The DCIT, 4(1), V. M/s Siddhartha Marketing Service P. Ltd,

ITSSA 57/IND/2009

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7810 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-10-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 19-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Keywords: Business income; Document seized; Documents seized
• Section: 143(3); 153A; 234B; 68; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER IT(SS)A NOS. 57 TO 59/IND/2009 A.YS. 2002-03 TO 2004-05 DY. COMMISSIONER OF INCOME TAX 4(1) INDORE ... APPELLANT VS M/S SIDDHARTHA MARKETING SERVICES PRIVATE LIMITED INDORE PAN AAECS-3556J ... RESPONDENT AND ITA NO. 5/IND/2009 A.Y. 2002-03 M/S SIDDHARTHA MARKETING SERVICES PRIVATE LIMITED INDORE ::: APPELLANT VS DY. COMMISSIONER OF INCOME TAX 4(1) INDORE ::: RESPONDENT 2 ASSESSEE BY : SHRI PRAKASH JAIN REVENUE BY : SHRI KESHAVE SAXENA DATE OF HEARING : 21.12.2011 DATE OF PRONOUNCEMENT : 12.01.2012 O R D E R PER JOGINDER SINGH THE REVENUE IS AGGRIEVED BY THE DIFFERENT ORDERS D ATED 24.11.2008 FOR THE ASSESSMENT YEARS 2002-03 TO 2004 -05 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS), INDORE, WHEREAS THE ASSESSEE IS IN CROSS APPEAL FOR THE ASSESSMENT YEAR 2002-03. THE REVENUE HAS RAISED TH E FOLLOWING COMMON GROUNDS :- (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N OF RS 12,34,489/- (A.Y. 2002-03), MADE BY THE A.O. ON ACCOUNT OF UNRECORDED ADVANCES RECEIVED FROM THE CUSTOMERS. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.5,28,035/-(A.Y. 2002-03), RS. 13,59,864/- (A.Y . 2003- 04) AND RS. 7,38,896/- (A.Y. 2004-05) MADE BY THE A.O. REJECTING THE BOOKS OF ACCOUNT AND APPLYING G.P. RATE ON ESTIMATED SALES. (C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AS THE DEFECTS IN THE BOOKS HAD BEEN POINTED OUT, THE LD.CIT(A)OUGHT TO ISSUED APPROPRIATE DIRECTIO NS 3 IN ESTIMATING G.P. AND SALES, INSTEAD OF DELETIN G THE ADDITION, IN VIEW OF THE PROVISIONS OF SECTI ON 292C AND FULLY ACCEPTING THE ASSESSEES VERSION. 2. SINCE THE FACTS AND THE ISSUES INVOLVED ARE ALMO ST COMMON IN ALL THE APPEALS, THEREFORE, THESE APPEALS CAN BE DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF BREVITY. THE FIRST GROUND RAISED BY THE REVENUE PERTAINS TO DELETING THE ADDITION OF RS.12,34,489/- ON ACCOUNT OF UNRECORDE D ADVANCES RECEIVED FROM THE CUSTOMERS. THE LEARNED COUNSEL FO R THE ASSESSEE CONTENDED THAT NECESSARY DETAILS FOR RECEI VING THE ADVANCES WERE DULY FURNISHED BEFORE THE ASSESSING O FFICER. THE LEARNED CIT DR SUPPORTED THE ASSESSMENT ORDER W HEREAS THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. FOR BETTER APPRECI ATION OF THE FACTS, THE DETAILS ARE SUMMARISED AS UNDER :- S.NO. PARTICULAR AMOUNT OF ADDITION (IN RUPEES) RELIEF ALLOWED BY THE CIT(A) (IN RUPEES) ADDITION CONFIRMED (IN RUPEES) 1 SHARE APPLICATION MONEY 8,48,000 -- 8,48,000 4 2 ADVANCE RECEIVED 12,34,489 12,34,489 -- 3 ESTIMATION OF G.P. 5,28,035 5,28,035 -- 4 DISCOUNT OF SALES 15,000 15,000 -- 5 OUT OF TELEPHONE EXPENSES 6,000 -- 6,000 6 VEHICLE REPAIR AND MAINT. 5,000 -- 5,000 7 VEHICLE RUNNING 3,000 -- 3,000 8 TRAVELLING EXPENSES 6,000 -- 6,000 4. THE ADDITION WAS MADE BY THE LEARNED ASSESSING O FFICER ON THE PLEA THAT VARIOUS AMOUNTS WERE RECEIVED BY T HE ASSESSEE FROM UNKNOWN PERSONS AND ON VERIFICATION O F THE BOOKS OF ACCOUNT OF THE ASSESSEE, HE FURTHER FOUND THAT THE DATES OF RECEIPT OF PAYMENTS ARE ALSO NOT MENTIONED . HE FURTHER NOTED THAT AT THE SAME TIME THE AMOUNTS ARE ALSO NO T APPEARING IN THEIR PERSONAL ACCOUNT, CONSEQUENTLY, THE ASSESS ING OFFICER MADE ADDITION OF RS.12,34,489/-. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), IT WAS FOUND THAT OUT OF 64 ENTRIES, 34 ENTRIES BELONG TO ONE PERSON NAMELY, SHRI MOHANLAL JAT, THE DETAILS OF WHICH HAVE BEEN REPROD UCED AT PAGE 8 ONWARDS (PARA 4.3) OF THE IMPUGNED ORDER. SO FAR AS ANOTHER 15 ENTRIES WITH REFERENCE TO SHRI NARESH DH INGRA ARE CONCERNED, IT WAS FOUND THAT ON MOST OF THE DATES, THERE WERE MORE THAN ONE ENTRY OF RECEIPT OF AMOUNTS AND THE A DVANCES 5 WERE RECEIVED AGAINST SUPPLY OF PVC PIPES. THERE I S UNCONTROVERTED FINDING IN THE IMPUGNED ORDER THAT N O EFFORTS WERE MADE BY THE ASSESSING OFFICER EITHER TO VERIFY OR TO REBUT THE FACTS SUBMITTED BY THE ASSESSEE, THEREFORE, HE DELETED THE ADDITION. WE FURTHER FIND THAT THE SUBMISSIONS OF T HE ASSESSEE HAVE BEEN REPRODUCED IN PARA 4.2 (PAGE 7) OF THE IM PUGNED ORDER. IF THE TOTALITY OF FACTS IS ANALYSED, THE F ACTUM OF RECEIPT OF DETAILS OF PAYMENT WITH REFERENCE TO MANOHARLAL JAT AND NARESH DHINGRA WAS NOT CONTROVERTED BY THE REVENUE, CONSEQ UENTLY, WE FIND NO INFIRMITY IN THE STAND OF LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) AND CONFIRM THE SAME ESPECIALL Y WHEN POLICE COMPLAINTS WERE FILED BY THE ASSESSEE AGAINS T SHRI DHARMENDRA JAIN, THE EX-ACCOUNTANT OF THE ASSESSEE. IT IS PERTINENT TO MENTION HERE THAT IF THE ASSESSING OFF ICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, NOT HING PREVENTED HIM TO EXAMINE SHRI DHARMENDRA JAIN. 5. THE SECOND GROUND RAISED BY THE REVENUE PERTAINS TO DELETING THE IMPUGNED ADDITION BY REJECTING THE BOO KS OF ACCOUNT AND APPLICATION OF GROSS PROFIT RATE ON EST IMATED SALES. 6 BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZU RE OPERATION U/S 132(1) OF THE ACT WAS CARRIED OUT AT SANGHVI/GU PTA GROUP OF CASES ON 8.10.2003. NOTICE U/S 153A OF THE ACT WAS SERVED UPON THE ASSESSEE ON 3.6.2004 IN RESPONSE TO WHICH THE ASSESSEE DECLARED LOSS OF RS. 4,16,100/-. HOWEVER, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.22,29,8 24/- AND THE ADDITIONS WERE MADE ON VARIOUS ACCOUNTS. THE AS SESSING OFFICER REJECTED THE BOOKS OF ACCOUNT BY APPLYING S ECTION 145(3) AND THE BOOK RESULTS WERE NOT ACCEPTED. THE TOTAL SALES WERE ESTIMATED AT RS.3,75,00,000/- AND THE GROSS PR OFIT WAS ESTIMATED AT 16.5% WHICH RESULTED INTO GROSS PROFIT OF RS.61,87,500/- AGAINST THE TOTAL SALES SHOWN BY THE ASSESSEE TO THE TUNE OF RS.3,72,34,558/- @ 13% GROSS PROFIT (RS.48,27,636/-), THUS, THE GROSS PROFIT WAS WORKED OUT AT RS.13,59,864/- (RS.61,87,500/- (-) RS. 48,27,636/-) THUS IMPUGNED ADDITION WAS MADE. ON APPEAL BEFORE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE CHALLENGED THE REJECTION OF BOOKS OF ACCOUNT BY APP LYING THE PROVISIONS OF SECTION 143(3) ON THE PLEA THAT THE R OUGH ENTRIES 7 WERE MENTIONED IN LPS-1/21, HOWEVER, THE NEXUS BETW EEN THE SAID LPS AND REGULAR BOOKS OF ACCOUNTS WAS DENIED. IT WAS CLAIMED THAT THE ACCOUNTANT OF THE COMPANY WANTED T O BLACK MAIL AND HARASS THE COMPANY ALONG WITH ITS DIRECTOR S FOR WHICH REPEATED TELEPHONE CALLS WERE CLAIMED TO HAVE BEEN RECEIVED. IT WAS ALSO POINTED OUT THAT THE ASSESSEE COMPANY L ODGED COMPLAINTS WITH CENTRAL KOTWALI, INDORE, AND COPIES OF SUCH COMPLAINTS WERE DULY FILED BEFORE THE ASSESSING OFF ICER. THE ESTIMATION OF SALES WAS ALSO DISPUTED. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IN SUPPORT TO THE ASSES SMENT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE DEFEND ED THE IMPUGNED ORDER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. WE FIND THAT THE R EVENUE IS AGGRIEVED BY THE DELETION OF THE ADDITION OF RS. 5, 28,035/- (ASSESSMENT YEAR 2002-03), RS. 13,59,864/- (A.Y. 20 03-04) AND RS. 7,38,896/- (A.Y. 2004-05) ON THE PLEA THAT THE BOOKS OF ACCOUNT WERE RIGHTLY REJECTED BY THE ASSESSING OFFI CER AND THE ESTIMATION OF SALES BY APPLYING THE GROSS PROFIT WA S ALSO 8 DEFENDED WHEREAS THE ASSESSEE HAS CHALLENGED THE RE JECTION OF BOOKS AND ESTIMATION OF SALES ALONG WITH APPLICA TION OF GROSS PROFIT. WE FIND THAT FOR THE ASSESSMENT YEAR 2002- 03 THE ASSESSEE SHOWED THE SALES AT RS.3,00,81,719/- AGAIN ST WHICH THE ASSESSING OFFICER ESTIMATED SUCH SALES AT RS.3, 16,00,000/- RESULTING INTO ADDITION OF RS.5,28,035/-. FOR THE A SSESSMENT YEAR 2003-04 THE TOTAL SALES WERE SHOWN AT RS.3,72, 34,558/- WHICH WERE ESTIMATED AT RS.3,75,00,000/- BY THE ASS ESSING OFFICER BY APPLYING GROSS PROFIT AT THE RATE OF 16. 5%, AS AGAINST 15.5% SHOWN BY THE ASSESSEE, RESULTED INTO ADDITION OF RS.13,59,864/-. LIKEWISE, FOR THE ASSESSMENT YEAR 2004-05 THE ASSESSEE SHOWED THE GROSS SALES AT RS.3,26,04,695/- WHICH WERE ESTIMATED AT RS.3,30,00,000/- BY APPLYING THE GROSS PROFIT RATE AT 16.5% AGAINST 14.45% SHOWN BY THE ASSESSEE, RESULTING INTO ADDITION OF RS. 7,38,896/-. ON APPEAL, LEARNED COMMISSIONER OF INCOME TAX (APPEALS), FOR THE ASSES SMENT YEAR 2002-03, HELD AS UNDER :- 5.3 THE ISSUE IS CONSIDERED. THE A.O. REJECTED THE TRADING RESULTS ON THE BASIS OF DOCUMENTS NO. LPS-1/21 FOUND AND SEIZED DURING THE COURSE OF 9 SEARCH IN WHICH MANY ROUGHT ENTRIES WERE MADE WHICH WERE NOT VERIFIABLE WITH THE REGULAR BOOKS OF ACCOUNT AND ESTIMATED THE SALES AT RS.3,15,00,000/- AND G.P. @ 16.5% AS AGAINST SALES OF RS. 3,00,81,719/- AND G.P. @ 17.51% DECLARED BY THE APPELLANT. THE A.O. NEITHER SPECIFIED THE ENTRIES MADE IN THE SEIZED DOCUMENTS NOR BASIS OF ESTIMATING THE SALES AND G.P. AS AGAINST DECLARED BY THE APPELLANT. IT IS A SEARCH CASE AND NO EVIDENCE HAS BEEN BROUGHT ON RECORD IN ESTIMATING THE SALES AT RS. 3,15,00,000/- AS AGAINST RS. 3,54,81,719/- DECLARED AND APPLYING THE G.P. @ 16.51% AS AGAINST @ 17.51% DECLARED BY THE APPELLANT. IN VIEW OF THESE FACTS, THE ACTION OF THE A.O. CANNOT BE SUSTAINED AND HENCE ADDITION MADE ON THIS ACCOUNT IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 7. IF THE TOTALITY OF FACTS IS ANALYSED, THE UNDISP UTED FACT REMAINS THAT THE WHOLE SUSPICION AROSE DUE TO THE W RONG ENTRIES DELIBERATELY ENTERED BY THE EX-ACCOUNTANT T O HARASS THE ASSESSEE FIRM ALONG WITH ITS DIRECTORS AND ULTIMATE LY THE DOCUMENTS NO. LPS1/21, ON THE BASIS OF WHICH THE BO OKS WERE REJECTED, AND ADDITION WAS MADE, WERE FOUND TO BE D UMP DOCUMENTS AS POLICE COMPLAINT WAS FILED IN THIS RES PECT. COPIES OF THESE COMPLAINTS WERE DULY FILED BEFORE T HE ASSESSING OFFICER. THIS FACTUM WAS NOT CONTROVERTED BY THE REVENUE. EVEN OTHERWISE, THE ESTIMATED SALES AND CO NSEQUENT G.P. BY THE ASSESSING OFFICER WAS ALSO OFF-SHOOT OF THESE 10 ENTRIES, CONSEQUENTLY, WE FIND NO INFIRMITY IN THE STAND OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IT I S AFFIRMED. THIS WILL COVER THE IDENTICAL GROUND FOR THE ASSESS MENT YEAR 2003-04 AND 2004-05 ALSO. 8. THE NEXT GROUND PERTAINS TO NOT GIVING THE DIREC TION TO THE ASSESSING OFFICER IN VIEW OF THE PROVISIONS OF SECT ION 292C OF THE ACT. THE PLEA OF THE REVENUE IS THAT IF THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) DID NOT FIND A NY DEFECT IN THE BOOKS OF ACCOUNT THEN APPROPRIATE DIRECTION SHOULD HAVE BEEN GIVEN TO THE ASSESSING OFFICER INSTEAD OF DELE TION. HOWEVER, THE LEARNED COUNSEL FOR THE ASSESSEE DEFEN DED THE IMPUGNED ORDER. 9. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT RATHER THIS IS THE BABY OF THE AFORESAID GROUNDS AND SINCE THE STAND OF THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS BEEN AFFIR MED, IT HAS REMAINED FOR ACADEMIC INTEREST ONLY, CONSEQUENT LY, WE FIND NO INFIRMITY IN THE STAND OF THE LEARNED COMMISSION ER OF INCOME 11 TAX (APPEALS) ESPECIALLY WHEN THE APPLICATION OF G. P. AND ESTIMATION OF SALES WAS FOUND TO BE BASED ON SURMIS ES ONLY. OUR STAND WILL ALSO COVER THE IDENTICAL GROUND RAIS ED FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05. IN THE RESULT, APPEALS OF THE REVENUE ARE HAVING N O MERIT. 10. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE IN WHICH THE ASSESSEE IS AGGRIEVED BY THE SUSTENANCE OF ADDI TION OF RS.8,48,400/- IN RESPECT OF SHARE CAPITAL RECEIVED FROM SUBSCRIBERS, DENYING DEDUCTION U/S 80IA AND DISALLO WANCE OF AD HOC ADDITIONS ON ACCOUNT OF TELEPHONE AND COMMU NICATION EXPENSES, VEHICLE REPAIR AND MAINTENANCE EXPENSES, VEHICLE RUNNING EXPENSES AND TRAVELLING EXPENSES. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT SO FAR AS SHARE CAPITAL IS CONCERNED, THIS ISSUE IS DECIDED BY THE TRIBUNAL IN THE CASE OF STL EXTRUSION (P) LIMITED (IT(SS) A NOS. 25 9 AND 260/IND/2008 VIDE ORDER DATED 10 TH MAY, 2010) AND NO AD HOC DISALLOWANCE IS REQUIRED TO BE MADE IN CASE OF A LI MITED COMPANY FOR THE REMAINING DISALLOWANCES. ON THE OT HER HAND, 12 THE LEARNED CIT DR THOUGH DEFENDED THE IMPUGNED OR DER BUT DID NOT CONTROVERT THE ASSERTION MADE BY THE LEARNE D COUNSEL FOR THE ASSESSEE . 10.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. FOR FAIR A PPRAISAL OF THE ISSUE, WE HAVE REPRODUCED THE TABLE AT PAGE 4 (PARA 3) OF THIS ORDER WHERE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS MADE THE DISALLOWANCES. SO FAR AS THE ISSUE OF SHARE APPLICATION MONEY IS CONCERNED IN RESPECT OF STL EXTRUSION (P) LIMITED, THE SAME HAS BEEN DISPOSED O F BY THE COORDINATE BENCH, WHEREIN ONE OF US, IS SIGNATORY T O THE ORDER AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. TH E RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER :- BOTH THESE APPEALS ARE BY THE ASSESSEES FOR DIFFE RENT ASSESSMENT YEARS AGAINST THE COMMON ORDER OF THE LEARNED CIT(A) DATED 18.9.2008 WHEREIN FOLLOWING CO MMON GROUNDS HAVE BEEN RAISED :- 1. THAT IMPUGNED ORDER PASSED BY THE LEARNED COMMIS SIONER OF INCOME TAX (A) IS BAD IN LAW AS WELL AS ON THE F ACTS. IT IS BASED ON INCORRECT INTERPRETATION OF LAW AND THE FA CTS HAVE ALSO BEEN INCORRECTLY CONSTRUED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN UPHOLDING THE A.O.S ACTION FOR MAKING ADDITION OF RS.1,59,000/- AND RS. 15,31,200/- RESPE CTIVELY BEING AMOUNT OF SHARE APPLICATION MONEY RECEIVED DU RING 13 THE YEAR BY ALLEGING THAT THE SAME IS BOGUS WITHOUT APPRECIATING THE FACTS OF THE CASE, WITHOUT DISPROV ING THE AFFIDAVITS FILED AND SUBMISSIONS MADE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD.CIT(A) ERRED IN UPHOLDING THE A.O.S ACTION FOR CHARGING INTEREST U/S 234B. IT IS SUBMITTED THAT THE LD. A. O. BE DIRECTED TO CHARGE INTEREST AS PER PROVISIONS OF SE CTION 234B(3) OF THE INCOME TAX ACT. 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD S HRI PRAKASH JAIN, LD. COUNSEL FOR THE ASSESSEE AND SHRI K.K. SINGH, LEARNED CIT DR. THE ASSESSEE HAS ALSO FILED WRITTEN ARGUMENTS/SYNOPSIS. THE CRUX OF ARGUMENTS ON BEHA LF OF THE ASSESSEE IS THAT DUE REPLY WAS FILED BY THE ASS ESSEE TO THE QUERY RAISED BY THE LD. ASSESSING OFFICER ALONG WITH CONFIRMATION LETTERS OF CONCERNED SUBSCRIBERS TO TH E SHARE APPLICATION MONEY IN THE FORM OF AFFIDAVIT CONTAINI NG THE PARTICULARS LIKE NAME, AGE AND ADDRESS OF THE APPL ICANT. THE NUMBER OF SHARES FOR WHICH APPLICATION WAS MADE ALONG WITH THE AMOUNT AND SOURCE OF INCOME WERE ALS O FURNISHED. IT WAS FURTHER CLAIMED THAT THE ASSESSE E PROVED THE IDENTITY AND SOURCE OF THE SUBSCRIBERS. IT WAS POINTED OUT THAT THE SUBSCRIBERS EVEN WHILE AFFIRMING THE C ONTENTS OF THE AFFIDAVITS, DULY APPEARED BEFORE THE NOTARY PUBLIC AND ENTERED THEIR SIGNATURES IN THE REGISTER MAINTA INED BY THE SAID NOTARY. THE ASSESSING OFFICER NEVER CROSS EXAMINED THE SUBSCRIBERS, THEREFORE, THE FACTS MAIN TAINED IN THE AFFIDAVIT ARE UNCHALLENGEABLE FOR WHICH RELI ANCE WAS PLACED UPON THE DECISION FROM THE HONBLE APEX COUR T IN MEHTA PARIKH & COMPANY V. CIT; 30 ITR 181 (SC). ANO THER ARGUMENT PREFERRED BY THE ASSESSEE IS THAT THE AMOU NT OF SHARE APPLICATION CANNOT BE REGARDED AS UNDISCLOSED INCOME U/S 68 FOR WHICH RELIANCE WAS PLACED ON THE DECISION IN CIT V. LOVELY EXPORTS; 216 CTR 195 (SC) ; CIT V. DIVINE LEASING & FINANCE LIMITED; 299 ITR 268 (D EL); CIT V. GP INTERNATIONAL LIMITED; 229 CTR (P&H) 86; CIT V. STELLAR INVESTMENT LIMITED; 192 ITR 287 (DEL) AND C IT V. SOPHIA FINANCE; 205 ITR 98 (DEL). 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. GROUND NO. 1 IS GENERAL IN NAT URE, THEREFORE, REQUIRES NO DELIBERATION FROM OUR SIDE. FOR GROUND NO. 2 THE BRIEF FACTS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRA DING OF PVC RIGID PIPES, ORIGINALLY FILED ITS RETURN OF LOS S OF RS.22,91,022/- ON 30.11.2000. A SEARCH U/S 132 WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE COMPANY ON 8.10.2003. CONSEQUENT TO SEARCH, A NOTICE U/S 153C READ 14 WITH SECTION 153A WAS SERVED UPON THE ASSESSEE ON 3.6.2004 TO WHICH THE ASSESSEE AGAIN FILED THE RETU RN OF LOSS I.E. RS.22,91,022/- AS ORIGINALLY FILED. DURI NG ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED ABOUT THE DETAILS OF INCREASE IN SHARE CAPITAL OF THE ASS ESSEE TO WHICH THE ASSESSEE FILED A LIST CONTAINING NINE SHA RE HOLDERS FROM WHOM THE SHARE CAPITAL OF RS.1,59,300/ - AND RS. 15,31,200/- WAS RECEIVED. THE ASSESSEE ALSO FI LED CONFIRMATION FROM THE SUBSCRIBERS THROUGH DULY NOTA RIZED AFFIDAVIT CONTAINING THE DETAILS LIKE NAME, ADDRESS , AGE, SOURCE OF INCOME, ANNUAL INCOME, DATE OF PURCHASE O F APPLICATION OF SHARE TENDERED, NUMBER OF SHARES PUR CHASED ALONG WITH THE AMOUNT GIVEN BY SUBSCRIBERS. ON RECE IPT OF THESE CONFIRMATIONS, NEITHER ANYTHING WAS ASKED FRO M THE ASSESSEE NOR ANY INQUIRY WAS MADE. THE ADDITION OF RS.1,59,300/- WAS MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER : ON PERUSAL OF SUBMISSION MADE BY THE ASSESSEE IN RESPECT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR. IT IS SEEN THAT IN RESPE CT OF THE FOLLOWING PERSONS THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY IN CASH. THESE PERSONS ARE NOT AS SESSED TO INCOME TAX AND PAN ARE NOT MENTIONED. ON PERUSAL OF AFFIDAVITS FILED, IT IS SEEN THAT ALL THE AFFIDAVIT S ARE IN THE HANDWRITING OF ONE PERSON. IT IS ALSO NOTICED THAT EVEN ON THE SAME PAGE THE SIGNATURES OF DEPONENT DIFFERS. IT IS QUITE UNLIKELY THAT WHEN A PERSON APPLYING HUGE AMOUNTS S UCH AS RS. 5,00,000/- ARE MORE IS NOT ASSESSED TO TAX. HEN CE CONSIDERING THE ABOVE, THE NAMES OF THE PERSONS ARE NOT GENUINE AND IT IS THE UNEXPLAINED MONEY OF THE ASSE SSEE, WHICH IS INTRODUCED BY THE ASSESSEE COMPANY UNDER T HE NAME OF SHARE APPLICATION MONEY. THESE PERSONS APP EAR TO BE DUMY PERSONS AND HENCE THE ENTIRE AMOUNT OF THE SHARE APPLICATION MONEY IS CONSIDERED AS BOGUS SHARE APPL ICATION MONEY. THE ASSESSEE COMPANY HAS NOT PROVED THE GENUINENESS OF SUCH PERSONA DNA SLO NOT PROVED THEI R CAPACITY TO APPLY FOR SUCH HUGE AMOUNT. THESE ARE D UMY AND THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN MON EY AS SHARE APPLICATION MONEY. 4. ON APPEAL, THE LD. FIRST APPELLATE AUTHORITY BY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT V. RATHI FINLEASE LIMITED; 215 CTR (MP) 429 TO THE EFFECT THAT ONUS IS ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE CREDITS, AFFIRMED THE STAND OF THE ASSESSING OFFICER WHICH IS UNDER CHALLENGE BEFORE THE TRIBUNAL. WE HAVE FOUND THAT THE IMPUGNED ADDITION U/S 68 OF THE ACT HAS BEEN MADE BY THE LEARNED ASSESSING OFFICER BY SUSPECTING THAT THE SHARE APPLICATION MONEY IS BOGUS WITHOUT APPRECIATING THE FACT AND EVEN THE CONTENTS OF THE AFFIDAVIT HAVE NOT BEEN DISAPPROVED. THE 15 UNDISPUTED FACT IS THAT THE ASSESSEE HAS PROVED THE IDENTITY OF THE SUBSCRIBERS WITH THE HELP OF AFFIDAVITS WHICH WERE NOT FOUND TO BE BOGUS OR FALSE. AN AFFIDAVIT IS NOT A MERE PIECE OF PAPER RATHER IT CARRIES ITS AUTHENTICITY AS THE CONTENTS OF THE SAME ARE DULY SWORN BEFORE THE A MAGISTRATE OR A NOTARY PUBLIC/OATH COMMISSIONER, AS THE CASE MAY BE. DURING SIGNING OF THESE AFFIDAVITS, THE DEPONENT APPEARS BEFORE THE PERSON BEFORE WHOM THEY ARE SWORN AND THEIR SIGNATURES ARE DULY TAKEN ON THE REGISTER MAINTAINED BY SUCH NOTARY PUBLIC. IF THE ASSESSING OFFICER WAS APPREHENSIVE ON THE AUTHENTICITY OF SUCH AFFIDAVIT, NOTHING PREVENTED HIM TO CROSS EXAMINE THE DEPONENTS AND TO VERIFY THE CONTENTS OF SUCH AFFIDAVIT BUT TH AT WAS NOT DONE IN THE PRESENT APPEALS. THEREFORE, IN VIEW OF A DECISION OF THE HONBLE APEX COURT IN THE CASE OF MEHTA PARIKH & COMPANY V. CIT (SUPRA), THESE AFFIDAVITS BECOME UNCHALLENGEABLE. THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. SHIV PRASAD AGRAWAL (306 ITR 324) (RELEVANT PAGE 326) FURTHER FORTIFIES OUR VIEW . AS FAR AS THE RELIANCE OF THE REVENUE UPON THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. RATHI FINLEASE LIMITED (SUPRA) TO THE EXTENT THAT THE ASSESSEE HAS TO ESTABLISH THE GENUINENESS OF THE CREDITS, WE ARE IN FULL AGREEMENT WITH THE ARGUMENT BUT IN THE PRESENT APPEAL THE ASSESSEE HAS DULY ESTABLISHED THE IDENTITY, SOURCE OF THE CREDITS. EVEN IT IS NOT TH E CASE THAT THE SHARES HAVE BEEN ISSUED TO NON- EXISTING PERSONS. BROADLY WE ARE OF THE VIEW THAT ONCE THE IDENTITY AND SOURCE OF THE SUBSCRIBERS IS ESTABLISHED FOR MAKING SHARE APPLICATION, NO ADDITION CAN BE MADE U/S 68 OF THE ACT BECAUSE EVEN THE HONBLE APEX COURT IN THE CASE OF CIT V. LOVELY EXPORTS PRIVATE LIMITED; 216 CTR (SC) 195 EVEN STEPPED AHEAD BY CONCLUDING AS UNDER :- IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE A.O. THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDI VIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. OUR VIEW IF FURTHER FORTIFIED BY THE DECISION OF TH E HONBLE DELHI HIGH COURT IN CIT V. DIVINE LEASING & FINANC E LIMITED; GENERAL EXPORTS & CREDIT LIMITED AND LOVE LY EXPORTS PRIVATE LIMITED (2008) 299 ITR 268 (DEL) WH EREIN IT 16 WAS HELD THAT IT IS THE DUTY OF THE ASSESSING OFFIC ER TO INVESTIGATE THE CREDIT WORTHINESS OF THE SHARE HOLD ERS AND IN VIEW OF THE FINDING THAT THE ASSESSEE PROVED GENUINENESS OF SHAREHOLDERS NO ADDITION CAN BE MADE U/S 68 OF THE ACT. IN THE PRESENT APPEAL, SINCE THE ASS ESSEE HAS DISCHARGED ITS ONUS BY PROVING THE IDENTITY OF SUBSCRIBERS AND EVEN OTHERWISE HAD ANY SUSPICION ST ILL REMAINED IN HIS MIND, NOTHING PREVENTED HIM TO INIT IATE ACTION AS PER THE PROVISIONS OF THE ACT. THE EXISTE NCE OF SUBSCRIBERS 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 WHI CH RESPECTIVE APPLICATIONS WERE MADE, AMOUNT GIVEN AND THE SOURCE OF INCOME OF THE APPLICANT. IN VIEW OF THES E FACTS, WE ARE OF THE CONSIDERED OPINION THAT THAT THERE IS NO JUSTIFICATION FOR MAKING THE IMPUGNED ADDITION BECA USE ONCE THE EXISTENCE OF THE INVESTOR/SHARE SUBSCRIBER S IS PROVED, ONUS SHIFTS ON THE REVENUE TO ESTABLISH THA T EITHER THE SHARE APPLICANTS ARE BOGUS OR THE IMPUGNED MONE Y BELONGS TO THE ASSESSEE COMPANY ITSELF. ONCE THE CONFIRMATION LETTERS ARE FILED, NO ADDITION CAN BE MADE ON ACCOUNT OF SHARE APPLICATION MONEY IN THE HANDS OF THE COMPANY. OUR VIEW FINDS SUPPORT FROM THE DECISION IN SHRI BARKHA SYNTHETICS LIMITED V. ACIT; 155 TAXMAN 289 ( RAJ). THE CASE LIKE CIT V. GP INTERNATIONAL LIMITED; 229 CTR (P&H) 86, CIT V. STELLER INVESTMENT LIMITED; 192 IT R 287 AND SOPHIA FINANCE LIMITED; 205 ITR 98 (DEL) SUPPOR TS THE CASE OF THE ASSESSEE. 4. AS FAR AS CHARGING OF INTEREST U/S 234B IS CONC ERNED, IT IS ARGUED TO BE CONSEQUENTIAL IN NATURE. WE HAVE FO UND THAT NO SPECIFIC SECTION HAS BEEN MENTIONED FOR CHA RGING OF INTEREST AND MERELY IT HAS BEEN MENTIONED THAT CHAR GE INTEREST IF ANY, AS PER LAW. HOWEVER, SINCE THE ISS UE OF SHARE APPLICATION HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THE ADDITION MADE U/S 68 OF THE ACT HA S BEEN DELETED, THEREFORE, CHARGING OF INTEREST IS CONSEQUENTIAL IN NATURE, MEANING THEREBY THAT IT IS NOT LEVIABLE/CHARGEABLE. 5. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEME NTS BOTH THESE APPEALS OF THE ASSESSEE ARE ALLOWED. FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 10 TH MAY, 2010. 17 10.2 IN THE AFORESAID ORDER THE TRIBUNAL HAS DISCU SSED VARIOUS DECISIONS INCLUDING OF THE HON'BLE JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT V. RATHI FINLEASE LIMITED; 215 CTR 429(MP), DECISIONS FROM VARIOUS HIGH COURTS AND HON 'BLE APEX COURT SUCH AS MEHTA PARIKH & COMPANY VS. CIT; 30 IT R 181 (SC), CIT VS. LOVELY EXPORTS; 216 CTR 195 (SC), CIT V. DIVINE LEASING & FINANCE LIMITED; 299 ITR 268 (DEL), G.P. INTERNATIONAL LIMITED; 229 CTR (P&H) 86, STELLER IN VESTMENT LIMITED; 192 ITR 287 (DEL) AND SOPHIA FINANCE; 205 ITR 98 (DEL). THE SHARE APPLICANTS IN THE CASE OF THE PRES ENT APPEAL ARE THE SAME WHICH WERE ALSO SHARE APPLICANTS IN TH E CASE OF STL EXTRUSION (P) LTD., WHO WERE FOUND TO BE GENUIN E BY THE TRIBUNAL AS THEIR IDENTITY WAS NOT IN DOUBT, THEREF ORE, THE SAME APPLICANT CANNOT BE SAID TO BE BOGUS IN THE PRESENT APPEAL. HOWEVER, THE LEARNED ASSESSING OFFICER ADDED THE AM OUNT OF RS.8,48,400/- ON THE PLEA THAT IT IS THE OWN MONEY OF THE ASSESSEE. IT IS PERTINENT TO MENTION HERE THAT THE AFORESAID DECISION OF THE BENCH DATED 10 TH MAY, 2010 (STL EXTRUSION PRIVATE LIMITED) WAS AFFIRMED BY THE HON'BLE JURISDICTIONAL 18 HIGH COURT, THEREFORE, THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORTS; 216 CTR (SC) 1 95 CLEARLY COMES TO THE RESCUE TO THE ASSESSEE, CONSEQUENTLY, WE ARE OF THE VIEW THAT IF THE ASSESSING OFFICER WAS APPREHEN SIVE OF ANY MALA FIDE ON THE PART OF SHARE APPLICANT, HE WAS AT LIBERTY TO REOPEN THEIR INDIVIDUAL ASSESSMENTS, THEREFORE, THE RE IS NO JUSTIFICATION TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE, CONSEQUENTLY, THIS GROUND OF THE ASSESSEE IS ALLOWE D. 10.3. SO FAR AS THE DISALLOWANCE OF RS. 6,000/- OU T OF TELEPHONE AND COMMUNICATION EXPENSES, RS. 5,000/- O UT OF VEHICLE REPAIR AND MAINTENANCE EXPENSES, RS. 3,000/ - OUT OF VEHICLE RUNNING EXPENSES AND RS. 6,000/- OUT OF TRA VELLING EXPENSES IS CONCERNED, WE FIND THAT THESE DISALLOWA NCES WERE MADE BY THE ASSESSING OFFICER AS NECESSARY BILLS AN D VOUCHERS WERE NOT FILED BY THE ASSESSEE, THEREFORE, EXPENSES WERE NOT FULLY VERIFIABLE. EVEN BEFORE THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) AS WELL AS BEFORE THIS TRIBUNA L, NO EVIDENCE WAS FILED IN SUPPORT OF ITS CLAIM, CONSEQU ENTLY, WE FIND 19 NO INFIRMITY IN THE STAND OF THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS), THEREFORE, ON THIS COUNT, WE AFFIRM HIS STAND. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED IN TERMS INDICATED HEREINABOVE. FINALLY, THE APPEALS OF THE REVENUE ARE DISMISSED AND THAT OF THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN ON 12 JANUARY, 2 012 SD/- SD/- (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12.1.2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-