Nin Finance & Credit Capital Pvt. Ltd.,Petlad., Anand. v. The ACIT., Circle-3,, Anand.

ITA 1253/AHD/2004 | 1993-1994
Pronouncement Date: 28-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 125320514 RSA 2004
Assessee PAN EYEAR1994A
Bench Ahmedabad
Appeal Number ITA 1253/AHD/2004
Duration Of Justice 7 year(s) 10 month(s) 12 day(s)
Appellant Nin Finance & Credit Capital Pvt. Ltd.,Petlad., Anand.
Respondent The ACIT., Circle-3,, Anand.
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 28-02-2012
Date Of Final Hearing 08-12-2011
Next Hearing Date 08-12-2011
Assessment Year 1993-1994
Appeal Filed On 16-04-2004
Judgment Text
. .. . . .. . !' ! !' ! !' ! !' !. .. .#$ '#$ #$ '#$ #$ '#$ #$ '#$ %& ' %& ' %& ' %& ' % % % % IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD BEFORE SHRI G.C.GUPTA HONBLE V.P. & SHRI A.MOHAN ALANKAMONY HONBLE A.M.) ITA NOS. 1253 TO 1255/A/2004 ASSESSMENT YEARS 1993-1994 1994-1995 & 1996-1997 NIN FINANCE & CREDIT CAP. PVT. LTD. PETL AD ( () /APPELLANT) -VS- ACIT CIRCLE-3 BARODA ( *+() /RESPONDENT ) () - % / APPELLANT BY : SHRI ASEEM THAKKAR A.R. *+() - % / RESPONDENT BY : SHRI VINOD TANWANI SR.D.R. $. /0& / DATE OF HEARING : 08/12/2011 1#2 /0& / DATE OF PRONOUNCEMENT : 28/02/2012 %3 %3 %3 %3 / ORDER PER SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER : THESE THREE APPEALS OF THE ASSESSEE COMPANY ARE DIR ECTED AGAINST THE IMPUGNED ORDERS OF THE LD. CIT (A)-I BARODA IN (I) APPEAL NO.CAD/I/102/02-03; (II) NO.CAD/I/103/02-03; AND (I II) NO.CAD/I/101/02- 03 DATED 14.1.2004 FOR THE ASSESSMENT YEARS 1993-94 1994-95 AND 1996-97 . I. ITA NO.1253/A/04 A.Y. 1993-94: 2. THE GROUNDS RAISED ARE AS UNDER: (1) THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.16 49 000/- MADE ON ACCOUNT OF SHARE APPLICATION MONEY; ITA NOS.1253 TO 1255-AHD-2004 2 (2) THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.35 35 000/- ON ACCOUNT OF DEPOSITS AND UNSECURED LOANS TREATING THEM AS UNEXPLAINED RECEIPTS; (3) ALSO ERRED IN CONFIRMING THE DISALLOWANCE OF RS .20 526/- FOR INTEREST PAID FOR LOANS AND ADVANCES; & (4) CHARGING OF INTEREST U/S 234A AND 234B OF THE A CT IS MANDATORY AND CONSEQUENTIAL IN NATURE AND THUS THIS GROUND IS NOT MAINTAINABLE AND THEREFORE DISMISSED. II. ITA NO.1254/A/04 A.Y. 1994-95: 2.1. THE GROUNDS RAISED ARE AS UNDER: (I) THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.29 73 120/- MADE ON ACCOUNT OF SHARE APPLICATION MONEY AS UNACC OUNTED INCOME U/S 68 OF THE ACT; & (II) CHARGING OF INTEREST U/S 234A AND 234B OF THE ACT IS MANDATORY AND CONSEQUENTIAL IN NATURE AND THUS TH IS GROUND IS NOT MAINTAINABLE AND THEREFORE DISMISSED. III ITA NO.1255/A/04 A.Y. 1996-97: 2.2. THE GROUNDS RAISED ARE AS UNDER: (1) THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.47 73 776/- MADE ON ACCOUNT OF UNEXPLAINED CREDITS U/S 68 OF T HE ACT; (2) THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.1 50 218/- ON ACCOUNT OF INTEREST PAID ON BORROWING FUNDS DIVERTE D FOR NON- BUSINESS PURPOSES; (3) CONFIRMING THE ADDITION OF RS.3 898/- BEING UNP AID BONUS; & (4) CHARGING OF INTEREST U/S 234A 234B AND 244A OF THE ACT IS MANDATORY AND CONSEQUENTIAL IN NATURE AND THUS TH E GROUND RAISED IS NOT MAINTAINABLE AND ACCORDINGLY DISMIS SED. ITA NOS.1253 TO 1255-AHD-2004 3 3. AS THE ISSUES RAISED BEING INTER-LINKED PERTAINI NG TO THE SAME ASSESSEE THESE APPEALS WERE HEARD CONSIDERED TOGE THER AND DISPOSED OFF FOR THE SAKE OF CONVENIENCE AND CLARITY IN TH IS COMMON ORDER. 4. BEFORE VENTURE TO DEAL WITH THE ISSUES RAISED T HE SEQUENCE OF EVENTS WHICH TOOK PLACE DURING THE INTERVENING PERI OD BEING THAT THESE APPEALS WERE DISMISSED IN LIMINE BY THE EARLIER BEN CH IN ITS ORDER DATED 31.3.2008. HOWEVER SUBSEQUENTLY THE HONBLE BENC H IN ITS ORDER IN M.A. NOS. 85 86 & 87/AHD/2000 DATED 13.5.2011 HAD R ECALLED ORDER OF THE EARLIER BENCH DATED 31.3.2008 BY RESTORING ALL THE APPEALS AND THE REGISTRY WAS DIRECTED TO POST THE APPEALS FOR HEARI NG ON 28.7.2011. THUS THESE APPEALS HAVE COME UP BEFORE THIS BENCH FOR AD JUDICATION. 5. LET US NOW PROCEED TO ADJUDICATE THE ISSUES RAIS ED BY THE ASSESSEE CHRONOLOGICALLY. I. ITA NO.1253/A/04 A.Y 1993-94 : THE ASSESSEE HAD NOT FURNISHED ITS RETURN OF INCOME WITHIN THE TIME FRAME U/S 139 OF THE ACT FOR THE ASSESSMENT YEAR UN DER CONSIDERATION. THERE WAS A SEARCH OPERATION U/S 132 OF THE ACT IN THE RESIDENTIAL AND PREMISES OF THIS GROUP ON 5.10.1993 ACCORDING TO W HICH BOOKS OF ACCOUNTS WERE IMPOUNDED. CONSEQUENTLY THE ASSESSE E WAS REQUIRED TO FURNISH ITS RETURN OF INCOME AND THE ASSESSEE FURNI SHED ITS RETURN OF INCOME ONLY ON 11.1.1999 ADMITTING ITS INCOME AT R S.14 341/-. AS THERE WAS NO PROPER RESPONSE WITH REGARD TO QUERIES RAISE D TIME AND AGAIN BY THE ASSESSING AUTHORITY THE AO CONCLUDED THE ASSES SMENT U/S 144 R.W.S 148 OF THE ACT ON 26.9.1999 DETERMINING THE ASSESS EES INCOME AT RS.52.19 LAKHS WHICH WAS HOWEVER SET ASIDE BY THE LD.CIT (A) BARODA VIDE HIS APPELLATE ORDER DATED 30.1.2001 WITH A DIR ECTION TO REFRAME THE ITA NOS.1253 TO 1255-AHD-2004 4 ASSESSMENT AS DIRECTED IN HIS IMPUGNED ORDER. AS T HERE WERE NO COMPLIANCE TO THE VARIOUS NOTICES SERVED THE AO CO NCLUDED THE RE- ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 250 OF THE ACT DETERMINING THE TOTAL INCOME AT RS.52.25 LAKHS FOR THE REASONS RECO RDED THEREIN. 5.1 ON APPEAL THE LD. CIT AFTER DUE CONSIDERATION OF THE CONTENTIONS PUT-FORTH BY THE ASSESSEE HAD DEALT WITH THE ISSUE S THE FINDINGS OF WHICH ARE AS UNDER: (I) SHARE APPLICATION MONEY OF RS.16 49 000/-: 4.4. AS REGARDS THE SHARE APPLICATION MONEY OF RS.16 49 000/- I AM IN AGREEMENT WITH THE ASSESSIN G OFFICER THAT IT IS NOT SUFFICIENT FOR THE PARTIES TO ATTEND AND SAY THAT THEY HAVE LOANED THE FUNDS. THEIR SOURCE OF INCOME HAS TO BE SUITABLY EXPLAINED AND THE REASON FOR MAKING THE IN VESTMENT HAS ALSO TO BE EXPLAINED. AS NONE OF THIS HAS HAPPE NED BY EVEN THE SIX PARTIES WHO HAVE ATTENDED IT IS NOT P OSSIBLE TO ACCEPT THE GENUINENESS OF THESE TRANSACTIONS. THE PARTIES DO NOT APPEAR TO BE HAVING LARGE HOLDINGS AND NO OTHER INVESTMENTS. THEREFORE GIVING DEPOSITS TO THE APP ELLANT COMPANY DOES NOT APPEAR TO BE CREDIBLE BESIDES BEI NG NON- VERIFIABLE. UNDER THE CIRCUMSTANCES THE ADDITION MADE ON THIS POINT ALSO IS CONFIRMED. (II) ADDITION OF RS.35 35 000/-: 4. THE MAIN GROUND OF APPEAL IS REGARDING THE ADD ITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS/DEPOSITS MONEY OF RS.35 35 000/- AND ON ACCOUNT OF SHARE APPLICATION MONEY OF RS.16 49 000/-. SIMILAR ISSUES WERE PRESENT IN ASS ESSMENT YEARS 94-95 & 96-97. THE APPELLANT SUBMITTED THAT A LARGE NUMBER OF DETAILS STATING THAT ALL HAD BEEN FILED L ATE BEFORE THE ASSESSING OFFICER DUE TO RIOTS IN BARODA. IN THE I NTEREST OF JUSTICE THE SAME WERE FORWARDED TO THE ASSESSING O FFICER AGAIN U/S 46A TO SUBMIT FACTUAL REPORT. FIRSTLY ON WHET HER THE DETAILS STATED TO HAVE BEEN SUBMITTED WERE SO SUBMITTED BEF ORE THE ASSESSING OFFICER. IF THEY WERE NOT EXAMINED DUE T O BEING FILED LATE THEN THE PARTIES ASSESSED IN BARODA MAY BE VER IFIED AND PARTIES OUTSIDE BARODA WHEREVER PAN/GIR NO. IS GIVE N SHOULD BE SUBJECTED TO SIMILAR VERIFICATION. WHERE NO GIR /PAN NOS. ITA NOS.1253 TO 1255-AHD-2004 5 ARE AVAILABLE THE PARTIES MAY BE SUMMONED TO ESTAB LISH THEIR IDENTIFY AND CREDITWORTHINESS. 4.1. THE ASSESSING OFFICER FORWARDED A REPORT STA TING THAT THE DETAILS WERE FURNISHED ONLY ON 28.3.2002 WHILE THE ASSESSMENT ORDER HAS BEEN PASSED ON 26.3.2002. EVEN AFTER GIV ING ADEQUATE OPPORTUNITIES OVER MORE THAN 6 MONTHS THE DETAILS HAD NOT BEEN FURNISHED. WITHOUT PREJUDICE TO THE A BOVE HOWEVER THE ASSESSEE WAS REQUESTED TO PRODUCE THE PERSONS WHO HAVE SUBSCRIBED TO THE SHARE CAPITAL WITH THE C OMPANY. AFTER GIVING FOUR DIFFERENT OPPORTUNITIES IN JULY AUGUST AND SEPTEMBER THE ASSESSEE COULD PRODUCE ONLY 6 PERSON S OUT OF 42 CREDITORS. THE STATEMENTS OF THESE 6 PERSONS WE RE RECORDED. THEY ATTENDED WITH PROOF OF IDENTITY LIK E RATION CARD ELECTION CARD ETC. MOST OF THEM HAD AGRICULTURAL I NCOME AND WERE NOT ASSESSED TO TAX. THEY STATED THAT THEY HA VE MADE INVESTMENT IN THE SHARE CAPITAL OF THE COMPANY BUT THEIR CREDIT WORTHINESS COULD NOT BE VERIFIED IN THE ABSENCE OF ANY ACCOUNTS OR DETAILS. IN RESPECT OF A FURTHER 6 PER SONS IT WAS SUBMITTED THAT THE PARTIES HAD DIED AND THEIR DEATH CERTIFICATES WERE PROVIDED. IN RESPECT OF A THIRD LOT OF 6 PERS ONS IT WAS STATED THAT THEY HAD GONE ABROAD AND NO DETAILS WER E AVAILABLE. THE ASSESSEE SOUGHT FURTHER TIME FOR PR ODUCING PARTIES AND DETAILS BUT TILL DATE OF REPORT NOTHIN G FURTHER WAS FILED. 4.2. DURING HEARINGS THE ASSESSING OFFICER WAS A GAIN ASKED TO LOOK INTO THE DEPOSITS OF RS.35 35 000/- ALSO AN D REPORT ON THE POSITION. VIDE REPORT DATED 11.1.2004 IT WAS REPORTED THAT M/S. GUJARAT OIL & INDS. LTD WAS STATED TO BE ASSE SSED IN BARODA BUT THE CORRECT JURISDICTION COULD NOT BE FO UND. HENCE MATTER HAS NOT BEEN VERIFIED. 4.3. THE APPELLANT ON THE OTHER HAND HAS STATED THAT THIS WAS AN AMOUNT RECEIVED FROM GUJARAT OIL & INDS. LTD WHO ARE DULY ASSESSED TO TAX. AS PROOF OF THE SAME A LETTER FR OM GUJARAT OIL & INDS LTD ALONG WITH PAN WAS SUBMITTED SHOWIN G THE AMOUNT OF INTER-CORPORATE DEPOSIT GIVEN FOR THE PER IOD 1.4.93 TO 30.6.93. THEY HAVE SUBMITTED COPY OF ACCOUNT WITH THE PARTY ALSO. FROM THE DETAILS AVAILABLE THE MATTER WOULD BE TREATED AS EXPLAINED AS THE APPELLANT HAD GIVEN COPIES OF A CCOUNT FROM THE PARTY CONFIRMING THE INTER-CORPORATE DEPOSIT. HOWEVER AS THE ASSESSING OFFICER IS STILL MAKING INQUIRIES REG ARDING M/S. ITA NOS.1253 TO 1255-AHD-2004 6 GUJARAT OIL & INDS. LTD. HE IS DIRECTED TO COMPLET E THE ENQUIRY AND IF THE PARTY IS DULY ASSESSED TO TAX AND HAS SH OWN THE LOAN GIVEN IN ITS ACCOUNT THE SAME MAY BE TREATED AS GE NUINE. IF HOWEVER THE DEPOSITS ARE NOT SHOWN BY THAT PARTY THE ADDITION MAY BE SUSTAINED. (III) INTEREST ON BORROWING FUNDS: 4. THE THIRD GROUND OF APPEAL IS REGARDING INTERES T PAID ON BORROWED FUNDS THE APPELLANT STATES THAT THE FIGUR E SHOULD ACTUALLY BE RS.20 106/- AND NOT RS.20 506/-. FURTH ER SHARE APPLICATION MONEY WAS AVAILABLE WITH THE ASSESSEE A ND IF THE SAME WAS CONSIDERED THERE WOULD BE NO DISALLOWANCE. ON THIS POINT I AM UNABLE TO AGREE WITH THE APPELLANT AS THE GENUINENESS ITSELF OF THE DEPOSITS IS NOT CONFIRMED . HENCE THE ADDITION IS SUSTAINED. THE ASSESSING OFFICER S HOULD HOWEVER VERIFY THE CORRECT FIGURE OF DISALLOWANCE. 6. AGGRIEVED THE ASSESSEE HAS COME UP WITH THE PRE SENT APPEAL. DURING THE COURSE OF HEARING THE LD. AR REITERATED MORE OR LESS WHAT HAS BEEN ADVOCATED BEFORE THE CIT (A). IN FURTHERANCE THE LD. A R HAD FURNISHED A BUNCH OF PAPERS IN THE SHAPE OF A PAPER BOOK CONTAINING (I) COPIES OF PAYMENT ADVICES FROM GUJARAT OILAND INDUS TRIES LTD. (II) BALANCE SHEET (III) PROFIT AND LOSS ACCOUNT (IV) S TATEMENT GIVING DETAILS OF SHAREHOLDERS NAME AND ADDRESSES ETC. AND CONFI RMATION LETTERS OF SOME OF THE INVESTORS TO STRENGTHEN THE ASSESSEES CLAIM THAT IT HAD RECEIVED SHARE APPLICATION MONEY ETC. FURTHER THE LD. A R RELIED ON THE RULINGS OF THE (I) HONBLE APEX COURT IN CIT V. LO VELY EXPORTS (P) LTD REPORTED IN (2008) 216 CTR 195 (SC); AND (II) HONB LE BOMBAY HIGH COURT IN CIT V. RELIANCE UTILITIES AND POWER LTD RE PORTED IN (2009) 313 ITR 340 (BOM). 6.1. ON THE OTHER HAND THE LD. DR CONTESTED THE AS SESSEES CLAIM THAT THE INVESTORS WERE AGRICULTURISTS AND THEIR SHARE A PPLICATION MONIES WERE ORIGINATED FROM THEIR AGRICULTURE INCOME ETC. ITA NOS.1253 TO 1255-AHD-2004 7 7. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS C AREFULLY PERUSED THE RELEVANT CASE RECORDS THE OBSERVATIONS OF THE LD. CIT (A) AND ALSO THE DOCUMENTARY EVIDENCES PRODUCED BY THE LD. A R I N THE SHAPE OF A PAPER BOOK CITED SUPRA. 7.1. AT THE OUTSET WE WOULD LIKE TO POINT OUT THAT THE DOCUMENTARY EVIDENCES FURNISHED DURING THE COURSE OF HEARING HA VE NOT BEEN PLACED BEFORE THE ASSESSING OFFICER DURING THE COURSE REAS SESSMENT PROCEEDINGS. AS COULD BE SEEN FROM THE RECORDS IN SPITE OF REPEATED REQUISITION AND ALSO SUFFICIENT OPPORTUNITIES HAVE BEEN EXTENDED TO THE ASSESSEE TO FURNISH THE REQUIRED DETAILS WHICH WOUL D HAVE FACILITATED THE ASSESSING AUTHORITY TO COME A CONCLUSION ON THE BAS IS OF THE DOCUMENTARY EVIDENCES AVAILABLE FOR HIS SCRUTINY H OWEVER THE ASSESSEE HAD CHOSEN NOT TO OBLIGE THE LD.AO. AT THIS JUNCTU RE WE WOULD LIKE TO RECALL THE REMAND REPORT OF THE ASSESSING OFFICER [ COURTESY: PAGES 17 & 18 OF PB AR] WHEREIN THE LD.AO HAD EXPLAINED THAT 2 DURING THE COURSE OF FRESH ASSESSMENT PROCEEDINGS THE ASSESSEE WAS GIVEN A NUMBER OF OPPORTUNITIES AS MEN TIONED IN THE ASSESSMENT ORDER TO PROVIDE THE FOLLOWING DETAI LS (I) COPY OF ACCOUNT IN RESPECT OF DEPOSITOR; (II) CONFIRMATION OF DEPOSITOR IN SUPPORT OF THEIR CLAIM THAT THEY HAVE GIVEN LOAN TO THE DEPOSITORS OF THE COMPANY; (III) TO PROVE THE IDENTITY AND GENUINENESS OF THE SHAREHOLDERS AND DEPOSITORS AND THEIR CREDITWORTHINESS WITH REFE RENCE TO PAN WARD ETC. THE ASSESSEE HAS HOWEVER NOT FURNISHED THE ABOVE DETAILS DURING THE ASSESSMENT PROCEEDING. THE ASSESSEE HAS FURNISHED DETAILS ONLY ON 28.3.2002 WHILE THE ASSESSMENT ORDE R WAS PASSED ON 26.3.2002. EVEN AFTER GIVING ADEQUATE OP PORTUNITIES THE ABOVE DETAILS WERE NOT FURNISHED BEFORE THE ASS ESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS; THEREF ORE THE ITA NOS.1253 TO 1255-AHD-2004 8 QUESTION OF NOT CONSIDERING THEM DOES NOT ARISE. F URNISHING OF FRESH DETAILS BEFORE THE CIT (A) IS STRONGLY OBJECT ED. WITHOUT PREJUDICE TO THE ABOVE AND AS DIRECTED BY Y OUR OFFICE THE ASSESSEE WAS REQUESTED TO PRODUCE THE PERSONS WHO H AVE SUBSCRIBED TO SHARE CAPITAL WITH THE COMPANY. AFTE R ALLOWING OPPORTUNITIES ON 26.7.2003 4.8.2003 6.8.2003 AND 8.9.2003 ASSESSEE COULD PRODUCE ONLY SIX PERSONS OUT OF 42 C REDITORS. THE STATEMENTS OF THESE SIX PERSONS WERE RECORDED. THE SE SIX PERSONS HAVE ATTENDED ALONG WITH THE PROOF OF IDENT ITY LIKE RATION CARD ELECTION CARD ETC. MOST OF THEM HAVE AGRICUL TURAL INCOME AND DO NOT MAINTAIN BOOKS OF ACCOUNTS AND ARE NOT A SSESSED TO TAX. THEY HAVE STATED THAT THEY HAVE MADE INVESTME NT IN SHARE CAPITAL OF THE COMPANY. HOWEVER FOR WANT OF OTHER EVIDENCES CREDITWORTHINESS COULD NOT BE VERIFIED. 7.2. THOUGH THE LD.CIT(A) ACKNOWLEDGED THE PRODUCIN G OF A LETTER FROM GUJARAT OILAND INDUSTRIES LIMITED ALONG WITH PAN SH OWING THE AMOUNT OF INTER-CORPORATE DEPOSIT GIVEN ETC. HE HAD DIRECTED THE LD.AO TO COMPLETE THE ENQUIRY AND IF THE PARTY IS DULY ASSESSED TO TA X AND HAS SHOWN THE LOAN GIVEN IN ITS ACCOUNT THE SAME MAY BE TREATED AS GENUINE [PARA 4.3.]. 7.3. IN VIEW OF THE ABOVE AND IN THE INTERESTS OF P RINCIPLES OF NATURAL JUSTICE AND FAIRNESS THIS ISSUE [RS.35 35 000/- ON ACCOUNT OF DEPOSITS AND UNSECURED LOANS] IS REMITTED BACK TO THE FILE OF TH E LD.AO TO IMPLEMENT THE DIRECTIONS OF THE LD.CIT(A) IN HIS IMPUGNED ORDER U NDER DISPUTE. IN THE MEANWHILE THE ASSESSEE THROUGH ITS LD.AR IS ADVI SED TO FURNISH ALL THE RELEVANT DOCUMENTARY EVIDENCES AT ITS POSSESSION TO FACILITATE THE LD.AO TO CARRY OUT THE DIRECTIONS REFERRED SUPRA . IT IS ORDERED ACCORDINGLY. 7.4. WITH REGARD TO THE ADDITION OF RS.16 49 000/- THE LD.CIT (A) TOOK A STAND THAT THE PARTIES THOUGH APPEARED BEFORE THE LD.AO AND AFFIRMED THAT THEY HAVE LENT THE LOANS TO THE FUNDS THEY HA VE NOT PRODUCED ANY DOCUMENTS TO SUBSCRIBE THAT THEY HAD SOURCES OF INC OME TO INVEST ETC; ITA NOS.1253 TO 1255-AHD-2004 9 AND THE INVESTING OF DEPOSITS TO THE ASSESSEE DID NOT APPEAR TO BE CREDIBLE AND NOT VERIFIABLE HE ACCORDINGLY CONFIRM ED THE ADDITION. 7.5. HOWEVER THE LD.AO IN HIS REMAND REPORT (REFER RED ABOVE); STATED THAT THE ASSESSEE HAD FURNISHED CERTAIN DETAILS ONL Y AFTER THE COMPLETION OF ASSESSMENT PROCEEDINGS AND PRECISELY IN HIS CO MMUNICATION AT PARA 4 AFFIRMED THAT 4. THOUGH THE ASSESSEE WAS REQUESTED TO FURNISH TH E DETAILS OF THE PERSONS WHO ARE ASSESSED TO TAX HOW EVER NO SUCH DETAILS HAVE BEEN FURNISHED BY THE ASSESSEE. IN RESPECT OF THE PERSONS WHO ARE DEAD OR WHO HAVE GONE OUTSIDE INDIA NO VERIFICATIO N COULD BE MADE AS NO DETAILS HAVE BEEN FURNISHED. ASSESSEE IS SEEKING M ORE TIME THEREFORE REPORT OF VERIFICATION COMPLETED TILL DATE IS SUBMI TTED. 7.6. DURING THE COURSE OF HEARING BEFORE THIS BENCH THE ASSESSEE HAD FURNISHED ONLY COPIES OF CONFIRMATION LETTERS FROM THE PERSONS WHO PURPORTED TO BE THE LENDERS OF LOANS TO JUSTIFY ITS CLAIM. HOWEVER ON PERUSAL OF SUCH CONFIRMATION LETTERS IT HAS BEEN N OTICED THEY APPEAR TO BE TAILOR-MADE AND IN MAJORITY OF AGRICULTURISTS NO PA RTICULARS SUCH AS THE EXTENT OF LAND-HOLDINGS WITH COPIES OF TITLES OBTAI NED FROM THE REVENUE AUTHORITIES OF THE STATE GOVERNMENT AS TO WHETHER T HEY HAVE CULTIVATED THEIR LANDS VARIETY OF CROPS GROWN SALE PROCEEDS OF THE CROPS GROWN ETC. WERE FORTH-COMING. NO SUCH VITAL PARTICULARS WERE FURNISHED TO VERIFY THE AUTHENTICITY OR OTHERWISE OF SUCH CONFIRMATIONS. MO REOVER THE AO WHILE FURNISHING HIS REMAND REPORT HAD ALSO HIGHLIGHTED S UCH SHORT COMINGS. 7.7. WITH DUE RESPECTS WE HAVE PERUSED THE RULING OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. LOVELY EXPORTS (P) LTD CITED SUPRA WHEREIN THE HONBLE COURT HAD OBSERVED THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO THEN THE ITA NOS.1253 TO 1255-AHD-2004 10 DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. 7.8. WITH HIGHEST REGARDS TO THE OBSERVATIONS OF TH E HONBLE COURT WE WOULD LIKE TO POINT OUT THAT IN THE PRESENT CASE M AJORITY OF THE ALLEGED SHARE-HOLDERS WHO PURPORTED TO HAVE FUNDED SHARE AP PLICATIONS MONIES WERE AGRICULTURISTS PRODUCED NONE OTHER THAN THE RA TION CARDS ELECTION IDENTITY CARDS. WHEN THEY HAVE BEEN REQUIRED TO PR ODUCE THE PARTICULARS SUCH AS THE EXTENT OF LAND HOLDINGS TITLES CROPS CULTIVATED THE EXPENSES INCURRED FOR AGRICULTURAL OPERATIONS SALES PROCEED S OF SUCH PRODUCTS RAISED IN THEIR LANDS ACCORDING TO THE LD.AO NONE OF THEM HAVE COME UP WITH SUCH BARE DETAILS. WITH THE LAPSE OF DURATION INVOLVED IN THE ALLEGED CASH INVESTMENTS IN SHARE APPLICATIONS MONEY AND TH E ASSESSEES COULD NOT ABLE TO PRODUCE ANY RELIABLE DOCUMENTARY PROOFS TO SUBSTANTIATE ITS CLAIM EVEN AT THIS POINT OF TIME EXCEPT ONLY IN FEW CASES WITH THEIR PALTRY LAND-HOLDINGS WE ARE OF THE CONSIDERED VIEW THAT W E HAVE BEEN LEFT WITH NO OTHER OPTION EXCEPT WITH CONSTRAINT TO CONFIRM T HE FINDINGS OF THE LD.CIT (A) ON THIS ISSUE. 7.9 BEFORE PARTING WITH WITH HIGHEST REGARDS TO TH E OBSERVATIONS OF THE HONBLE APEX COURT WE WOULD LIKE TO FURTHER POINT OUT THAT IN THE PRESENT CASE MOST OF THE LENDERS BEING AGRICULTURISTS WITH OUT ANY OTHER SOURCES OF INCOME OTHER THAN THE ALLEGED INCOMES FROM AGRICULT URE. SOME OF THE AGRICULTURISTS WHO APPEARED BEFORE THE LD.AO COULD NOT ABLE TO PRODUCE ANY CREDIBLE DOCUMENTARY EVIDENCES TO VOUCH THAT TH EY WERE IN A POSITION TO INVEST WITH THE ASSESSEE. IN THIS CONNECTION T HE REASONING OF THE LD.CIT (A) IS REPRODUCED (AT THE COST OF REPETITION ) AS UNDER: 4.1. THE ASSESSING OFFICER FORWARDED A REPORT S TATING THAT THE DETAILS WERE FURNISHED ONLY ON 28.3.2002 WHILE THE ITA NOS.1253 TO 1255-AHD-2004 11 ASSESSMENT ORDER HAS BEEN PASSED ON 26.3.2002. EVE N AFTER GIVING ADEQUATE OPPORTUNITIES OVER MORE THAN 6 MONTHS THE DETAILS HAD NOT BEEN FURNISHED. WITHOU T PREJUDICE TO THE ABOVE HOWEVER THE ASSESSEE WAS REQUESTED TO PRODUCE THE PERSONS WHO HAVE SUBSCRIBE D TO THE SHARE CAPITAL WITH THE COMPANY. AFTER GIVING F OUR DIFFERENT OPPORTUNITIES IN JULY AUGUST AND SEPTEM BER THE ASSESSEE COULD PRODUCE ONLY 6 PERSONS OUT OF 42 CRE DITORS. THE STATEMENTS OF THESE 6 PERSONS WERE RECORDED. T HEY ATTENDED WITH PROOF OF IDENTITY LIKE RATION CARD E LECTION CARD ETC. MOST OF THEM HAD AGRICULTURAL INCOME AND WERE NOT ASSESSED TO TAX. THEY STATED THAT THEY HAVE MADE INVESTMENT IN THE SHARE CAPITAL OF THE COMPANY BUT THEIR CREDIT WORTHINESS COULD NOT BE VERIFIED IN THE ABSE NCE OF ANY ACCOUNTS OR DETAILS. IN RESPECT OF A FURTHER 6 PERSONS IT WAS SUBMITTED THAT THE PARTIES HAD DIED AND THEIR D EATH CERTIFICATES WERE PROVIDED. IN RESPECT OF A THIRD LOT OF 6 PERSONS IT WAS STATED THAT THEY HAD GONE ABROAD AN D NO DETAILS WERE AVAILABLE. 7.10 IN VIEW OF THE FACTS OF THE ISSUE AS DISCUSSE D ABOVE WE ARE OF THE CONSIDERED VIEW THAT THE PREPONDERANCE OF PROBABILI TY AND EVIDENCE AVAILABLE ON RECORD MAKES IT AMPLY CLEAR THAT THE W HOLE SET OF TRANSACTION WAS NOTHING BUT A SHAM TRANSACTION AND THEREFORE DISTINGUISHING THE CASE WHICH WAS BEFORE THE HONBLE SUPREME COURT REF ERRED ABOVE. 7.11 WITH REGARD TO CONFIRMING THE DISALLOWANCE OF RS.20 506/- THE CIT (A) HAD REASONED THAT SINCE THE GENUINENESS OF SHA RE APPLICATION MONEY WAS AT STAKE HE REJECTED THE ASSESSEES CONTENTION AND WENT AHEAD IN CONFIRMING THE ADDITION. 7.12 DURING THE COURSE OF HEARING IT WAS CONTENDED THAT THE ASSESSEE HAD SHARE APPLICATION MONEY OF RS.16 51 000/- (SIC) RS.16 49 000/- WHICH ITA NOS.1253 TO 1255-AHD-2004 12 WAS INTEREST FREE AND HENCE THE CIT (A) OUGHT TO HAVE CONSIDERED THE SAME BEFORE MAKING SUCH DISALLOWANCE. 7.13 AT THIS JUNCTURE WE WOULD LIKE TO REITERATE T HAT THE ISSUE OF GENUINENESS OF THE SHARE APPLICATION MONEY OF RS.16 .49 LAKHS HAS SINCE BEEN DECIDED AGAINST THE ASSESSEE IN THE FORE-GOING PARAGRAPHS [REFER: PARAS 7.4. 7.4.4 ]. IN VIEW OF THE ABOVE THE CON FIRMATION OF DISALLOWANCE OF RS.20 506/- MADE BY THE CIT (A) REMAIN STANDS. IT IS ORDERED ACCORDINGLY. 7.14 BEFORE PARTING WITH WE WOULD LIKE POINT OUT T HAT THE CASE LAW RELIED ON BY THE ASSESSEE [CIT V. RELIANCE UTILITIES AND P OWER LTD (SUPRA)] CANNOT COME TO ITS RESCUE OF THE ASSESSEE AS IT STA NDS ON DIFFERENT FOOTING. II. ITA NO.1254/A/04 A.Y 1994-95: 8. A SOLITARY GROUND SURVIVED FOR ADJUDICATION BEIN G THAT CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.29 73 120/- MADE O N ACCOUNT OF SHARE APPLICATION MONEY AS UNACCOUNTED INCOME U/S 68 OF T HE ACT. 8.1. AS COULD BE SEEN FROM THE ASSESSMENT ORDER U/S 144 R.W.S. 148 OF THE ACT [SOURCE: P 1 5 OF PB AR] THE ASSESSEE HA D SHOWN TO HAVE RECEIVED DEPOSITS AMOUNTING TO RS.30 50 120/-. AFT ER VERIFICATION OF CERTAIN DETAILS FURNISHED BY THE ASSESSEE THE LD.A O HAD OBSERVED THUS: (ON PAGE 4).ONE OF THE DEPOSITORS M/S. PATEL TRACT ORS CO. PVT. LTD WHICH IS ONE SHOWN TO HAVE GIVEN RS.9 35 000/- TO ASSESSEE COMPANY IS ASSESSED IN THIS RANGE. THE CASE RECORD AND RETURN OF INCOME OF M/S. PATEL TRACTOR CO. PVT. LTD. FOR THE PERIOD (A.Y 1994-95) WAS VERIFIED AND IT WAS FOUND THAT NO SUCH LOAN AND ADVANCE HAS BEEN GIVEN TO ASSESSEE COMPANY DURING T HE YEAR. SIMILARLY CASE RECORDS OF M/S.DEVAL SALES CORP. A HMEDABAD ITA NOS.1253 TO 1255-AHD-2004 13 AND PETLAD AND PIYUSH SALES CORPN. PETLAD ASSESSED WITH THE ACIT CIR.I BARODA WERE VERIFIED AND THE DEPOSITS WERE FOUND TO BE REFLECTED IN THEIR ACCOUNTS. THE AMOUNT OF RS.7 000/- AS RECEIPT ON ACCOUNTS. THE AMOUNT OF RS.7 00 000/- S HOWN AS RECEIPT ON ACCOUNT OF SHARE APPLICATION MONEY AND RS.22 73 120/- RECEIVED AS DEPOSITS IS TREATED AS U NACCOUNTED INCOME U/S 68 OF THE I.T. ACT. 8.2 AS PER THE DIRECTIONS OF THE LD.CIT (A) DATED: 31.1.2001 THE RE- ASSESSMENT OF THE ASSESSEE WAS CONCLUDED U/S 143(3) R.W.S. 250 OF THE ACT ON 26.3.2002 DETERMINING THE TOTAL INCOME AT R S.32 12 670/- 8.3 DURING THE COURSE OF APPELLATE PROCEEDINGS THE AO WAS REQUIRED TO FURNISH FURTHER DETAILS. IN COMPLIANCE THE AO HAD STATED THAT:- (PAGE 2) IN THIS CASE ORDER U/S 144 R.W.S.148 WA S PASSED ON 26.2.99 BY THE THEN JT.CIT (A) SR-2 BARODA ON A TO TAL INCOME OF RS.32 12 671/- WHICH INCLUDED ADDITION OF RS.29 73 120/- ADDED U/S 68 AS UNACCOUNTED INCOME SHOWN UNDER THE HEAD S HARE AND APPLICATION MONEY AND DEPOSITS RECEIVED AS UNDER: (I)DEVAL SALES CORPORATION PETLAD RS.9 64 800 (II)DEVAL SALES CORPORATION AHMEADABAD 82 000 (III)DEEPAK M PATEL 1 04 686 (IV)MITUL V PATEL 1 11 790 (V)PATEL TRACTOR CO. P.LTD 9 35 000 (VI)PIYUSH SALES CORPORATION P. LTD 5 09 115 (VII)VIMLABEN V PATEL 2 16 397 (VIII)VITHALBHAI S PATEL (HUF) 1 09 285 (IX)SHARE APPLICATION MONEY 7 00 000 40 19 920 IN THE BODY OF ASSESSMENT ORDER UNDER THE HEAD SHA RE CAPITAL AND UNSECURED LOANS INTRODUCED THE ASSESSING OFFICER H AS STATED THAT ASSESSEE HAS SHOWN TO HAVE RECEIVED DEPOSITS AMOUNT ING TO RS.30 15 120/- WHILE HE HAS TOTALED UP THE DEPOSITS AT RS.22 73 120/- UNDER THIS HEAD AS AGAINST THE CORRE CT TOTAL OF RS.33 19 920/-AND A SUM OF RS.7 LACS SHOWN AS RECEI PT ON ACCOUNT OF SHARE APPLICATION MONEY ALSO REMAINED TO BE ADDED UP. AS AGAINST THE SHOWN TOTAL OF UNACCOUNTED INCOME AD DED U/S 68 AT ITA NOS.1253 TO 1255-AHD-2004 14 RS.29 73 120/- THERE SHOULD HAVE BEEN ADDITION OF R S.40 19 920/- AS SHOWN ABOVE I.E. TOTAL OF (I) TO (IX). THE SAI D ASSESSMENT ORDER WAS SET-ASIDE BY THE CIT (A)-I BARODA VIDE ORDER N O.CAB /I- 74/99-2000 DATED 20.1.2001 TO BE FRAMED AFRESH. IN VIEW OF THE ABOVE ORDER U/S 143(3) RWS 250 WAS PASSED ON 26.3.02 ON A TOTAL INCOME OF RS.32 12 670/- (AS ORI GINALLY ASSESSED AS PER ORDER DATED 26.2.99) WHEREIN ADDITION IN RES PECT OF UNACCOUNTED INCOME U/S 68 UNDER THE HEAD SHARE APP LICATION MONEY AND DEPOSITS RECEIVED WAS ADDED AT RS.29 73 120/- AS PER ORIGINAL ASSESSMENT ORDER DATED 26.2.99 AS AGAINST ADDITION OF RS.40 19 920/- WOULD HAVE BEEN ADDED. DUE TO TOTAL ING MISTAKE THE MISTAKE IN ADDITION HAS CREPT IN THE ORDER PASS ED ON 26.3.02 IN RESPECT OF WHICH ASSESSEE HAS FILED APPEAL BEFORE Y OUR HONOUR WHICH IS PENDING. IN VIEW OF THE ABOVE I HAVE TO REQUEST YOUR HONOUR TO KINDLY CONFIRM THE ADDITION UNDER THE HEAD UNACCOUNTED IN COME ADDED U/S 68 AT RS.40 19 920/- AS AGAINST ADDITION OF RS .29 73 120/- WRONGLY MADE IN THE ASSESSMENT ORDER PASSED. IT IS FURTHER REQUESTED THAT WHILE DECIDING APPEAL THE MISTAKE I N TOTALING MAY KINDLY BE CONSIDERED FAVOURABLY. 2.1. IN VIEW OF THE ABOVE REPORT THE APPELLANT W AS APPRAISED OF THE ASSESSING OFFICERS LETTER REGARDING ANY OBJECT IONS IN RESPECT OF THE SAME AS THERE IS NO RESPONSE FROM THE APPELLANT . THE FIGURES AS GIVEN BY ASSESSING OFFICER ARE NOW SUBSTITUTED F OR THE FIGURES GIVEN IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER WAS AGAIN ASKED TO CLARIFY IF ANY AMOUNT ON ACCOUNT OF SHARE APPLICATION MONEY OR LOAN WAS P RESENT WHICH HAS ALREADY BEEN ADDED IN THE PRECEDING YEAR. THE ASSESSING OFFICER HAS CLARIFIED THAT THIS WAS AS FOLLOWS: OPENING BA LANCE AMOUNT RECEIVED 1.DEVAL SALES CORPN. PETLAD RS.2 69 800 + RS.6 99 000 2.DEVAL SALES CORPN. 1 30 000 + 2 12 000 3.PIYUSH SALES CORPN. 1 83 701 + 5 09 115 2.2. AS REGARDS THE ADDITION ITSELF THE MATTER R EMAINS EXACTLY THE SAME AS ALREADY DISCUSSED IN THE APPELLATE ORDER FO R AY 93-94 AND FOR THE REASONS GIVEN THEREIN THE ADDITIONAL A MOUNTS RECEIVED THIS YEAR (I.E. MINUS THE OPENING AMOUNT INDICATED ITA NOS.1253 TO 1255-AHD-2004 15 ABOVE) ARE TREATED UNEXPLAINED AND THE ADDITION ITS ELF IS CONFIRMED. 8.4 WE HAVE DULY PERUSED THE REASONING OF THE CIT ( A) AND ALSO THE DOCUMENTARY EVIDENCES IN THE SHAPE OF COPIES OF (I) CONFIRMATION LETTERS (IN FEW CASES ONLY WITH COPIES OF PALTRY LAND-HOL DINGS (II) AUDITORS REPORT; (III) STATEMENT SHOWING THE DETAILS OF NAMES ADDRE SSES OF THE SHAREHOLDERS ETC. IN VIEW OF THE ABOVE THE ISSUE IS REMITTED BACK TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE DETAI LS/DOCUMENTARY EVIDENCES WHICH WILL BE FURNISHED BY THE ASSESSEE AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE RELEVANT PROVISIONS OF ACT PREV AILED AT THAT RELEVANT PERIOD AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY. III ITA NO.1255/A/04 A.Y. 1996-97: 9. THE MAIN GRIEVANCE OF THE ASSESSEE BEING THAT TH E CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.47 73 776/- MADE ON A CCOUNT OF UN- EXPLAINED CREDITS U/S 68 OF THE ACT; 9.1. IT WAS SUBMITTED DURING THE COURSE OF HEARING BEFORE THIS BENCH THAT THE ASSESSEE HAD RECEIVED RS.30 LAKHS THROUGH CHEQU ES AND DEMAND DRAFT FROM NOVA PREFAB CONSTRUCTION PVT. LTD WHICH IS BEING ASSESSED TO INCOME-TAX UNDER PAN 31-615-CV/2749 WITH COMPANY CI RCLE-1 BARODA. SINCE THERE WERE DISPUTES THE PARTY WAS NOT CO-OPE RATING WITH THE ASSESSEE IN GIVING CONFIRMATION LETTER BUT A COPY OF CERTIFICATE ISSUED BY THE SAID PARTY HAS BEEN FURNISHED [REFER: P 8 OF PB ]. IN RESPECT OF MITUL V PATEL [RS.8 53 767/-] IT WAS EXPLAINED THAT HE IS RELATIVE OF THE DIRECTOR OF THE ASSESSEE COMPANY AND HE HAD GIVEN RS.1 11 790/- DURING THE YEAR 1994 AND THAT HE IS BEING ASSESSED WITH ITO WARD-1 ANAND. IT WAS FURTHER CLAIMED THAT DURING THE YEAR VARIOUS AMOUN TS WERE RECEIVED ITA NOS.1253 TO 1255-AHD-2004 16 THROUGH ACCOUNT PAYEE CHEQUES AND SINCE STRAINED RE LATIONSHIP IT WAS CLAIMED HE HAD REFUSED SUCH TRANSACTION WHICH LED TO TREAT THE SAID AMOUNTS AS UNEXPLAINED. HOWEVER A COPY OF ACCOUNT HAS BEEN FURNISHED WHICH INDICATES THAT THE TRANSACTIONS THROUGH CHEQU ES. IN RESPECT OF PETCO AHMEDABAD [RS.9 05 300/-] IT WAS EXPLAINED THAT THE SAID COMPANY IS BEING ASSESSED UNDER PAN AAACP8842Q WITH DICT COMPANY CIRCLE 7(5) AHMEDABAD AND FURNISHED COPY O F CONTRACT ACCOUNT OF THE SAID PARTY ALONG WITH THE ACCOUNT FROM THE A SSESSEES BOOKS. 9.2 HOWEVER IT HAS BEEN NOTICED THAT THE ABOVE PAR TICULARS WERE PROVIDED TO THE ASSESSING OFFICER VIDE ITS LETTER D ATED 27.3.2001 BUT PRECISELY FILED IN THE O/O THE AO ONLY ON 28.3.2002 [SOURCE: PAGE 6 & 7 OF PB AR] THAT IS TO SAY AFTER THE COMPLETION OF THE A SSESSMENT DATED 26.3.2002 . 9.3 IT COULD BE SEEN FROM THE FINDINGS OF THE CIT ( A) THAT THE AO HAD REPORTED THAT [PARA 2.1. OF CIT(A)S ORDER] LETTERS WERE SENT TO HIS COUNTERPARTS TO OBTAIN THE NECESSARY DETAILS IN RES PECT OF M/S. NOVA PREFAB CONSTRUCTION PVT. LTD SHRI MITUAL V PATEL A ND M/S.PETCO AHMEDABAD AND IN RESPECT OF M/S.PADMAVATI INVESTMEN TS FURTHER INVESTIGATIONS WERE UNDER WAY. IN VIEW OF THE SITU ATION EVEN THOUGH THE TRANSACTIONS WERE APPEARED TO BE THROUGH BANKING CH ANNELS AND THE ASSESSING OFFICER WAS ON THE JOB TO VERIFY THE AUTH ENTICITY OF THE ASSESSEES CLAIM THE CIT (A) CONFIRMED THE ADDITIO N WITH A RIDER TO EXTEND RELIEF AS PER LAW AFTER COMPLETION OF ENQUIRIES. 9.4 TAKING INTO THE ABOVE ASPECTS INTO CONSIDERATIO N AND ALSO THE LD. A R FAIRLY CONCEDED THAT THE REQUIRED PARTICULARS WER E FURNISHED BEFORE THE AO ONLY AFTER THE COMPLETION AND PASSING OF THE ASS ESSMENT ORDER AND CHIEFLY THE CIT (A) IN HIS FINDINGS HAD SPECIFICAL LY OUTLINED THAT THE RELIEF ITA NOS.1253 TO 1255-AHD-2004 17 DUE TO THE ASSESSEE TO BE GIVEN AFTER COMPLETION OF THE ENQUIRIES WE ARE THEREFORE OF THE CONSIDERED VIEW THAT THIS ISSUE R EQUIRES TO THE REMITTED BACK TO THE FILE OF THE AO. SINCE THE AO IS SEIZED OF THE MATTER AND THE ENQUIRY WITH REFERENCE TO THE EVIDENCES ADDUCED BY THE ASSESSEE IS STILL IN THE PIPELINE WE REVERT BACK THE ISSUE TO THE FI LE OF THE AO WITH A SPECIFIC DIRECTION TO EXPEDITE THE ENQUIRY AND IF H E FINDS AFTER VERIFICATION OF REQUIRED PARTICULARS RECEIVED FROM HIS COUNTERPA RTS THAT THE TRANSACTIONS HAVE BEEN THROUGH BANKING CHANNELS AS CLAIMED BY TH E ASSESSEE ALL ALONG THE ADDITION REQUIRES TO BE DELETED. IT IS O RDERED ACCORDINGLY. 9.5 WITH REGARD TO THE DISALLOWANCE OF INTEREST OF RS.1 50 218/- IT WAS CLAIMED BY THE ASSESSEE THAT THOUGH DETAILS OF DEPO SITS RECEIVED FROM ITS SISTER CONCERNS NAMELY NIN TRADING PVT. LTD OF RS. 71.24 LAKHS A.N.DESAI TRADING PVT. LTD OF RS.15.99 LAKHS SAMIR MOTORS OF RS.9 LAKHS DEVAL SALES CORPORATION OF RS.8.8 LAKHS AND PATEL TRACTOR S CO. PVT. LTD OF RS.42.25 LAKHS FOR WHICH NO INTEREST WAS PAID BY THE ASSESSEE ETC. WERE FURNISHED BEFORE THE AO WHO HAD CONSIDERED ONL Y THE SHARE CAPITAL AND IGNORED THE ABOVE RECEIPTS AND ACCORDINGLY DIS ALLOWED THE INTEREST PAYMENT. 9.6. IT IS OBSERVED THAT THE SAME SET OF ARGUMENT H AS BEEN ADVANCED BEFORE THE CIT (A) WHO AFTER CONSIDERING THE ASSES SEES CONTENTIONS OBSERVED THAT: 3.2. THIS ISSUE HAD COME UP IN EARLIER YEAR ALSO (AY 93-94) WHEREIN IT HAS BEEN HELD THAT THE SHARE APPLICATION MONEY WAS WITH THE APPELLANT BUT THE GENUINENESS OF THE SAME WAS IN DOUBT. IN THE PRESENT YEAR THESE ARE INTER-CORPORATE DEPO SITS IN POSSESSION OF THE APPELLANT. NO NEXUS HAS BEEN SHO WN BETWEEN THE RECEIPT OF SUCH DEPOSITS AND GIVING OF INTEREST FREE ADVANCES. MERE EXISTENCE OF SUCH AMOUNTS ON THE LAST DATE OF THE FINANCIAL YEAR IS NOT SUFFICIENT TO STATE THAT THESE FUNDS WE RE UTILIZED FOR ITA NOS.1253 TO 1255-AHD-2004 18 GIVING OF INTEREST FREE DEPOSITS. THE DEPOSITS ALS O HAVE BEEN TO VARIOUS OTHER SISTER CONCERNS AND THE SITUATION APP EARS TO BE VERY MUCH MORE OF ROTATING FUNDS TO SUITE THE GROUP. UN DER THE CIRCUMSTANCES THE STATEMENT OF THE APPELLANT CANNO T BE PRIMA FACIE ACCEPTED. IN THE ABSENCE OF ANY FUND FLOW ST ATEMENTS TO PROVE THE NEXUS BETWEEN NON-INTEREST BEARING DEPOSI TS AND NON- INTEREST BEARING ADVANCES THE ADDITION MADE IS CON FIRMED. 9.7 WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS PU T-FORTH BY THE LD. A R AND ALSO DULY PERUSED THE FINDINGS OF THE AUTHORI TIES BELOW. 9.8 AS RIGHTLY POINTED OUT BY THE AO THE ASSESSEE HAD EQUITY CAPITAL FUND OF ONLY RS.23.50 LAKHS IN ITS KITTY WHICH WAS NON-INTEREST BEARING AGAINST WHICH IT HAD ADVANCED A SUM OF RS.88.39 L AKHS WHICH WAS NON- BEARING INTEREST ADVANCES. NO PRUDENT FINANCIAL IN STITUTION LIKE THAT OF THE ASSESSEE WOULD HAVE VENTURED TO ADVANCE SUCH A HUGE SUM AS NON- INTEREST LOANS KEEPING ASIDE ITS BUSINESS FEASIBILI TY. EVEN AT THIS STAGE OF HEARING THE ASSESSEE HAD NOT COME UP WITH ANY CRED IBLE EVIDENCE IN THE SHAPE OF FUND FLOW STATEMENTS TO SUBSTANTIATE THE N EXUS BETWEEN NON- INTEREST BEARING DEPOSITS AND NON-INTEREST BEARING ADVANCES. IN THE ABSENCE OF ANY CONCLUDING EVIDENCE TO BACK ITS CLAI M WE ARE OF THE CONSIDERED VIEW THAT THE CIT (A) WAS JUSTIFIED IN H IS STAND WHICH DOESNT WARRANT OUR INTERVENTION AT THIS STAGE. IT IS ORDE RED ACCORDINGLY. 9.9 CONSIDERING THE SMALLNESS OF THE CLAIM OF RS.38 98/- BEING UNPAID BONUS WE DELETE THE ADDITION. 9.10 BEFORE PARTING WITH WE WOULD LIKE TO REITERAT E THAT THE CASE LAW RELIED ON IN THE CASE OF POWER DRUGS LTD V. CIT RE PORTED IN (2011) 13 ITA NOS.1253 TO 1255-AHD-2004 19 TAXMANN.COM 56(P & H) HAS DULY BEEN PERUSED WHILE D EALING WITH THE RELEVANT ISSUE. 10. IN THE RESULT THE ASSESSEES APPEALS FOR THE A .YS 1993-94 AND 1996-97 ARE TREATED AS PARTLY ALLOWED FOR STATISTIC AL PURPOSES WHEREAS APPEAL FOR THE ASSESSMENT YEAR 1994-95 IS ALLOWED F OR STATISTICAL PURPOSE. 4 %3 1#2 5$'6 28 / 02 /201 2 # 7 . SD/- SD/- (G.C.GUPTA) (A.MOHAN ALANKAMONY) VICE PRESIDENT ACCOUNTANT MEMBER DATED :28/02/2012 %3 %3 %3 %3 */8 */8 */8 */8 9%82/6 9%82/6 9%82/6 9%82/6- -- - 1. () 2. *+() 3. '' / > 4. >- - 5. 8A */$ B 6. D E4 %3 % / ' B TALUKDAR/ SR. P.S.