Laxmiraj Distributors Pvt. Ltd., Baroda v. The ACIT, Circle-1(2),, Baroda

ITA 109/AHD/2016 | 2009-2010
Pronouncement Date: 13-10-2016 | Result: Allowed

Appeal Details

RSA Number 10920514 RSA 2016
Assessee PAN AABLL0756G
Bench Ahmedabad
Appeal Number ITA 109/AHD/2016
Duration Of Justice 8 month(s) 29 day(s)
Appellant Laxmiraj Distributors Pvt. Ltd., Baroda
Respondent The ACIT, Circle-1(2),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 13-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 13-10-2016
Date Of Final Hearing 23-08-2016
Next Hearing Date 23-08-2016
Assessment Year 2009-2010
Appeal Filed On 15-01-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I S. S. GODARA JUDICIAL MEMBER AND SHRI MANISH BORAD ACCOUNTANT MEMBER LAXMIRAJ DISTRIBUTORS PVT. LTD. NARSHINGH ESTATE WADI YAMUNA MILL ROAD PRATAPNAGAR BARODA - 390004 PAN: AABLL0756G (APPELLANT) VS THE ACIT CIRCLE - 1(2) BARODA (RESPONDENT) REVENUE BY : S H RI R.I. PATEL CIT - D . R. ASSESSEE BY: S H RI SASHI TULSIYAN A.R. DATE OF HEARING : 23 - 08 - 2 016 DATE OF PRONOUNCEMENT : 13 - 10 - 2 016 / ORDER P ER : S. S. GODARA JUDICIAL MEM BER : - THIS ASSESSEE S APPEAL FOR A.Y. 2009 - 10 AR I SES FROM ORDER OF THE CIT(A) - I VADODARA DATED 29 - 10 - 2015 IN APPEAL NO. CAB - 1 / 187/2014 - 15 IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 148 OF THE INCOME TAX ACT 1961; IN SHORT THE ACT . I T A NO . 109 / A HD/20 1 6 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 2 2. WE COME TO PLEADINGS PORTION FIRST. THE INSTANT APPEAL RAISES I TO VIII GROUNDS. THE SUM AND SUBS TANTIVE THEREOF I S THAT THE CIT(A) HAS ERRED IN CONFIRMING ASSESSING OFFICER S ACTION IN MAKING ADDITION OF RS. 7.52 CRORES VIDE IMPUGNED RE - ASSESSMENT FRAMED ON 31 - 03 - 2 014 AFTER TREATING THE SHARE PREMIUM SUBSCRIBED BY DIFFERENT COMPANIES IN ASSESSEE S SHARE CAPITAL AS RE - INVESTMENT OF LATTER S UNACCOUNTED MONEY ITSELF. 3. THE ASSESSEE INSTITUTED THE INSTANT APPEAL ON 15 - 01 - 2016 BEFO RE THIS TRIBUNAL. IT FILED AN AP PLICATION ON 28 - 29/03/2016 UNDER RULE 11 OF THE INCOME TAX APPELLATE TRIBUNAL S RULES 1963 SEEKING TO RAISE AN ADDITIONAL GROUND CHALLENGING VALID ITY OF THE REOPENING TAKEN RECOURSE TO BY THE ASSESSING OFFICER WITHOUT INDICATING ANY RELIABLE MATERIAL AND INFORMATION ESTABLISHING THAT ANY TAXABLE INCOME HAD IN FACT ESCAPED ASSESSMENT. THIS IS FOLLOWED BY ITS YET ANOTHER APPLICAT ION UNDER THE VERY RULE AVERRING THAT THE ABOVE ADDITIONAL GROUND SOUGHT TO BE RAISED NEEDS TO BE REVISED TO THE FOLLOWING EFFECT: - 1) O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. ASSESSING OFFICER ERRED IN FRAMING ASSESSMENT FRAMED U/S. 143(3) R.W.S. 147 OF THE INCOME - TAX ACT 1961 EVEN - THOUGH THE REOPENING OF THE ASSESSMENT IS NOT IN CONFORMITY WITH THE EXPRESS L EGAL PROVISIONS IN VIEW OF THE FOLLOWING: A) THE ASSESSING OFFICER HAS NOT ESTABLISHED A LIVE LINK BETWEEN MATERIAL BEING RELIED UPON TO REOPEN THE ASSESSMENT PROCEEDINGS AND THE ESCAPEMENT OF CHARGEABLE INCOME IN THE HANDS OF THE APPELLANT. B) RE - OPEN ING OF THE ASSESSMENT IS DONE WITHOUT APPLICATION OF MIND SINCE THE ASSESSING OFFICER HAS NOT CARRIED OUT HONEST I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 3 AND UNBIASED EXERCISE TO LOOK INTO MATERIAL AVAILABLE BEFORE HIM. C) THE ASSESSING OFFICER HAS INITIATED THE REASSESSMENT PROCEEDINGS ON THE BASIS OF INCORRECT FACTS AND IRRELEVANT MATERIAL. D) THE ASSESSING OFFICER HAS INITIATED THE REASSESSMENT PROCEEDINGS WITHOUT ANY FRESH TANGIBLE MATERIAL IN HIS POSSESSION TO SHOW THAT THE INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT. E) THE LEGALIT Y AND VALIDITY OF THE REOPENING OF THE ASSESSMENT HAS TO BE ADJUDGED ON THE BASIS OF REASONS RECORDED AND IT CANNOT BE SUPPLEMENTED BY FURTHER REASONS. THESE PLEADINGS DRAW SUPPORT FROM HO N BLE APEX COURT DECISION IN NATIONAL THERMAL POWER COMPANY LTD. VS. CIT 229 ITR 383 HOLDING THAT THIS TRIBUNAL DOES HAVE A DISCRETION AS TO WHETHER OR NOT A NEW GROUND IS TO BE ALLOWED TO BE RAISED. THEIR LORDSHIP CLARIFY THAT THERE IS NO REASON IN NOT ALLOWING SUCH AN ADDITIONAL GROUND IN THE NA T URE OF A QUESTION O F LAW WHEN THE RELEVANT FACTS ARE ALREADY ON RECORD AND IT IS NECESSARY TO CONSIDER THE SAME IN ORDER TO DETERMINE CORRECT TAX LIABILITY OF AN ASSESSEE. NEXT JUDICIAL PRECEDENT QUOTED IS (2012) 137 ITD 287 (MUM) (SB) ALLCARGO LOGISTICS LTD. VS. DCIT RELYI NG ON HON BLE APEX COURT VIEW HEREINABOVE TO CONCLUDE THAT A PURE QUESTION OF LAW IS TO BE ALLOWED TO BE RAISED FOR WHICH THE RELEVANT FACTS ARE ALREADY ON RECORD. 4. WE GRANTED SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES ON THIS ADDITIONAL GROUND ASPECT. THE ASSESSEE RELIES ON ITS PLEADINGS IN LIGHT OF THE ABOVE TWO DECISIONS. THE REVENUE ON THE OTHER HAND I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 4 INTER ALIA SUBMITS THAT THIS ADDITIONAL GROUND IS NOT ADMISSIBLE SINCE THE ASSESSEE HAS NOT CHALLENGED VALIDITY OF THE IMPUGNED REOPENING TILL DATE IT DID NOT RESPOND TO SECTION 148 NOTICE NO SUCH PLEA HAS BEEN RAISED BEFORE THE LOWER AUTHORITIES DESPITE THE FACT THAT THE CIT(A) HAD CALLED FOR A REMAND REPORT WHICH WAS SUBMITTED BY THE ASSESSING OFFICER AN D THIS ADDITIONAL PLEA IS OTHER WISE NOT MAINT AINABLE AS THE IMPUGNED REOPENING DESERVES TO BE UPHELD ON PITH AND SUBSTANCE RULE. 5. HEARD BOTH SIDES ON ADMISSIBILITY OF THIS ADDITIONAL GROUND CHALLENGING VALIDITY OF REOPENING. THERE IS NO DISPUTE ABOUT THE ABOVE TWO CASE LAWS HOLDING THAT THIS T RIBUNAL CAN EXERCISE ITS DISCRETION FOR RAISING OF A LEGAL QUESTION IN CASE THE RELEVANT FACTS ARE ALREADY ON RECORD. THIS IS NOT THE REVENUE S CASE THAT THE IMPUGNED ADDITIONAL GROUND INVOLVES COMPLICATED FACTS WHICH ARE NOT AVAILABLE ON RECORD . O R THAT IT DOES NOT DECIDE UPON THE ISSUE OF CORRECT TAX LIABILITY OF THE ASSESSEE/APPELLANT. IT RAISES HYPER - TECHNICAL OBJECTIONS NARRATED HEREINABOVE. WE FURTHER FIND NO MERIT IN ITS PITH AND SUBSTANCE PLEA SINCE THE SAME ARISES W HEN THE QUESTION IS DETERMINI NG AS TO WHETHER A PARTICULAR LAW FALLS IN ONE HEAD OR THE OTHER WHICH IS TO BE ADJUDICATED KEEPING IN MIND PITH MEANING TRUE NATURE OR ESSENCE OF SOMETHING AND SUBSTANCE TO BE INTERPRETED AS THE MOST IMPORTANT OR ESSENTIAL PART OF SOMETHING . OUR VIEW IS THAT THIS PLEA IS HARDLY GERMANE TO THE LEGAL QUESTION OF VALIDITY OF REOPENING. WE ACCORDINGLY SEEK GUIDANCE FRO M THE ABOVE TWO LEGAL PRECEDENTS AND ALLOW THE ASSESSEE S APPLICATION DATED 28 - I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 5 29/03/2016 SEEKING TO RAISE AN ADDITIONAL GROUND FOR CH ALLENGING VALIDITY OF REOPENING. WE FURTHER ACCEPT THE ASSESSEE S PLEA BY WAY OF AN APPLICATION DAT ED 24 - 06 - 2016 AND REVISE THE ADDITIONAL GROUND HEREINABOVE AS EXTRACTED IN PRECEDING PARAGRAPHS IN LARGER INTEREST OF JUSTICE. THE ASSESSEE ACCORDINGLY SU CCEEDS IN ITS BOTH OF THE PETITIONS . ITS NET EFFECT IS THAT WE ARE NOW TO ADJUDICATE CORRECTNESS OF THE IMPUGNED ADDITION OF RS. 7.25 CRORES ON LEGAL ASPECT OF RE OPENING AS WELL AS ON MERITS. 6. WE ADVERT TO THE RELEVANT FACTS NOW. THE ASSESSEE COMPANY TRADES IN FERROUS AND NON - FERROUS METALS. IT FILED RETURN ON 1 3 - 09 - 2009 STATING INCOME OF R S. 78 46 640/ - . THE SAME WAS PROCESSED ON 22 - 03 - 2011. THE DEPARTMENT CARRIED OUT A SURVEY THEREAFTER AT ITS PREMISES. CASE RECORD REVEAL S THAT THE ASSISTANT CO MMISSIONER OF INCOME TAX CIRCLE - 1(2) VADODARA PASSED SECTION 133A(3)(IA) ORDER IMPOUNDING ASSESSEE S BOOKS OF ACCOUNTS/DOCUMENTS BF - 1 TO BF - 15 FOUND IN THE COURSE OF SURVEY. ONE OF ASSESSEE S DIRECTOR SHRI PARASMAL JAIN GOT RECORDED HIS STATEMENT DURING SURVEY ON 30 - 08 - 2012 . THIS FORMS PART OF CASE RECORDS BEFORE US AT PAGES 624 TO 629 OF THE PAPER BOOK. WE DEEM IT APPROPRIATE TO REITERATE THAT THE INSTANT LIS PERTAINS TO SHARE APPLICATION MONEY ASPECT ONLY. SHRI JAIN WAS PUT TOTAL 21 QUESTIONS. TH IS STATEMENT TERMINATED AT 6.30 PM DUE TO HIS ILL HEALTH. NONE OF THESE 21 QUERIE S TOUCHED UPON THE ISSUE OF SHARE APPLICATION MONEY. SHRI JAIN S STATEMENT RESUMED THEREAFTER ON 03 - 09 - 2012 AT THE INCOME TAX OFFICE VADODADRA. PAGES 630 TO 644 COMPRISE A COPY THEREOF INVOLVING 71 QUESTIONS I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 6 RANGING FROM SHRI JAIN S DOB MARRIAGE AND OTHER ASPECTS OF PRIVATE LIFE. SOME OF THE QUERIES SOUGHT LIGHT ON ASSESSEE S ENTITY INCORPORATION AND ITS CONVERSION FROM A PROPRIETARY CONCERN TO A COMPANY. THE SURVEY AUTH ORITIES PUT UP A SPECIFIC QUERY AT SERIAL NO. 68 QUA NINE INVESTOR COMPANY OF THE IMPUGNED SHARE PREMIUM ALLEGEDLY EXCEEDING ASSESSEE S ENTIRE INCOME. THEY SOUGHT TO KNOW NAMES OF THE A CTUAL INVESTORS ALONG WITH TELEPHONE NOS. ETC. SHRI JAIN EXPRESSED HI S INABILITY TO RECALL THE SAME. THE DEPARTMENTAL AUTHORITIES FURTHER ASKED HIM AS TO WHETHER THESE INVESTORS EVER ASKED FOR ANYTHING AFTER MAKING THE IMPUGNED INVESTMENTS. AGAIN CAME THE REPLY I DO NOT REMEMBER . 7. WE PROCEED FURTHER TO NOTICE THAT S HRI JAIN S STATEMENT AGAIN TERMINATED AFTER BEING REMINDED ABOUT THE FACT THAT IT WAS A SURVEY EXERCISE. THIS FOLLOWED SHRI JAIN S HAND WRITTEN LETTER ON THE VERY DAY ADDRESSED TO THE DCIT - COMPANY CIRC LE - 1(2) VADODARA QUOTING ASSES SEE S COMPANY DIRECTOR S MUTUAL CONSULTATION TO DECLARE AN UNACCOUNTED INCOME OF RS. 9 CRORES (PAGES 645 TO 646 OF THE PAPER BOOK). THE ASSESSEE THEREAFTER FILED A LETTER DATED 04 - 09 - 2012 BEFORE THE ACIT - 1(2) VADODARA DECLARING GROSS INCOME OF RS. 9 CRORES AS UNDER: - TO THE ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 1(2) AAYAKAR BHAVAN VADODARA. SUB: - SURVEY PROCEEDINGS U/S. 133A OF THE I.T. ACT KINDLY REFER TO THE CAPTIONED SUBJECT AND THE SURVEY CONDUCTED AT OUR BUSINESS PREMISES ON 30 TH AUGUST 2012. I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 7 IN THE COURSE OF SURVEY VARIOUS DOCUMENTS WERE FOUND AND IMPOUNDED. FURTHER PROCEEDING WITH RESPECT THERETO IS PENDING. IN THE MEANTIME THE COMPANY HAS VERIFIED ITS RECORDS FOR VARIOUS YEARS IT IS FELT THAT THERE ARE CERTAIN ISSUES / TRANSACTIONS RECORDED IN THE REGULAR BOOKS OF ACCOUNTS WHICH MAY NOT BE POSSIBLE TO SUBSTANTIATE AS REQUIRED UNDER LAW AND THAT IT MAY TAKE LOT OF EFFORTS AND ALSO SUBSTANTIAL TIME PERSUASION WITH OTHER PARTIES TO PROVIDE INFORMATION AND DETAILS WHICH MAY OR MAY NOT BE POSSIBLE TO OBTAIN DU E TO LAPSE OF TIME. THE COMPANY HAD A REASONABLE GROWTH IN THE PAST AND DO NOT FORESEE SAME TREND IN THE COMING TIMES DUE TO OVERALL RECESSION AND SLOW DOWN AND DURING THIS TIME THE MANAGEMENT OF THE COMPANY DESIRES TO FOCUS ALL ITS ENERGIES AND ATTENTIO N IN THE PRESERVATION AND MAINTENANCE OF THE COMPANY'S BUSINESS WITHOUT DIVERTING ITS ATTENTION TO PROTRACTED LITIGATION WITH THE INCOME - TAX DEPARTMENT AND ALSO TO AVOID UNDESIRED CONFRONTATION AND INVOLVEMENT OF TIME AND ENERGY. WITH THE ABOVE INTENTION AND ALSO WITH A DESIRE TO BUY PEACE AVOID LITIGATION AND ALSO ANY PENALTY THE COMPANY IS VOLUNTARILY DISCLOSING AN AMOUNT OF RS. 9.00 CRORES AS INCOME DISCLOSED DURING THE SAID PROCEEDINGS REPRESENTED BY THE FOLLOWING : - ASSTT. YEAR PARTICULARS AMOU NT (RS.) 2009 - 10 S HARE CAPITAL + RESERVES 7 52 00 000 2013 - 14 ESTIMATED PROFIT FOR THE YEAR 1 48 00 000 THE COMPANY MAY SUBMIT THAT DURING THE ASSESSMENT YEAR 2009 - 10 AFTER COMPLYING ALL THE PROVISIONS AND LAWS THE COMPANY HAD ISSUED AND ALLOT TED SHARES OF RS. 75.20 LAKHS NUMBERING 7 52 000 SHARES WITH A PREMIUM OF RS. 676.80 LAKHS TO VARIOUS COMPANIES AS UNDER 1. SHRIKANT BROKING PVT LTD 2. BHANDARI GLASSES PVT LTD I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 8 3. FACSEL CONTECH PVT LTD 4. CHIRAG CALL SHOP PVT LTD 5. ANGELICA COMM TRADE PVT LTD 6. ANTI CLOCK WYAPER P LTD 7. VERONICA COMMERCE PVT LTD 8. MUSE DEALERS PVT LTD 9. MEDLAR DELCOM PVT LTD 10 . WINTER FRESH FOOD PVT LTD ABOVE THESE COMPANIES ARE REGISTERED WITH REGISTRAR OF COMPANIES AND AS PER THE INFORMATION AVAILAB LE WITH THE ASSESSEE COMPANY THEY ARE REGULARLY FILING THEIR RETURNS AND ALSO COMPLYING WITH THE STATUTORY REQUIREMENTS AND ASSESSED TO INCOME TAX. THE CAPITAL WAS SUBSCRIBED BY G ENUINE SHARE HOLDERS BY ACCOUNT PAYEE CHEGUES/DRAFTS AND THE REPORTING OF THE ALLOTMENT IS ALSO MADE TO THE CONCERNED AUTHORITIES. EVEN THEIR SOURCE IS IMPECCABLE AND BEYOND ANY DOUBT. WE ARE HOWEVER INFORMED THAT THE SOURCE OF THE SOURCE OR EVEN THE FURTHER SOURCE MAY BE MATTER OF DISPUTE. ACCORDING TO OUR UNDERSTANDING IT IS NO T AN OBLIGATION TO PROVE ANY SUCH DEETAILS. HOWEVER IN ORDER NOT TO RAISE CONTROVERSIES AND ONLY IN ORDER TO BUY PEACE AND WITHOUT PREJUDICE TO CONTENTION THAT SHARE CAPITAL RAISED IS DULY EXPLAINED WE AGREE WITH AN UNDERSTANDING THAT THERE WOULD BE NO PENAL CONSEQUENCES WE SHALL PAY APPLICABLE TAX WITH INTEREST THEREON ON SUCH SHARE CAPITAL AND SHARE PREMIUM AMOUNTING TO RS. 7.52 CRORE AND THE ACCORDINGLY INCOME MAY BE TAKEN INTO ACCOUNT. FOR THE YEAR UNDER CONSIDERATION THE COMPANY EXPECTS AN ESTIMA TED PROFIT OF RS. 148 LAKHS ON WHICH APPROPRIATE TAX WOULD BE PAID IN ACCORDANCE WITH LAW. FURTHER THE ASSESSEE COMPANY DESIRES TO FULFILL ITS TAX OBLIGATIONS IN ACCORDANCE WITH THE LAW THROUGH E - PAYMENT AT THE EARLIEST. TO SHOW ITS COMMITMENT WE ARE AT TACHING HEREWITH POST - DATED CHEQUES AS UNDER AND THE SAME \ S TO BE RETURNED TO US ON PRODUCTION OF PROOF OF E - PAYMENT BY US: - DATE CHEQUE NO. AMOUNT (RS.) 15/9/2012 002038 RS. 15 LACS 25/9/2012 002042 RS.25 LACS I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 9 WE TRUST YOU WILL FIND THE AB OVE OFFER OF THE ASSESSEE COMPANY AS GENUINE VOLUNTARY AND WITH AN INTENTION TO BUY PEACE AND CO - OPERATE WITH THE DEPARTMENT WITH AN UNDERSTANDING AND A CONDITION THAT IN DOING SO THE COMPANY SHALL NOT BE LEVIED ANY PENALTY UNDER THE ACT. THANKING YOU YOURS FAITHFULLY FOR LAXMIRAJ DISTRIBUTORS PVT. LTD. DIRECTOR 8. WE FIND THAT THE MATTER DID NOT REST UPTO THIS STAGE. THE ASSESSING OFFICER ISSUED SECTION 148 NOTICE DATED 13 - 02 - 2013 AFTER FORMING REASONS TO BELIEVE THAT ASSESSEE S TAXABLE INCOM E LIABLE TO BE ASSESSED HAD ESCAPED ASSESSMENT. THE INSTANT CASE RECORD CONTAINS COPY OF THESE REASONS AT PAGES 622 TO 623 READING AS UNDER: - A SURVEY U/S 133A WAS CARRIED OUT IN THE CASE OF LAXMIRAJ DISTRIBUTORS PRIVATE LIMITED BARODA ON 30 - 082012. DUR ING SURVEY PROCEEDINGS SOME INCRIMINATING DOCUMENTS WERE FOUND WHICH ARE INVENTORIE D AND IMPOUNDED AS ANNEXURE BF - 1 TO BF - 15. ON SCRUTINIZING THE ANNEXURE BF - 1 IT WAS NOTICED THAT THE ASSESSEE HAD INTRODUCED UNACCOUNTED CAPITAL THROUGH SHARE CAPITAL AND SHARE PREMIUM. THE ASSESSEE COMPANY RAISED AN AMOUNT OF RS. 7 52 00 000 / - BY ALLOTTING ITS SHARES TO 10 DIFFERENT C OMPANIES LOCATED AT SURAT AHMEDABA D AND KOLKATA. THE ASSESSEE COMPANY HAD ALLOTTED TOTAL 7 52 000 SHARES WITH FACE OF RS.10/ - AT A PREMIUM OF RS.90/ - IN F.Y. 2008 - 09. LATER IN F.Y.2009 - 10 THE ASSESSEE PURCHASED BACK THESE SHARES FORM THESE 10 COMPANIES AT A RATE OF RS. 10/ - EACH SHARE. THE ASSESSEE COMPANY PAID BACK RS. 75 20 000/ - TO PURCHASE THE ALLOTTED SHARES. THE DETAILS WORKING IS AS UNDER: I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 10 SL..N O. NAME OF ALLOTTEE NO. OF SHARES ALLOTED @ RS.10 / - EACH AT A PREMIUM OF RS.90 / - AMOUNT/ REALIZED NO. OF SHARES SALE BACK @ RS. 10 TO LAXMIRAJ DISTRIBUTORS AMOUNT PAID 1 SKRIKANT BROKING PVT LTD 30000 3000000 30000 3000 00 2. BHANDARI GLASSES PVT LTD 48000 4800000 48000 480000 3 . FLACSEL CONTECH PVT LTD 49000 4900000 49000 490000 4 CHIRAG CALL SHOPS PVT LTD 25000 2500000 25000 250000 5 ANGELICA COMMOTRADE PVT LTD 80000 8000000 80000 800000 6 ANTICLOCK VYAPAAR PVT LTD 95000 9500000 95000 950000 7 VERONICA COMMERCE PVT LTD 100000 10000000 100000 1000 8 MUSE DEALERS PVT LTD 155000 15500000 155000 155000 0 9 MEDLER DEALCOM PVT LTD 125000 12500000 125000 125000 0 10 WIN TER FRESH FOOD PVT LTD 45000 4500000 45000 450000 I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 11 TOTAL 752000 75200000 752000 752000 0 DURING SURVEY PROCEEDINGS THE STATEMENT OF SHRI PARASMAL JAIN DIRECTOR OF THE COMPANY WAS ALSO RECORDED. BUT THE STATEMENT LEFT UNCONCLUDED DUE TO HIS HEALTH REASONS. ACCORDINGLY THE ASSESSEE WAS SUMMONED U/S 131 OF I.T. ACT ON 31.08 2012 T O ATTEND THE OFFICE OF ACIT CIRCLE - 1(2) BARODA ON 03.09.2012. IN COMPLIANCE TO SUMMON ISSUED THE ASSESSEE ATTENDED THE OFFICE OF THE UNDERSIGNED WHERE HIS STA TEMENT U/S 131 WAS RECORDED. WHILE RECORDING STATEMENT THE DIRECTOR OF THE COMPANY WAS ASKED VIDE Q. NO. 57 TO 70 OF THE STATEMENT RECORDED U/S 131 OF THE ACT ON 03.09.2012 ABOUT DETAILS OF INVESTORS OF THE COMPANY AND THE INVESTMENTS MADE BY THEM. BUT TH E DIRECTOR SHRI PARASMAL JAIN WHO IS THE ONLY BENEFICIARY TO ENJOY THE PROFITS OF THE COMPANY AND WHO TAKE CARE ALL THE MATTERS OF THE COMPANY WAS UNABLE TO GIVE ANY DETAIL IN RESPECT OF INVESTORS. EVEN HE WAS NOT ABLE TO NAME ANY ONE OF INVESTORS WHO MAD E SUCH HUGE INVES TMENTS IN THE COMPANY. LATER ON THE SAME DAY THE DIRECTOR OF THE COMPANY SHRI PARASMAL JAIN VIDE HIS HAND WRITT EN LETTER ADMITTED RS. 9 CRORES AS HIS UNACCOUNTED INCOME. HE ALSO STATED IN THE LETTER THAT THE BREAKUP - AND THE NATURE OF T HIS UNACCOUNTED INCOME WILL BE SUBMITTED IN SHORT DURATION OF TIME. ACCORDINGLY THE ASSESSEE COMPANY VIDE ITS SUBMISSION DATED 04.09.2012 RECEIVED THIS .1 2012 THROUGH THE DIRECTOR SHRI RARASMAL V JAIN SUBMITTED THE YEAR WISE NATURE OF THE UNACCOUNTED INCOME WHICH IS AS UNDER A.Y PARTICULARS AMOUNT (RS.) 2009 - 10 SHARE CAPITAL + RESERVES 7 52 00 000 2013 - 14 ESTIMATED PROFIT FOR THE YEAR 1 48 00 000 I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 12 REGARDING UNACCOUNTED INCOME ON ACCOUNT OF BOGUS SHARE CAPITAL THE ASSES SEE VIDE ABOVE MENTIONED LETTER SUBMITTED THE FOLLOWING NAMES OF COMPANIES THROUGH WHICH UNACCOUNTED MONEY WAS INTRODUCED: 1 SHRIKANT BROKING PVT LTD 2. BHANDARI GLASSES PVT LTD 3. FLACSEL CONTECH PVT LTD 4. CHIRAG CALL SHOPS PVT LTD 5. ANGELICA COMMOTRADE PVT LTD 6. ANTICLOCK VYAPAARPVTLTD 7. VERONICA COMMERCE PVT LTD 8. MUSE DEALERS PVT LTD 9. MEDLER DEALCOM PVT LTD 10. WINTER FRESH FOOD PVT LTD VIDE THIS SUBMISSION THE COMPANY HAD CLAIMED TO HAVE ALLOTTE D SHARES OF RS.75.20 LACES NUMBERING TO 7 52 000 SHARES WITH A PREMIUM OF RS.676.8O LAKHS TO VARIOUS COMPANIES NUMBERING 10 IN NUMBERS. THE ASSESSEE HAD SURRENDERED THIS SHARE CAPITAL ALONG WITH SHARE PREMIUM AMOUNTING TO RS.7.52 CRORES. HE HAD ALSO FURNIS HED A COMPUTATION OF INCOME FOR THE PURPOSE WHEREIN THIS INCOME HAS BEEN SHOWN AS ADDITIONAL INCOME. WHEREFORE SINCE THE INCOME DISCLOSED AS A RESULT OF SURVEY AT RS.7 - 52 CRORES OVER AND ABOVE RS.78 46 643/ - RETURNED IN THE ORIGINAL RETURN FILED ON 13.09. 2009. IN VIEW OF THE ABOVE FACTS I HAVE REASON TO BELIEVE THAT INCOME OF RS.7 - 52 CRORES HAVE BEEN ESCAPED FROM ASSESSMENT. THEREFORE NOTICE U/S 148 IS BEING ISSUED FOR A.Y.2009 - 10. 9. THE ASSESSEE SO UGHT FOR PHOTOCOPY OF SHRI JAIN STATEMENT S ALONG WITH THE OTHER MATERIAL IMPOUNDED DURING SURVEY . THE AS SESSING OFFICER WAS FAIR ENOUGH IN FURNISHING THE SAME. HE THEREAFTER ISSUED NOTICES TO ALL INVESTOR COMPANIES SUBSCRIBING TO ASSESSEE S S HARE CAPITAL. EIGHT SUCH NOTICES CAME BACK WITH LEFT OR NOT KN OWN REMARKS OR THAT THESE INVESTOR COMPANY DID NOT RESIDE AT THE GIVEN ADDRESSES. ONE OF THE INVESTOR COMPANY M/S. WINTER FRESH FOODS PVT. LTD REPLIED TO HAVE PURCHASED ASSESSEE S SHARES IN FY I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 13 2008 - 09 RELEVANT TO THE IMPUGNED ASSESSMENT YEAR 2009 - 10. IT FURNISHED THE RELEVANT COPY OF BANK STATEMENT AND BALANCE SHEET AS ON 31 - 03 - 2009. THE LATTER DOCUMENT ALLEGEDLY DID NOT REFLECT ITS INVESTMENT IN ASSESSEE S SHARE CAPITAL. THIS COMPANY HAD PAID RS. 10 LACS 25 LACS 8 LACS AND 2 LACS ON 10 - 05 - 2008 15 - 05 - 2008 17 - 06 - 2008 AND 24 - 06 - 20 08; RESPECTIVELY THROUGH BANKING CHANNEL. IT FILED ITS BANK STATEMENT REFLEC TING THE ABOVE STATED PAYMENTS. THE ASSESSING OFFICER WOULD NOTICE THAT THIS ENTITY HAD INTRODUCED SIMILAR SUMS IN BANK ACCOUNTS WITHIN A DAY OR TWO BEFORE THE PAYMENTS IN QUESTION. HE SOUGHT TO KNOW THE SOURCE THEREOF. THIS QUERY SEEMS TO HAVE BEEN NEVER RESPONDED. THE ASSESSING OFFICER OBSERVED THAT THIS COMPANY S BALANCE SHEET INTER AL IA INDICATED DEBTORS AT A NEGAT E FIGURE OF 1 11 80 888/ - LO ANS AND ADVANCES OF RS. 3 19 45 522/ - INCREASING FROM RS. 1 54 68 468/ - IN THE IMMEDIATE PR E VIOUS YEAR. ITS RETURN STATED GROSS TOTAL INCOME OF RS. 7 79 572/ - . AND THAT IT WAS FURTHER NOT CLEAR UNDER IN WHICH ASSET SIDE OF THE BALANCE SHEET HAD THIS COMP ANY SHOWN THE IMPUGNED INVESTMENT. THE ASSESSING OFFICER ACCORDINGLY ASKED FOR FURTHER DETAILS OF SOURCE OF THE CREDIT ENTRY IN THE ABOVE STATED BANK ENTITY LEADING TO INVESTMENT BEING MADE IN ASSESSEE S SHARE CAPITAL IN QUESTION. 10. WE STAY BACK ON T HE IMPUGNED REASSESSMENT ORDER DATED 31 - 03 - 2014. THE ASSESSING OFFICER ISSUED A COMMISSION TO THE ASSESSING AUT HORITY OF ABOVE INVESTOR COMPANIES TO INVESTIGATE AND CONDUCT INQUIRY ABOUT SOURCE OF THESE BANK CREDIT AS INVESTED IN ASSESSEE S SHARE CAPITAL WITHIN A FEW DAYS. HE ADOPTED A SIMILAR I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 14 COURSE OF ACTION FOR ALL OTHER ENTITIES . A PERUSAL OF THE REASSESSMENT ORDER INDICATE S THAT ONE OF THE INVESTOR COMP ANIES M/S. SHRIKANT BROKING PVT. LTD WAS FOUND TO BE HAVING SURAT ADDRESS IN ONE OF THE RESIDENTIAL COLONY. A TENANT LIVING AT THE SAID ADDRESS ALLEGEDLY DEPOSED TO HAVE BEEN STAYING THERE FOR AROUND 8 YEARS AND NO SUCH ENTITY OCCUPIED THE PREMISES IN QUESTION. ANOTHER ITO OF WA RD - 3 HIMATNAGAR INTIMATED THAT ONE SHRI PRAVINBHAI MODI WAS A DIRECTOR I N ANOTHER INVESTOR ENTITY M/S. FLASCEL PVT. LTD. DENIED ANY TRANSACTION WITH THE ASSESSEE MAKING SHARE CAPITAL INVESTMENT. THE ASSESSING OFFICER FURTHER OBSERVED IN HIS ORDER THA T ASSESSEE HAD AVAILED NUMEROUS OPPORTUNITIES IN ORDER TO PROVE GENUINENESS/ C REDITWORTHINESS OF THE IMPUGNED SHARE INVESTMENT BY THE ABOVE INVESTOR ENTITIES . HE RECORDED THAT THE ASSESSEE HAD RESORTED TO PIECEMEAL FILLING OF THE RELEVANT EVIDENCE IN FEBRUARY AND MARCH 2014 . A ND THE SAME INDICATED THAT DIRECTORS IN SOME OF THE T HESE INVESTOR COMPANY HAS CHANGED. THE ASSESSING OFFICER ACCORDINGLY TERMED ASESSEE S DETAILS TO BE NOT VERIFIABLE AT SUCH BELATED STAGE. HE ACCUSED THE ASSESSEE TO HAVE ADOPTED WELL CALCULATED DI LATORY TACTICS IN PROLONGING REASSESSMENT DESPITE THE FACT THAT THE ONUS WAS OF F COURSE FELL ON IT TO VERIFY THE IMPUGNED SHARE CAPITAL INVESTMENT S BY VARIOUS INVESTOR COMPANY BASED AT SURAT AHMEDABAD AND CALCUTTA AT AN UNLIKELY P REMIUM OF RS. 90/ - PER SHARE A ND THAT TOO ; IN A PRIVATE LIMITED COMPANY DOING A BUS INESS OF LESS THAN 100 CRORES AND H AVING A SURPLUS OF RS. 3.5 CORE S ONLY. HE DREW ADVERSE INFERENCE OF THE FACT THAT NO VADODARA BASED INVESTOR HAD COME FORWARD TO PURCHASE ASSESSEE S SHARE CAPITAL. THE I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 15 ASSESSING AUTHORITY WAS FURTHER OF THE VIEW THAT TH E IMPUGNED SHARE INVESTMENT HAVE BEEN MADE IN ASSESSEE S SHARE CAPITAL ON PRIVATE PLACEMENT MEANING THEREBY THAT IT HAD ACCESS TO SHARE APPLICANTS DETAILS SINCE ENJOYING CLOSE RELATIONSHIP THEREWITH. IT OPINED THAT ASSESSEE S DELAYING TACTICS WERE A WELL CALCULATED MOVE TO GUARD ITSELF AGAINST ANY FINDING HOLDING THE IMPUGNED SHARE CAPITAL AS SHAM TRANSACTION. THE ASSESSING OFFICER CAME TO A CONCLUSION THAT THE ASSESSE E HAD NOT DISCHARGED ITS ONUS OF PROVING THAT ITS INVESTOR COMPANIES HAD MADE THE IMPUGN ED SHARE TRANSACTION S OUT OF THEIR OWN CAPITAL SINCE IT WAS BEYOND COMMON PRUDENCE AS TO WHY WOULD ANYONE INVEST IN AN UNKNOWN COMPANY SHARES AND BUT THEM BACK AT A HEAVY LOSS AS DONE IN THE INSTANT CASE. HE RECORDED A FINDING OF FACT THE ASSESSEE HAD PUR CHASED BACK THE VERY SHARE CAPITAL FROM THE TEN INV ESTOR COMPANIES IN QUESTION @ RS.10 PER SHARE. HE PREPARED A CHART THEREOF AS EXTRACTED HEREINABOVE IN HIS REASSESSMENT ORDER. THE ASSESSING OFFICER THEN QUOTED SHRI JAIN S WRITTEN STATEMENT DATED 04 - 09 - 2012 HIS SURVEY STATEMENT AND DELIBERATIONS IN THE ENTIRE REASSESSMENT EXERCISE TO CONCLUDE THAT ALL THIS WAS A SHAM ARRANGEMENT LACKING GENUINENESS/ CREDITWORTHINESS . ALLL THIS MADE HIM TO MAKE THE IMPUGNED ADDITION OF RS. 7.52 CROES IN THE NATURE OF AS SESSEE S UNACCOUNTED INCOME. 11. THE ASSESSEE PREFERRED APPEAL. IT FILED ADDITIONAL SUBMISSIONS IN COURSE OF THE LOWER APPELLATE PROCEEDINGS BY PLEADING THAT SHRI JAIN SUFFERED FROM HEALTH COMPLICATION DURING REASSESSMENT. THE I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 16 CIT(A) CALLED FOR A REMA ND REPORT. THE SAME CAME ON 11 - 06 - 2015 READING AS UNDER: - 5.1.2 IN RESPONSE THE AO SUBMITTED HIS REMAND REPORT AS FOLLOWS: '2. AS DESIRED VIDE LATTER DATED 25.05.2015 THE ASSESSEE WAS GIVEN OPPORTUNITY TO PROVE THE IDENTITY AND CREDITWORTHINESS OF A LL THE 10 COMPANIES FROM WHOM THE ASSESSEE COMPANY HAS RECEIVED SHARE CAPITAL OF RS.7.52CORES INCLUDING SHARE PREMIUM OF RS. 676.70 LACS DURING THE YEAR UNDER CONSIDERATION AND ALSO TO PROVE THE GENUINENESS OF TRANSACTION. THE RELEVANT PORTION OF THE LETT ER DATED 25 - 05 - 2015 OF THIS OFFICE IS REPRODUCED AS UNDER: - 'PLEASE REFER TO THE APPELLATE PROCEEDING IN THE CASE OF M/S LAXMIRAJ DISTRIBUTORS PVT. LTD. FOR THE A.Y. 2009 - 10. LD. COMMISSIONER OF INCOME TAX (A) - I BARODA HAS DIRECTED THE UNDERSIGNED TO EXA MINE THE IDENTITY AND CREDITWORTHINESS OF ALL THE 10 COMPANIES FROM WHOM YOU HAVE RECEIVED SHARE CAPITAL OF RS.7.52CORES INCLUDING SHARE PREMIUM OF RS. 6 76 CRORES DURING THE YEAR UNDER CONSIDERATION AND ALSO TO EXAMINE THE GENUINENESS OF TRANSACTION. IN T HIS REGARD YOU ARE REQUIRED TO COMPLY WITH THE FOIL OWING: - 1. FILE CONFIRMATIONS COPIES OF ACKNOWLEDGMENT OF RETURNS COMPUTATION OF INCOME COPIES OF THE BANK ACCOUNTS OF THE ALL THE 10 COMPANIES FOR THE F.Y. 2008 - 09 AND 2009 - 10 AS THESE COMPANIE S ALLEGEDLY INVESTED CAPITAL IN THE F.Y. 2008 - 09 @ RS.100/ - PER SHARE INCLUDING PREMIUM OF RS.90/ - PER SHARE AND SOLD THE SAME SHARES TO M/S LAXMIRAJ DISTRIBUTORS PVT. LTD. ITSELF @ RS. 10 / - PER SHARE ONLY ON HEAVY LOSS OF RS.90/ - PER SHARE DURING THE F .Y. 2009 - 10. PLEASE MARK AND HIGHLIGHT THE RELEVANT ENTRIES OF THE BANK ACCOUNT. 2. COPY OF THE BANK ACCOUNTS OF M/S LAXMIRAJ DISTRIBUTORS PVT. LTD. FOR THE F.Y. 2008 - 09 AND F.Y. 2009 - 10 IN WHICH THE SHARE CAPITAL OF RS.7.52 CRORES IS DEPOSITED DURING THE F.Y. 2008 - 09 AND AMOUNTS HAVE BEEN DEBITED TO BUY BACK THE SAME SHARES DURING THE F.Y. 2009 - 10 MARKING/HIGHLIGHTING THE RELEVANT ENTRIES. I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 17 3. AS PER INSPECTOR'S REPORT THE COMPANY M/S SHRIKANT BROKING PVT. LTD. WAS NOT LOCATED AT THE GIVEN ADDRESS OF TRUP TI SOCIETY SURAT PLEASE EXPLAIN. 4. AS PER THE LETTER OF THE ITO WARD - 4(3) AHMEDABAD THE DIRECTOR OF M/S FLACSEL CONTECHPVT. LTD. SH. PRAVINBHAI MODI HAD DENIED ANY LINK/TRANSACTION EVER WITH M/S LAXMIRAJ DISTRIBUTORS PVT. LTD. PLEASE EXPLAIN. 5. P RODUCE THE MANAGING DIRECTOR OR MAIN DIRECTOR OF ALL THE COMPANIES FOR EXAMINATION ALONG WITH THE PROOF OF THEIR IDENTITY COPIES OF BANK ACCOUNTS RETURN FILING PROOF COMPUTATION OF INCOME AUDIT REPORTS BALANCE SHEETS PROFIT AND LOSS ACCOUNT AND SHARE HOLDING PATTERN OF THE COMPANIES FOR THE F.Y. 2008 - 09 AND 2009 - 10. YOU ARE REQUESTED TO COMPLY WITH THE ABOVE ON 02/06/2015 AT 11.30AM. PLEASE NOTE IF YOU REMAIN FAIL TO COMPLY WITH THE ABOVE ON THE GIVEN DATE AND TIME IT WILL BE PRESUMED THAT YOU HAVE NOTHING TO SAY IN THIS REGARD AND THE REPORT WILL BE SUBMITTED TO THE CIT(A) - I ACCORDINGLY.' 3. IN RESPONSE TO THE ABOVE NOTICE THE ASSESSEE HAS FILED REPLIES ON 02 - 06 - 2015 AND 11 - 06 - 2015. THE RELEVANT PORTION OF THE REPLY OF THE ASSESSEE DATED 02 - 06 - 201 5 IS AS UNDER: - ' WITH REFERENCE TO ABOVE I AM SUBMITTING AS UNDER: 1. TO PROVE THE IDENTITY AND CREDITWORTHINESS OF ALL TEN COMPANIES FROM WHOM SHARE CAPITAL HAS BEEN RECEIVED THE RELEVANT DOCUMENTS ARE ENCLOSED HEREWITH AS ANNEXURE - 1. 2. COPY OF BANK ACCOUNT OF M/S LAXMIRAJ DISTRIBUTORS PVT. LTD. IN WHICH THE SHARE CAPITAL OF RS. 7.52 CRORES IS DEPOSITED IS ENCLOSED HEREWITH AS ANNEXURE - 2. FURTHER IN RESPECT OF BUY BACK OF SHARES M/S LAXMIRAJ DISTRIBUTORS PVT. LTD. HAS NOT DONE BUY BAC K OF SHARES. HOWEVER COPY OF BANK STATEMENTS OF THE PERSONS WHO HAD BOUGHT BACK THE SHARES IS ENCLOSED HEREWITH AS ANNEXURE - 3 3. FURTHER IN RESPECT OF ADDRESS OF M/S. SHRIKANT BROKING PVT. LTD. THE COMPANY IS TRYING TO LOCATE THEIR ADDRESS. I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 18 HOWEVER AS PER OUR INFORMATION AVAILABLE WITH THEM IT MAY BE PRESENTLY LOCATED AT 311 SAHAJANAND COMPLEX OFF. C.G. ROAD SWASTIC CHAR RASTA NAVRANGPURA AHMEDABAD GUJARAT - 380 009. 4. THE DIRECTOR OF M/S. FLACSEL CONTECH PVT. LTD. MR. PRAVINBHAI MODI HAD DENIED ANY LINK/TRANSACTION EVER WITH M/S. LAXMIRAJ DISTRIBUTORS PVT. LTD. HOWEVER THE ASSESSEE COMPANY HAD RECEIVED CONFIRMATION FROM THEM AND ALSO RECEIVED A COPY OF PAN CARD CERTIFICATE OF INCORPORATION MOA AND AOA ETC. FURTHER THE AMOUNT OF SH ARE CAPITAL RECEIVED FROM THEM IS ALSO REFLECTED IN THE BANK STATEMENT OF THE ASSESSEE COMPANY. THE DIRECTOR OF M/S FLACSEL CONTECH PVT. LTD. MR. PRAVINBHAI MODI MAY NOT BE AWARE OF THE SAME. 5. IN RESPECT OF THE DOCUMENTS OF THE MANAGING DIRECTOR O R MAIN DIRECTOR OF ALL THE COMPANIES SINCE THE MONEY HAS BEEN RECEIVED FROM THE COMPANY THE DIRECTORS ARE RELUCTANT TO PASS ON THEIR PERSONAL INFORMATION. I WOULD NOW REQUEST YOU TO KINDLY TAKE THE ABOVE INFORMATION ON RECORD AND LET ME KNOW IF ANY FURTH ER INFORMATION IS REQUIRED. ' THE RELEVANT PORTION OF THE REPLY OF THE ASSESSEE FILED ON 11 - 05 - 2015 IS REPRODUCED AS UNDER: - WITH REFERENCE TO ABOVE AND IN CONTINUATION OF EARLIER I AM SUBMITTING AS UNDER: 1. TO PROVE THE IDENTITY AND CREDITWORTHINE SS OF THE COMPANIES THE COPIES OF CONFIRMATION OF ACCOUNTS BANK STATEMENT AND IT ACKNOWLEDGEMENT OF ANGELICA COMMO TRADE PVT. LTD. ANTI CLOCK VYAPAR PVT. LTD. MEDLER DELCOM PVT. LTD. MUSE DEALERS PVT. LTD. VERONICA COMMERCE PVT. LTD. AND WINTER FRESH FOOD PVT. LTD. IS ENCLOSED HEREWITH FOR YOUR KIND PERUSAL. FURTHER IN RESPECT OF BANK STATEMENT AND IT ACKNOWLEDGEMENT OF SHRIKANT BROKING PVT. LTD. BHANDARI GLASSES PVT. LTD. FLACSEL CONTECH PVT. LTD. AND CHI RAG CALL SHOPS PVT. LTD. THE ASSESSEE CO MPANY WAS NOT ABLE TO COLLECT I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 19 THAT DATA AS THE DIRECTORS OF THOSE COMPANIES ARE NOT COOPERATING. 2. THE ASSESSEE HAS MADE COMMUNICATION WITH REGARDS TO THE DOCUMENTS OF THE MANAGING DIRECTORS OF ALL TEN COMPANIES BUT THEY HAVE DENIED TO GIVE ANY PERSONAL DATA TO THE ASSESSEE COMPANY. THEY HAVE DENIED TO PRODUCE BEFORE YOUR KIND HONOUR ALONG WITH THE REQUIRED DOCUMENTS AS THE INVESTMENT WAS MADE BY THE COMPANIES AND HENCE GIVING THEIR PERSONAL DATA IS NOT JUSTIFIABLE.' 4. THE ASSESSEE HAS FILED CONFIRMATI ONS COPIES OF RETURN FILING PROOF AND COPIES OF BANK STATEME NTS IN RESPECT OF THE FOLLOWING 6 COMPANIES TO WHOM THE SH ARES ARE SOLD ON PREMIUM: - I. M.S ANGELICA COMMOTRADE PVT. LTD. II . M/S ANTICLOCK VYSPAAR PVT. LTD. II I. M/S MEDLAR DEALCOM PVT. LTD. IV. M/S MUSE DEALERS PVT. LTD. V. V. M/S VERONICA COMMERCE PVT. LTD. VI. M/S WINTER FRESH FOODS PVT. LTD. ALTHOUGH THE ASSESSEE FILED CONFIRMATIONS COPIES OF RETURN FILING PROOF AND COPIES OF .BANK STATEMENTS FOR THE A.Y. 2009 - 10 BUT COULD NOT PRODUCE THE MAIN DIRECTORS OR MANAGING DIRECTORS OF THOSE ABOVE 6 COMPANIES FOR EXAMINATION. SECONDLY ON PERUSAL OF ACKNOWLEDGEMENTS OF THE RETURNS FILED BY THESE 6 COMPANIES NAMELY M.S ANGELICA COMMOTRADE PVT. LTD. M/S ANTIDOCK VYAPAAR PVT. LTD. M/S MEDLAR DEA LCOM PVT. LTD. M/S MUSE DEALERS PVT. LTD. M/S VERONICA COMMERCE PVT. LTD. AND M/S WINTER FRESH FOODS PVT. LTD. IT HAS BEEN NOTICED THAT THESE COMPANIES HAVE DECLARED TOTAL INCOME OF RS.760/ - RS.530/ - ( - )RS.30 220/ - ( - )RS.30 493/ - RS.2 550/ - AND RS.7 79 580/ - RESPECTIVELY. THUS THE INCOMES OF 5 COMPANIES OUT OF THE ABOVE 6 COMPANIES IS EITHER IN LOSS OR IS BELOW RS.3 000/ - . AND THE INCOME OF THE REST OF ONE COMPANY NAMED M/S WINTER FRESH FOODS PVT. LTD IS RS.7 79 580/ - ONLY. THIRDLY ON CAREFUL PERUSAL OF THE BANK STATEMENTS OF THESE COMPANIES FILED BY THE ASSESSEE IT HAS BEEN NOT ICED THAT BEFORE THE AMOUNT WAS TRANSFERRED THERE ARE IMMEDIATE CREDIT ENTRIES' IN THE ACCOUNT. APART FROM THESE ENTRIES THE REGULAR I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 20 BALANCES IN THESE ACCOUNTS OF THE ALLEGED COMPANIES ARE VERY MEAGRE WHICH DOES NOT PROVE THE CREDITWORTHINESS OF THE COPANY . FOURTHLY THE SAME 5 10 000 SHARES HAVE BEEN PURCHASED BY THE RELATED PERSONS OF THE ASSESSEE COMPANY'S DIRECTORS NAMELY SMT. PRIYANKA SANGHVI RAVI SNGHVI SHANTABEN P JAIN AND VIMLA P SANGHVI IN THE MONTH OF AUGUST 2009 FROM THE ABOVE SAID 6 COMPANIES ON FACE VALUE OF RS. 10/ - PER SHARE ONLY. NO PRUDENT I NVESTOR WILL SELL THE SHAR E S ON LOSS OF RS. 90/ - PER SHARE WITHIN A YEAR. TIS SHOWS IN REAL THERE WAS NO SALE PURCHASE OF TH E SHARES BUT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES ONLY. FIFTHLY DURING THE SURVEY PROCEEDINGS CONDUCTED UNDER SECTION 133A OF THE I.T. ACT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 30 - 08 - 2012 THE MANAGING DIRECTOR OF THE COMPANY SH. PARASM AL JAIN ADMITTED THAT HE HIMSEL F INTRODUCED UNACCOUNTED INCOME OF THE ASSESSEE COMPANY IN THE FORM OF S HARE CAPITAL THROUGH SOME OF THE UNSCRUPULOUS ENTRY PROVIDERS LOCATED AT AHMEDABAD SURAT AND KOLKATA. SIXTHLY AS GIVEN FINDING BY THE ASSESSING OFFICE R IN THE ASSESSMENT ORDER ON THE GROUND VIVIDLY NARRATED IN THE ASSESSMENT ORDER THAT THE ASSESSEE ITSELF INTRODUCED ITS OWN MONEY THROUGH SHAM TRANSACTIONS IN THE GARB OF SALE OF SHARES ON HUGE PREMIUM. IN VIEW OF THE ABOVE TO SUM UP THE ASSESSEE HAS FA ILED TO SATISFY THE THREE MAIN PARAMETERS I.E . IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN RESPECT OF ALLEGED SALE OF SHARES ON HEAVY PREMIUM. THEREFORE THE ADDITION MADE BY THE ASSESSING DESERVES TO BE SUSTAINED IN RESPECT OF ABOVE 6 COMPANIES. 5. THE ASSESSEE HAS FILED COPIES OF CONFIRMATIONS IN RESPECT OF THE FOLLOWING COMPANIES - I. M/S. SHRIKANT BROKING PVT. LTD. II. BHANDARI GLASSES PVT. LTD. III. M/S. FLACSEL CONTECH PVT. LTD. IV. CHIRAG CALL SHOPS PVT. LTD. EXCEPT THE COPIES OF CONFIRMATIONS THE ASSESSEE COULD NOT FILE ANY OTHER EVIDENCES LIKE COPIES OF RETURN FILING PROOF AND COPIES OF BANK STATEMENTS ETC.. SECONDLY THE ASSESSEE COULD NOT PRODUCE THE MAIN DIRECTORS OR MANAGING DIRECTORS OF THE ABOVE 4 COMPANIES FOR. EXAMINATION. THIRDLY THE SAME I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 21 1 52 000 SHARES HAVE BEEN PURCHASED BY THE RELATED COMPANY OF THE ASSESSEE M/S LAXMIRAJ INFRASTRUCTURE PVT. LTD. IN THE MONTH OF DECEMBER 2009 FROM THE ABOVE SAID 4 COMPANIES ON FACE VALUE OF RS.10/ - PER SHARE ONLY. NO P RUDENT INVESTOR WILL SELL THE SHARES ON LOSS OF RS. 90/ - PER SHARE WITHIN SO SHORT SPAN OF TIME. THE DIRECTOR OF M/S FLACSEL CONTECH PVT. LTD. SH. PRAVINBHAI MODI HAS A/READY DENIED ANY LINK/TRANSACTION EVER WITH M/S LAXMIRAJ DISTRIBUTORS PVT. LTD. THIS SHOWS IN REAL SENSE THERE WAS NO SALE PURCHASE OF THE SHARES BUT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES ONLY. FOURTHLY DURING THE SURVEY PROCEEDINGS CONDUCTED UNDER SECTION 133A OF THE I.T. ACT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 30 - 08 - 201 2 THE MANAGING DIRECTOR OF THE COMPANY SH. PARASMAL JAIN HIMSELF ADMITTED THAT HE HIMSELF INTRODUCED UNACCOUNTED INCOME OF THE ASSESSEE COMPANY IN THE FORM OF SHARE CAPITAL THROUGH SOME OF THE UNSCRUPULOUS ENTRY PROVIDERS LOCATED AT AHMEDABAD SURAT AND K OLKATA. FIFTHLY AS GIVEN FINDING BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ON THE GROUND VIVIDLY NARRATED IN THE ASSESSMENT ORDER THAT THE ASSESSEE ITSELF INTRODUCED ITS OWN MONEY THROUGH SHAM TRANSACTIONS IN GARB OF SALE OF SHARES ON HUGE PREMIUM. IN VIEW OF THE ABOVE TO SUM UP THE ASSESSEE HAS FAILED TO SATISFY THE THREE MAIN PARAMETERS I.E . IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN RESPECT OF ALLEGED SALE OF SHARES ON HEAVY PREMIUM. THEREFORE THE ADDITION MADE BY THE ASS ESSING OFFICER DESERVES TO BE SUSTAINED IN RESPECT OF ABOVE 4 COMPANIES. IN VIEW OF THE ABOVE FACTS THE ENTIRE ADDITION OF RS.7.52 CRORES DESERVES TO BE SUSTAINED. THE REPORT IS SUBMITTED FOR YOUR KIND PERUSAL AND NECESSARY ACTION AT YOUR END.' THE CI T(A) THEREAFTER REJECTS ASSESSEE S ARGUMENTS CHALLENGING THE IMPUGNED ADDITION BY PLACING RELIANCE ON SHRI JAIN S SURVEY S TATEMENT FOLLOWED BY WRITTEN CORRESPONDENCE CONTENTS OF THE ABVOESTATED REMAND REPORT SO AS TO CONFIRM THE ASSESSING OFFICER S FINDIN GS. THE ONLY EXCEPTION IN THE LOWER APPELLATE ORDER AND THE ABOVE EXTRACTED REMAND REPORT GOING AGAINST THE ASSESSING OFFICER S I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 22 OBSERV ATIONS IN HIS REASSESSMENT AND ONE OF THE REASONS STATED IN REOPENING EXERCISE IS THAT EARLIER THE ASSESSEE WAS ALLEGED TO HAVE PURCHASED BACK THE IMPUGNE D SHARE CAPITAL FROM THE INVESTOR COMPANIES ITSELF WHEREIN THE LATTER DEVELOPMENTS INDICATE THAT THE SAID SHARE CAPITAL WAS PURCHASED BY SMT. PRIYANKA SANGHVI RAVI SANGHVI SANTABEN P. JAIN AND VIMALA P. SANGHVI. THE ASS ESSING OFFICER S REMAND REPORT AS FORTIFIED IN THE LOWER APPELLATE ORDER HOLDS THAT ALL THESE FOUR SHARE CAPITAL PURCHASERS ARE RELATED PE RSONS OF ASSESSEE S DIRECTORS. THIS LEAVES THE ASSESSEE AGGRIEVED. 12 . LEARNED AUTHORIZED REPRESENTATIVE OPENS UP ASSESS EE S ARGUMENTS. HE COMES TO LEGAL GROUND FIRST CHALLENGING VALIDITY OF THE IMPUGNED REOPENING. OUR ATTENTION IS INVITED TO REOPENING REA SONS EXTRACTED HEREINABOVE. LEARNED COUNSEL STATES THAT THE ASSESSING OFFICER HAS EXERCISED SECTION 148 JURI SDICT ION ON FOUR COUNTS I.E. SCRUTINY OF THE IMPOUNDED DOCUMENTS BF - 01 INDICATED ASSESSEE TO HAVE INTRODUCED ITS UNACCOUNTED CAPITAL THROUGH SHARE CAPITAL AND PREMIUM I T THEREAFTER RE - PURCHASED THE V ERY SHARE FROM INVESTOR COMPANIES SHRI JAIN S STATEMENT S DID NOT DISCLOSE INVESTORS ENTITIES NAMES AND THAT HE HIMSELF HAD ADMITTED UNACCOUNTED INCOME ON ASSESSEE S BEHALF; RESPECTIVELY. 13 . THE ASSESSEE COMES TO FIRST REASON OF REOPENING. IT INVITES OUR ATTENTION TO THE IMPOUNDED DOCUMENT(S) BF - 01 AT PAG ES 1 TO 620 OF THE PAPER BOOK INCLUDING ANNUAL STATEMENTS REPORT S AND SHARE TRANSFER FORMS ETC. IT SUBMITS THAT THE ASSESSING OFFICER S I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 23 REASSESSMENT ORDER DOES NOT REFER TO ANY DOCUMENT FORMING PART OF THIS COMPILATION. IT CONTENDS THAT ALL THE RELEVANT DETAIL S OF THE IMPUGNED SHARE CAPITAL TRANSFER ARE ALREADY RECORDED IN ITS REGULAR BOOKS AS ENCLOSED WITH THE ORIGINAL RETURN. AND THAT THERE IS NO THING IN BF - 01 SO AS TO FORM REASONS TO BELIEVE THAT ANY INCOME TAXABLE HAS ESCAPED AS SESSMENT . THE ASSESS EE REFERS TO CASE LAW ITO VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) TO BUTTRESS ITS SUBMISSION THAT THERE OUGHT TO BE A LIVE NEXUS BETWEEN SUCH IMPOUNDED OR OTHER MATERIAL AND REASONS OF REOPENING. THE ASSESSEE PLEADS THAT THE ASSESSING OFFICER HAS M ERELY DRAWN AN INFERENCE OF ITS UNACCOUNTED INCOME WIT HOUT EVEN REFERRING TO ANY OF THE IMPOUNDED DOCUMENTS. IT THEN QUOTES CASE LAW (2015) 94 CCH 39 (DELHI HIGH COURT) PCIT VS. G & G PHARMA LTD. TO STRENGTHEN ITS PLEA THAT AN ASSESSING OFFICER MUST STATE THE RELEVANT MATERIAL RESULTING IN FORMATION OF ITS PLEA THAT ANY TAXABLE INCOME HAS ESCAPED ASSESSMENT. IT ACCORDINGLY CONCLUDES FIRST FACET OF ITS ARGUMENT CHALLENGING VALIDITY OF IMPUGNED REOPENING ON THE GROUND THAT ASSESSING OFFICER S RELIANCE ON BF - 01 IS ENTIRELY ILL - FOUNDED. 14 . NEXT COME ASSESSEE S CONTENTION S ON SECOND FACET OF THE REOPENING REASONS THAT IT REPURCHASED THE VERY SHARE CAPITAL IN QUESTION FROM THE ABOVE STATED INVESTOR COMPANY. IT REFERS TO DEVIATION OF THE LOWER AUTHORITIES RIG HT FROM ASSESSING OFFICER S REOPENING REASONS ALLEGING THE ASSESSEE TO HAVE RE - PARTED THE SHARE CAPITAL FOLLOWED BY HIS REMAND REPORT THAT RELATIVES OF ITS DIRECTOR S WHO HAVE PURCHASED BACK THE SHARE CAPITAL. THE CIT(A) ADMITTEDLY I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 24 APPROVES THE SAME . THE ASSESSEE S PLEA IS THAT THE IMPUGNED REOPENING IS ACCORDINGLY BASED ON INCORRECT FACTS AND DESERVES TO BE DECLARED INVALID AS PER CASE LAW (2010) 324 ITR 154 (MUM) PRASHANT JOSHI VS. ITO (2016) 383 ITR 361 (DEL) DR. AJIT GUPTA VS. ACIT AND (2012) 17 ITR (TRIBUNAL) 332 (AHD) MAHADEV TRADING COMPANY VS. ITO. 15 . THE ASSESSEE COMES TO THE THIRD SUBMISSION CHALLENGING VALIDITY OF THE IMPUGNED REOPENING FOR THE REASON THAT ITS DIRECTOR SHRI PARASMAL JAIN HAD SIMPLY NOT REMEMBERED THE REPRESENTATIVES OR NEGO TIATORS OF THE INVESTOR COMPANIES AND THEIR NAMES IN THE SURVEY STATEMENT. IT REFERS TO SHRI JAIN S SURVEY STATEMENT THAT HE HAD REPLIED TO ALL QUERIES AND A MERE LAPSE OF MEMORY AT SOME POINT OF TIME; EVEN IF TAKEN AS ADMISSION IS NOT SUFFICIENT FOR MA KING THE IMPUGNED ADDITION IN ABSENCE OF ANY CORROBORATIVE EVIDENCE AS PER CBDT CIRCULAR DATED 10 - 03 - 2003. CASE LAW OF (2008) 174 TAXMANN 466(GUJ) KAILASHBEN MANHARLAL CHOKSHI VS. CIT IS QUOTED IN SUPPORT. 16 . THE ASSESSEE S LAST ARGUMENT QUA FOURTH FAC ET OF THE IMPUGNED REOPENING COMES TO BOTH THE LOWER AUTHORITIES FINDINGS RELYING ON SHRI JAIN S STATEMENT TO HAVE INTRODUCED UNACCOUNTED SHARE CAPITAL. IT INVITES OUR ATTENTION TO WRITTEN CORRESPONDENCE DATED 03 & 04/09/2012 HEREINABOVE THAT THE SAME HA D IN FACT CLAIMED THE SHARE CAPITAL PURCHASE INSTANCES TO BE GENUINE. WE PUT A SPECIFIC QUERY AS TO WHETHER THE SURVEY AUTHORITIES EVER MADE A SUGGESTION THAT THESE WERE SHAM SHARE CAPITAL TRANSFERS. THE ASSESSEE IN REPLY I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 25 TAKES US TO ALL OF THE SURVEY Q UERIES NOT DEMONSTRATING ANY SUCH SUGGESTION EVEN. IT THEREAFTER REITERATES THE FACT THAT IT HAD ONLY OFFERED TO PAY TAXES AFTER TREATING THE IMPUGNED TRANSACTIONS AS GENUINE ON ES. IT SUBMITS THAT THE ASSESSING OFFICER S ALL FOUR REASONS FORMING FOUNDATI ON OF THE IMPUGNED REOPENING ARE LIABLE TO BE REVERSED RENDERING THE ENTIRE REASSESSMENT INVALID. 17 . THE ASSESSEE COMES TO MERITS OF THE IMPUG NED ADDITION AS WELL . IT TAKES US TO CI T(A) S ORDER PAGE 32 PARA 6 ONWARDS THEREIN INTER ALIA QUOTING SHRI JAIN S SURVEY STATEMENT UNDER OATH HIS FINDING THAT RELATIVES OF I T S DIRECTOR S HAD IN FACT PURCHASED THE IMPUGNED SHARE CAPITAL SIX INVESTOR COMPANIES HAD MEA GER INCOMES PLACING RELIANCE ON HON BLE DELHI HIGH COURT JUDGMENT IN (2014) 42 TAXMANN.COM 377 (DEL) MAF ACADEMY P VT. LTD INSTEAD OF THE OTHER CASE LAW QUOTED AND CIT VS. LOVLY EXPORTS 299 ITR 268 (DEL) . THE ASSESSEE ACCORDINGLY SUBMITS THAT THERE IS NO MATERIAL IN THE INSTANT CAS E POINTING OUT TO ANY UNACCOUNTED INCOME IN SCRUTINY SURVEY STATEME NT REASSESSMENT ETC. 18 . LEARNED COUNSEL THEREAFTER STATES THAT THE ASSESSEE HAS FILED ALL RELEVANT DETAILS OF THE INVEST OR COMPANIES BEFORE THE LOWER AUTHORITIES I . E. PAN DETAILS INCOME TAX ACKNOWLEDGMENT S BANK STATEMENT S CONFIRMATIONS SHARE TRA NSFER DOCUMENT S ETC. IT ARGUES THAT THE MERE FACT OF SIX INVESTOR COMPANIES HAVING MEAGER INCOME IS NO GROUND TO MAKE THE IMPUGNED ADDITION IN ASSESSEE S HANDS AS PER HON BLE DELHI HIGH COURT DECISION IN CIT VS. VRINDAVAN FARMS ITA I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 26 NO. 71 (ALONG WITH A B ATCH OF APPEALS) OF 2015 DECIDED ON 12 - 08 - 2015 HOLDING THAT IF IDENTITY AND OTHER DETAILS OF THE SHARE APPLICANTS ARE AVAILABLE SHARE APPLICATION MONEY IN QUESTION IS NOT TO BE TREATED AS UNDISCLOSED INCOME IN THE HANDS OF THE TRANSFEROR ENTITY AND THE SA ME IS TO BE ADDED IN CASE OF THE APPLICANT COMPANY CONCERNED. IT IS FURTHER PLEADED THAT THE REPURCHASE INSTANCE OF THE SHARE CAPITAL IN QUESTION IS NOT RELEVANT IN SUCH A CASE AS PER CIT VS. FINE VISION PROMOTERS PVT . LTD. (2016) 380 ITR 289 (DEL). 1 9 . LD. COUNSEL CONTINUES HIS ARGUMENT S IN THE SAME BREADTH AGAINST THE IMPUGNED ADDITION ON MERITS. HE AVERS THAT BOTH THE LOWER AUTHORITIES ARE FAIR ENOUGH IN NOT QUESTIONING GENUINENESS OF THE EVIDENCE ON RECORD NOT SUGGESTING THAT ANY OF THE SIX INVES TOR COMPANIES HAVE EVER DEPOSITED ANY CASH IN THEIR ACCOUNTS SINCE IT IS AN INSTANCE OF CASH BEING CREDITED ONLY. THE ASSESSEE TAKES US TO PAGE 31 OF ITS WRITTEN SUBMISSIONS QUA FOUR REMAINING ENTITIES TO STATE THAT ALL THE SHARE APPLICATION MONEY HAS COM E THROUGH BANKING CHANNEL ONLY. IT RELIES UPON HON BLE GAUHATI HIGH COURT DECISION IN NEMICHAND KOTHARI VS. CIT (2003) 264 ITR 254 OBSERVING THAT ONLY ONUS OF AN ASSESSEE IN SUCH A CASE IS TO THE EXTENT OF PROVING SO URCE OF THE AMOUNT RECEIVED . IT IS REI TERATED THAT ALL CHEQUE PAYMENTS IN QUESTION ARE FOLLOWED BY CONFIRMATIONS NOT INVOLVING ANY IDENTITY DISPUTE OF THE SHARE APPLICANT COMPANIES . A CO - ORDINATE BENCH DECISION OF THE TRIBUNAL ITO VS. NEELKANTH FINBUILD LTD. (2015) 40 ITR (TRIB) 665 (DEL) IS FURTHER RELIED UPON. I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 27 20 . THE ASSESSEE COMES TO ONE OF THE SHARE APPLICANT ENTITY M/S SHRIKANT BROKERAGE. THE ASSESSING OFFICER HOLDS THIS COMPANY TO BE NOT AVAILABLE (SUPRA). THE SAME IS STATED TO BE CONTRADICTED IN HIS OWN REMAND REPORT EXTRACTED HERE INABOVE THAT TH IS TIME THE SAID COMPANY HAS BEEN FOUND TO BE AVAILABLE. 21 . THE ASSESSEE TAKES US TO STATEMENT OF SHRI PRAVIN MODI. IT PLEADS THAT ALL THE OVERWHELMING DOCUMENTS AVAILA BLE IN THE CASE FILE PROVING THIS COMPANY TO HAVE MADE THE IMPUGNED INVESTMENT PREVAIL S OVER SUCH AN ORAL ASSERTION. IT REFERS TO CIT(A) S FINDINGS AS PER HON BLE DELHI HIGH COURT S DECISION IN MAF ACADEMY CASE (SUPRA) AND SEEKS TO DISTINGUISH THE SAME; MORE PARTICULARLY PARA S 7 TO 10 THEREOF BY STATING THAT NO SUCH EVI DENCE O F SHAM SHARE CAPITAL TRANSACTION EXISTS IN FACTS OF THE INSTANT CASE SINCE THERE IS NO BASIS OF ANY FINDING OF ACCOMMODATION ENTRY SUPPORTED FROM THE CASE RECORD BEFORE US. THE ASSESSEE ACCORDINGLY ARGUES THAT IT HAD DISCHARGED ALL ITS ONUS ON MERI TS AS WELL IN PROVING GENUINENESS/ CREDITWORTHINESS OF THE IMPUGNED SHARE CAPITAL TRANSFERS. IT PRAYS FOR ACCEPTANCE OF THE INSTANT APPEAL THEREFORE 22 . SHRI R.I. PATEL IS THE LD. CIT - DEPARTMENTAL REPRESENTATIVE APPEARING AT REVENUE S BEHEST. HE STRONG LY SUPPORTS BOTH THE LOWER AUTHORITIES FINDINGS ON LEGALITY AS WELL MERITS. HE IN T ER ALIA SUBMITS THAT ASSESSEE IS A PRIVATELY HELD COMPANY. ITS DIRECTOR S SURVEY STATEMENT HAS ALREADY ADMITTED THE IMPUGNED UNACCOUNTED INCOME BY WAY OF INTRODUCTION OF S HARE CAPITAL AS FOLLOWED BY THE LETTER DATED I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 28 04 - 09 - 2012 (SUPRA). SHRI PATEL CONTENDS THAT ALL THIS OVERWHELMING MATERIAL ON RECORD FORMED SUFFIC I E N T REASONS UNDER FOR ASSESSING OFFICER FOR EXERCISING SECTION 148 JURISDICTION . HE INVITES OUR ATTENTION TO THE FACT THAT ASSESSEE S RETURN WAS IN FACT PROCESSED ONLY U/S. 143(1) OF THE ACT. 23 . SHRI PATEL THEREAFTER COMES TO MERITS OF THE ISSUE. HE REITE RATES ASSESSEE S STATUS OF A PRIVATELY HELD COMPANY UNDER COMPANIES ACT AND ITS ADMISSION DURING SURVEY IN ABSENCE OF ANY UNDUE INFLUENCE. HE HIGHLIGHTS THAT THE ASSESSING OFFICER HAD CONDUCTED DUAL EXERCISE DURING REASSESSMENT AND REMAND PROCEEDINGS TO FIND OUT GENUINENESS/CREDITWORTHINESS ELEMENT. HE TAKES US TO PAGE 69 OF THE PAPER BOOK DEMONSTRATING S HARE APPLICATION FORMS FOLLOWED BY TRANSFER RECEIPTS THEREOF AT PAGE 709 SHOWN TO BE BLANK. SHRI PATEL SUBMITS MERE FILING OF DOCUMENT IS NOT SUFFICIENT TO PROVE GENUINENESS OF THE TRANSACTION IN QUESTION. 24 . THE REVENUE THEREAFTER QUOTES THE FOLLOWI NG CASE LAW ON LEGALITY OF REOPENING AS WELL AS MERIT ASPECT: - VALIDITY OF REOPENING: - CASE LAWS U/S. 147 (1) OLWIN TILES (INDIA) P. LTD. VS. DCIT - 66 TAXMANN.COM 8 (GUJ.) (2) YOGENDRAKUMAR GUPTA VS. ITO - 51 TAXMANN.COM 383 (SC) (3) YOGENDR AKUMAR GUPTA VS. ITO - 46 TAXMANN.COM 56 (GUJ.) (4) DCIT VS. ZUARI ESTATE DEVELOPMENT & INVESTMENT CO. LTD. - 63 TAXMANN.COM 177 (SC) (5) SUN PHARMACEUTICALS INDUSTRIES LTD. VS. DCIT - 29 TAXMANN.COM 262 (GUJ.) I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 29 (6) SUN PHARMACEUTICALS INDUSTRIES LTD. VS. DCIT - 25 TAXMANN.COM 509 (GUJ.) (7) LALITA ASHWIN JAIN VS. ITO - 45 TAXMANN.COM 404 (GUJ.) (8) NAREN SADASHIV BURADE VS. ITO - 61 TAXMANN.COM 182 (GUJ.) (9) ACIT VS. RAJESH JHAVERI STOCK BROKERS (P.) LTD. - 161 TA XMAN 316 (SC) (A) CASE LAWS U/S. 68 (1) NAVODAYA CASTLE (P.) LTD. VS. CIT - 56 TAXMANN.COM 18 (SC) (2) CIT VS. NAVODAYA CASTLE (P.) LTD. - 50 TAXMANN.COM 110 (DELHI) (3) N. TARIKA PROPERTY INVEST. (P.) LTD. VS. CIT - 51 TA XMANN.COM 387 (SC) (4) CIT VS. N. TARIKA PROPERTY INVEST. (P.) LTD. - 40 TAXMANN.COM 525 (DELHI) (5) CIT VS. NIPUN BUILDERS & DEVELOPERS (P.) LTD. - 30 TAXMANN.COM 292 (DELHI) (6) RIDDHI PROMOTERS (P.) LTD. VS. CIT - 58 TAXMAN N.COM 367 (DELHI) (7) CIT VS. N. R. PORTFOLIO (P.) LTD. - 29 TAXMANN.COM 291 (DELHI) (8) CIT VS. MAP ACADEMY (P.) LTD. - 42 TAXMANN.COM 377 (DELHI) THE REVENUE ACCORDINGLY PRAYS FOR REJECTION OF THE INSTANT APPEAL . 25. WE AFFORDED REBUTTAL O PPORTUNITY TO THE ASSESSEE. IT REITERATES ITS EARLIER SUBMISSIONS THAT THE MAIN REASON FOR THE ASSESSING OFFICER IN INVOKING SECTION 148 JURISDICTION WAS ON AN ASSUMPTION THAT IT HAD REPURCHASED THE IMPUGNED SHARE CAPITAL SINCE THERE I S NO IDENTITY ISSUE OF THE INVESTOR COMPANIES. THE ASSESSEE THEREAFTER INVITES OUR ATTENTION TO PAGES 701 708 AND 709 OF THE PAPER BOOK TO REBUT REVENUE S CONTENTION THAT ITS SHARE APPLICATION/TRANSFER FORM ARE BLANK. ITS CASE IS THAT THE SAME ARE MERE SAMPLE COPIES WHEREA S THE I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 30 ORIGINAL DOCUMENT S FORM PAGES 382 385 388 391 394 397 487 489 491 AND 493 OF THE PAPER BOOK. THE ASSESSEE THEREFORE STATES THAT ALL THESE DOCUMENTS DULY REBUT THE REVENUE S CONTENTIONS IN QUESTION . 26. WE HAVE HEARD BOTH THE PARTIES AT CONS IDERABLE LENGTH. CASE FILE PERUSED. THE INSTANT APPEAL RAISES TWO QUESTIONS BEFORE US. FIRST ONE IS AS WHETHER THE ASSESSING AUTHORITY HAS RIGHTY TAKEN RECOURSE TO THE IMPUGNED REOPENING IN ABOVE NARRATED FACTS OF THE CASE. LATTER ISSUE IS ABOUT CORREC TNESS OF THE IMPUGNED SHARE APPLICATION MONEY ADDITI ON OF RS. 7.5 CRORES . WE PROCEED T O EXAMINE THE LEGAL ISSUE FIRST . THERE IS NO QUARREL BETWEEN THE PARTIES THAT ASSESSE S RETURN WAS PROCESSED ONLY U/S. 143(1) OF THE ACT IN STE A D OF A REGULAR ASSESSMEN T BEING FRAMED. AND THAT THE IMPOUNDED MATERIAL D URING SURVEY IS BF - 01 COMPRIES OF ASSESSEE S ANNUAL STATEMENTS RETURN ANNUAL REPORT WHAT WAS ALREADY ENCLOSED WITH THE RETURN. 27. WE DEEM IT APPROPRIATE AT THIS STAGE TO REFER TO SOME LAN D MARK JUDICI AL PRE CE DENTS QUA SIGNIFICANCE OF THE RELEVANT REASONS LEADING TO A REOPENING U/S. 148 OF THE ACT. HON BLE BOMBAY HIGH COURT IN CASE OF HINDUSTAN LEVER LTD VS. RB WADKAR (2004) 268 ITR 332 HO LD S THAT . IT IS NEEDLES TO MENTION THAT REASONS ARE REQUIRED TO BE READ AS THEY WERE RECO RDED BY THE ASSESSING OFFICER. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITION COULD BE MADE TO THOSE REASON S . NO INF ERENCE IS ALLOWED TO BE DRAWN O N THE BASIS OF REASONS NOT RECORDED. IT IS FOR THE ASSESSING OFFICE R TO DISCLOSE AND OPEN HIS I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 31 MIND THROUGH THE REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH THE REASONS . THEIR LORDSHIP S FURTHER EMPHASIZE THAT THE REASONS SHOULD BE SELF EXP LANATORY AND SHOULD NOT KEEP ON ASSESSEE GUESSING FOR THE REASONS. AND THAT R E ASONS PROVIDE LINK BET WEEN CONCLUSIONS AND EVIDENCE. THE VERY HON B LE COURT IN PRASHANT B JOSHI VS ITO (2010) 324 ITR 159 IS OF THE VIEW THAT ASSESSING OFFICER MUST HAVE REASONS TO BELIEVE OF ANY TAXABLE INCOME HAVING ESCAPED ASSESSMENT BEFORE HE PROCEEDS TO ISSUE REOPENING NOTICE AND THE RELEVANT REASONS RECORDED ARE THE ONLY REASONS WHICH CAN BE CONSIDERED UNLESS FORMATION OF THIS BELIEF IS IMPUGNED. 28. HON BLE APEX COURT SIMILARLY IN CASE LAW OF LAKHMANI MEWAL DAS (SUPRA) HOLDS THAT REASONS FOR THE F ORMATION OF BELIEF MUST HAVE RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO NOTICE OF THE ITO AND FORMATION OF HIS BEL IEF THAT THERE HAS BEEN ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCLOSE FU LLY OR TRULY ALL RELEVANT FACTS. IT IS NO DOUBT TRUE THAT THE COURT CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPINION FOR THAT OF THE INCOME - TAX OFFICER ON THE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING ASSESSMENT. AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY MATERIAL HOWSOEVER VAGUE A ND INDEFINITE OR D ISTANT REMOTE AND FAR - FETCHED WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESCAPEMEN T OF THE INCOME OF THE ASSESSEE I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 32 FROM ASSESSMENT. THEIR LORDSHIPS THEN CONSIDER SECTION 147 OF THE INCOME TAX ACT 1961 AS WELL TO CONCL UDE IN PARA 11 THAT THIS FORMATION OF BELIEF SHOULD NOT BE MERE PRETENCE. 29. WE FURTHER DEEM IT APPROPRIATE AT THIS STAGE TO DEAL WITH REVENUE S PRELIMINARY ARGUMENT THAT THAT INSTANT CASE INVOLVES PROCESSING ONLY U/S. 143(1) OF THE ACT AND NOT A CASE O F A REGULAR ASSESSMENT U/S. 143(3) BEING FRAMED. IT QUOTES CASE LAW OF RAJESH JAVERI STOCK BROKERS (SUPRA) DRAWING FINE DISTINCTION BETWEEN THE TWO ASSESSMENT CONCEPTS TO CONCLUDE THAT TH E FORMER ONE IS A MERE INTIMATION AS AGAINST THE LATTER BEING TREATE D AS AN ASS ESSMENT. THEIR LORDSHIP CLARIFY IN PARA 16 OF THE JUDGMENT THAT REASONS TO BELIEVE IN THE RELEVANT CONTEXT MEAN CAUSE OR JURISDICTION AND IF THE ASSESSING OFFICER HAS SUCH A CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT AN INCOME HAS ESCAPED ASSESSMENT IT CAN BE SAID TO HAVE REASONS TO BELIEVE THAT AN INCOME HAS ESCAPED . THEIR LORDSHIP OBSERVE THAT ONLY QUESTION AT THE STAGE OF ISSUANCE OF NOTICE REQUIRED THAT THERE IS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD FORM A REQUISITE BEL IEF OF ANY TAXABLE INCOME TO HAVE ESCAPED ASSESSMENT. AND THAT CONCLUSIVE PROOF OF SUCH MATERIAL IS NOT THE CONCERN AT SUCH STAGE. H ON BLE JURISDICTIONAL HIGH COURT IN CASE OF M/S. INDUCTOTHERM INDIA PVT. LTD. VS. M. GOPALAN DCIT (2013) 356 ITR 481 ALSO REITERATES THE VERY LEGAL P ROPOSITION PROPOUNDED BY THE HON BLE APEX COURT THAT AN ASSESSING OFFICER HAS TO HAVE REASONS TO BELIEVE EVEN IF IT IS A CASE OF SECTION 143(1) INTIMATION AND SUCH A COURSE CANNOT BE TAKEN RECOURSE IN ORDER TO CONDUCT A FINISHING OR ROV ING INQUIRY SEEKING TO I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 33 VERIFY THE CLAIMS AS IF IT WERE A REGULAR ASSESSMENT. HON BLE JURISDICTIONAL HIGH COURT IN A VERY RECENT JUDGMENT POST FACTO HEARING OF THE INSTANT CASE I.E. SHETH MULTILINK PVT. LTD VS. ITO SCA NO.14353/2016 DECIDED ON 29 - 08 - 2016 HAS DECLINED TO INTERFERE IN A CHALLENGE TO REOPENING OF A SECTION 143(1) PROCESSING IN CASE WHEREIN THE ASSESSING OFFICER HAD COLLECTED SUFFICIENT MATERIAL BEFORE FORMING REASONS TO BELIEVE THAT ASSESSEE S INCOME HAD LIABLE TO BE ASSESSED HAD ESCAPE D ASSESSMENT. 30. WE KEEP MIND THE ABOVE LEGAL PRINCIPLES INTER ALIA THAT AN ASSESSING OFFICER S REOPENING REASONS CANNOT BE IMPROVED UPON THEY HAVE TO HAVE CAUSE AND EFFECT RELATIONSHIP BETWEEN REOPENING REASONS AND ESCAPEMENT OF TAXABLE INCOME AN ASSESSING OFFICER CANNOT RESORT TO REOPENING IN ABSENCE OF MATERIAL LEADING TO FORMATION OF REASONS TO BELIEVE AS PER REASONABLE PRUDENCE THAT ANY TAXABLE INCOME HAS ESCAPED ASSESSMENT AND THAT THE SAME IS NOT IN THE NATURE OF A FISHING OR ROV ING INQUIRY; RESPECTIVELY AND PROCEED TO EXAMINE THE VALIDLY OF THE IMPUGNED REOPENING BEFORE US. 31. THE ASSESSEE S PLEA IS THAT THE IMPOUNDED DOCUMENT ANNEXURE BF - 01 IS ITS ANNUAL STATEMENT/REPORT AT PAG E 01 TO 620 OF THE PAPER BOOK ALREAD Y FILED WITH THE RETURN. THE ASSESSING OFF ICER S FIRST REASON IS THAT A SCRUTINY THEREOF INDICATES THE ASSESSEE TO HAVE INTRODUCED UNACCOUNTED CAPITAL THROUGH SHARE CAPITAL AND PREMIUM. THE SAME IS NOWHERE EVEN REFERRED TO IN THE BODY OF ASSESSMENT ORDER CONTAINING 13 PAGES OF A SSESSING OFFICER S FINDING S. WE I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 34 AFFORDED SUFFICIENT OPPORTUNITY TO S HRI PATEL TO TAKE US TO ANY SUCH MATERIAL IN BF - 01 FORMING PART O F THE PAPER SO AS TO EVEN PRIMA FACIE INDICATE AT SLIGHTEST PRETEXT THAT THERE IS EVEN AN Y EVIDENCE MUCH LESS A CONCLUSIO N INDICATING ASSESSEE S UNACCOUNTED INCOME HAVE BEEN INVESTED IN THE SHARE CAPITAL IN QUESTION. HE FAILS TO REFER TO ANY SUCH MATERIAL. WE ACCORDINGLY OBSERVE THAT THE IMPUGNED REOPENING REASONS NOWHERE INDICATE ANY LIVE NEXUS BETWEEN THE INCOME SOUGHT T O BE REAS SESSED. OUR VIEW THEREFORE IS THAT THE ASSESSING OFFICER HAS PROCEEDED ON A MERE APPREHENSION LEADING TO THE IMP UGNED LONG DRAWN PROCESS OF ROV ING INQUIRY WHICH HAS HELD TO BE NOT PERMISSIBLE BY THE HON BLE APEX COURT. THIS FIRST REASON ACCORDIN GLY FAILS THE TEST OF CAUSE - EFF ECT RELATIONSHIP AS DISCUSSED IN PRECEDING PARAS . THE ASSESSEE S FIRST LIMB OF ARGUMENT IS THUS ACCEPTED . 32. WE COME TO SECOND REASON OF THE IMPUGNED REOPENING THAT THE ASSESSEE COMPANY BOUGHT BACK THE SHARE CAPITAL IN QU ESTION FROM THE TEN INVESTOR COMPANIES BY PAYING THEM A SUM OF RS. 75.20 LAC S. T HIS REASON NO MORE SURVIVES IN VIEW OF ASSESSING OFFICER S REMAND REPORT AS WELL AS CIT(A) S LOWER APPELLATE FINDINGS THAT IT IS THE RELATIVES OF ASSESSEE S DIRECTORS WHO HAVE BEEN FOUND TO BE THE PURCHASERS OF THE SHARE CAPITAL IN QUESTION. WE PUT UP A SPECIFIC QUERY TO SHRI PATEL TO POINT OUT THAT THE ABOVE FOUR SHARE CAPITAL PURCHASERS ARE IN ANY WAY RELATED TO ASSESSEE S DIRECTORS. HIS CASE IS THAT THE ASSESSEE IS A CLOSE LY HELD COMPANY AND IT IS NOT POSSIBLE FOR THE DEPARTMENT TO PROVE THIS RELATIONSHIP. THIS PLEA DOES NOT IMPRESS UPON US. WE NOTICE FROM SHRI JAIN S SURVEY STATEMENT THAT I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 35 HE WAS PUT UP A VERY SPECIFIC QUERY ABOUT HIS FAMILY MEMBERS AND ASSESSEE S OTH ER DIRECTORS. THE SAME WERE SUFFICIENTLY REPLIED. THERE IS NO EVIDENCE IN THE CASE FILE LINKING THE SAID PERSONS WITH THOSE INVESTORS FO UND IN THE REMAND REPORT . OUR VIEW IS THAT NEITHER THERE IS ANY MATERIAL ON RECORD TO POINT OUT SPECIFIED RELATIONSHI P U/S. 40A(2)(B) OF THE ACT NOR ARE THEIR ASSESSMENT RECORD S PLACED IN THE CASE FILE TO PROVE THIS CRUCIAL RELATIONS HIP . WE ARE ALSO OF THE OPINION THAT THIS NEGATIVE BURDEN THAT THESE PURCHASERS ARE NOT ITS RELATIVES CANNOT BE PUT TO THE ASSESSEE. NOR THE DEPARTMENT IN INSTANT CASE MADE ANY EFFORT TO FI N D ABOUT FIN DING OF THE ASSESSMENT IN CASES OF INVESTOR COMPANIES AS WELL AS THE FOUR INDIVIDUAL ASSESSEE WHO HAVE REPURCHASED T HE SHARE CAPITAL DESPITE THAT THE FACT IT ITSELF IS THE ASSESSING AUTHORI TY OF ALL OF THEM. WE RELY ON THE CASE LAW IN PRE CEDING PARAGRAPHS THAT THE BASIC TENET OF CAUSE - EFFECT RELATION BETWEEN THE REOPENING REASONS AND TAXABLE INCOME HAVING ESCAPED ASSESSMENT IS ACCORDINGLY NOT MADE OUT. THE ASSESSEE SUCCEEDS IN THE INSTANT ARGUMENT AS WELL. 33. WE NOW COME TO ASSESSE E S THIRD LIMB OF ARGUMENT THAT THE MER E FACT OF SHRI JAIN S STATEMENT NOT BEING ABLE TO FURNISH NAMES OF THE INVESTOR C OMPANIES OR THEIR NEGOTIATORS CAN NOT FORM THE REASON TO BELIEVE OF ITS TAXABLE INCOME HAVI NG ESCAPED ASSESSMENT. WE NOTICE THAT PAGE 644 CONTAINS SURVEY PARTY S SPECIFIC QUERIES AS TO WHETHER HE REMEMBERED THE ABOVE STATE PARTICULARS OF THE INVESTORS. HIS REPLY WAS THAT HE DID NOT REMEMBER. WE REITERATE THAT ASSESSEE TRANSFERRED ITS SHARE C APITAL IN FINANCIAL YEAR 2008 - 09 AND THIS SURVEY I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 36 STATEMENT IS DATED 03 - 09 - 2012 I.E. AFTER A TIME GAP OF FOUR YEARS. THERE IS FURTHER NO ISSUE THAT THE DEPARTMENT HAD ALREADY IMPOUNDED BF - 01 ON 31 - 08 - 2012 STATING ALL DETAILS OF ASSESSEE S COMPANIES CONTAIN ED IN ITS ANNUAL STATEMENT AND OTHER DOCUMENTS. THE SAME WAS FURNISHED BACK ONLY AFTER ISSUANCE OF REOPENING NOTICE (SUPRA). THERE IS THUS NOTHING IN SHRI JAIN S STATEMENT WHICH COULD BE HELD TO BE TREATED AS AN ADMISSION OR THAT IT IS POINTING TOWARDS I NTRODUCTION ANY UNACCOUNTED INCOME IN SHARE CAPITAL. THE CBDT CIRC ULAR DATED 10 - 03 - 2003 { AS REITERATED ON 18/12/2014 VIDE CLARIFICATION NO. 2 86/98/2013 - IT(I N V - II) } HAS ALREADY CLARIFIED THAT SEARCH/SURVEY TEAMS HAVE TO COLLECT EVIDENCE INSTEAD OF OBTAINING CONFESSIONS OF T HE CONCERNED ASSESSEE . HON BLE JURISDICTIONAL HIGH COURT I N KAILASHBEN CASE (SUPRA) TAKES NOTES O F THE SAME IN PARA 13 OF THE JUDGMENT TO CONCLUDE THAT AN ADDITION IN ABSENCE OF CORROBORATIVE EVIDENCE OUGHT NOT TO BE MADE MERELY ON THE BASIS OF ASSESSEE S ADMISSION. WE ACCORDINGLY REJECT REVENUE S CONTENTIONS S UPPORTING THIS THIRD LIMB OF THE IMPUGNED REOPENING AS WELL. 34. THIS LEAVES US WITH THE LAST REASON OF REOPENING STATED TO BE BASED ASSESSEE S WRITTEN CORRESPONDENCE DATED 03 - 09 - 2012 AND 04 - 09 - 2012 DISCLOSING NAMES OF TEN INVESTOR COMPANIES TH ROUGH WHOM IT HAD ALLEGEDLY INTRODUCED THE IMPUGNED UNACCOUNTED MONEY. WE REVERT BACK TO PAGE 648 OF THE PAPER BOOK. SHRI JAIN SUBMITTED A HAND WRITTEN LETTER DATED 03 - 09 - 2012 THAT ASSESSEE S DIRECTOR HAD CONSUL TED THE MATTER TO AGREE FOR DISCLOSING AN UNACCOUNTE D INCOME OF RS. 9 CRORES. THIS FOLLOWED ASSESSEE S RETRACTION ON THE VERY NEXT I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 37 DA Y I . E. 04 - 9 - 2012 CLAIMING THAT ITS SHARE TRANSFER WERE VERY MUCH GENUINE UNDER THE C OMPANY LAW AGREED AT THE SAME TIME FOR DECLARING TAXABLE INCOME OF RS. 9 CRORES. THE ASSE SSING OFFICER DID NOT COLLECT ANY MATERIAL EVEN UP TO SECTION 148 NOTICE ON 13 - 02 - 2013 DESPITE THE FACT THAT HE WAS HAVING AT HIS DISPOSAL ALL THE IMPOUNDED MATERIAL COUPLED WITH DETAILS OF THE TEN INVESTOR COMPANIES. THE REVENUE AT THIS S TAGE SEEKS TO INVOLVE ESTOPLE PRINCIPLE . ITS CASE IS THAT THE ABOVE C ORRESPONDENCE B INDS THE ASSESSEE SINCE FILED DURING SURVEY OR UNDER SECTION 131 OF THE ACT; AS THE CASE MAY BE. WE DO NOT AGREE WITH THIS PLEA EITHER WAY. WE QUOTE BOARD S CIRCULAR HEREINABOVE TO H O LD THAT THE SAME HARDLY CARRIES ANY SIGNIFICANCE IN ABSENCE OF CORROBORATIVE EVIDENCE . THE REVENUE S LATTER LIMB OF ARGUMENT IS ALSO DEVOID OF MERITS BECAUSE IF THIS ADMISSION IS NOT EVEN ADMISSIBLE IN SPECIAL PROVISIONS OF SEAR CH OR SURVEY IT CAN BE SAF ELY HELD THAT THE VERY ANALOGY COVERS SECTION 131 PROCEEDINGS FOR GENERAL PROVISIONS AS WELL. WE HAVE ALRE ADY INDICATED MANY A TIMES THAT THERE IS NO CORROBORATIVE EVID EN CE CASTING DOUBTS ON ASSESSEE S SHARE CAPITAL TRANSFER UPTO THE DATE OF REOPENING NO TICE. WE FURTHER QUOTE A CO - ORDINATE BENCH DECISION OF THIS TRIBUNAL IN ITO VS. GHANSHYAMBHAI R. THAKKAR (1996) 56 TTJ AHD 460 REJECTING A SIMILAR ARGUMENT THAT A STATEMENT MADE DURING SURVEY CANNOT BE ACCEPTED IN PIECEMEAL. WE ADOPT THE VERY REASONING T O OBSERVE THAT THE REVENUE S APPROACH IN SEEKING TO ASSESS ASSESSEE S AMO UNT DECLARED OF RS. 9 CRORES AND AT THE SAME TIME QUESTIONING GEN UINENESS THEREOF BY ADOPTING PIC K AND CHOOSE METHOD IS I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 38 ACCORDINGLY REJECTED. THE ASSESSEE THEREFORE SUCCEEDS IN ITS FOURTH ARGUMENT AS WELL. 35. WE HAVE ALREADY DISCUSSED IN PRECEDING PARAGRAPHS THAT SHRI PATEL HAS ALSO FILED A CATENA OF CASE LAW SUPPORTING THE IMPUGNED REOPENING. FI R ST ONE OF OLWIN TILES (SUPRA) UPHOLDING ASSESSING OFFICER S ACTION ISSUING SECTION 1 48 NOTICE SINCE THE ASSESSEE THEREIN HAD RECEIVED HUGE PREMIUM S HAVING REGARD TO ITS NET WORTH. WE REITERATE THAT THERE IS NO SUCH REASON IN THE IMPUGNED REOPENING BEFORE US. THE SAME CAN ALSO NOT BE ALLOWED TO BE SUBSTITUTED AT THIS STAGE. WE FIND REV ENUE S JUDGMENTS ON THIS LEGAL ASPECT ARE NOT GERMANE TO THE ISSUE SINCE THE RE - OPENING S THEREIN FULFILLED ALL RELEVANT PARAMETERS AS PER FACTS INVOLVED THEREIN. TH E SAME ARE ACCORDINGLY DISTINGU I SH ED. 36. WE RELY UPON OUR DETAILED DISCUSSION HEREINABOV E TO FINALLY CONCLUDE THAT A LL FOUR REASONS O F THE IMPUGNED REOPENING RECORDED BY THE ASS ESSING OFFICER HAVE TO BE HELD AS NOT SUSTAINABLE AS PER THE SETTLED LAW . WE ACCORDINGLY QUASH THE IMPUGNED RE - OPENING . THE ASSESSEE S ADDITIONAL GROUND IS ACCEPTED . ALL OTHER ARGUMENTS ADVANCED AT BOTH PARTIES BEHEST QUA MERITS O F THE CASE ARE RENDER ED ACADEMIC. 37. THIS ASSESSEE S APPEAL IS ALLOWED . ORDER PR ONOUNCED IN THE OPEN C OURT ON 13 - 10 - 201 6 SD/ - SD/ - ( MANISH BORAD ) ( S. S. GODARA ) ACCOUNTA NT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 13 / 10 /2016 I.T.A NO. 109 /AHD/20 16 A.Y. 2009 - 10 PAGE NO LAXMIRAJ DISTRIBUTORS PVT. LTD. VS. A CIT 39 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER/ /