The ITO, 2, Ratlam v. Shri Dasrath lal Agrawal,

ITA 158/IND/2009 | 2005-2006
Pronouncement Date: 09-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 15822714 RSA 2009
Assessee PAN ABRPA2892C
Bench Indore
Appeal Number ITA 158/IND/2009
Duration Of Justice 2 year(s) 7 month(s) 12 day(s)
Appellant The ITO, 2, Ratlam
Respondent Shri Dasrath lal Agrawal,
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 09-11-2011
Date Of Final Hearing 25-04-2011
Next Hearing Date 25-04-2011
Assessment Year 2005-2006
Appeal Filed On 27-03-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.158/IND/2009 A.Y. 2005-06 ITO WARD-2 RATLAM ... APPELLANT VS DASHRATHLAL AGRAWAL BAMNIA DISTRICT JHABUA PAN ABRPA 2892 C ... RESPONDENT APPELLANT BY : SHRI ARUN DEWAN RESPONDENT BY : SHRI AVINASH GAUR DATE OF HEARING : 9.11.2011 DATE OF PRONOUNCEMENT : 9.11.2011 O R D E R PER JOGINDER SINGH THIS IS AN APPEAL BY THE REVENUE CHALLENGING THE O RDER DATED 7.1.2009 OF THE LEARNED COMMISSIONER OF INCOM E TAX(A)- 2 UJJAIN. THE FIRST GROUND RAISED IS THAT ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE THE LD. FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.2 LACS MADE BY THE A SSESSING OFFICER U/S 68 OF THE I.T. ACT WHEN THE ASSESSEE DI D NOT PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSAC TION WITH SHRI HANUMAN PRASAD LUHARIWALA. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHR I ARUN DEWAN LEARNED SR. DR AND SHRI AVINASH GAUR LEARNE D COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE LD. SR. DR IS THAT CREDITWORTHINESS AND GENUINE NESS OF THE TRANSACTION IS DOUBTFUL THEREFORE THE ADDITION WA S RIGHTLY MADE. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSE SSEE SHRI GAUR CONTENDED THAT THE IDENTITY GENUINENESS AND CREDITWORTHINESS ARE PROVED THEREFORE THE IMPUGNE D ORDER WAS DEFENDED. 3. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVA L CONTENTIONS WE FIND THAT THE ASSESSEE IS ENGAGED I N TRADING OF COTTON. THE ASSESSING OFFICER MADE ADDITION OUT OF UNSECURED 3 LOAN OF RS.1 LAC IN THE NAME OF SHRI SITARAM LOHARI WALA AND RS.2 LACS IN THE NAME OF SHRI HANUMAN PRASAD LOHARI WALA. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 28.8.2007. THESE LOANS WERE RECEIVED THROUGH ACCOUN T PAYEE CHEQUES AND SHRI HANUMAN PRASAD LOHARIWALA WAS EXAM INED ON OATH BY THE ASSESSING OFFICER AND THE ADDITION W AS MADE ON THE GROUND THAT THE CREDITWORTHINESS IS NOT PROVED. SHRI SITARAM LOHARIWALA WAS NOT AN INCOME-TAX ASSESSEE THEREFOR E THE AMOUNT OF RS.1 LAC WAS SUSTAINED. SO FAR AS THE DEP OSITS FROM HANUMAN PRASAD ARE CONCERNED HE WAS HAVING PAN NO. WAS FILING INCOME-TAX RETURNS HIS COPY OF BANK ACCOUNT WAS FILED AS PER WHICH THE AMOUNT OF RS.2 LACS WAS GIVEN THROUGH CHEQUE MEANING THEREBY THE IDENTITY AND GENUINENESS OF TRA NSACTION AS WELL AS CREDITWORTHINESS IS NOT IN DOUBT THEREFORE IN VIEW OF THE DECISION IN THE CASE OF CIT VS. METACHEM INDUSTRIES (245 ITR 160) (MP) AND THE DECISION FROM THE HONBLE APEX CO URT IN LOVELY EXPORTS (216 CTR (SC) 195) THE CONCLUSION D RAWN ON THIS ISSUE IS AFFIRMED. 4 4. THE SECOND GROUND PERTAINS TO DELETING THE ADDIT IONS MADE U/S 68 OF THE ACT BY THE ASSESSING OFFICER ESP ECIALLY WHEN THE ASSESSEE DID NOT PRODUCE THE CREDITORS AND FAILED TO PROVE THE IDENTITY CREDITWORTHINESS AND GENUINENES S OF TRANSACTION WITH M/S. HINDUSTAN CONTINENTAL LTD. TH E CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IDENTICAL TO THE GROUND RAISED WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. WITHOUT GOING INTO MUCH DELIBERATION SO FAR AS THE DEPOSITS FROM M/S. HINDU STAN CONTINENTAL LTD. IS CONCERNED AN ELABORATE DISCUSS ION HAS BEEN MADE IN THE CASE OF M/S. AGRAWAL COAL CORPORAT ION LTD. & OTHERS (ITA NOS.151 136 196 137 & 190/IND/2009) AND (ITA NOS.158 34 283 & 193/IND/2010) VIDE ORDER DATED 3 1.10.2011 HELD THAT THE IDENTITY OF M/S. HINDUSTAN CONTINENTA L LTD. WAS NOT PROVED AT ANY STAGE. THE RELEVANT PORTION OF THE OR DER IS REPRODUCED HEREUNDER: 5 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. BRIEF FACT S OF THE CASE ARE THAT THE ASSESSEE (M/S AGRAWAL COAL CORPORATION PRI VATE LIMITED) IS A PRIVATE LIMITED COMPANY ENGAGED IN THE TRADING BU SINESS. IN THE YEAR UNDER CONSIDERATION THE COMPANY ENTERED IN THE FIELD OF POWER GENERATION WITH INSTALLATION OF TWO WIND MILLS AND DECLARED INCOME OF RS.83 46 090/- IN ITS RETURN FILED ON 30.10.2005 FOR ASSESSMENT YEAR 2005-06. THE CASE WAS SELECTED FOR SCRUTINY. THE LEARNED ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDING S NOTED THAT M/S HINDUSTAN CONTINENTAL LIMITED APPLIED FOR 40 0 00 SHARES OF THE ASSESSEE COMPANY OF THE COUNTENANCE VALUE OF RS.10/ - EACH AT A PREMIUM OF RS.90/- PER SHARE. SIMILARLY OPTIMATES TEXTILE INDUSTRIES LIMITED ALSO APPLIED FOR 10 000 SHARES O F THE ASSESSEE COMPANY OF THE SAME VALUE AND PREMIUM PER SHARE. TH E LEARNED ADDITIONAL CIT INDORE (ASSESSING OFFICER) HAS REF ERRED THE REPORT OF ACIT 5(1) INDORE WHEREIN IT WAS FOUND THAT ON THE BASIS OF INVESTIGATION CARRIED OUT BY HIM IN SOME OTHER CASE S M/S HINDUSTAN CONTINENTAL LIMITED AND OPTIMATES TEXTILES LIMITED ARE NOT THE GENUINE COMPANIES. THE REPORT OF ACIT 5(1) HAS BEE N REPRODUCED IN THE ASSESSMENT ORDER. THIS REPORT WAS CONFRONTED TO THE ASSESSEE COMPANY BY THE ASSESSING OFFICER DURING THE ASSESS MENT PROCEEDINGS AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE COMPANY IT WAS HELD THAT THE SHARE CAPITAL CLAIMED TO BE APPLIED BY THESE COMPANIES IS UNEXPLAINED THEREFORE THE S AME WAS ADDED TO THE INCOME OF THE ASSESSEE COMPANY. THE RELEVANT EXTRACT FROM THE ASSESSMENT ORDER IS EXTRACTED HERE UNDER :- THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE. ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE I.T.A.T. INDORE BENCH IN CASE OF ACIT VS. KALANI INDUSTRIES LTD. THE SAID DECISION WAS NOT ACCEPTABLE TO THE DEPARTMENT AND IS BEING CONTESTED BEFORE HON'BLE HIGH COURT OF M.P. ASSESSEE HAS TRIE D TO PROVE GENUINENESS OF TRANSACTION BY FURNISHING CONFIRMATION COPY OF BANK ACCOUNT AND ACKNOWLEDGEMENT OF RETURN. IT HAS ALSO FURNISHED VARIOUS DECISION IN SUPPORT OF ITS CONTENTIONS. BU T IT IS EVIDENT FROM THE INVESTIGATION MADE BY ACIT 5(1) INDORE THAT BOTH THESE COMPANY ARE NOT EXISTING COMPANIES IN THE REAL SENSE. THESE COMPANIES ARE PAPER COMPANIES ONLY AND EXIST NOWHERE AND WERE USED TO GIVE ACCOMMODATION ENTRIES TO VARIOUS PARTIES WHO WANT TO LAUNDER THEIR UNACCOUNTED 6 MONEY IN THE GUISE OF SHARE APPLICATION OR UNSECURE D LOAN OR LONG TERM CAPITAL GAIN. THE ASSESSEE IS A CLOSELY HELD PVT. LTD. COMPANY IN WHICH PUBLIC IS NOT SUBSTANTIALLY INTERESTED. T HUS AS PER SECTION 68 ONUS WAS UPON THE ASSESSEE TO ESTABLISH DEPOSITORS IDENTITY CREDITWORTHINESS AN D GENUINENESS OF TRANSACTION. ASSESSEE IN ITS WRITTE N SUBMISSION STATED THAT COMPANY HAS RECEIVED SHARE APPLICATION MONEY OF RS. 40 00 000/- FROM HINDUSTAN CONTINENTAL LTD. 19 SHUBH KAMNA APARTMENT GUL BAZAR JABALPUR. AS PER THE REPORT OF THE ACIT 5(1) INDORE IT IS CLEAR THAT NO SUCH COMPANY EXIST AT T HE GIVEN ADDRESS. THE CREDITWORTHINESS OF THE COMPANY HAS ALSO NOT BEEN ESTABLISHED IN VIEW OF THE FACT T HAT THERE IS HUGE INFLOW AND OUTFLOW OF FUND IN THE BAN K ACCOUNT WITHOUT ANY LOGIC. THERE IS HUGE CASH DEPO SIT IN THE BANK ACCOUNT OF HINDUSTAN CONTINENTAL LTD. MAINTAINED UTI BANK LTD. COPY OF WHICH IS FILED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION. THE COMPANY IS NOT EXISTING IN REAL SENSE THE GENUINENESS OF TRANSACTION IS ALSO DOUBTFUL. SINCE ASSESSEE FAILE D ESTABLISHED IDENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTION CREDIT IN THE ACCOUNT O F THE ASSESSEE ON ACCOUNT OF SHARE APPLICATION MONEY FROM HINDUSTAN CONTINENTAL LTD. RS. 4 00 000/- AND SHARE PREMIUM AMOUNT OF RS. 36 00 000/- ARE BEING TREATED AS UNEXPLAINED CREDIT U/S 68 AND ADDED BACK TO TAXABLE INCOME. SIMILARLY ASSESSEE HAS TRIED TO ESTABLISH IDENTITY OF M/S OPTIMATES TEXTILE INDUSTRIES LTD. BUT IT IS EVIDENT FROM THE REPORT OF THE ACIT 5(1) IND ORE THAT COMPANY IS ALSO A PAPER COMPANY USED TO PROVIDING ACCOMMODATION ENTRIES ONLY. ENQUIRIES REVEALED THAT NO SUCH COMPANY EXISTS AT THE ADDRESS AS PROVIDED BY THE ASSESSEE. ACIT 5(1) INDORE REPORTED THAT THE ASSISTANT DIRECTOR OF INCOME TAX INVESTIGATION IX(3) MUMBAI HAD CONFIRMED IN HIS REPORT THAT M/S OPTIMATES TEXTILE INDUSTRIES LTD. D OES NOT EXIST AT THE GIVEN ADDRESS AND SEEMS TO BE BOGU S. 7 ASSESSEE HAS GIVEN THE ADDRESS OF THE COMPANY AS TO DEV KARAN MENSION IIND FLOOR 63B PRINCES ESTATE MUMBAI WHEREAS THE BANK ACCOUNT OF THE COMPANY HAS BEEN MENTIONED IN INDORE IN WHICH THE ADDRESS O F THE COMPANY WAS GIVEN AS 13 SOUTH HATI PALA INDORE. THIS COMPANY IS ALSO NOT EXISTING IN REAL S ENSE AND ONLY ACCOMMODATION ENTRIES ARE BEING GIVEN TO THE BENEFICIARIES IN THE FORM OF SHARE APPLICATION MONEY OR UNSECURED LOANS. SINCE ASSESSEE FAILS TO ESTABLISH IDENTITY CREDITWORTHINESS AND GENUINENES S OF THE TRANSACTIONS SHARE APPLICATION MONEY CREDIT ED ON ACCOUNT OF M/S OPTIMATES TEXTILE INDUSTRIES LTD. RS. 1 00 000/- SHARE PREMIUM RS.9 00 000/- IS TREAT ED UNEXPLAINED U/S 68 AND ADDED BACK TO TAXABLE INCOME. TOTAL ADDITION UNDER THIS HEAD IS RS. 50 00 000/- 22. THE ABOVE FINDING WAS CONFRONTED TO THE ASSESSE E DURING APPELLATE PROCEEDINGS AGAINST WHICH THE ASSESSEE PR EFERRED WRITTEN SUBMISSIONS. DURING THE FIRST APPELLATE STAGE AS W ELL AS BEFORE US THE LD. COUNSEL FOR ASSESSEE HAS CHALLENGED THE FIN DING OF ACIT ON THE GROUND THAT THE SAID COMPANY IS A LISTED COMPAN Y ON STOCK EXCHANGE AND THE ASSESSING OFFICER WAS IN KNOWLEDGE AND POSSESSION OF THE INCOME TAX RETURN OF THE COMPANY. OUR ATTENTION WAS INVITED TO THE DETAILS OF CAPITAL WORK IN PROG RESS AND LICENCE CAPACITY OF HCL LIMITED BY ARGUING THAT THE EXISTEN CE AND CREDIT WORTHINESS OF HCL IS ESTABLISHED SINCE IT IS HAVING SHARE CAPITAL OF RS. 8.09 CRORES. DURING HEARING BEFORE US THE LD. COU NSEL FOR ASSESSEE MR. CHOUDHARY INVITED OUR ATTENTION TO DEPOSIT OF CASH IN BANK ACCOUNT OF M/S SAHAYATA MARKETING AND TRANSFER THER EOF THROUGH ACCOUNT PAYEE CHEQUE TO THE BANK ACCOUNT OF M/S SUN IL SHARES STOCKS PRIVATE LIMITED AND THEREAFTER TO THE ULTIMA TE BENEFICIARY. IT WAS SUBMITTED THAT THE TRANSACTIONS OF CASH TRANSFE R AND DEPOSITION OF CASH HAS NOTHING TO DO WITH THE ASSESSEE. A STR ONG PLEA WAS RAISED BY THE LD. COUNSEL FOR ASSESSEE THAT IDENTIT Y OF SHARE APPLICANTS IS ESTABLISHED WHICH WAS STRONGLY DENIED BY THE LEARNED CIT DR. AT THIS STAGE A QUERY WAS RAISED BY THE BENCH AS T O WHETHER THE ASSESSEE IS IN A POSITION TO PRODUCE BE FORE THIS BENCH ANY OF THE DIRECTORS OR THE EMPLOYEES OF THESE COM PANIES ? THE LD. COUNSEL FOR ASSESSEE CONVENIENTLY CONTENDED THA T THE ASSESSEE CANNOT BE PUT TO ADVERSE BURDEN MEANING THEREBY THA T THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE SUCH PERS ONS. THE 8 BENCH AGAIN CONTENDED THAT IN VIEW OF THE ABOVE REP LY OF THE LD. COUNSEL FOR ASSESSEE AN ADVERSE VIEW MAY BE TAKEN AGAINST THE ASSESSEE. THE LD. COUNSEL FOR ASSESSEE REMAINED MU M AND NOTHING WAS CANVASSED AGAINST THE QUERY RAISED BY T HE BENCH . 23. THE NOTICES ISSUED U/S 133(6) OF THE ACT TO M/S HCL LIMITED AND M/S OPTIMATES TEXTILES INDUSTRIES LIMIT ED COULD NOT BE SERVED AS THESE COMPANIES WERE FOUND NON-EXISTENT A T THE ADDRESSES SUPPLIED TO THE DEPARTMENT BY THE ASSESSE E. THEREAFTER COMMISSION WAS ISSUED TO ADIT(INV.) UNIT-IX-3 MUMB AI TO VERIFY THE EXISTENCE/GENUINENESS OF THESE COMPANIES WHO A LSO REPORTED THAT THE SAID COMPANIES DID NOT EXIST AT THE GIVEN ADDRESSES. THE WHOLE ISSUE FOR ADJUDICATION IS WHETHER THE IDENTIT Y OF THESE COMPANIES WAS ESTABLISHED ? DURING HEARING THE L D. COUNSEL FOR ASSESSEE CLAIMED THAT IDENTITY OF BOTH THESE COMPAN IES HAS BEEN ESTABLISHED AS BOTH THESE COMPANIES WERE REGISTERED WITH REGISTRAR OF COMPANIES AND THEIR INCOME TAX RETURNS WERE FILE D AND BOTH ARE HAVING PANS/BANK ACCOUNTS. WE ARE NOT AGREEING WITH THIS PROPOSITION BECAUSE AT THE TIME OF REGISTRATION TH ESE COMPANIES MAY BE EXISTING EITHER ON PAPERS OR IN REAL SENSE B UT THEREAFTER WERE SPECIFICALLY FOUND NON-EXISTENT AS THE SUMMONS / NOTICES ISSUED WERE RETURNED BACK UNSERVED AND THE COMMISSI ON ISSUED WITH THIS PURPOSE ALSO FOUND THAT THESE COMPANIES W ERE NON- EXISTENT. AT THE SAME TIME NONE OF THE CERTIFICAT ES CLAIMED TO BE ISSUED BY VARIOUS AUTHORITIES DOES NOT ESTABLISH T HE IDENTITY OF THE SHARE APPLICANTS AS THE CERTIFICATES WERE ISSUED WI THOUT PHYSICALLY VERIFYING THE EXISTENCE OF APPLICANTS SUCH AS INCO ME TAX DEPARTMENT RECEIVES RETURNS OF INCOME OR DOCUMENTS WITHOUT VER IFICATION OF EXISTENCE OF THE PERSONS FILING THE RETURNS/DOCUMEN TS. PAN IS ALSO ALLOTTED TO THE APPLICANTS ON THE BASIS OF APPLICAT IONS WITHOUT VERIFYING THE EXISTENCE OF APPLICANTS AT THE ADDRES S GIVEN IN THE APPLICATION. LIKEWISE REGISTRAR OF COMPANIES ALSO REGISTER A COMPANY WITHOUT PHYSICAL VERIFICATION OF THE EXISTE NCE OF THE APPLICANT COMPANY. THERE IS A SPECIFIC FINDING THA T ON VERIFICATION BY THE ACIT IN THE CASE OF M/S SAHAYATA MARKETING COMP ANY NEITHER THE OPERATORS OF THE ACCOUNTS WERE AVAILABLE AT THE ADDRESSES GIVEN TO THE BANK NOR THE INTRODUCER. THEREFORE THE ASSE SSEE CANNOT CLAIM TO HAVE ESTABLISHED THE IDENTITY OF BOTH THES E COMPANIES ON THE BASIS OF SOME DOCUMENTS. LEAVE IT APART AS ME NTIONED ABOVE THE LD. COUNSEL FOR ASSESSEE IN REPLY TO A SPECIFI C QUERY REGARDING PRODUCTION OF ANY OF THE DIRECTORS OR THE EMPLOYEES OF THE SHARE APPLICANTS BEFORE THE BENCH THE ASSESSEE DID NOT C OMPLY WITH THE DIRECTIONS OF THE BENCH THEREFORE TO THIS LIMITED EXTENT WE ARE OF THE VIEW THAT THESE SHARE APPLICANTS ARE NON-EXISTE NT AND THEIR IDENTITY IS NOT PROVED. IT IS PERTINENT TO MENTION HERE THAT THERE IS A 9 DIFFERENCE BETWEEN A PRIVATE AND PUBLIC LIMITED COM PANY AS IN A PRIVATE LIMITED COMPANY THE PUBLIC AT LARGE IS NOT SUBSCRIBING THE SHARES AS THE SHARES ARE ALLOTTED TO CLOSE RELATIVE S FRIENDS AND OTHER KNOWN PERSONS WHO ARE HAVING FAITH IN THE SUBSCRIBI NG COMPANY ON PERSONAL RELATIONS WHEREAS THERE IS AN INVITATION T O THE PUBLIC AT LARGE BY A PUBLIC LIMITED COMPANY AND NOT NECESSARI LY HAVING PERSONAL RELATIONS AND IN THAT CASE THE INDIVIDUAL RELATIONS ARE NORMALLY FOUND TO BE NON-EXISTENT. IN VIEW OF THES E FACTS THE SHARE APPLICANTS ARE KNOWN TO THE ASSESSEE COMPANY BEING PRIVATE LIMITED COMPANY AND THERE SHOULD BE NO DIFFICULTY TO PRODUCE THEM OR THEIR REPRESENTATIVE TO ENABLE THE ASSESSING OFF ICER TO VERIFY THE IDENTITY GENUINENESS OF THE CAPITAL CLAIMED TO BE SUBSCRIBED BY THEM THEREFORE THE ASSESSEE CANNOT CLAIM IGNORANC E ABOUT THESE COMPANIES. UNLESS THE ASSESSEE IS ABLE TO ESTABLIS H IDENTITY OF THE COMPANIES WHO HAVE SUBSCRIBED IN THEIR SHARE CAPITA L HOW THE DEPARTMENT WILL PROCEED AGAINST THESE COMPANIES IN TERMS OF THE VERDICT OF THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA). ANY ADDITION IN THE HANDS OF SUCH SUBSCRI BING COMPANIES IS ONLY POSSIBLE WHEN THE ASSESSEE IS ABLE TO ESTABLIS H IDENTITY OF THESE COMPANIES WHICH THE ASSESSEE HAS GROSSLY FAILED NOT ONLY BEFORE THE ASSESSING OFFICER BUT ALSO BEFORE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) AND THE TRIBUNAL. UNDER THESE FACTS A ND CIRCUMSTANCES THERE IS NO QUESTION OF APPLY THE PR OPOSITION OF LAW AS SUGGESTED BY THE LD. COUNSEL FOR ASSESSEE. 24. ON THE ISSUE OF DISCHARGE OF ONUS/BURDEN THE ASSERTION OF THE LD. COUNSEL FOR THE ASSESSEE IS TH AT THE ONUS SHIFTED TO THE DEPARTMENT WHEN COPY OF SHARE APPLICATION FO RM PAN NAME AND ADDRESSES AND ROC REGISTRATION ETC. WERE FILED BY THE ASSESSEE. WE ARE NOT AGREEING WITH THE SUBMISSION OF THE ASSE SSEE IN VIEW OF THE FACT THAT AT THE ADDRESSES (4 PLACES) GIVEN TO THE DEPARTMENT THESE COMPANIES WERE FOUND TO BE NON-EXISTENT. EVEN THE INSPECTOR WAS DEPUTED TO VERIFY THE ADDRESSES WHO ALSO REPORT ED THAT THESE COMPANIES WERE NOT AVAILABLE AT THE GIVEN ADDRESSES . IT IS NOT POSSIBLE THAT THE COMPANIES MAKING HUGE INVESTMENT IN THE FORM OF SHARE APPLICATION ARE NOT FOUND AT THE GIVEN ADDRES SES. THERE IS A POSSIBILITY THAT THERE MAY BE A CHANGE OF ADDRESS B UT TILL THE STAGE OF THE TRIBUNAL NOT TO TALK OF THE ASSESSING OFFICER OR THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) NO SUCH ADDRE SS WAS FURNISHED BY THE ASSESSEE THEREFORE WE ARE OF THE CONSIDERED OPINION THAT THE ONUS WAS NOT DISCHARGED AS THE ASS ESSEE NEITHER FURNISHED THE CORRECT ADDRESSES NOR THE CREDITORS W ERE PRODUCED RATHER THE ASSESSEE TRIED TO STALL THE ASSESSMENT P ROCEEDINGS BY GIVING MISLEADING FACTS AND INCORRECT ADDRESSES. EV EN AS PER PREPONDERANCE OF PROBABILITIES ALL FACTS GO AGAINS T THE ASSESSEE AND 10 THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN TH E CASE OF SUMATI DAYAL (214 ITR 801) GOES AGAINST THE ASSESSEE. HON 'BLE CALCUTTA HIGH COURT IN THE CASE OF NIVENDAN VANIJYA NIYOJAY LIMITED (SUPRA) (PAGE 14) HELD AS UNDER :- AFTER THE INITIAL ONUS WAS DISCHARGED BY ASSESSEE THE INCOME TAX AUTHORITIES HAVE MADE ENQUIRIES AND HAD COMMUNICATED THE RESULT OF THE ENQUIRY TO THE ASSESSEE AND REQUIRED THE ASSESSEE T O PRODUCE THE SUBSCRIBERS WHO PROVIDED SUCH CREDIT I N ORDER TO ESTABLISH ITS CASE. BUT THE ASSESSEE DID NOT DO SO. ON THIS BASIS ADDITION MADE BY THE A.O. U/S 68 OF I.T. ACT WAS CONFIRMED. IDENTICALLY THE HON'BLE CALCUTTA HIGH COURT IN TH E CASE OF HINDUSTAN TEA TRADING COMPANY LIMITED; 182 CTR 585 AT PAGE 23 (PARA 21) WHERE THE IDENTITY OF 12 PERSONS WHO WERE NOT FOUND AT THE ADDRESSES IT WAS HELD THAT IDENTITY IS NOT ESTABLIS HED. ON THE ISSUE OF ONUS IT WAS HELD THAT PRINCIPLE REGARDING ONUS IS LAID DOWN U/S 68 WHEREBY ONCE A REASONABLE ENQUIRY IS MADE THEN THE ASSESSING OFFICER CAN DO NO FURTHER EXCEPT ARRIVING AT A CONC LUSION. WHEN SUCH CONCLUSION IS COMMUNICATED TO ASSESSEE ONUS SHIFTS ON THE ASSESSEE. LIKEWISE HON'BLE JURISDICTIONAL HIGH COU RT IN THE CASE OF M/S RATHI FINLEASE LIMITED; 215 CTR 429 AT PAGE 28 WHEN COMPANY IS NOT FOUND AT THE GIVEN ADDRESS AGAINST THE SUMMO NS ISSUED BY THE ASSESSING OFFICER OBSERVED AS UNDER THE ASSESSEE TRIED TO EXPLAIN THE GENUINENESS OF T HE CREDIT ON THE BASIS OF LETTERS OF CONFIRMATIONS. I T COULD NOT BE EXPLAINED AS TO HOW THE TRANSACTION WAS MATERIALISED WHEN THE COMPANIES WERE NOT IN EXISTENCE AND THE AMOUNT WAS PAID BY CHEQUE ONLY ON THE DATE ON WHICH THE AMOUNT WAS CREDITED TO THE ACCOUNT OF THE COMPANY. THE ASSESSEE FAILED TO DISCHARGE THE BURDEN WITH REGARD TO THE CREDIT IN I TS BOOKS AND THE EXISTENCE OF THE CREDITORS TO INDICAT E THE GENUINENESS OF THE TRANSACTION. THE FULL BENCH OF HON'BLE DELHI HIGH COURT IN THE C ASE OF M/S SOPHIA FINANCE LIMITED; 205 ITR 98 OBSERVED AS UNDER :- 11 THE ITO WOULD BE ENTITLED TO ENGAGE AND IT WOULD INDEED BE HIS DUTY TO DO SO WHETHER THE ALLEG ED SHAREHOLDERS DO IN FACT EXIST OR NOT. IF THE SHAREHOLDERS EXIST THEN POSSIBLY NO FURTHER ENQUIRY NEED TO BE MADE. BUT IF THE ITO FINDS THAT THE SHA RE HOLDERS DO NOT EXIST THEN IN EFFECT IT WOULD MEAN THAT THERE IS NO VALID ISSUANCE OF SHARE CAPITAL. SHARE S CANNOT BE ISSUED IN THE NAME OF NON-EXISTING PERSON S. THE USE OF WORDS MAY BE CHARGEDIN SECTION 68 CLEARLY INDICATES THAT THE ITO WOULD THEN HAVE THE JURISDICTION IF THE FACTS SO WARRANTS TO TREAT SUCH CREDIT TO BE THE INCOME OF THE ASSESSEE. THE HON'BLE CALCUTTA HIGH COURT IN PRECISION FINANC E PRIVATE LIMITED; 208 ITR 465 HELD THAT INQUIRY OF ITO REVEA LED THAT EITHER THE ASSESSEE WAS NOT TRACEABLE OR THERE WAS NO SUCH FILE AND ACCORDINBGLY THE FIRST INGREDIENT AS TO THE IDENTIT Y OF THE CREDITORS HAS NOT BEEN ESTABLISHED. IF THE IDENTITY OF THE C REDITOR HAS NOT BEEN ESTABLISHED CONSEQUENTLY THE QUESTION OF EST ABLISHMENT OF THE GENUINENESS OF THE TRANSACTION OR THE CREDIT WO RTHINESS OF THE CREDITORS DID NOT AND COULD NOT ARISE. DURING HEAR ING RELIANCE WAS PLACED UPON THE DECISION IN THE CASE OF STELLAR INV ESTMENT LIMITED; 251 ITR 263 (SC) WHEREIN THE ISSUE WAS SUBSCRIPTION OF SHARE CAPITAL OF A PUBLIC LIMITED COMPANY WHEREAS IN THE PRESENT APEPALS PRIVATE LIMITED COMPANIES ARE INVOLVED THEREFORE THERE IS A MATERIAL DIFFERENCE BETWEEN THE TWO AS DISCUSSED EARLIER TH E SHARES OF PRIVATE LIMITED COMPANIES ARE GENERALLY GIVEN TO AP PLICANTS KNOWN TO THE DIRECTORS WHEREAS IN A PUBLIC LIMITED COMPAN Y THE APPLICANTS ARE UNKNOWN TO THE DIRECTORS. IT IS PERTINENT TO M ENTION THAT WHILE COMING TO A PARTICULAR CONCLUSION THE FULL BENCH O F DELHI HIGH COURT IN THE CASE OF SOPHIA FINANCE LIMITED (SUPRA) DULY CONSIDERED THE CASE OF STELLAR INVESTMENT LIMITED. EVEN IN THE CA SE OF M/S LOVELY EXPORTS PRIVATE LIMITED (SUPRA) THE HON'BLEBLE DEL HI HIGHCOURT IN PARA 4 OBSERVED AS UNDER :- REFERENCE TO SECTION 68 OF THE IT ACT IS CONSPICU OUS BY ITS ABSENCE THE STELLAR INVESTMENT LIMITED RATI O CANNOT BE STRESSED TO THE EXTENT THAT IT PARTAKES A S A REFLECTION ON SECTION 68 WHEN THE INQUIRY PERTAINE D ONLY TO SECTION 263. 12 25. IN VIEW OF THE FACTS NARRATED ABOVE AND THE JU DICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE IT CAN BE SAI D THAT THE ASSESSEE DID NOT DISCHARGE THE ONUS CAST UPON IT BY THE PROVISIONS OF THE ACT. WE TEND TO REPRODUCE SECTION 68 OF THE AC T :- 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AN D THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HI M IS NOT IN THE OPINION OF THE [ASSESSING] OFFICER SATISFACTORY THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IF THE AFORESAID PROVISION OF THE ACT IS ANALYSED IT SPEAKS ABOUT CASH CREDITS AND THE SUM FOUND CREDITED IN THE BOOKS OF AN ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION IS NOT FOUND SATISFACTOR Y BY THE ASSESSING OFFICER THEN THE SAME MAY BE CHARGED TO TAX AS THE INCOME OF THE ASSESSEE. IN THE PRESENT APPEAL AT ANY STAGE THE ASSESSEE DID NOT FILE ANY EXPLANATION REGARDING THE IDENTITY OF THE SHARE APPLICANTS THEREFORE THE ONUS WAS NOT DISCHARGED BY THE ASSES SEE. A BARE READING OF SECTION 68 SUGGEST THAT THERE HAS TO BE CREDITS OF AMOUNTS IN THE BOOKS MAINTAINED BY THE ASSESSEE THA T SUCH CREDIT HAS TO BE OF A SUM DURING THE PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDIT OR THE EXPLANATION OFFERED BY THE ASSESSEE IN THE OPINION OF THE ASSESSING OFFICER IS NOT SATISFACTORY IT IS ONLY THEN THE SU M SO CREDITED MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. WE ARE AWARE THAT THE OPINION OF THE ASSESSI NG OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT APPEALS THE A SSESSING OFFICER WAS NEVER SATISFIED AND THE NOTICES/SUMMONS ISSUED TO THE SUBSCRIBING COMPANIES WERE FOUND TO BE FICTITIOUS OR NON-EXISTENT THEREFORE ONE FACT OOZING OUT THAT THE ASSESSEE HA S NOT FULFILLED THE REQUIREMENT OF SECTION 68. A CLOSE READING OF SECT ION 68 MAKES IT CLEAR THAT IN CASE OF SECTION 68 THERE SHOULD BE CR EDIT ENTRY IN THE BOOKS OF ACCOUNT. THIS IS A FUNDAMENTAL DIFFERENCE BETWEEN THESE TWO PROVISIONS. THE LAW IS WELL SETTLED THAT THE ON US OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVE D BY AN ASSESSEE IS ON HIM WHERE THE NATURE AND SOURCE OF A RECEIPT WHETHER IT BE OF MONEY OR OTHER PROPERTY CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE IT IS OPEN TO THE REVENU E TO HOLD THAT IT IS 13 THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LI ES ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICU LAR SOURCE FOR WHICH WE ARE SUPPORTED BY THE DECISION OF THE HON'B LE APEX COURT IN ROSHAN DI HATTI VS. CIT; 107 ITR 938 AND KALE KH AN MOHD. HANIF VS. CIT; 50 ITR 1 (SC). IT IS FOR THE ASSESSEE TO PROVE THAT EVEN IF CASH CREDIT REPRESENTS INCOME IT IS INCOME FROM A SOURCE WHICH HAS ALREADY BEEN TAXED FOR WHICH WE ARE SUPPORTED BY TH E DECISION IN CIT V. DEVIPRASAD VISHWANATHPRASAD; 72 ITR 194 (SC) . THE HONBLE APEX IN THE CASE OF SUMATI DAYAL VS. CIT; 214 ITR 8 01 CLEARLY HELD THAT IF THE EXPLANATION OF THE ASSESSEE IS UNSATISF ACTORY THE AMOUNT CAN BE TREATED AS INCOME OF THE ASSESSEE. THERE AR E CONTRARY DECISION LIKE ADDL. CIT V. BAHRI BROTHERS; 154 ITR 244 (PAT) HOLDING THAT IDENTITY OF CREDITORS IS NOT RELEVANT FOR CHEQ UE TRANSACTIONS BUT AT THE SAME TIME IT IS NOT SACROSANCT AS WAS HELD I N NEMICHAND KOTHARI VS. CIT; 264 ITR 254 (GAU). IN THE CASE OF SHRI BARKHA SYNTHETICS LIMITED VS. ACIT; 155 TAXMAN 289 THE HON BLE RAJASTHAN HIGH COURT HELD THAT WHERE THE MATTER CONCERNS MONE Y RECEIPTS BY WAY OF SHARE APPLICATION FROM THE INVESTORS THROUGH BANKING CHANNEL THE ASSESSEE HAS TO PROVE THE EXISTENCE OF THE PERSON I N WHOSE NAME THE SHARE APPLICATION IS RECEIVED . ONCE THE EXISTENCE OF THE INVESTOR IS PROVED IT IS NOT FURTHER THE BU RDEN OF THE ASSESSEE TO PROVE WHETHER THAT PERSON ITSELF HAS INVESTED TH E MONEY OR SOME OTHER PERSON HAS MADE INVESTMENT IN THE NAME OF THA T PERSON. THE BURDEN THEN SHIFTS TO THE REVENUE TO ESTABLISH THAT SUCH INVESTMENT HAS COME FROM THE ASSESSEE COMPANY ITSELF. 26. ONCE THE RECEIPT OF THE CONFIRMATION LETTER F ROM THE CREDITOR IS PROVED AND THE IDENTITY AND EXISTEN CE OF THE INVESTOR HAS NOT BEEN DISPUTED NO ADDITION ON ACCOUNT OF S HARE APPLICATION MONEY IN THE NAME OF SUCH INVESTOR CAN BE MADE IN T HE HANDS OF THE ASSESSEE. IN THE CASE OF CIT V. DIVINE LEASING & FINANCE; 158 TAXMAN 440 (DEL) THE HON'BLE COURT CLEARLY HELD TH AT IN CASE OF PUBLIC ISSUE THE COMPANY CONCERNED CANNOT BE EXPEC TED TO KNOW EVERY DETAIL PERTAINING TO IDENTITY AS WELL AS FINA NCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST HOWEVER MAINT AIN AND MAKE AVAILABLE TO THE ASSESSING OFFICER FOR HIS PERUSAL ALL THE INFORMATION CONTAINED IN THE SHARE APPLICATION DOCUMENTS. THE HON'BLE COURT CLEARLY HELD THAT IN CASE OF PRIVATE PLACEMENT THE LEGAL REGIME WOULD NOT BE SAME . A DELICATE BALANCE MUST BE MAINTAINED WHILE WALKING THE TIGHT ROPE OF SECTION 68 AND 69. THE B URDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSE E. HOWEVER IF THE ASSESSING OFFICER HARBOURS DOUBTS OF THE LEGITI MACY OF ANY SUBSCRIPTION HE IS EMPOWERED RATHER DUTY BOUND TO CARRY OUT INVESTIGATIONS. THE ASSESSEE MERELY WANTS TO TAKE SHELTER OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF L OVELY EXPORTS 14 PRIVATE LIMITED WHEREIN IT WAS HELD THAT EVEN THE S HARE APPLICANTS ARE BOGUS IT CANNOT BE ADDED IN THE HANDS OF THE A SSESSEE. IN THAT CASE THE TRIBUNAL CLEARLY NOTED THAT THE ASSESSEE W AS A PUBLIC LIMITED COMPANY AND SUBSCRIPTIONS WERE RECEIVED FRO M PUBLIC AT LARGE THROUGH BANKING CHANNEL AND THE SHARES WERE A LLOTTED IN CONSONANCE WITH THE PROVISIONS OF THE SECURITIES CO NTRACT (REGULATION) ACT 1956 AS ALSO THE RULES AND REGULA TIONS OF DELHI STOCK EXCHANGE AND IN PARA 12 THE HON'BLE DELHI HIG H COURT HAS CLEARLY DIFFERENTIATED THE CASES OF SHARE CAPITAL O F PRIVATE LIMITED COMPANY FROM PUBLIC LIMITED COMPANY BY SAYING IN T HE CASE OF PRIVATE PLACEMENT THE LEGAL REGIME WILL NOT BE THE SAME. THEREFORE THE FACTS OF THAT CASE ARE NOT APPLICABL E TO THE CASE OF THE ASSESSEE AS IT IS A PRIVATE LIMITED COMPANY OR CLOSELY HELD COMPANY. BESIDES THIS IN CASE OF M/S LOVELY EXPORT S LIMITED (IN PARA 23) THE HON'BLE DELHI HIGH COURT NOTED THAT T HE ASSESSING OFFICER HAS NEITHER CONTROVERTED NOR DISPROVED THE MATERIAL FILED BY THE ASSESSEE. HOWEVER IN THE PRESENT CASE THE A SSESSING OFFICER AFTER MAKING INQUIRY DISAPPROVED THE VERY FIRST INF ORMATION REGARDING IDENTITY OF SUCH CREDITORS AS THEY WERE F OUND NON-EXISTENT AT ALL THE GIVEN ADDRESSES. SO FAR AS THE ARGUMENT OF THE LEARNED CIT DR THAT DISMISSAL OF SLP IN THE CASE OF LOVELY EXPO RT WHERE THERE IS NO MERGER OF ORDER IS NOT AN EXPRESSION OF JUDICIA L VIEW NOR A BINDING PRECEDENT. WE ARE NOT GOING INTO THIS CONT ROVERSY BECAUSE THE FACTS OF THE PRESENT APPEALS ARE DISTINGUISHABL E FROM THE FACTS OF LOVELY EXPORTS PRIVATE LIMITED. HONBLE DELHI HIGH COURT IN A LATTER DECISION IN CIT V. OASIS HOSPITALITIES PRIVATE LIMI TED (2011) 333 ITR 119 HELD AS UNDER :- WE ARE OF THE VIEW THAT RATIO LAID DOWN IN STELLER INVESTMENT LTD. (2001) 251 ITR 263 IS APPLICABLE ONLY IN THOSE CASES WHERE THE ASSESSEE I S A LIMITED COMPANY AND THE SHARES WERE QUOTED IN THE STOCK EXCHANGE. BUT WHENEVER THE ISSUE IS SUBSCRIB ED WITHOUT QUOTING IT ON THE STOCK EXCHANGE BY A LIMIT ED OR PRIVATE LIMITED COMPANY THE PRESUMPTION IS VERY STRONG AGAINST THE ASSESSEE THAT SUBSCRIPTION IS AVAILABLE ONLY TO THE CLOSELY CONNECTED PERSONS OF THE ASSESSEE. ONCE THE INFERENCE IS AGAINST THE ASSESS EE THAT THE ISSUE IS SUBSCRIBED BY ITS CLOSELY CONNECT ED PERSON THE ONUS IS UPON THE ASSESSEE TO PROVE THE IDENTITY OF THE SUBSCRIBERS AND THEIR CREDITWORTHINESS. 15 27. THERE IS ANOTHER PERCEPTION TO LOOK INTO THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF L OVELY EXPORTS PRIVATE LIMITED WHEREIN THE HON'BLE APEX COURT HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE FROM ALLEGED BOGUS SHARE HOLDERS WHOSE NAMES ARE GIVEN TO THE A SSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW BUT I T CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMP ANY. IN OUR VIEW FIRST OF ALL THE ALLEGED BOGUS SHARE HOLDERS SHOULD BE IN EXISTENCE ONLY THEN THE DEPARTMENT MAY BE IN A POS ITION TO REOPEN THEIR INDIVIDUAL ASSESSMENT. HOWEVER IN THE PRESEN T APPEALS THE SHARE APPLICANTS/SHARE SUBSCRIBERS ARE NO MORE IN E XISTENCE MEANING THEREBY THEIR IDENTITY IS NOT PROVED THERE FORE HOW THE DEPARTMENT CAN PROCEED TO REOPEN THEIR INDIVIDUAL A SSESSMENTS. 28. THE HON'BLE MADHYA PRADESH HIGH COURT AFFIRMED THE DECISION OF M/S RATHI FINLEASE LIMITED (SUPRA) IN THE CASE OF M/S STL EXTRUSION PRIVATE LIMITED (2011) 333 ITR 269 R ELIED UPON BY BOTH THE SIDES BEFORE US. WE FIND THAT THE FACTS IN STL EXTRUSION ARE MATERIALLY DIFFERENT FROM BOTH THE ASSESSEES NAMEL Y M/S AGRAWAL COAL CORPORATION AS WELL AS FROM M/S RATHI FINLEASE LIMITED. IN THE CASE OF M/S STL EXTRUSION ON RECEIPT OF CONFIRMATIO N OF SHARE APPLICANTS EXCEPT OBSERVING DISCREPANCIES IN CONFI RMATION THE ASSESSING OFFICER NEITHER ASKED ANYTHING FROM THE A SSESSEE NOR MADE ANY INQUIRY TO ARRIVE AT THE CONCLUSION THAT S HARE APPLICANTS WERE BOGUS. HOWEVER IN THE PRESENT APPEAL DETAI LED INQUIRIES WERE MADE NOTICES RECEIVED UNSERVED COMMISSION AL SO RETURNED EMPTY HANDED AS THE SHARE SUBSCRIBING COMPANIES WER E FOUND NON- EXISTENT. IN THAT SITUATION THE HON'BLE HIGH COUR T CONCLUDED THAT ONCE EXISTENCE OF AN INVESTOR/SHARE HOLDER IS PROVE D ONUS SHIFTS TO THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPL ICANTS ARE BOGUS OR IMPUGNED MONEY BELONGS TO THE ASSESSEE ITSELF. T HE CONTRARY FINDING IN THESE CASES WERE CONFRONTED TO THE ASSES SEE BY THE ASSESSING OFFICER BUT THE ASSESSEE IN SPITE OF SUFF ICIENT OPPORTUNITY PROVIDED FAILED TO PROVE THE EXISTENCE OF SUCH SHA RE APPLICANTS COMPANIES AS THE CORRECT ADDRESSES WERE NOT PROVIDE D TO THE ASSESSING OFFICER AND EVEN THE DIRECTORS OR ANY OF THE EMPLOYEES OR BOOKS OF ACCOUNT WERE NOT PRODUCED. THEREFORE THE ONLY CONCLUSION ARRIVED AT BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S RATHI FINLEASE LIMITED THAT THE ASSESSE E FAILED TO DISCHARGE BURDEN WITH REGARD TO CREDITS IN ITS BOOK S AND THE EXISTENCE OF ITS CREDITORS CONSEQUENTLY ADDITION U/S 68 WAS SUSTAINED. THIS DECISION IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT APPEALS BECAUSE IDENTITY OF SHARE APPLICANT ITSELF WAS NOT PROVED. THE PRINCIPLE LAID DOWN IN THE CASE OF M/S RATHI FINLEASE 16 LIMITED WAS RECENTLY AFFIRMED BY HON'BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF STL EXTRUSIONS IT HAS BECOME BINDING P RECEDENT ON THE TRIBUNAL ESPECIALLY WHEN THE DECISION OF THE HON'BL E APEX COURT IN THE CASE OF LOVELY EXPORTS WAS VERY MUCH AVAILABLE. HON'BLE JURISDICTIONAL HIGH COURT WHILE COMING TO A PARTICU LAR CONCLUSION FOLLOWED THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN CIT V. ASK BROTHERS LIMITED (2011) 333 ITR 333 AND DULY CO NSIDERED THE DECISION FROM THE HON'BLE APEX COURT IN CIT V. LOV ELY EXPORTS PRIVATE LIMITED AND STELLER INVESTMENT LIMITED (SU PRA). IN ANOTHER LATEST DECISION IN CIT V. OASIS HOSPITALITIES PRIVA TE LIMITED UP BONE MILLS INDIA LIMITED AND VIJAY POWER GENERATORS LIMI TED ETC. (2011) 333 ITR 119 (DEL) IDENTICALLY HELD THAT IDENTITY A ND CREDIT WORTHINESS OF SHARE APPLICANTS WAS NOT PROVED THER EFORE THE ADDITION U/S 68 OF THE ACT WAS JUSTIFIED. WHILE COM ING TO THE AFORESAID DECISION THE HON'BLE DELHI HIGH COURT CON SIDERED THE FOLLOWING DECISIONS :- 1. BHOLA SHANKAR COLD STORAGE P. LTD. V. JCIT; (200 4)270 ITR 487 (CAL (PARA 40) 2. CIT V. AKJ GRANITES P. LTD. (2008) 301 ITR 298 ( RAJ) (PARA 18) 3. CIT V. ARUNANANDA TEXTILES P. LTD. (2011) 333 IT R 116 (KARN) (PARA 17) 4. CIT V. ASK BROTHERS LTD. (2011) 333 ITR 111 (KAR N) 5. CIT VS. CREATIVE WORLD TELEFILMS LTD. (2011) 333 ITR 100 (BOM) 6. CIT VS. DIVINE LEASING & FINANCE LTD. (2008) 299 ITR 268 (DEL) 7. CIT V. DOLPHIN CANPACK LTD. (2006) 283 ITR 190 ( DELHI) 8. CIT V. K.C. FIBERS LTD. (2011) 332 ITR 481 (DEL HI) 9. CIT V. LOVELY EXPORTS P. LTD. (2009) 319 ITR (ST .) 5 (HC) 10.CIT V. MOHANKALA (P) (2007) 291 ITR 278 (SC) 11.CIT V. SOPHIA FINANCE LTD. (1994) 205 ITR 98 (DE L) 12.CIT V. STELLER INVESTMENT LTD. (1991) 192 ITR 28 7 (DEL) 13.CIT V. STELLER INVESTMENT LTD. (2001) 251 ITR 26 3 (S.C.) 14.CIT V. VALUE CAPITAL SERVICES P. LTD. (2008) 307 ITR 334 (DEL) 17 15. MADHURI INVESTMENT PVT. LTD. V. ACIT(ITA NO. 11 0 OF 2004 DATED 18.2.2006 (KARN.) 16. SHREE BARKHA SYNTHETICS LTD. VS. ACIT; (2006) 2 83 ITR 377 (RAJ.) 29. AS PER THE PROVISIONS OF SECTION 68 OF THE ACT IN CASE THE ASSESSEE HAS NOT BEEN ABLE TO GIVE SATISFACTORY EXP LANATION IN RESPECT OF NATURE AND SOURCE OF ANY SUM OR IF IN TH E OPINION OF THE ASSESSING OFFICER SUCH EXPLANATION IS NOT SATISFACT ORY THE ASSESSING OFFICER MAY TREAT THE SAME AS UNDISCLOSED INCOME AN D ADD IT TO THE INCOME OF THE ASSESSEE MEANING THEREBY THE ASSESSEE IS REQUIRED TO GIVE SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUMS FOUND CREDITED IN THE BOOKS OF ACCOUNT. WHAT KIND OF PROOF IS TO BE FURNISHED BY THE ASSESSEE IS A QUESTION. IT HAS COME UP FOR DISCUSSION IN VARIOUS JUDGMENTS RENDERED BY VARIOUS HON'BLE COURTS INCLUDING HON'BLE SUPREME COURT AND HIGH COURTS. T HE LAW DISCUSSED BY THE HON'BLE COURT IN THE CASE OF CIT V . DIVINE LEASING & FINANCE LIMITED (2008) 299 ITR 268 IS ALSO AN IMPOR TANT DECISION TO QUOTE. A DELICATE BALANCE HAS TO BE MAINTAINED. T HE HON'BLE DELHI HIGH COURT IN CIT V. DOLPHIN CANPACK LTD.; 283 ITR 190 QUOTED AT PAGE 193 THE FOLLOWING OBSERVATIONS :- ....CREDIT ENTRY RELATES TO THE ISSUE OF SHARE CAP ITAL THE INCOMETAX OFFICER IS ALSO ENTITLED TO EXAMINE WHETHER THE ALLEGED SHAREHOLDERS DO IN FACT EXIST O R NOT. SUCH AN INQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER IN THE PRESENT CASE. IN THE COURSE OF THE SAID INQUIRY THE ASSESSEE HAD DISCLOSED TO THE ASSESSIN G OFFICER NOT ONLY THE NAMES AND THE PARTICULARS OF T HE SUBSCRIBERS OF THE SHARES BUT ALSO THEIR BANK ACCOU NTS AND THE PERMANENT ACCOUNT NUMBERS ISSUED BY THE INCOMETAX DEPARTMENT. SUPER ADDED TO ALL THIS WAS THE FACT THAT THE AMOUNT RECEIVED BY THE COMPANY WAS ALL BY WAY OF CHEQUES. THIS MATERIAL WAS IN T HE OPINION OF THE TRIBUNAL SUFFICIENT TO DISCHARGE TH E ONUS THAT LAY UPON THE ASSESSEE. THE HON'BLE HIGH COURT TOOK NOTE OF MANY OTHER JUDG MENTS OF MANY OTHER HIGH COURTS AND ON ANALYSIS OF THOSE JUDGMENT S FORMULATED THE FOLLOWING PROPOSITIONS WHICH EMERGE AS UNDER (D IVINE LEASING & FINANCE LIMITED; 299 ITR PAGE 282 (DEL) :- 18 IN THIS ANALYSIS A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE INCOME TAX ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE THE IDENTITY OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRANSACTION NAMELY WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER UNDISPUTABLE CHANNELS THE CREDIT WORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER IF RELEVANT DETAILS OF ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHARE HOLDERS REGISTER S HARE APPLICATION FORMS SHARE TRANSFER REGISTERS ETC. I T WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE. THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICES THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE NOR SHOULD THE ASSESSING OFFICER TAKE SUCH REPUDIATION AT FACE VAL UE AND CONSTRUE IT WITHOUT MORE AGAINST THE ASSESSEE AND THE ASSESSING OFFICER IS DUTY BOUND TO INVESTIGATE THE CREDIT WORTHINESS OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION. 30. IF THE TOTALITY OF FACTS AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE ARE KEPT IN JU XTAPOSITION IT IS CLEAR THAT THE INITIAL BURDEN IS UPON THE ASSESS EE TO EXPLAIN THE NATURE AND SOURCE OF SHARE APPLICATION MONEY RECEIV ED BY THE ASSESSEE. IN ORDER TO DISCHARGE ITS BURDEN THE AS SESSEE IS REQUIRED TO PROVE 19 THE IDENTITY OF THE SHARE HOLDER THE GENUINE OF TRANSACTION THE CREDIT WORTHINESS OF THE SHARE HOLDER DURING HEARING SHRI R.K. CHAUDHARY AND SHRI K.K. S INGH THE LEARNED COMMISSIONERS OF INCOME TAX CONTENDED THAT HINDUSTA N CONTINENT PVT. LTD.; AGRAWAL ROAD CARRIERS PVT. LTD. AND SUNI SHARES AND STOCK LIMITED (INTER-CONNECTED WITH EACH OTHER) ARE PAPE R CONCERNS. THESE COMPANIES PROVIDED ACCOMMODATION ENTRY TO VAR IOUS PARTIES OF INDORE BHOPAL GWALIOR NAGPUR SURAT MUMBAI AHMEDABAD VADODARA AND IN VARIOUS OTHER CITIES THROUGH THEIR BANK ACCOUNTS MAINTAINED AXIS BANK INDORE DURING THE PERIOD 1.4 .2002 TO 31.3.2005. THE MODUS OPERANDI OPERATED WAS THAT THE ACCOMMODATION ENTRIES WOULD FIRST PAY THE CASH WHIC H WAS DEPOSITED IN BANK ACCOUNTS MAINTAINED IN THE NAME O F M/S YASH ASSOCIATES M/S G.R. INVESTMENTS M/S V.S. TRADERS PATH PRADARSHAK FINVEST PVT. LTD. M.S. RIBEKA GARG AND BHANURAJ SI NGH RANAWAT ETC. MAINTAINED IN THE SAME BANK BRANCH (IN DUE COURSE O LD ACCOUNTS WERE CLOSED AND NEW ACCOUNTS IN THE NAME OF NEW CON CERNS WERE OPENED). THEREAFTER THE AMOUNT WAS TRANSFERRED IN ANY OF THE ACCOUNT OF HINDUSTAN CONTINENTAL PRIVATE LIMITED A GRAWAL ROAD CARRIERS PRIVATE LIMITED AND SUNIL SHARES & STOCK L IMITED. IT WAS SUBMITTED THAT ON CERTAIN OCCASION THERE IS INTER-T RANSFER OF FUNDS AMONGST THE THREE COMPANIES THEN THE CHEQUES WERE ISSUED TO DESIRING PARTIES IN THE GARB OF LOAN OR SHARE CAPIT AL. NOT ONLY THAT THE SHARES OF HINDUSTAN CONTINENTAL WERE CLAIMED T O BE TRADED BY SUNIL SHARES & STOCK LIMITED M/S JAI SHARE FIN LIM ITED AND OTHERS THROUGH MANIPULATION GIVING RISE TO ARTIFICIAL HEIG HT SO AS TO ENABLE CERTAIN PARTIES TO RE-INTRODUCE THEIR BLACK MONEY A S HUGE CAPITAL GAIN. IT WAS CLAIMED THAT IN THOSE CASE ALSO THE C ASH WAS DEPOSITED FIRST IN CERTAIN ACCOUNT AND THEREAFTER THE FUNDS W ERE TRANSFERRED TO THE SHARE BROKERS INVOLVED IN THE MANIPULATION AND THEN ULTIMATELY TO THE ACCOUNTS OF THE PARTY CONCERNED AS SALE PROC EEDS OF SHARES. IT WAS ALSO SUBMITTED THAT SEBI HAS EVEN PENALISED HINDUSTAN CONTINENTAL PRIVATE LIMITED AND SUNIL SHARES & STOC K PRIVATE LIMITED. THIS ASSERTION OF THE LEARNED COMMISSIONE R OF INCOME TAX WAS NOT CONTROVERTED BY THE ASSESSEE BUT MERELY ARG UED THAT THE MONEY WAS TRANSACTED THROUGH BANKING CHANNEL AND IN VIEW OF THE DECISION IN THE CASE OF LOVELY EXPORTS THEIR INDIVI DUAL ACCOUNTS CAN BE REOPENED. HOWEVER AS MENTIONED EARLIER THE E XISTENCE OF THESE SHARE SUBSCRIBERS/SHARE APPLICANTS WAS NOT FO UND EXISTENT THEREFORE WHERE IS THE QUESTION OF REOPENING THEIR INDIVIDUAL ASSESSMENTS. TRANSACTION ENQUIRY WAS ALSO MADE (PA GES 1 TO 104) OF THE PAPER BOOK FILED ON 4.5.2010. PAGES 108 TO 125 OF THE PAPER BOOK DATED 4.5.2010 CONTAINS THE ADJUDICATION ORDER U/S 151 OF THE 20 SECURITIES AND EXCHANGE BOARD OF INDIA ACT READ WI TH RULE 5(1) OF THE SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSIN G PENALTIES BY THE ADJUDICATING OFFICER). RULES 1995 AGAINST OPTIM ATES TEXTILES INDUSTRIES LIMITED (FORMERLY KNOWN AS PRIYANSH SARE E INDUSTRIES LIMITED). VIDE PARA 17 OF THE ORDER (PAGE 125) IT HAS BEEN HELD THAT SUNIL SHARES & STOCKS PRIVATE LIMITED FAILED TO PRO VIDE NECESSARY INFORMATION TO THE INVESTIGATING AUTHORITY OF SEBI AND PENALTY OF RS. 2 LACS WAS IMPOSED IN TERMS OF PROVISIONS OF SECTIO N 15A(A) OF SEBI ACT 1992 FOR FAILURE TO PROVIDE NECESSARY INFORMAT ION TO SEBI. 31. THE HON'BLE APEX COURT IN THE CASE OF VIJAY K UMAR TALWAR V. CIT (2011) 330 ITR 1 (S.C.) ON THE ISSUE U/S 68 READ WITH SECTION 260A DECIDED IN FAVOUR OF THE REVENUE . ID ENTICAL RATIO WAS LAID DOWN BY THE HON'BLE SUPREME COURT IN CASE OF C IT V. BIJU PATNAIK; 160 ITR 674. 32. SO FAR AS THE CONTENTION OF THE LD. COUNSEL FO R ASSESSEE TO THE EFFECT THAT THE ISSUE IS SQUARELY C OVERED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF KAL ANI INDUSTRIES IS CONCERNED WE DO NOT FIND ANY SUBSTANCE IN THE SAME IN VIEW OF THE FACT THAT THE ADDITION MADE IN THE CASES BEFORE US WAS AFTER PASSING OF THE ORDER BY THE TRIBUNAL AND THE INQUIRY CONDUC TED BY THE DEPARTMENT THEREAFTER. THE ENQUIRY SO CONDUCTED BY THE DEPARTMENT AFTER THE RELEVANT ASSESSMENT YEARS INVO LVED IN THE CASE OF KALANI INDUSTRY IT WAS FOUND THAT NEITHER THE SHARE APPLICANTS WERE FOUND EXISTING AT THE ADDRESS GIVE N BY THE ASSESSEE NOR AT DIFFERENT ADDRESSES SUPPLIED BY THE ASSESSE E TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDING S. AS THE FACTS OF SUBSEQUENT YEAR ARE DIFFERENT THE DECISION ARRI VED AT BY THE TRIBUNAL IN ASSESSMENT YEAR 2003-04 CANNOT BE APPLI ED TO THE ASSESSMENT YEARS 2005-06 & 2006-07 FACTS OF WHICH ARE MATERIALLY DIFFERENT. 33. THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE THAT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COUR T IN THE CASE OF LOVELY EXPORTS THE ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE AS PER OUR CONSIDERED VIEW THE CASE OF LOVELY EXPORTS (SU PRA) WILL BE APPLICABLE ONLY AFTER THE IDENTITY OF THE SHARE APP LICANT IS ESTABLISHED. SINCE IN THE INSTANT APPEALS BEFORE U S THE IDENTITY ITSELF HAS NOT BEEN ESTABLISHED THERE IS NO JUSTIF ICATION TO APPLY THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA). 34. THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF RATHI FINLEASE (SUPRA) HAS CLEARLY LAID DOWN THE PR OPOSITION WITH RESPECT TO CIRCUMSTANCES WHEREIN THE IDENTITY IS ES TABLISHED IN CASE THE SHARE APPLICANTS ARE COMPANIES. IT WAS HELD TH AT EVEN FILING OF CONFIRMATION OF SHARE APPLICANTS BY THE ASSESSEE WI LL NOT SERVE THE 21 PURPOSE OF ESTABLISHING THE IDENTITY INSOFAR AS THE INQUIRY CONDUCTED BY THE ASSESSING OFFICER AND THE LETTER ISSUED BY T HE ASSESSING OFFICER WERE RETURNED UNSERVED BY THE POSTAL DEPART MENT WITH THE REMARK THAT THE ADDRESSEES ARE NOT EXISTING AT THE GIVEN ADDRESSES WHICH CLEARLY ESTABLISHES THAT EITHER THE SHARE APP LICANTS ARE NON- EXISTENT OR IF EXIST THEN MERELY EXIST ON PAPERS A ND NOT IN REAL SENSE THEREFORE THEIR IDENTITY IS NOT PROVED. WI TH ALL RESPECT WITHIN THE TERRITORIAL JURISDICTION OF MADHYA PRADE SH WE ARE BOUND TO FOLLOW THE PROPOSITION OF LAW LAID DOWN BY THE H ONBLE JURISDICTIONAL HIGH COURT WHICH WAS FURTHER CONFIR MED BY HON'BLE HIGH COURT IN THE CASE OF STL EXTRUSION (SUPRA) AF TER CONSIDERING THE PROPOSITION LAID DOWN IN THE CASE OF LOVELY EXPORT (SUPRA) THE FACTS OF WHICH ARE PARI MATERIA ESPECIALLY WHEN THE FACTS OF THE INSTANT APPEALS BEFORE US ARE IDENTICAL TO THE FACTS WHERE IN THE HONBLE HIGH COURT HAS DECIDED IN FAVOUR OF THE REVENUE WHE REAS THE FACTS IN THE CASE OF LOVELY EXPORTS ARE DISTINGUISHABLE AS DISCUSSED ABOVE. 35. SO FAR AS THE CONTENTION OF THE LD. COUNSEL FO R THE ASSESSEE THAT THE COMPANY CAN ONLY BE WOUND UP BY T HE ORDER OF THE HONBLE HIGH COURT AND DEATH OF THE COMPANY IS KNOWN TO THE PROCESS OF LAW AND ALSO THAT THE COMPANY IS STILL A VAILABLE ON THE WEBSITE OF THE COMPANY LAW BOARD IS CONCERNED WE A RE NOT AGREEING WITH THIS PROPOSITION OF THE ASSESSEE BECA USE HERE IT IS NOT A CASE OF WINDING PROCESS RATHER IT IS A CASE OF AD MISSIBILITY OF CLAIM OF THE ASSESSEE U/S 68 OF THE ACT. SINCE THE SHARE APPLICANTS/SHARE SUBSCRIBERS IDENTITY IS NOT PROVED THEREFORE THE ASSESSEE CANNOT BE PERMITTED TO TAKE SHELTER OF TECHNICALITIES. EV EN OTHERWISE WEBSITE EXISTENCE ON THE COMPANY LAW BOARD IS NOT A SOLE PROOF THAT IN FACT THE SHARE APPLICANTS ARE IN EXISTENCE ESPECIALLY WHEN RIGHT FROM THE ASSESSMENT STAGE TO THE STAGE OF THE TRIBUNAL (THREE STAGES) THE ASSESSEE DID NOT PROVE THE IDENTITY OF THE SHARE APPLICANTS. TECHNICALITIES ALSO HELP THOSE WHO ARE WITH CLEAN HANDS. HOWEVER WE ARE IN AGREEMENT WITH THE ARGUMENT OF T HE ASSESSEE THAT THE WINDING UP POWERS OF A COMPANY LIES WITH T HE HONBLE HIGH COURT BUT THIS ISSUE IS NOT BEFORE US THEREFORE W E ARE REFRAINING OURSELVES TO COMMENT FURTHER. IT WAS FAIRLY ACCEPTE D BY THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE PRESENT APPEAL S MERELY THE ASSESSEE FILED CERTAIN DOCUMENTS WHICH DID NOT PROV E THE IDENTITY BUT DID NOT PRODUCE THE SHARE APPLICANTS/SUBSCRIBER S. AT THE SAME TIME THE LEARNED CIT DR TIME AND AGAIN IS HARPING THAT THE SHARE APPLICANTS ARE MERELY PAPER COMPANIES. THEREFORE F ROM THIS ANGLE ALSO WE ARE NOT CONVINCED WITH THE ARGUMENT OF THE ASSESSEE. WITH REGARD TO THE CONTENTION OF LD. AR THAT COPY OF THE INQUIRY CONDUCTED BY THE ASSESSING OFFICER WAS FURNISHED TO THE ASSESSEE ONLY ONE DAY PRIOR TO THE COMPLETION OF ASSESSMENT WE FOUND THAT 22 THE ASSESSEE HAS GOT FULL OPPORTUNITY TO SUBSTANTIA TE ITS CLAIM AND NEGATE THE REPORT BEFORE THE LD. CIT(A) BUT THE ASS ESSEE GROSSLY FAILED TO REBUT THE REPORT REGARDING NON-ESTABLISHM ENT OF IDENTITY OF SHARE APPLICANTS. THE LD. CIT(A) HAS GOT CO-TERMINU S POWERS TO DO WHAT THE ASSESSING OFFICER HAS FAILED TO DO. PROCEE DIGNS BEFORE LD. CIT(A) IS ALSO EXTENSION OF ASSESSMENT PROCEEDINGS IN ADDITION TO THE APPELLATE PROCEEDINGS. HOWEVER INSPITE OF FULL OPP ORTUNITY THE ASSESSEE FAILED TO REBUT THE CONTENTS OF THE REPORT WHICH INDICATED THAT NO SHAREHOLDERS EXIST IN THE NAME OF THE COMPA NIES SO PROVIDED BY THE ASSESSEE. EVEN THOUGH THE REPORT R ELIED BY THE ASSESSING OFFICER WAS IN RESPECT OF ANOTHER ASSESSE E BUT THE FACT REMAINS THAT THE INQUIRY WAS IN THE CASE OF SAME SH ARE SUBSCRIBERS I.E. M/S. HINDUSTAN CONTINENTAL LTD. & M/S. OPTIMAT ES TEXTILES IND. LTD. UNDER THESE CIRCUMSTANCES THE INQUIRY CONDUCT ED IN RESPECT OF M/S. HINDUSTAN CONTINENTAL LTD. & M/S. OPTIMATES TE XTILES IND. LTD. WHICH ARE COMMON APPLICANTS IN THE CASE OF ALL THE ASSESSEES BEFORE US COULD NOT BE SAID TO BE A RELEVANT AND NOT CONC ERNING TO THE ASSESSEE IN THE INSTANT CASES. 36. EVEN IF THE CASES RELIED UPON BY THE LD. COUNS EL FOR THE ASSESSEE AS MENTIONED/CITED/DISCUSSED IN THE P RECEDING PARAS OF THIS ORDER LIKE DIVINE LEASING & FINANCE LIMITED DWARKADHEESH INVESTMENT PRIVATE LIMITED GANGOR INVESTMENT LIMIT ED K.C. FIBRES LIMITED DOLPHIN CANPACK LIMITED SHREE BARKHA SYNT HETICS (RAJ.) DOWN TOWN HOSPITALS PRIVATE LIMITED ILLAC INVESTME NTS PRIVATE LIMITED ROHINI BUILDERS AND SHREE BARKHA SYNTHETIC S (RAJ.) (SUPRA) ARE CONSIDERED THE HONBLE COURTS HAVE CLEARLY HEL D THAT AT LEAST THE ASSESSEE HAS TO POVE THE IDENTITY/EXISTENCE OF THE PERSON IN WHOSE NAMES SHARE APPLICATIONS ARE RECEIVED MEANING THEREBY THE BURDEN LIES ON THE ASSESSEE IS TO ESTABLISH THE IDE NTITY/EXISTENCE OF SUCH SHARE HOLDINGS AND ONCE IT IS ESTABLISHED THE ASSESSEE IS NOT REQUIRED TO PROVE ANYTHING FURTHER. THEREFORE THE SE JUDICIAL PRONOUNCEMENTS ARE IN FAVOUR OF THE REVENUE AND MAY NOT HELP THE ASSESSEE BECAUSE THE ASSESSEE HAS NOT PROVED THE ID ENTITY OF SUCH SHARE APPLICANTS. 37. THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE TO THE EFFECT THAT THE DECISION OF RATHI FINLEASE BY THE JURISDIC TIONAL HIGH COURT WAS RENDERED MUCH PRIOR TO THE DECISION OF THE SUPR EME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) THEREFORE THE P ROPOSITION LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN RATHI FINL EASE CANNOT BE APPLIED AFTER THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF LOVELY EXPORTS HAVE NO LEGS TO STAND INSOFAR AS THE JURISDICTIONAL HIGH COURT IN THE CASE OF STL EXTRUSION WHEREIN CAS E OF LOVELY EXPORT WAS RELIED ON DULY APPROVED ITS PREVIOUS PR OPOSITION LAID DOWN IN CASE OF RATHI FINLEASE. HE FURTHER SUBMITTE D THAT 23 JURISDICTIONAL HIGH COURT IN THE CASE OF ACIT VS. S HREE KELA PRAKASHAN PRIVATE LIMITED AFFIRMED THE DECISION OF THE TRIBUN AL REPORTED AT (2010) 14 ITJ 539 DATED 8.10.2009 THEREFORE THE L ATER DECISION HAS TO BE FOLLOWED. AS PER OUR CONSIDERED VIEW THE CON TENTION OF THE LD. COUNSEL FOR ASSESSEE IS WHOLLY MISPLACED INSOFA R AS DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) ITSELF PRESUPPOSES THE ESTABLISHMENT OF IDENTITY AS A PRE- CONDITION FOR NOT MAKING ADDITION IN THE HANDS OF THE ASSESSEE COMPAN Y. IN THE CASE OF SHRI KELA PRAKASHAN PRIVATE LIMITED THE TRIBUNA L HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS PROVED TH E IDENTITY OF THE SUBSCRIBERS. THEREFORE NO ADDITION WAS WARRANTED IN THE HANDS OF THE ASSESSEE. HOWEVER IN THE INSTANT CASE BEFORE US THE IDENTITY OF THE SUBSCRIBERS HAS NOT BEEN ESTABLISHED AS PER OUR DISCUSSION DETAILED HEREINABOVE. THIS FINDING OF THE TRIBUNAL WAS AFFIRMED BY THE HON'BLE HIGH COURT AND THEREFORE THE APPEAL F ILED BY THE REVENUE WAS DISMISSED WHEREAS IN THE PRESENT APPEA L THE MATTER WAS INVESTIGATED BY THE ASSESSING OFFICER AND EVEN THE INSPECTOR OF THE DEPARTMENT WHO WAS DIRECTED BY THE ASSESSING OF FICER TO KNOW THE WHEREABOUTS REPORTED THAT THE SHARE SUBSCRIBING COMPANIES ARE NON-EXISTENT AND THE ADDRESSEES GIVEN OF FOUR PLACE S WERE ALSO FOUND TO BE FICTITIOUS. THE SUMMONS/NOTICES ISSUED BY THE DEPARTMENT WERE ALSO RETURNED UNSERVED BY THE POSTA L DEPARTMENT WITH THE REMARK THAT NO SUCH COMPANIES ARE EXISTING AT THE GIVEN ADDRESSES THEREFORE IN THE PRESENT APPEALS THE I DENTITY OF SHARE HOLDERS WAS NOT PROVED AT ANY STAGE CONSEQUENTLY THE DECISION IN THE CASE OF SHRI KELA PRAKASHAN PRIVATE LIMITED IS NOT APPLICABLE BEING ON DIFFERENT FINDINGS THEREFORE MAY NOT HEL P THE ASSESSEE. LIKEWISE THE HON'BLE KARNATKA HIGH COURT IN THE CA SE OF CIT VS. ARUNANANDA TEXTILES PRIVATE LIMITED (2011) 333 ITR 116 DEALT WITH IDENTICAL ISSUE AND THAT TOO AFTER CONSIDERING THE DECISION IN THE CASE OF LOVELY EXPORTS PRIVATE LIMITED AND STELLER INVESTMENT LIMITED. THE HON'BLE COURT HELD AS UNDER :- IT IS NOT FOR THE ASSESSEE TO PLACE MATERIAL BEFOR E THE ASSESSING OFFICER IN REGARD TO THE CREDIT WORTHINES S OF THE SHARE HOLDERS. IF THE ASSESSEE HAS GIVEN THE ADDRESSES OF THE SHARE HOLDERS AND THEIR IDENTITY I S NOT IN DISPUTE WHETHER THEY WERE CAPABLE OF INVESTING THE ASSESSING OFFICER SHALL INVESTIGATE. IT IS NOT FOR THE ASSESSEE TO ESTABLISH BUT IT IS FOR THE DEPARTMENT TO INQUIRE WITH THE INVESTORS ABOUT THEI R CAPACITY TO INVEST THE AMOUNT IN THE SHARES . 24 IF THE AFORESAID CONCLUSION IS ANALYSED ONE FACT I S CLEAR THAT THE IDENTITY OF THE SHARE HOLDERS HAS TO BE PROVED BY T HE ASSESSEE. HOWEVER IN THE PRESENT APPEALS THE IDENTITY ITSEL F IS IN DISPUTE THEREFORE THE AFORESAID DECISION CLEARLY SUPPORTS THE CASE OF THE REVENUE. 38. LIKEWISE IN THE CASE OF CIT V. ASK BROTHERS ( 2011) 333 ITR 111 (KARN.) THE SHAREHOLDERS ADMITTED THE P AYMENT OF AMOUNT FOR SHARES TO BE ALLOTTED. IN THESE CIRCUMS TANCES HON'BLE COURT HELD THAT THE AMOUNTS OF SHARE CAPITAL CANNOT BE ADDED IN THE ASSESSEES HANDS. HOWEVER IN THE PRESENT APPEALS THE SHARE APPLICANTS ITSELF ARE NON-EXISTENT CONSEQUENTLY T HERE IS NO QUESTION OF ADMITTING BY THE SHARE HOLDERS REGARDING MONEY I NVESTED BY THEM AND THEN SHARES ALLOTTED TO THEM. THIS JUDICIA L PRONOUNCEMENT ALSO GOES AGAINST THE ASSESSEE. HON'BLE DELHI HIGH COURT IN A LATER DECISION IN VIJAY POWER GENERATORS LIMITED V. DIREC TOR OF INCOME TAX AND OTHERS (ITA NO. 514 OF 2007) (2011) 333 ITR 119 (DEL) AT PAGE 136 THE APPEAL WAS ADMITTED ON THE FOLLOWING Q UESTION OF LAW :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN LAW IN SUSTAINING THE ADDITION OF RS. 25 23 500/- ON ACCOUNT OF RECEIPT OF SHARE APPLICATION MONEY ? 37. THE FACTS LEADING TO THE ADMISSION OF THE AFORESAID QUESTION WERE AS FOLLOWS :- THE ASSESSEE IN THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 1997-98 HAD SHOWN RECEIPTS IN THE FORM OF SHARE MONEY SUBSCRIBED OF 15 PER CENT TO WHOM THE SHARES WERE LATER ON ALLOCATED. TOTAL MONEY ON THIS ACCOUNT RECEIVED BY THE ASSESSEE WAS RS. 25 23 500. THE INVESTMENT IN THESE SHARES WAS RANGING FROM RS. 1 LAKH TORS. 2.5 LAKHS. IN ORDER TO VERIFY THE GENUINENESS OF THESE TRANSACTIONS THE ASSESSING OFFICER ISSUED SUMMONS TO THESE PARTIES WHICH WERE RECEIVED BACK EITHER WITH THE REMARKS INCOMPLETE ADDRESS OR IN SPITE OF BEST EFFORTS T HE ADDRESS NOT FOUND OR NOT MET OR NO SUCH PERSON 25 OR NOT FOUND ETC. THE ASSESSING OFFICER THEREAF TER ASKED THE ASSESSEE TO PRODUCE THESE PERSONS WHO HAD INTRODUCED THE SHARE CAPITAL IN THE COMPANY. THE ASSESSEE WAS ALSO ASKED TO FURNISH CHEQUE NUMBERS/DRAFT NUMBERS FOR PAYMENT OF SHARE APPLICATION MONEY ALONG WITH THE NAMES OF THE DRAWEE BANK AND BRANCH OF THE BANK. HOWEVER NO DETAILS WERE FURNISHED DESPITE VARIOUS OPPORTUNITIE S. THE ASSESSEE COULD NOT EVEN IDENTIFY THE ENTRIES IN THE BANK ACCOUNT REGARDING THE RECEIPTS OF THE SHARE APPLICATION MONEY NOR COULD HE PRODUCE THE RELEVANT LEDGER FOR VERIFYING THE RECEIPTS ACCORDING TO THE ASSESSING OFFICER. ULTIMATELY THE ASSESSEE PRODUC ED FIVE PERSONS WHOSE STATEMENTS WERE RECORDED. THE ASSESSEE DID NOT CROSS EXAMINE THESE PERSONS. THEY DID NOT FURNISH ANY PROOF OF THEIR IDENTITY IN THE FORM OF RATION CARD ELECTION CARD OR PASSPORT DESPITE REQUEST BY THE ASSESSING OFFICER. THE ASSESSING OFF ICER AFTER ANALYSING THE STATEMENTS OF THESE PERSONS OBSERVED THAT THESE FIVE PERSONS WERE SMALL AGRICULTURISTS AND HAD NO MEANS TO MAKE INVESTMENT IN THE COMPANY. 38 . IN THESE CIRCUMSTANCES THE ENTIRE RECEIPT OF RS.25 23 500/- IN RESPECT OF THESE FIVE PERSONS WAS TREATED AS UNEXPLAINED INVESTMENT AND MADE THE ADDITION U/S 68 OF THE ACT. 39. THE LEARNED COMMISSIONER RE-EXAMINED THE ENTIR E ISSUE ANALYSING THE EVIDENCE IN THE LIGHT OF THE JU DGMENT IN THE CASE OF STELLER INVESTMENT LIMITED AND SOPHIA FINANCE LI MITED (SUPRA) AND ULTIMATELY CONFIRMED THE ADDITION. ON FURTHER APPEAL THE TRIBUNAL AFFIRMED THE DECISION OF LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) IN THE FOLLOWING MANNER :- 15. HAVING CAREFULLY EXAMINED THE MATERIAL AVAILABLE ON RECORD AND THE ORDERS OF THE LOWER AUTHORITIES WE FIND THAT SHARES WERE NOT QUOTED ON THE STOCK EXCHANGE AND IT WAS SUBSCRIBED BY THE 26 PERSONS WHO WERE KNOWN TO THE ASSESSEE BUT DURING THE COURSE OF HEARING DESPITE VARIOUS OPPORTUNITIES THE ASSESSEE COULD NOT PRODUCE THEM FOR VERIFICATIO N NOR WAS ANY EVIDENCE FILED WITH REGARD TO THEIR FINANCIAL STATUS. OUT OF 15 SUBSCRIBERS 5 SUBSCRI BERS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND DURING THE COURSE OF THE EXAMINATION IT WAS ADMITTE D THAT THEY WERE SMALL AGRICULTURISTS AND WERE CULTIVATING THE AGRICULTURAL LAND AFTER TAKING IT O N LEASE FROM OTHER AGRICULTURISTS. NO EVIDENCE REGARDING THE AGRICULTURAL HOLDINGS WERE PRODUCED BEFORE THE ASSESSING OFFICER NOR HAVE THEY FILED AN Y EVIDENCE WITH REGARD TO THEIR FINANCIAL SOUNDNESS WHEREAS THE INVESTMENT IN SHARES WERE MADE BETWEEN RS. 1 LAKH TO RS. 2.5 LAKHS. COPY OF THE STATEMENT ARE (SIC. IS) PLACED ON RECORD AND FROM I TS PERUSAL ONE WOULD FIND THAT ALL THESE 5 PERSONS ARE OF ORDINARY STATUS AND THEY HAVE NO MEANS TO INVEST A HUGE SUM IN SHARES WITH THE ASSESSEE. 16. SO FAR AS THE LEGAL POSITION AND THE JUDGMENT O F THE APEX COURT IN THE CASE OF STELLER INVESTMENT LT D. (2001) 251 ITR 263 IS CONCERNED WE ARE OF THE VIEW THAT THE RATIO LAID DOWN IN STELLER INVESTMENT LTD. (2001) 251 ITR 263 IS APPLICABLE ONLY IN THOSE CASE S WHERE THE ASSESSEE IS A LIMITED COMPANY AND THE SHARES WERE QUOTED IN THE STOCK EXCHANGE. ONCE THE SHARES ARE QUOTED IN THE STOCK EXCHANGE AND THE SUBSCRIPTION IS OPEN TO PUBLIC AT LARGE THE ASSESS EE CANNOT HAVE CONTROL OVER THE SUBSCRIPTION AND ALSO CANNOT MAKE A VERIFICATION OF THE SUBSCRIBERS AS SUBSCRIPTION CAN BE DONE BY ANY PERSON. BUT WHENEVER THE ISSUE IS SUBSCRIBED WITHOUT QUOTING IT ON THE STOCK EXCHANGE BY A LIMITED OR PRIVATE LIMIT ED COMPANY THE PRESUMPTION IS VERY STRONG AGAINST THE ASSESSEE THAT SUBSCRIPTION IS AVAILABLE ONLY TO THE CLOSELY CONNECTED PERSONS OF THE ASSESSEE. ONCE TH E INFERENCE IS AGAINST THE ASSESSEE THAT THE ISSUE IS SUBSCRIBED BY ITS CLOSELY CONNECTED PERSONS THE ON US 27 IS UPON THE ASSESSEE TO PROVE THE IDENTITY (SIC. IDENTIFICATION) OF THE SUBSCRIBERS AND THEIR CREDIT WORTHINESS. THEIR LORDSHIPS OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BHOLA SHANKAR COLD STORA GE P. LTD. V. JOINT CIT (2004) 270 ITR 487 HAVE EXAMIN ED THE JUDGMENT OF THE APEX COURT IN THE CASE OF STELL ER INVESTMENT LTD. AND THAT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF SOPHIA FINANCE LTD (1994) 205 ITR 98 AND HAVE HELD THAT IN THE CASE OF STELLER INVESTMENT LTD. THE RATIO LAID DOWN BY THE FULL BEN CH OF THE DELHI HIGH COURT WAS NOT OVERRULED AND IT ST ILL HOLDS THE FIELD. WHENEVER THE ISSUE WAS SUBSCRIBED BY CLOSELY CONNECTED PERSONS OF THE ASSESSEE AND THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY AND CREDITWORTHINESS THE ADDITION UNDER SECTION 68 CAN BE MADE IN THE HANDS OF THE ASSESSEE. IN THE INSTANT CASE THE ASSESSEE COULD NOT PLACE ANY EVIDENCE ON RECORD TO PROVE THE IDENTITY AND THE CREDITWORTHINE SS OF THE SO-CALLED SUBSCRIBERS AND THE ASSESSING OFFI CER WAS JUSTIFIED IN TREATING THIS INVESTMENT AS UNEXPLAINED AND MADE THE ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT. WE THEREFORE FIND NO INFIR MITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). ACCORDINGLY WE CONFIRM THE SAME. XXX XXX XXX XXX 42. WE HAVE CONSIDERED THESE SUBMISSIONS IN SO FAR AS THE STATEMENTS OF THE PERSONS WHO ARE PRODUCED ARE CONCERNED THEY ARE GONE INTO AND ANALYSED BY THE THREE AUTHORITIES BELOW ON THE BASIS OF WHICH FINDING OF FACT IS ARRIVED AT THAT NEITHER THEIR ID ENTITY IS ESTABLISHED NOR THEIR CAPACITY TO INVEST THIS KI ND OF MONEY IS PROVED. THEY ARE ALL AGRICULTURISTS AND HA D NOT PRODUCED A SINGLE DOCUMENT TO SUPPORT THEIR VERSION. THIS IS A FINDING OF FACT AND THERE IS NO REASON 28 TO INTERFERE WITH THE SAME. LEARNED COUNSEL FOR TH E REVENUE HAD DRAWN OUR ATTENTION TO VIEW ALL THESE STATEMENTS. ONE MR. SUKH LAL SINGH IN HIS STATEMEN T HAD STATED THAT HE HAD PURCHASED THE SHARES OF RS. 1 90 000. OUT OF THE SHARE MONEY HE HAD PAID RS. 70 000 OUT OF HIS OWN SOURCE AND RS. 1 20 000 WAS RECEIVED BY HIM FROM HIS FRIENDS AND WAS PAID IN MANY INSTALMENTS. LIKEWISE ONE MR. VIJAY KUMAR WHO ALSO PURPORTEDLY PURCHASED THE SHARES OF RS. 1.90 LAKHS STATED THAT THE PAYMENTS WERE MADE BY HIM IN CASH IN MANY INSTALMENTS. HE ALSO STATED THAT HE PERSONALLY KNEW THE DIRECTORS OF THE COMPANY AND HAD VERY OLD RELATION WITH HIM. ON THE BASIS OF SUCH STATEMENT WITHOUT AN IOTA OF DOCUMENTARY EVIDENCE TO SUPPORT WE ARE OF THE OPINION THAT THE FINDINGS OF THE AUTHORITIES BELOW CANNOT BE TREATED AS PERVERSE. IT IS ON PROPER ANA LYSIS OF THE STATEMENTS OF THESE PERSONS WHICH WERE RECORDED BY THE ASSESSING OFFICER. WHEN WE KEEP IN MIND THE PRINCIPLE OF LAW LAID DOWN IN THE RATIO IN THE AFORESAID DECISIONS AND APPLY THE SAME TO THE FACTS OF THIS CASE IT IS DIFFICULT TO FIND FAULT WITH THE A PPROACH OF THE TRIBUNAL. WE HAVE TO KEEP IN MIND THAT THE RATIO IN A DECISION CANNOT BE APPLIED IN EACH CASE. THE FACTS AND CIRCUMSTANCES OF EACH CASE ARE TO BE WEIGHED AND EXAMINED AS TO WHETHER A PARTICULAR RATIO DECIDED IN A PARTICULAR CASAE COULD BE APPLIE D. AS NOTED ABOVE THE INITIAL ONUS IS UPON THYE ASSES SEE TO ESTABLISH THREE THINGS NECESSARY TO OBVIATE THE MISCHIEF OF SECTION 68 OF THEACT. THESE ARE : (I) T HE IDENTITY OF INVESTORS; (II) THEIR CREDITWORTHINESS/INVESTMENTS AND (III) THE GENUINENESS OF THE TRANSACTION. ONLY WHEN THESE THREE INGREDIENTS ARE ESTABLISHED PRIMA FACIE IT IS ONLY THEN THE DEPARTMENT IS REQUIRED TO UNDERTAKE FURTHE R EXERCISE AS DISCUSSED ABOVE. IN THE INSTANT CASAE NO SUCH DOCUMENTS ARE FILED AND NO STEPS TAKEN BY THE 29 ASSESSEE WHICH COULD ESTABLISH THE AFORESAID THREE INGREDIENTS. ADDITIONAL EVIDENCE IN THE FORM OF BANK STATEMENT ETC. IS GIVEN BUT THE ASSESSEE HAS NOT D ONE ANYTHING TO PROVE THESE BANK ACCOUNTS. ON THIS EVIDENCE PRODUCED BY THE ASSESSEE REMAND REPORT WAS CALLED FOR AND THE ASSESSING OFFICER IN HIS REM AND REPORT DATED DECEMBER 23 2003 SUBMITTED AS UNDER :- NONE OF THE 6 ALLEGED SHAREHOLDERS PRODUCED ANY DOCUMENTS IN SUPPORT OF THEIR IDENTITY. THE FACT W AS INTIMATED TO THE ASSESSEE VIDE ORDER SHEET ENTRIES DATED JUNE 13 2002 AND MARCH 17 2003 . THEY ARE NOT ASSESSED TO TAX. THEY HAVE NOT PRODUCED ANY DOCUMENTARY EVIDENCE SHOWING THAT THEY ARE CAPABLE OF SAVING/INVESTING ANY AMOUNT AT ALL. IF THE PERSONS PRODUCVED ARE NOT CARRYING RELEVANT DOCUMEN TS TO ESTABLISH THEIR IDENTITY CREDITWORTHINESS AT THE T IME OF RECORDING OF THE STATEMENTS AND FURNISHING PHOTO CO PY OF SOME DOCUMENTS AFTER A GAP OF SUBSTANTIAL PERIOD IT IS NOT POSSIBLE TO VERIFY ITS CORRECTNESS UNLESS THE CONCERNED PERS ONS ARE PRODUCED WITH NECESSARY DOCUMENTARY EVIDENCE (IN OR IGINAL) IN SUPPORT OF THEIR IDENTITY AND CREDITWORTHINESS. THE ASSESSEE HAS NOT EVEN FURNISHED BASIC REQUIREMENTS OF SHARE CAPITAL I.E. CHEQUE NUMBER DATE AMOUNT(S) DETAILS OF DRAWEE BANK ETC. THE ASSESSEES BANK ACCOUNT WAS ALSO NOT PRODUCED. HENCE THE ASSESSEES CLAIM REGARDING INVESTMENT BY THE SHAREHOLDERS REMAINED UNVERIFIABLE. NO COMMENTS CAN NOW BE OFFERED AT THIS STAGE WITHOUT NECESSARY VERIFICATION. PROOF OF IDENTITY PRODUCED AT A LATER STAGE CANNOT BE VERIFIED IN THE ABSENCE OF CONCERNED PERSONS ORIGINAL DOCUMENTS. 45. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) CLEARLY DEMONSTRATES THAT THIS REMAND 30 REPORT WAS SENT TO THE ASSESSEE WHO HAD SUBMITTED HIS REPLY DATED FEBRUARY 10 2004 WHICH IS EVEN REPRODUCED IN THE ORDER AND THEREAFTER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DISCUSSED THE SAME IN THE LIGHT OF CERTAIN DECISIONS CITED BEFORE HIM AND CAME TO THE CONCLUSION THAT THE ASSESSEE HAD NO T GIVEN SATISFACTORY EVIDENCE TO DISCHARGE THE ONUS. IT HAD MERELY GIVEN NAMES OF THE PARTIES WITHOUT ANYTHING MORE. THAT WOULD NOT BE SUFFICIENT COMPLIANCE. EVEN THE BANK STATEMENT OF THE ASSESSE E WHICH WAS SUBMITTED HAS NOT BEEN PROVED. 46. FOR ALL THESE REASONS WE ARE OF THE VIEW THAT THE ASSESSEE HAD NOT BEEN ABLE TO DISCHARGE THE ONU S PROBANDI AND ADDITION WAS RIGHTLY MADE. WE THEREFORE ANSWER THE QUESTION IN THE NEGATIVE AND DISMISS THIS APPEAL OF THE ASSESSEE. 40. IF THE AFORESAID CONCLUSION DRAWN BY THE HON'B LE HIGH COURT IS KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL ONE FACT IS CLEARLY OOZING OUT THAT THE ASS ESSEE HAS NOT DISCHARGED ITS ONUS TO THE SATISFACTION OF THE ASSE SSING OFFICER AND EVEN DID NOT PROVE THE IDENTITY OF THE SHARE APPLIC ANTS. MERELY GIVING THE NAMES OF SUCH SHARE APPLICANTS IS NOT EN OUGH ESPECIALLY WHEN THESE APPLICANTS WERE FOUND NON-EXISTENT THER EFORE THIS JUDICIAL PRONOUNCEMENT CLEARLY GOES AGAINST THE ASS ESSEE. IT IS PERTINENT TO MENTION HERE THAT WHILE COMING TO THE AFORESAID CONCLUSION THE HON'BLE COURT ALSO DISCUSSED THE DEC ISIONS LIKE AKJ GRANITES PRIVATE LIMITED; 301 ITR 291 (RAJ) CIT V. ARUNALANDA TEXTILES PVT. LTD. (2011) 333 ITR 116 (KARN.) (PARA 17) ORDER DATED 2 ND MARCH 2010 CIT V. ASK BROTHERS (2011) 333 ITR 11 1 (KARN.) ORDER DATED 18 TH FEBRUARY 2010 . IN BOTH THESE CASES THE HON'BLE KARNATAKA HIGH COURT HAS DULY DISCUSSED THE DECISIO N IN LOVELY EXPORTS PVT. LTD. AND STELLER INVESTMENT LTD. (SUPR A) MEANING THEREBY THAT BOTH THESE DECISIONS WERE RENDERED AFT ER THE PRONOUNCEMENTS OF DECISIONS FROM HON'BLE APEX COURT IN LOVELY EXPORTS PRIVATE LIMITED (SUPRA). AS DISCUSSED IN O THER PARAS OF THIS ORDER SO FAR AS THE DECISION IN THE CASE OF M/S ST L EXTRUSION VS. DCIT (2010) 15 ITJ 872 (I.T.A.T. INDORE) IS CONCERNED THAT DECISION WAS RENDERED BY THE BENCH ON THE FACTS THAT SINCE THE A SSESSEE PROVED THE IDENTITY OF THE INVESTORS THEREFORE IT WAS HE LD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE COMPANY WH EREAS IN THE 31 PRESENT APPEALS THE EXISTENCE/IDENTITY OF SHARE SU BSCRIBERS WAS NOT PROVED CONSEQUENTLY THESE JUDICIAL PRONOUNCEMENTS RATHER HELPS THE REVENUE AND NOT THE ASSESSEE. 41. EVEN OTHERWISE IF THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORTS PR IVATE LIMITED WHILE DISMISSING THE SPECIAL LEAVE PETITION IT IS CLEAR THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO PROVE THE IDENTITY O F SHARE SUBSCRIBERS AND ONCE THE IDENTITY IS PROVED IN CAS E OF BOGUS INVESTMENT ADDITION CAN BE MADE IN THEIR INDIVIDUA L CAPACITY AND NOT IN THE CASE OF THE COMPANY. HOWEVER IN THE PR ESENT APPEALS EVEN THE IDENTITY OF SUCH SHARE HOLDERS IS NOT PROV ED AS WE HAVE DISCUSSED ABOVE THEREFORE THE INITIAL ONUS HAS NO T BEEN DISCHARGED BY THE ASSESSEE ESPECIALLY WHEN THE ASSESSEE WAS CO NFRONTED WITH THE FINDING OF THE COMMISSION (INSPECTOR) SUMMONS/ NOTICES RETURNED UNSERVED AND THE ADDRESSES GIVEN BY THE AS SESSEE ITSELF THAT TOO AT FOUR PLACES WERE FOUND TO BE FICTITIOUS . THE ASSESSEE HAS NOT GIVEN SATISFACTORY EVIDENCE TO DISCHARGE THE ON US. IT HAS MERELY GIVEN THE NAMES OF FICTITIOUS PARTIES AND IN OUR HU MBLE OPINION THIS IS NOT A SUFFICIENT COMPLIANCE THEREFORE THE DECI SION FROM HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS MAY NOT HELP THE ASSESSEE. IN A LATER DECISION DATED 25 TH OCTOBER 2010 THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. STL EXTRUSION (P) LIMITED; (2011) 17 ITJ 648 (MP) EVEN CONSIDERED VAR IOUS DECISIONS INCLUDING THE OFF-QUOTED DECISION OF DIVINE LEASING & FINANCE LIMITED RATHI FINLEASE LIMITED STELLER INVESTMENT LIMITED AND OF COURSE LOVELY EXPORTS PRIVATE LIMITED WHEREIN THE A SSESSEE FILED LIST OF ALL SUBSCRIBERS AND GAVE AFFIDAVITS OF ALL SUBSC RIBERS IN THE FORM OF CONFIRMATIONS AND IN THAT SITUATION THE HON'BLE COU RT HELD THAT THE ASSESSEE IS REQUIRED TO ESTABLISH THE IDENTITY AND SOURCE OF CREDITS AND FURTHER HELD THAT IF THE CONFIRMATION IS GIVEN NO ADDITION COULD BE MADE AGAINST THE ASSESSEE WHEREAS IN THE CASE OF THE ASSESSEE THE SHARE APPLICANTS WERE FOUND TO BE NON-EXISTENT THEREFORE THIS JUDICIAL PRONOUNCEMENT FROM THE HON'BLE JURISDICTIO NAL HIGH COURT CLEARLY GOES AGAINST THE ASSESSEE. 42. THE NEXT GROUND PERTAINS TO UPHOLDING THE AD H OC DISALLOWANCE OF RS. 1 LAC MADE OUT OF TELEPHONE EXP ENSES. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE LEARNED ASSESSING OFFICER MADE AD HOC DISALLOWANCE OF RS. 1 LAC OUT O F TOTAL EXPENSES OF RS. 12 29 154/-. WE FIND THAT FIRST NO REASON HA S BEEN ASSIGNED FOR MAKING SUCH AD HOC DISALLOWANCE BY THE ASSESSIN G OFFICER AND SECONDLY WE ARE OF THE VIEW THAT SINCE THE COMPANY IS A JURISTIC PERSON NO DISALLOWANCE OF PERSONAL NATURE CAN BE M ADE IN THE CASE OF A COMPANY. WE THEREFORE REVERSE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 32 IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. 6. IN THE AFORESAID ORDER DATED 31.10.2011 AFTER A PPRISING THE RELEVANT FACTS ARGUMENTS FROM BOTH SIDES AND T HE JUDICIAL PRONOUNCEMENTS CITED BEFORE THIS BENCH IT WAS FOUN D THAT M/S. HINDUSTAN CONTINENTAL LTD. WAS MERELY EXISTING ON P APERS AND ITS IDENTITY WAS NOT PROVED. THE LAW IS WELL-SETTLE D THAT THE ONUS OF PROVING THE SOURCE OF A SUM FOUND TO HAVE BEEN R ECEIVED BY AN ASSESSEE IS ON HIM. EVEN THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORT P. LTD. (2008) (216 CTR 195) SPEAKS ABOUT PROVING THE IDENTITY THEN THE ADDITION CAN BE MADE BY REOPENING THE INDIVIDUAL ASSESSMENT OF ALLEGED BOGU S SHAREHOLDERS. IN THE CASE OF M/S. HINDUSTAN CONTINE NTAL LTD. THE IDENTITY WAS NOT PROVED AS THE SAME WAS FOUND N ON- EXISTENT THEREFORE WE ARE NOT IN AGREEMENT WITH T HE CONCLUSION DRAWN IN THE IMPUGNED ORDER ON THIS ISSUE. THEREFOR E THE STAND OF THE LD. CIT(A) IS REVERSED SO FAR AS THE LOAN FR OM M/S. HINDUSTAN CONTINENTAL LTD. IS CONCERNED THEREFORE THIS GROUND OF THE APPEAL OF THE REVENUE IS ALLOWED. FINALLY THE APPEAL OF THE REVENUE IS PARTLY ALLOW ED. 33 THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESE NCE OF LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF THE HEARING. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9.11.2011 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE !VYAS!