M/s. Odean Builders Pvt. Ltd, New Delhi v. ACIT, New Delhi

CO 383/DEL/2009 | 2002-2003
Pronouncement Date: 30-09-2011 | Result: Dismissed

Appeal Details

RSA Number 38320123 RSA 2009
Assessee PAN AAACO0155H
Bench Delhi
Appeal Number CO 383/DEL/2009
Duration Of Justice 1 year(s) 9 month(s) 28 day(s)
Appellant M/s. Odean Builders Pvt. Ltd, New Delhi
Respondent ACIT, New Delhi
Appeal Type Cross Objection
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 30-09-2011
Date Of Final Hearing 22-09-2011
Next Hearing Date 22-09-2011
Assessment Year 2002-2003
Appeal Filed On 02-12-2009
Judgment Text
ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NOS. 4014 4015 & 4016/DEL/2009 A.YRS. : 2002-03 2003-04 & 2004-05 ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 ROOM NO. 322 ARA CENTRE JHANDEWALAN NEW DELHI VS. M/S ODEAN BUILDERS PVT. LTD. N-49 (2 ND FLOOR) CONNAUGHT PLACE NEW DELHI (PAN/GIR NO. : AAACO0155H) AND C.O. NOS. 383 & 384/DEL/2009 (IN ITA NOS. 4014 & 4015/DEL /2009) A.YRS. 2002-03 & 2003-04 M/S ODEAN BUILDERS PVT. LTD. VS. ASSTT. COMMISSIONER OF INCOME N-49 (2 ND FLOOR) TAX CONNAUGHT PLACE NEW DELHI ROOM NO. 322 ARA CEN TRE (PAN/GIR NO. : AAACO0155H) JHANDEWALAN EXTENSION NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. VED JAIN AND MRS. RANO JAIN CAS DEPARTMENT BY : S H. R.S. NEGI SR. D.R. ORDER ORDER ORDER ORDER THESE APPEALS BY THE REVENUE AND CROSS OBJECTIONS BY TH E ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF LD. CO MMISSIONER OF INCOME TAX (APPEALS). SINCE THESE APPEALS WERE HEARD TOGET HER THEY ARE BEING CONSOLIDATED AND DISPOSED OF BY THIS COMMON ORDER. ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 2 REVENUE APPEALS (ITA NO. 4014 TO 4016) 2. THE GROUNDS RAISED IN ITA NO. 4014 READ AS UNDER:- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 37 00 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATI ON MONEY BEING TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 7400 0/- MADE ON ACCOUNT OF COMMISSION PAID @2% FOR OBTAINING THE EN TRY OF ` 37 LAKHS FROM ENTRY OPERATOR. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACT IN HOLDING THAT PROVISIONS OF SECTION 68 C ANNOT BE INVOKED FOR SHARE APPLICATION MONEY. 2.1 THE GROUNDS RAISED IN ITA NO. 4015 READ AS UNDER:- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 40 00 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATI ON MONEY BEING TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 8000 0/- MADE ON ACCOUNT OF COMMISSION PAID @2% FOR OBTAINING THE EN TRY OF ` 40 LAKHS FROM ENTRY OPERATOR. ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 3 (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACT IN HOLDING THAT PROVISIONS OF SECTION 68 C ANNOT BE INVOKED FOR SHARE APPLICATION MONEY. 2.2 THE GROUNDS RAISED IN ITA NO. 4016 READ AS UNDER:- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 1 00 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATION MONEY BEING TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 1 00 000/- MADE ON ACCOUNT OF COMMISSION PAID @ 1% FOR OBTAINING THE ENTRY OF ` 1 CRORE FROM ENTRY OPERATOR. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACT IN HOLDING THAT PROVISIONS OF SECTION 68 C ANNOT BE INVOKED FOR SHARE APPLICATION MONEY. 3. SINCE THE ISSUES AND FACTS ARE IDENTICAL THESE APPE ALS ARE BEING DISPOSED OFF BY LOOKING THE FACTS FROM ITA NO. 4014. 4. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HA S RECEIVED SHARE APPLICATION MONEY TO THE TUNE OF ` 37 00 000/- FROM 8 PARTIES. THESE PARTIES WERE FOUND TO BE INVOLVED IN THE BUSINESS OF PR OVIDING ACCOMMODATION BY THE DEPARTMENT. ON THE BASIS OF IN FORMATION RECEIVED FROM THE INVESTIGATION WING THE ASSESSING OFFICER REOP ENED THE ASSESSMENT. ASSESSING OFFICER PROCEEDED TO HOLD THAT THE AMOUNT OF ` 37 00 000/- RECEIVED BY THE ASSESSEE WAS UNEXPLAINED CAS H CREDIT AS PER THE ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 4 PROVISIONS OF SECTION 68 OF THE IT ACT. BEFORE THE ASSESSING OFFICER ASSESSEE FILED DETAILS SUCH AS SHARE APPLICATION FORM COPY OF ACKNOWLEDGEMENT OF IT RETURN AND COPY OF BANK STATEM ENT AND COPY OF RETURN TO ROC IN RESPECT OF THE PERSONS WHO INVESTED I N SHARE APPLICATION OF THE ASSESSEE. ASSESSING OFFICER DID NOT ACCEPT THESE CON TENTIONS. ASSESSING OFFICER OBSERVED THAT THAT SIMPLY FURNISHING TH E PAN AND ASSESSMENT PARTICULARS COPY OF SHARE APPLICATION ETC. AR E NOT ENOUGH. HE FURTHER OBSERVED THAT ACKNOWLEDGEMENT OF RETURN ARE NOT SUFFICIENT TO PROVE THE IDENTITY OF A PERSON OR TO DISCLOSE A TRUE ADDRESS. ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE COMPANY IS A PRIVATE LIMIT ED COMPANY. IN THE CASE OF SUCH COMPANIES THERE IS CLOSE AND PROXIMATE RELATIONSHIP BETWEEN THE PROMOTERS/DIRECTORS AND THE SHARE HOLDERS. HENCE HE OBSERVED THAT THERE SHOULD HAVE BEEN NO DIFFICULTY ON THE PART OF THE ASSESSEE TO PRODUCE SOMEBODY FROM THE SAID ENTITY. 4.1 ASSESSING OFFICER FURTHER OBSERVED THAT MERE PAYMEN T BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE A NON- GENUINE TRANSACTION GENUINE. HE OBSERVED THAT COPIES OF RELEVANT BANK ACCOUNT STATEMENTS WERE OBTAINED IN THE CASE OF THREE PARTIES AND IT W AS SEEN THAT THERE IS A UNIFORM PATTERN OF TRANSACTIONS IN THAT INVARIABLY TH E ISSUE OF CHEQUES IS IMMEDIATELY PRCEDED BY THE DEPOSITS OF EQUIVALENT AMO UNTS IN THE ACCOUNT EITHER IN CASH OR THROUGH CHEQUE / TRANSFER ENTRIES A ND AT THE END OF THE DAY THE CREDIT BALANCE IN THE ACCOUNT MOSTLY REMAINS BELO W RUPEES TEN THOUSAND. IN VIEW OF THIS ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS OF PROVING THE IDENTITY A ND CREDITWORTHINESS OF THE PARTIES. HENCE HE HELD THAT THE AMOUNT OF ` 3 7 LACS RECEIVED FROM THE PARTIES WAS ASSESSEE UNACCOUNTED MONEY AND THE TRANSACTI ON WAS ONLY A CAMOUFLAGE. ASSESSING OFFICER FURTHER HELD THAT THE ADDITION WAS REQUIRED FOR ` 74000/- WHICH WAS 2% OF ` 37 00 000/- BEING TH E COMMISSION PAID TO THE ENTRY OPERATORS. ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 5 5. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX ( APPEALS) NOTED THAT ASSESSEE HAS SUBMITTED THE FOLLOWING DOCUMENTA RY EVIDENCE TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTION BUT HE COULD NOT PRODUCE THE SAID PARTIES. A) SHARE APPLICATION FORMS RECEIVED FROM INVESTOR CO MPANIES CONTAINING FULL DETAILS OF INVESTMENT IN ASSESSEE COMPANY THEIR ADDRESSES AND PAN ETC. B) BOARD RESOLUTIONS OF INVESTOR COMPANIES FOR MAKING INVESTMENT IN ASSESSEE COMPANY. C) CERTIFICATES ISSUED BY INVESTOR COMPANIES CONFIRMING THE INVESTMENT IN ASSESSEE COMPANY AND SOURCE THEREOF ALONGWITH THEIR PAN AND ASSESSMENT PARTICULARS. D) BANK STATEMENTS OF INVESTOR COMPANIES SHOWING THE INVESTMENT MADE IN ASSESSEE COMPANY. E) PAN AND ADDRESS PROOF OF INVESTOR COMPANIES. F) IT RETURN ACKNOWLEDGEMENT RECEIPT / IT ASSTT. ORDE RS ETC. OF INVESTOR COMPANIES. G) CERTIFICATE OF INCORPORATION AND OTHER RELEVANT DOCUMENTS OF INVESTOR COMPANIES. H) MASTER DETAIL OF INVESTOR COMPANIES AS PER ROC SITE. 5.1 ON THE BASIS OF THE ABOVE ASSESSEE SUBMITTED THAT THE ABOVE DOCUMENTS SUPPORTED THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR COMPANIES AND ALSO PROVES THAT THE SHARE APPLICATION TR ANSACTION ENTERED BY IT WITH THE SAID INVESTOR COMPANIES WERE GENUINE TRANSA CTIONS. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT SUBSCRIPTION OF SHARES WAS RECEIVED FROM THE ABOVE COMPANIES BY THE ASSESSEE BY WAY ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 6 OF CHEQUE AND THESE COMPANIES WERE DULY REGISTERED W ITH THE ROC. IT WAS ALSO SUBMITTED THAT THESE COMPANIES WERE HAVING PAN AND WERE REGULARLY FILING RETURN OF INCOME. THE ASSESSMENT PARTICULARS O F THESE PARTIES WERE ALSO SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICE R DURING THE COURSE OF ASSESSMENT PROCEEDINGS. LD. COMMISSIONER OF IN COME TAX (APPEALS) FURTHER OBSERVED THAT ASSESSING OFFICER IN TH E ASSESSMENT ORDER HAS NOT BROUGHT ANY MATERIAL ON RECORDS WHICH CAN P ROVE THAT THIS MONEY WAS ASSESSEES OWN UNDISCLOSED INCOME. HE HAS SIMPLY RELI ED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT WITHOUT MAKING ANY CONCRETE EFFORT TO VERIFY THE FACTS STATED THEREIN. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED T HAT ASSESSING OFFICER HAS EVEN NOT PROVIDED THE ASSESSEE WITH THE CO PIES OF STATEMENT OF SHRI MAHESH GARG ON THE BASIS OF WHICH IT WAS HELD THA T THE SAID INVESTOR COMPANIES WERE IN THE BUSINESS OF PROVIDING ACCOMMODATI ON ENTRY. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT IT HAS BEEN HELD IN PLETHORA OF JUDICIAL PRONOUNCEMENTS THAT IF THE INFORMATION OR THE SOURCE OF THAT INFORMATION IS COLLECTED AT THE BACK O F THE ASSESSEE AND THE SAME IS NOT CONFRONTED TO THE ASSESSEE OR THE ASSESSEE IS NOT GIVEN REASONABLE OPPORTUNITY TO REBUT THEM THEN THE SAME C ANNOT BE USED AGAINST THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) F URTHER REFERRED TO THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF C.I.T. VS. LOVELY EXPORTS 299 ITR 268 (SC). LD. COMMISSIONER OF INCOME TAX (A PPEALS) FURTHER OBSERVED THE FACT THAT CHEQUE / CASH WAS DEPOSITED IN T HESE BANK ACCOUNTS BEFORE ISSUING CHEQUES TO THE ASSESSEE IS OF NO RELEVANCE AS FAR AS THE ASSESSEE IS CONCERNED. HE HELD THAT THE ASSESSEE CANNOT BE HELD RESPONSIBLE TO EXPLAIN DEPOSITS IN THOSE ACCOUNTS SPECI ALLY WHEN THERE IS NO EVIDENCE TO SUGGEST THAT SUCH DEPOSIT WERE IN ANY MANNE R LINKED TO THE ASSESSEE. IN THE BACKGROUND OF THE AFORESAID DISCUSSION LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT HE WAS OF THE OPIN ION THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS OF ESTABLISHING THE TRANSA CTIONS AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IGNORING VARIOUS EVIDENCES PROVIDED ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 7 THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) F URTHER OBSERVED THAT NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY T HE ASSESSING OFFICER TO ESTABLISH THAT THE AMOUNT OF SHARE APPLICATION MONEY O F ` 37 00 000/- RECEIVED BY THE ASSESSEE FROM THE SAID PARTIES REPRESENTS I TS OWN UNDISCLOSED INCOME. IN VIEW OF THE ABOVE LD. COMM ISSIONER OF INCOME TAX (APPEALS) DIRECTED THAT THE ADDITION OF ` 37 00 000 /- BE DELETED. 5.2 LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER CONSIDERED THE ADDITION OF ` 74000/- ON ACCOUNT OF COMMISSION WHICH WAS ALLEGED TO HAVE BEEN PAID BY THE ASSESSEE FOR OBTAINING THE HAWALA ENTR Y OF ` 37 00 000/-. HE HELD THAT HE HAS ALREADY DELETED THE ADDITION OF ` 37 00 000/-. HENCE HE DIRECTED THIS ADDITION OF ` 74000/- BE ALSO DELETED. 6. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF T HE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT THE ASSESSEE H AS SUBMITTED THE FOLLOWING DOCUMENTARY EVIDENCE IN SUPPORT OF THE TR ANSACTIONS IN SHARE APPLICATION MONEY. A) SHARE APPLICATION FORMS RECEIVED FROM INVESTOR CO MPANIES CONTAINING FULL DETAILS OF INVESTMENT IN ASSESSEE COMPANY THEIR ADDRESSES AND PAN ETC. B) BOARD RESOLUTIONS OF INVESTOR COMPANIES FOR MAKING INVESTMENT IN ASSESSEE COMPANY. C) CERTIFICATES ISSUED BY INVESTOR COMPANIES CONFIRMING THE INVESTMENT IN ASSESSEE COMPANY AND SOURCE THEREOF ALONGWITH THEIR PAN AND ASSESSMENT PARTICULARS. D) BANK STATEMENTS OF INVESTOR COMPANIES SHOWING THE INVESTMENT MADE IN ASSESSEE COMPANY. E) PAN AND ADDRESS PROOF OF INVESTOR COMPANIES. ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 8 F) IT RETURN ACKNOWLEDGEMENT RECEIPT / IT ASSTT. ORDE RS ETC. OF INVESTOR COMPANIES. G) CERTIFICATE OF INCORPORATION AND OTHER RELEVANT DOCUMENTS OF INVESTOR COMPANIES. H) MASTER DETAIL OF INVESTOR COMPANIES AS PER ROC SITE. 7.1 WE FIND CONSIDERABLE COGENCY IN THE CONTENTION THAT THE ABOVE DOCUMENTS SUPPORTED THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR COMPANIES AND ALSO PROVES THAT THE SHARE APPLICATION T RANSACTION ENTERED BY IT WITH THE SAID INVESTOR COMPANIES WERE GENUINE TRAN SACTIONS. IT IS OBSERVED THAT THAT THE SUBSCRIPTION OF THE SHARES WERE R ECEIVED FROM THE ABOVE MENTIONED COMPANIES BY THE ASSESSEE BY WAY OF C HEQUES AND THESE COMPANIES WERE DULY REGISTERED WITH ROC. IT IS ALS O NOTED THAT THE COMPANIES ARE HAVING PAN NUMBERS AND ARE REGULARLY FILING THE RETURN OF INCOME. THE ASSESSMENT PARTICULARS OF THESE PARTIES WE RE DULY SUBMITTED BEFORE THE ASSESSING OFFICER BUT THE ASSESSING OFFICER NEVER TRIED TO VERIFY THE SAID PARTIES. IT IS OBSERVED THAT ASSESSING OFFICER I N HIS ASSESSMENT ORDER HAS NOT BROUGHT ANY MATERIAL ON RECORDS WHICH CAN PROVE THAT THIS MONEY WAS ASSESSEES OWN UNDISCLOSED INCOME. ASSESSING OFFIC ER HAS SIMPLY RELIED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT WITHOUT MAKING ANY CONCRETE EFFORT TO VERIFY THE FACTS STATED THEREIN. IT HAS BEEN HELD BY THE VARIOUS COURT S THAT ASSESSING OFFICER MUST BRING ON RECORDS SOME POSITIVE MATERIAL OR EVIDE NCE TO INDICATE THAT THE SHARE HOLDERS WERE BENAMIDARS FICTITIOUS PERSONS O R THAT ANY PART OF THE SHARE CAPITAL MONEY REPRESENTED THE COMPANIES OWN INCOME FROM UNDISCLOSED SOURCES. 7.2 MOREOVER IT IS SEEN THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS ONLY GIVEN THE FINDINGS THAT THE ABOVE MENT IONED INVESTOR COMPANIES WERE ONLY PAPER ENTITIES FLOATED FOR THE P URPOSE OF ARRANGING ACCOMMODATION ENTRIES TO THE OTHERS AND THE SHARE APP LICATION MONEY ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 9 RECEIVED BY THE ASSESSEE FROM THESE ENTITIES WAS ACCOMM ODATION ENTRIES. HOWEVER THE FACTS ON THE BASIS OF WHICH THIS CONCLUSIO N WAS DRAWN HAS NEITHER BEEN PROVIDED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOR HAS BEEN DISCUSSED IN THE ASSESSMENT ORDER. IT IS FURTHER OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE ASSESSING OFFICER HAS CALLED INFORMATION FROM THE BANKS OF THE SAID INVESTOR COMPANIES. FROM THE SAID INFORMATION IT WAS VERIFIE D BY THE ASSESSING OFFICER THAT PAYMENT FOR APPLYING FOR SHARES WERE M ADE THROUGH THESE BANK ACCOUNT. THE FACT THAT CHEQUE/CASH WAS DEPOSITED I N THESE BANK ACCOUNTS BEFORE ISSUING CHEQUES TO THE ASSESSEE IS OF NO RELEVANCE AS FAR AS THE ASSESSEE IS CONCERNED. WE AGREE WITH THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT ASSESSEE CANNOT BE HELD RESP ONSIBLE TO EXPLAIN DEPOSITS IN THOSE ACCOUNTS SPECIALLY WHEN THERE IS NO EV IDENCE TO SUGGEST THAT SUCH DEPOSIT WERE IN ANY MANNER LINKED TO THE A SSESSEE. 7.3 IN THIS REGARD WE REFER TO THE DECISION OF THE H ONBLE APEX COURT DELIVERED IN THE CASE OF CIT VS. LOVELY EXPORTS 216 C TR 195. IN THIS CASE IT WAS HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIV ED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES AR E GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEE D TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CA NNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. 7.4. WE FURTHER PLACE RELIANCE UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. DW ARKADHISH INVESTMENT P LTD. IN ITA NO. 911/2010 VIDE ORDER DATED 02.8.201 0. THE RELEVANT PARAS OF THIS JUDGEMENT OF HONBLE DELHI HIGH COURT I.E. PARA NO. 6 7 & 8 ARE REPRODUCED HEREIN BELOW:- 6. IN OUR OPINION AS SECTION 68 OF THE ACT 1961 H AS BEEN INTERPRETED AS RECENTLY AS 2008 BY A DIVISION BENCH OF THIS COURT IN DIVINE LEASING AND FINANCE LTD. (SUPRA) AFTER CON SIDERING ALL ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 10 THE RELEVANT JUDGEMENTS WE DO NOT HAVE TO RECONSIDE R ALL THE JUDGEMENTS REFERRED TO BY MR. SAHNI WHICH ARE PRIOR IN DATE AND TIME TO THE AFORESAID JUDGEMENT. IN FACT A SPECIAL LEAVE PETITION FILED AGAINST THE SAID DIVISION BENCH JUDGEMENT WAS DIS MISSED BY THE SUPREME COURT BY WAY OF SPEAKING ORDER IN C.I .T. VS. LOVELY EXPORTS (P) LTD. 216 CTR 195 (SC). THE SUPRE ME COURT IN LOVELY EXPORTS PVT. LTD. (SUPRA) HAS HELD AS UNDER:- CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TA X ACT 1961. WE FIND NO MERIT IN THIS SPECIAL LEAVE P ETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MO NEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGEMENT. 7. CONSEQUENTLY THE DOCTRINE OF MERGER WOULD APPLY AND THE JUDGEMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) WOULD COVER THE FIELD WITH REGARD TO INTERP RETATION OF SECTION 68 OF THE ACT. 8. IN ANY MANNER THE ONUS OF PROOF IS NOT A STATIC ON E. THOUGH IN SECTION 68 PROCEEDINGS THE INITIAL BURDEN OF PROOF L IES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTITY OF THE CREDITOR S/ SHARE APPLICANTS BY EITHER FURNISHING THEIR PAN NUMBER OR INCOME TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRANSACTIO N BY SHOWING MONEY / HIS BOOKS EITHER BY ACCOUNT PAYEE C HEQUE OR BY DRAFT OR BY ANY OTHER MODE THEN THE ONUS OF PRO OF WOULD SHIFT TO THE REVENUE. JUST BECAUSE THE CREDITORS /SHA RE ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 11 APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN I T WOULD NOT GIVE THE REVENUE THE RIGHT TO INVOKE SECTION 68. O NE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HA S ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVE R IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE SOUR CE OF SOURCE. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND P RECEDENT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) HENCE WE UPHOLD THE SAME. THUS WE HOLD THAT THE ADDITION MADE U/S. 68 IN THIS REGARD CANNOT BE SUSTAINED. 9. AS REGARDS THE ADDITION ON ACCOUNT OF COMMISSION @2% WE FIND THAT WE HAVE ALREADY DELETED THE ADDITION U/S 68 REGARDI NG SHARE APPLICATION MONEY HENCE THIS ADDITION ON ACCOUNT OF COMMISSION C ANNOT BE SUSTAINED. IN THIS REGARD WE SUSTAIN THE ORDER OF THE LD. COMMISSI ONER OF INCOME TAX (APPEALS). 10. IN THE RESULT THESE APPEALS FILED BY THE REVENUE STAND DISMISSED. ASSESSES ASSESSES ASSESSES ASSESSES CROSS OBJECTION NOS. 383 CROSS OBJECTION NOS. 383 CROSS OBJECTION NOS. 383 CROSS OBJECTION NOS. 383- -- -384/DEL/2009 384/DEL/2009 384/DEL/2009 384/DEL/2009 11. THE GROUNDS RAISED IN CO NO. 383 READ AS UNDER:- (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORD ER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REGARDING THE CONTENTION OF THE APPELLANT THAT PRO CEEDINGS FOR REASSESSMENT UNDER SECTION 148 IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE REASSESSMENT PROCEEDINGS UNDER SECTION 148 ON THAT FOLLOW ING THE STATUTORY REQUIREMENT AND COMPLIANCE OF THE PROC EDURE PRESCRIBED IS BAD AND LIABLE TO BE QUASHED. ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 12 (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE A SSESSING OFFICER HAS ERRED BOTH ON FACTS AND IN LAW IN REOPE NING THE ASSESSMENT WITHOUT THERE BEING ANY LIVE NEXUS BETWEEN T HE REASONS RECORDED AND THE INCOME ESCAPING ASSESSMENT. 11.1 THE GROUNDS RAISED IN CO NO. 384 READ AS UNDER:- (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORD ER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REGARDING THE CONTENTION OF THE APPELLANT THAT PRO CEEDINGS FOR REASSESSMENT UNDER SECTION 148 IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE REASSESSMENT PROCEEDINGS UNDER SECTION 148 ON THAT FOLLOW ING THE STATUTORY REQUIREMENT AND COMPLIANCE OF THE PROC EDURE PRESCRIBED IS BAD AND LIABLE TO BE QUASHED. (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE A SSESSING OFFICER HAS ERRED BOTH ON FACTS AND IN LAW IN REOPE NING THE ASSESSMENT WITHOUT THERE BEING ANY LIVE NEXUS BETWEEN T HE REASONS RECORDED AND THE INCOME ESCAPING ASSESSMENT. 12. IN THE CROSS OBJECTIONS THE ASSESSEE HAS RAISED THE AP PEAL AGAINST THE PROCEEDINGS FOR REASSESSMENT UNDER SECTION 148 OF THE IT ACT. LD. COUNSEL OF THE ASSESSEE STATED THAT HE SHALL BE NOT PRESS T HE CROSS OBJECTIONS INCASE THE REVENUES APPEALS ON MERITS ARE D ECIDED IN FAVOUR OF THE ASSESSEE. SINCE WE HAVE DECIDED THE ISSUE ON MERIT S IN FAVOUR OF THE ASSESSEE IN THE REVENUES APPEALS BOTH THE CROSS OBJECTIONS ARE DISMISSED AS NOT PRESSED. ITA NOS. 4014-4016/DEL/2009 AND CO NOS. 383-384/DEL/2009 13 13. IN THE RESULT THREE APPEALS FILED BY THE REVEN UE STAND DISMISSED AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED AS NOT P RESSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/9/2011. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 30/9/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT DELHI BENCHES