE PROCEEDINGS. THE ONLY BASI S FOR MAKING ADDITION ON ACCOUNT OF SUBSCRIPTION AMOUNT RE CEIVED FROM M/S SONIC BIOCHEM EXTRACTION PVT. LTD REMAINS T O BE THE PRESUMPTION MADE BY AO AS WHY SHOULD A WELL REPUTED COMPANY INVEST IN THE KATARIYA GROUP OF COMPANIES A S THESE COMPANIES ARE BASED IN RATLAM AND THEIR SHARES ARE N OT TRADED ON ANY STOCK EXCHANGE. IN MY OPINION, REPLY T O THIS QUESTION WILL REMAIN WITH THE SUBSCRIBING COMPANY, WHICH IS ASSESSED TO INCOME TAX AND REFLECTING SUBSTANTIAL INC OME AND TURNOVER FOR VARIOUS YEARS. IF THE AO FOR THE APPEL LANT KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 34 COMPANY HAS ANY DOUBTS ABOUT THE INTENTIONS AND REAS ONS FOR MAKING INVESTMENT IN THESE KINDS OF COMPANIES, HE IS AT LIBERTY TO REFER THE ISSUE TO THE CONCERNED AO FOR F URTHER INVESTIGATION AS THE SUBSCRIBING COMPANY HAS ALREAD Y CONFIRMED THE TRANSACTIONS AND PLACED ALL THE DOCUME NTS RELEVANT TO THE CREDITWORTHINESS OF THE COMPANY BEF ORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE S AME HAVE NOT BEEN DISPUTED. HOWEVER, DURING THE COURSE OF APPEAL PROCEEDINGS, THE SPECIFIC QUERY WAS RAISED TO THE A PPELLANT TO SUBSTANTIATE THE GENUINENESS OF TRANSACTION IN VIEW OF THE FACT THAT THE SHARE SUBSCRIPTION WAS RECEIVED FROM T HE M/S SONIC BIOCHEM EXTRACTION LTD DESPITE THE FACT THAT T HE SHARES OF APPELLANT ARE NOT LISTED IN THE STOCK EXCHANGE AN D THE DIVIDEND WAS NOT DECLARED. THE APPELLANT HAS FILED A DETAILED REPLY DATED 24.09.2014 BRINGING OUT THE CIRCUMSTANCE S AND THE BUSINESS EXPEDIENCY COMPELLING BOTH THE COMPANI ES TO ENTER INTO PARTNERSHIP. THE GIST OF THE SUBMISSIONS MADE BY THE APPELLANT ARE REPRODUCED HEREUNDER. KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 35 8. THE BRIEF FACTS OF THE ISSUE AND PLEADINGS OF THE LEARNED COUNSEL FOR THE ASSESSEE CAN BE SUMMARISED AS UNDER :- CASH CREDIT U/S. 68 OF ACT (A.Y. 2006-07, 2008-09 & 2011-12) THE COMPANY HAD ACCEPTED SHARE APPLICATION MONEY FR OM M/S SONIC BIOCHEM EXTRACTIONS LTD., 38, PATEL NAGAR, IN DORE, HAVING ITS REGISTERED OFFICE AT MUMBAI (PAN : AABCS6326B) DURING A.Y. 2006-07, 2008-09 AND 2011-12. THE IDENTITY, GENUINE NESS OF THE TRANSACTIONS, CAPACITY & CREDIT WORTHINESS OF T HE APPLICANT WAS PROVED BEYOND DOUBT FROM FOLLOWING:- (I) NETWORTH OF THE APPLICANT WAS OVER RS.40 CRORES AND IT ALSO DECLARED SUBSTANTIAL INCOME WHILE FILING INCOME TAX RETURNS. THE SHARE APPLICATION MONEY WAS RECEIVED BY A/C PAY EE CHEQUES AND THE INVESTMENT IN SHARES OF ASSESSEE CO MPANY WAS APPROVED BY THE BOARD OF DIRECTORS OF APPLICANT COMPANY. (II) TO ASCERTAIN THE GENUINENESS INFORMATION WAS ALSO C ALLED U/S 133(6) OF THE ACT BY THE A.O. FROM M/S. SONIC B IOCHEM KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 36 EXTRACTIONS LIMITED DIRECTLY WHO HAD PERSONALLY ATT ENDED THE HEARINGS AND PRODUCED VOLUMINOUS DOCUMENTS INCLUDIN G VARIOUS CORRESPONDENCES, RESOLUTIONS PASSED FOR THE PURPOSE OF INVESTMENTS IN COMPANIES OF KATARIA GROUP AS WEL L BANK STATEMENTS IN SUPPORT OF INVESTMENTS MADE TO PROVE IDENTITY, CAPACITY AND CREDIT WORTHINESS, WHICH HAVE NOT BEEN DOUBTED UPON BY THE A.O. (PAGE NO. 161 & 162 OF PAPER BOOK) . (III) M/S. SONIC BIOCHEM EXTRACTIONS LIMITED REGULARLY SUBMITTED RETURNS WITH TAX AUDIT REPORTS UNDER I.T. ACT & IS BEING REGULARLY ASSESSED TO TAX BY DY. COMMISSIONER OF INCOME TAX, CIRCLE-7(2), MUMBAI AS PER COPIES OF AS SESSMENT ORDERS FOR A.Y. 2006-07, 2008-09 & 2010-11 WERE PLA CED ON RECORD. (PAGE NO. 203 TO 222 OF PAPER BOOK) (IV) INCOME RETURNED BY SAID COMPANY FOR A.Y. 2010-11 WA S RS.4,05,78,550/- WHICH WAS ASSESSED VIDE ORDER DAT ED 03.01.2013 AT RS.4,44,43,520/-. IN THIS YEAR, PROVI SION FOR TAX AS PER AUDITED ACCOUNTS APPEARS AT RS.1,05,00,0 00/- KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 37 (V) THE APPLICANT COMPANY IS REGISTERED WITH THE REGIST RAR OF THE COMPANIES AND ANNUAL RETURNS UNDER COMPANIES ACT AR E BEING SUBMITTED REGULARLY. (VI) THE COMPANY CONFIRMED THE INVESTMENT MADE IN SHARES OF KATARIA INDUSTRIES PVT. LTD. SUCH INVESTMENTS ARE R EFLECTED IN THE BALANCE SHEET OF INVESTOR COMPANY YEAR AFTER YE AR. (PAGE NO. 163 TO 198 OF PAPER BOOK). (VII) THE TURNOVER & NETWORTH (CAPITAL AND RESERVES) AS P ER THE AUDITED ACCOUNTS FROM A.Y. 2006-07 TO A.Y. 2011-12 OF M/S. SONIC BIOCHEM EXTRACTIONS LIMITED WAS AS UNDER :- A.Y. NETWORTH TURNOVER 2006-07 RS.10.91 CRORES RS.129.61 CRORES 2007-08 RS.11.84 CRORES RS.147.84 CRORES 2008-09 RS.14.61 CRORES RS.248.90 CRORES 2009-10 RS.33.40 CRORES RS.304.81 CRORES 2010-11 RS.41.51 CRORES RS.248.33 CRORES 2011-12 RS.39.99 CRORES RS.286.72 CRORES KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 38 (VIII) THAT THE DIRECTORS OF SAID COMPANY AND OTHER STAKEH OLDERS WHO MADE THE INVESTMENT IN THIS COMPANY ARE KNOWN T O ALL MEMBERS OF KATARIA GROUP INCLUDING THE DIRECTORS OF M/S. KATARIA INDUSTRIES PVT. LTD. (IX) IN THE CASE OF THE COMPANY, THE ASSESSMENT FOR A.Y. 2008- 09 WAS TAKEN UP FOR SCRUTINY AND AFTER DETAILED ENQ UIRY IN RELATION TO SHARE CAPITAL SUBSCRIBED AT RS. 6.72 CR ORES BY M/S. SONIC BIOCHEM EXTRACTION LTD., THE ASSESSMENT ORDER WAS PASSED U/S. 143(3) OF THE ACT BY THE DY. COMMIS SIONER OF INCOME TAX, 6(2), MUMBAI (PAGE NO. 199 TO 202 OF PAPER BOOK). VIDE PARA-10.4 OF THE ASSESSMENT ORDER, THE AO DID NOT DOUBT THE IDENTITY AND CAPACITY OF M/S. SONIC BIOCHEM EXTRACT ION LTD. BUT MERELY OBSERVED THAT THE GENUINENESS OF THE TRANSAC TION WAS NOT ESTABLISHED IN RESPECT OF AMOUNT RECEIVED ON THE GR OUND THAT SHARES ARE NOT TRADED ON ANY STOCK EXCHANGE NOR ANY DIVIDEND OR GOOD PROFIT HAS BEEN SHOWN BY THE ASSESSEE COMPANY. IT WAS EXPLAINED THAT M/S. SONIC BIOCHEM EXTRACTION LTD. HAD MAINLY INVESTED IN SHARE CAPITAL OF KATARIA INDUSTR IES PVT. KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 39 LIMITED TO ESTABLISH MEGA PROJECT, TO MANUFACTURE V ARIOUS TYPE OF STEEL WIRES SUCH AS TYRE BEAD WIRE, L.R.P.C. WIR E, OIL TEMPERED WIRE, CABLE CONDUCTOR, TO SET UP PROPERZ Y MILL FOR ALUMINUM WIRE ROD, WIRE DRAWING MACHINE & TO ACQUIR E WIND MILLS FOR GENERATION OF ELECTRICITY. TOTAL PROJECTE D COST WAS PLANNED OVER RS. 50 CRORE. THE COMPANY ACCORDINGLY STARTED THE PROJECT IN PHASE MANNER BY SETTING UP WIRE DIVI SION IN 2006 AND COMMENCED COMMERCIAL PRODUCTION ON 19.03.2 007 IN KATARIA INDUSTRIES PVT. LTD. AS PER M.P. GOVERNMENT INDUSTRIAL POLICY 2004, THE COMPANY WAS REQUIRED TO INVEST MORE THAN RS. 25 CRO RE IN BACKWARD CATEGORY TO AVAIL 75% SUBSIDY UNDER UDHYO G SANVARDHAN SAHAYATA YOJANA BEFORE COMMENCEMENT OF PRODUCTION. TO AVAIL SUCH BENEFITS IT BECAME NECESS ARY TO JOIN HANDS WITH OTHER ENTREPRENEUR, A TRUST WORTHY STRAT EGIC PARTNER, WHO CAN INVEST HUGE FUNDS AND TAKE RISK AN D WAIT FOR SHARING THE REWARD. THEREAFTER, AN OLD TRUSTED AND FAMILIAR FAMILY FRIEND VIZ. SHRI KISHAN MATLANI, FATHER OF M R. GIRISH MATLANI (DIRECTOR OF SONIC BIOCHEM) CAME FORWARD & INVESTED IN KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 40 SHARES OF KATARIA GROUP, WHICH WAS FAMILIAR TO HIM SINCE 1995. MATLANI GROUP AGREED TO INVEST TO THE EXTENT OF RS.15 CRORES WHEREBY INITIAL INVESTMENT OF RS. 479.81 LA CS WAS MADE BY SONIC BIOCHEM EXTRACTION LTD IN A.Y. 2006-0 7 & THEREAFTER RS.672 LACS IN A.Y. 2008-09 AND A SUM OF RS.37.40 LACS IN A.Y. 2011-12. IN THIS CONTEXT IT IS SUBMITTED THAT THE APPLICANT COMPANY PERSONALLY ATTENDED THE HEARING BEFORE A.O. IN RESP ONSE TO NOTICE U/S. 133(6) AND PRODUCED VARIOUS DOCUMENTS, IDENTIT Y WAS PROVED BEYOND DOUBT. AUDITED ACCOUNTS OF ALL YEARS WERE SU BMITTED WHICH WERE NOT DOUBTED BY A.O.. COPIES OF BANK STATEMENTS OF APPLICANT COMPANY FOR ALL YEARS WERE ALSO FURNISHED/PRODUCED WITH RELATED EXTRACT OF THEIR BOOKS OF ACCOUNTS ALONG WITH COPIE S OF ASSESSMENT ORDERS, INCOME RETURNED / ASSESSED. THEREFORE CREDI TWORTHINESS WAS ALSO PROVED BEYOND DOUBT. AS THE AMOUNT WAS RECEIVED BY A/C PAYEE CHEQUES FOR ALLOTMENT OF SHARES DULY SUPPORTED BY BANK STATEMEN TS AND BOARDS RESOLUTION OF SAID COMPANY AND THE DIRECTOR S OF BOTH THE COMPANIES ARE WELL ACQUAINTED TO EACH OTHER, GENUIN ENESS OF THE KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 41 TRANSACTION WAS ALSO PROVED. IN SUBSTANCE, IDENTITY , CAPACITY, CREDITWORTHINESS AND GENUINENESS OF SHARE CAPITAL S UBSCRIBED BY M/S. SONIC BIOCHEM EXTRACTIONS LTD., WAS PROVED BEY OND DOUBT BY AFORESAID EXPLANATIONS AND DOCUMENTS PLACED ON RECO RD. IN VIEW OF AFORESAID FACTS, THERE WAS NO REAS ON TO DOUBT THE GENUINENESS OF THE TRANSACTIONS RELATING TO INVESTM ENT MADE BY M/S. SONIC BIOCHEM EXTRACTION LTD IN KATARIA GROUP OF COMPANIES. THE ONUS CASTED UPON THE APPELLANT U/S 68 OF THE AC T WAS DISCHARGED NOT ONLY WITH REFERENCE TO IDENTITY AND CREDIT WORTHINESS OF M/S. SONIC BIOCHEM EXTRACTION LTD BUT ALSO IN RESPECT OF GENUINENESS OF TRANSACTION. THEREFORE AD DITIONS MADE BY THE A.O. U/S 68 OF THE ACT WITHOUT APPRECIATING AFORESAID FACTS WAS RIGHTLY DELETED BY CIT(A). RELIANCE IS PLACED O N CERTAIN JUDGMENTS GIST OF WHICH IS ANNEXED (ANNEXURE 1). THE A.O. HAD RELIED UPON THE JUDGMENT IN THE CAS E OF CIT VS. P. MOHANLKALA (2007) 291 ITR 278 (SC) & SUMATID AYAL VS. CIT (1995) 214 ITR 801 (SC) WHICH RELATED TO FOREIGN GI FTS RECEIVED BY THE APPELLANT AND EARNING FROM HORSE RACING RESPECT IVELY. BOTH THE JUDGMENTS ARE DISTINGUISHABLE NOT ONLY ON FACTS BUT ON DEMERITS OF KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 42 SUCH CASES WHICH ARE NOT PRESENT EVEN SLIGHTLY IN T HE CASE OF THE APPELLANT. THE RATIO OF THE PRINCIPAL LAID DOWN IN THESE JUDGMENTS BY THE APEX COURT CANNOT BE APPLIED BY ANY STRETCH OF IMAGINATION TO THE CASE OF THE APPELLANT. (II) - APPEALS/CROSS OBJECTIONS BY THE ASSESSEE CASH CREDIT U/S. 68 OF THE ACT (A.Y. 2006-07) : DURING A.Y. 2006-07 THE COMPANY HAD ACCEPTED SHARE APPLICATION MONEY FROM M/S. ANI ANU DEVELOPERS PVT. LTD. & M/S. SAMARPAN TEXTILES PVT LTD, MUMBAI. ABOVE TWO S HARE APPLICANTS INVESTED IN SHARES OF THE APPELLANT COMP ANY DURING A.Y. 2006-07 AT RS.40 LACS EACH. THOUGH NO INCRIMIN ATING DOCUMENTS WERE FOUND RELATING TO SUCH INVESTMENT MA DE BY THESE TWO COMPANIES DURING SEARCH, YET THE INVESTIG ATION WING REFERRED THE MATTER TO ASSTT. DIRECTOR OF INCOME TA X, INVESTIGATION, UNIT-I(1), MUMBAI WHO HAD RECORDED T HE STATEMENT U/S 131 OF THE ACT OF THE COMMON DIRECTOR ON 21.01. 2014. SHRI ASHOK GUPTA, DIRECTOR OF ABOVE TWO COMPANIES, STATE D IN REPLY TO QUESTION NO. 24 OF THE STATEMENT THAT HAD PROVID ED KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 43 ACCOMMODATION ENTRIES TO THE APPELLANT COMPANY THRO UGH ABOVE TWO COMPANIES. BASED ON AFORESAID STATEMENT, VIDE PARA-10.8.1 OF T HE ASSESSMENT ORDER, IT WAS CONCLUDED BY A.O. THAT AMO UNT OF SHARE APPLICATION MONEY RECEIVED FROM TWO COMPANIES VIZ. ANI- ANU DEVELOPERS PVT LTD AT RS. 40 LACS AND M/S. SAMA RPAN TEXTILES PVT LTD AT RS.40 LACS IS NOT GENUINE AND T HE ASSESSEE COMPANY HAS TAKEN ONLY ACCOMMODATION ENTRY FROM THE BOGUS PAPER COMPANIES AND ASSESSED TO TAX U/S. 68 OF THE ACT. DETAILED REPLY WAS SUBMITTED BY THE APPELLANT VIDE LETTER DATED 24.03.2014 ALONG WITH SHARE APPLICATION FORM, SHARE CERTIFICATES AND ACKNOWLEDGMENT OF RETURNS OF INCOME SUBMITTED B Y TWO COMPANIES TO PROVE THE IDENTITY AND CAPACITY (PAGE NO. 270 TO 274, 283 & 284 OF PAPER BOOK). THE COMMON DIRECTOR OF ABOVE TWO COMPANIES ALSO FILED AFFIDAVITS ON 24.05.2014 W HEREBY HE RE-AFFIRMED THE INVESTMENT MADE BY BOTH THE COMPANI ES. THE IDENTITY OF BOTH THE COMPANIES WAS PROVED BEYON D DOUBT NOT ONLY BY FILING THE AFFIDAVITS LATER ON BU T ALSO BY THE KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 44 PRESENCE OF COMMON DIRECTOR OF BOTH COMPANIES IN RE SPONSE TO NOTICE U/S 133(6) OF THE ACT BEFORE ADIT, MUMBAI. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION OF RS. 80 LACS U/S. 68 OF THE ACT VIDE LAS T PARA OF THE APPELLATE ORDER AT PAGE (16) ON THE GROUND THAT ABO VE TWO COMPANIES HAD GIVEN ACCOMMODATION ENTRY TO THE APPE LLANT, THE GENUINENESS OF THE TRANSACTIONS AND SOURCE OF WHICH HAS NOT BEEN EXPLAINED AND PROVED. IT IS HUMBLY SUBMITTED THAT ONCE IDENTITY IS PROVED BEYOND DOUBT, THE ONUS IS DISCHARGED SPECIALLY WHEN THE SU BSCRIBER TO THE SHARE CAPITAL IS BEING ASSESSED TO TAX. RELIANC E IS PLACED ON CERTAIN JUDGMENTS GIST OF WHICH IS ANNEXED (ANNEXUR E 2). 9. WE HAVE HEARD BOTH THE SIDES. THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM M/S SONIC BIOCHE M EXTRACTION PVT. LTD. WHICH HAS A PERMANENT ACCOUNT NUMBER. NET WORTH OF THE COMPANY IS ABOUT RS. 40 CROR ES. THE INVESTOR COMPANY HAS ALSO CONFIRMED THE INVESTMEN T WHILE THE INFORMATION WAS CALLED FOR U/S 133(6) OF TH E ACT KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 45 BY THE ASSESSING OFFICER. M/S SONIC BIOCHEM EXTRACTI ON PVT. LTD. HAS ALSO REPRESENTED BEFORE THE ASSESSING OFFICER TO CONFIRM THE INVESTMENTS MADE IN THE ASSESSEE COMP ANY. THE COPY OF BANK STATEMENT WAS ALSO FURNISHED. THE ASSESSMENT ORDER MADE BY THE INCOME TAX AUTHORITIES FO R THE ASSESSMENT YEARS 2006-07, 2008-09 AND 2010-11 WERE ALSO PLACED ON RECORD OF M/S SONIC BIOCHEM EXTRACTION PVT. LTD. FOR THE ASSESSMENT YEAR 2010-11 THE RETURN OF INCOME OF THE INVESTOR COMPANY M/S SONIC BIOCHEM EXTRACTION PVT. LTD. WAS RS.4,05,78,550/-. THE TURNOVER AND NET WORTH OF THIS INVESTOR COMPANY CAN BE SUMMARISED AS UNDER : A.Y. NETWORTH TURNOVER 2006-07 RS.10.91 CRORES RS.129.61 CRORES 2007-08 RS.11.84 CRORES RS.147.84 CRORES 2008-09 RS.14.61 CRORES RS.248.90 CRORES 2009-10 RS.33.40 CRORES RS.304.81 CRORES 2010-11 RS.41.51 CRORES RS.248.33 CRORES 2011-12 RS.39.99 CRORES RS.286.72 CRORES ALL THESE FACTS ESTABLISH THAT THERE WAS NO DOUBT REGARD ING IDENTITY AND CAPACITY OF SONIC BIOCHEM EXTRACTIONS LTD . KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 46 THE TRANSACTIONS WERE ESTABLISHED TO BE GENUINE, THERE FORE, THE ASSESSEE WAS ABLE TO DISCHARGE THE ONUS PLACED UPON IT AS PER THE PROVISIONS OF SECTION 68 OF THE ACT. THER EFORE, WE FIND NO MERIT IN THIS GROUND OF THE REVENUES APPEAL AND UPHOLD THE ORDER OF THE LEARNED CIT(A). WE WOULD ALSO LIKE TO MENTION THAT THE CASE LAWS RELIED UPON BY THE REV ENUE CIT VS. P. MOHANAKALA; 291 ITR 278 AND SUMATI DAYAL; 214 ITR 801 WERE HAVING TOTALLY DIFFERENT FACTS. IN TH E CASE OF P.MOHANKALA THE FOREIGN CURRENCY RECEIVED AND IN THE CASE OF SUMATI DAYAL THE EARNING WAS FROM HORSE RACING. THEREFORE, THE RATIO LAID DOWN BY THE HON'BLE APEX CO URT IN THESE JUDGMENTS IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. BY HOLDING SO, WE DISMISS THIS GROUND OF THE REVENUES APPEAL. WE WOULD ALSO LIKE TO MENTION THAT SI NCE NO INCRIMINATING DOCUMENTS WERE FOUND IN RELATION TO SHARE CAPITAL, THEREFORE, NO ADDITION COULD HAVE BEEN MADE IN PROCEEDINGS U/S 153A OF THE ACT WHERE NO ASSESSMENTS KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 47 WERE ABATED. FOR THE ASSESSMENT YEAR 2006-07 THERE WAS NO ABATEMENT OF ASSESSMENT, HENCE, NO ADDITION COULD H AVE BEEN MADE IN THE ORDER PASSED U/S 153A OF THE ACT. THEREFORE, THE ASSESSEES APPEAL ALSO STANDS ALLOWED ON T HIS ISSUE. 10. IN THE RESULT, ALL THE APPEALS OF THE REVENUE STAND DISMISSED AND ALL THE CROSS OBJECTIONS AND THE APPEALS O F THE ASSESSEE ARE ALLOWED. PRONOUNCED IN OPEN COURT ON 11 TH JANUARY, 2016 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 11 TH JANUARY, 2016 DN/- KATARIA INDUSTRIES P. LTD. IT(SS) A. NOS.293 TO 297/IND/2014, ETC. & CO NOS.10 TO 14/IND/2015 48