ACIT, Patiala v. M/s Motia Developers Pvt. Ltd., Zirakpur

ITA 233/CHANDI/2012 | 2006-2007
Pronouncement Date: 21-10-2016 | Result: Dismissed

Appeal Details

RSA Number 23321514 RSA 2012
Assessee PAN AAECM4069Q
Bench Chandigarh
Appeal Number ITA 233/CHANDI/2012
Duration Of Justice 4 year(s) 7 month(s) 27 day(s)
Appellant ACIT, Patiala
Respondent M/s Motia Developers Pvt. Ltd., Zirakpur
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 21-10-2016
Date Of Final Hearing 25-05-2016
Next Hearing Date 25-05-2016
Assessment Year 2006-2007
Appeal Filed On 24-02-2012
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA ACCOUNTANT MEMBER ITA NO. 233/CHD/2012 ASSESSMENT YEAR: 2006-07 THE ACIT VS. M/S MOTIA DEVELOPERS PVT. LIMITED CENTRAL CIRCLE ZIRAKPUR (PUNJAB) PATIALA PAN NO. AAECM4069Q (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUSHIL KUMAR RESPONDENT BY : SH. TEJ MOHAN SINGH DATE OF HEARING : 03.10.2016 DATE OF PRONOUNCEMENT : 21.10.2016 ORDER PER BHAVNESH SAINI AM THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)-I LUDHIANA DATED 21.12.2011 FOR ASSESSMENT YEAR 2006-07 CHALLENGING THE DELETION OF ADDITION OF RS. 40 LAKH S ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ASSESSING OFFICER MADE ADDITION OF RS. 40 LAKHS ON ACCOUNT OF SHARE A PPLICATION MONEY RAISED FROM M/S S.G. GLOBAL EXPORT LIMITED AND M/S N.P. WO OLEN MILLS (P) LTD. THE ASSESSING OFFICER IN THIS REGARD OBSERVED THAT OUT OF TOTAL APPLICATION MONEY RECEIVED DURING THE YEAR AMOUNTING TO RS. 3 6 9 00 000/- THE ASSESSEE 2 HAD RECEIVED RS. 15 00 000/- IN FEB./MARCH 2006 FR OM M/S S.G. EXPORT LIMITED AND RS. 25 LAC FROM M/S N.P. WOOLEN MILLS ( P) LIMITED AND THE FURTHER REFERRED TO THE SEARCH CONDUCTED BY INVESTI GATION WING AT LUDHIANA ON SH. PANKAJ SINGHANIA AND SH. SANJIV SINGHANIA DIRE CTOR OF M/S S.G. GLOBAL EXPORT (P) LTD. AND M/S N.P. WOOLEN MILLS (P) LTD. RESPECTIVELY WHEREIN THEY HAD ADMITTED THEIR REAL BUSINESS TO BE OF PROVIDING ACCOMMODATION ENTRY BY TAKING CASH. THE DEPOSIT IN CASH IN THE BANK ACCOUN TS OPERATED BY SH. PANKAJ SINGHANIA AND SH SANJIV SINGHANIA WAS EXPLAINED AS RECEIPT FROM PROSPECTIVE ACCOMMODATION ENTRIES SEEKERS. THE AO PROVIDED THE COPIES OF STATEMENT OF ABOVE MENTIONED PERSONS TO THE COUNSEL OF THE AS SESSEE AND ASKED THE ASSESSEE TO EXPLAIN THE REASONS AS TO WHY SHARE APP LICATION MONEY RECEIVED SHOULD NOT BE TREATED ASSESSEE'S INCOME. THE ASSESS EE FILED FRESH CONFIRMATIONS FROM M/S N.P. WOOLEN (P) LIMITED AND M/S S.G. GLOBAL EXPORT LIMITED AND THE AO REQUIRED THE ASSESSEE TO PRODUCE THE DIRECTORS OF SAID CONCERNS. THE ASSESSEE SUBMITTED THE FOLLOWING REPL Y TO THE AO ON 14/12/2010:- THE COMPANY HAS ALREADY SUBMITTED THE LATEST CONFI RMATIONS FROM M/S S.G. GLOBAL EXPORT (P) LTD. LANCER ENTERPR ISES LTD M/S N.P. WOLLEN MILLS (P) LTD. CHARU FINVEST CONSULTAN T LTD IN THE PREVIOUS REPLY ON 03/12/10. REGARDING STATEMENT OF PANKAJ SINGHANIA RECORDED WITH INCOME TAX AUTHORITIES ON 2 4/07/2008 HE WAS NOT DIRECTOR OF S.G. GLOBAL EXPORTS LTD. PR OOF REGARDING RESIGNATION OF PANKAJ SINGHANIA ON 26/02/2007 FILED WITH REGISTRAR OF COMPANIES IS ENCLOSED. SO STATEMENT OF PANKAJ SINGHANIA CANNOT BE RELIED AS HE IS NOT DIRECTOR OF THE COMPANY. REGARDING THE STATEMENT OF SANJEEV GUPTA WHO IS DIR ECTOR OF 'S.G ; GLOBAL EXPORTS LTD AND LANCER ENTERPRISES LTD HE HAS CONFIRMED THAT 'HE ON BEHALF OF THESE COMPANIES HAS GIVEN THIS MONEY WHICH PROVES OUR VERSION. CHARU FINVEST CONS ULTANT LTD HAS GIVEN THE CONFIRMATION AND WE HAVE SUBMITTED IN ORIGINAL 3 WITH OUR PREVIOUS REPLY AND SINGHANIA BROTHERS ARE NOT DIRECTORS OF THESE COMPANIES. REGARDING STATEMENT OF SANJEEV SINGHANIA ON BEHALF OF N.P. WOOLEN MILLS LTD. WHICH IS TAKEN ON BACK OF ME AND ON WHICH YOUR GOOD OFFICE IS RELYING CROSS EXAMINATION MAY B E CALLED AS IT IS NOT UNDER MY CONTROL TO PRODUCE HIM IN THIS SHOR T NOTICE BUT HE HAS TO COME IF YOUR GOOD OFFICE MAY CALL HIM FOR CR OSS EXAMINATION STATEMENT OF OTHER DIRECTORS OF THE CO MPANY SHOULD ALSO BE CONSIDERED WHO ARE ACCEPTING AND CONFIRMING THE INVESTMENT. CONFIRMATION DATED 25/11/2010 HAS ALSO BEEN SUBMITTED WITH OUR PREVIOUS REPLY. IN THE CASE OF C OMMISSIONER OF INCOME TAX VS LOVELY EXPORTS PVT. LTD. 216 CTR WIT H REGARD TO ADDITION ON ACCOUNT OF SHARE CAPITAL IS NO MORE RES -INTEGRA IN VIEW OF THE SAID DECISION OF HON'BLE SUPREME COURT HOLDING THAT WHEN SHARE APPLICATION MONEY IS RECEIVED BY THE ASS ESSEE 'COMPANY FROM ALLEGED BOGUS SHARE HOLDERS WHOSE NAM E ARE GIVEN TO AO THEN THE DEPARTMENT IS FREE TO PROCEED TO RE OPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW AND A MOUNT CANNOT BE ADDED IN THE ASSESSEE COMPANY AS UNEXPLAI NED INVESTMENT AS WE HAVE ALREADY PROVED IDENTITY OF SH ARE APPLICANTS ALONGWITH CONFIRMATION AND PAN NO. OF THE COMPANY H AS BEEN SUBMITTED BY US SIMILAR WAS THE FINDING OF THE HON 'BLE SUPREME COURT IN THE CASE OF SHIPRA RETAILERS PVT. LTD. IN SLP NO 451/08 DATED 21/01/2008 AS ALSO IN THE CASE OF DIVINE LEAS ING & FINANCE LTD. IN SLP NO. 375/08 DATED 21/01/08.'. 3. THE ASSESSING OFFICER PROCEEDED TO ADD THE SHARE APPLICATION MONEY AS ASSESSEE'S OWN UNACCOUNTED INCOME ON THE B ASIS OF FOLLOWING OBSERVATIONS :- 'A) FIRSTLY IT IS WRONG ON THE PART OF THE ASSESS EE TO CLAIM THAT SHORT TIME WAS PROVIDED TO HIM. VIDE QUESTIONNAIRE DATED 03/09/2010 IT WAS SPECIFICALLY BROUGHT TO THE NOTI CE OF THE ASSESSEE AS TO WHY MONEY RECEIVED FROM SG GLOBAL EX PORTS 4 LTD. AND NP WOOLEN MILLS PVT. LTD. IN SHAPE OF SH ARE APPLICATION MONEY MAY NOT BE TREATED AS ASSESSEE'S OWN IN THE LIGHT OF THE FACT THAT DURING THE COURSE OF SEA RCH ON THE PREMISES OF-THESE TWO CONCERNS IT WAS FOUND THAT T HESE CONCERNS HAVE NO WORTH AND ALSO THE DIRECTORS OF TH ESE CONCERNS HAVE CONFIRMED OF PROVIDING ACCOMMODATION ENTRIES TO BENEFICIARIES. B) CLAIM OF THE ASSESSEE THAT PANKAJ SINGHANIA & S ANJEEV SINGHANIA ARE NOT DIRECTOR OF SG GLOBAL EXPORTS LTD . AND NP WOOLEN MILLS PVT. LTD. AS ON DATE OF THE/SEARCH I.E. 24/07/2008 IS TRUE BUT HOWEVER IT IS ALSO TRUE THA T DURING THE F.Y. 2005-06 WHEN THE TRANSACTION OF SHARE APPL ICATION AT UNDER TAKEN BY THE ASSESSEE WITH THESE TWO CONCE RNS THEY WERE VERY MUCH THE DIRECTORS OF THE COMPANIES AND W ERE CONTROLLING /THE AFFAIRS OF THESE TWO CONCERNS. HEN CE THE STATEMENT WITH REGARD TO THE NATURE OF WORK UNDERTA KEN BY TWO COMPANIES HAS FULL SANCTITY AND THUS RELIABLE. C) WITH REGARD TO THE CONFIRMATION FILED BY THE ASSESSEE FR OM THE PRESENT DIRECTOR OF SG GLOBAL EXPORTS LTD. AND NP WOOLEN MILLS PVT. LTD. ON 03/12/2010 THE ASSESSEE WAS PROVIDED SUFFICIENT TIME AND OPPORTUNITY TO PRODUCE THE SAID PERSONS FOR CROSS EXAMINATION BY THE UNDERSIGNED AS THE CONFIRMATION ARE RELIED UPON BY THE ASSESSEE AND TH E SAID PERSONS ARE ASSESSEE'S WITNESS. BUT HOWEVER THE AS SESSEE FAILED TO DO SO AND INSTEAD ON 14/12/2010 THE ASSES SEE HAS STATED THE CASE LAW OF COMMISSIONER OF INCOME TAX V S. LOVELY EXPORTS PVT. LTD. 216 CTR STATING THAT THE A SSESSEE IS NO RESPONSIBLE FOR THE UNEXPLAINED INVESTMENT OF TH E SHARE APPLICANTS. THE CASE LAW QUOTED BY THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT CASE AS ONE OF THE DIRECT ORS CONTROLLING THE AFFAIRS OF THESE CONCERNS HAS HIMSE LF CLEARLY ACCEPTED THAT ACCOMMODATION ENTRY WAS PROVIDED TO T HE 5 ASSESSEE CONCERN. THE MODUS OPERANDI WAS TO ACCEPT CASH AND DEPOSIT IN BANK ACCOUNT AND AFTER TWO THREE TRA NSFERS ISSUE CHEQUE TO BENEFICIARIES AND HENCE CASE LAW OF LOVELY EXPORTS IS NOT APPLICABLE. ' . ' D) ALSO DURING THE COURSE OF SEARCH IT WAS FOUND THAT SG GLOBAL EXPORTS LTD. AND NP WOOLEN MILLS PVT. LTD. ARE PAPER COMPANIES. THUS IN LIGHT OF ABOVE FACTS OF THE CASE IT IS EVI DENT THAT DESPITE BEING PROVIDED SUFFICIENT OPPORTUNITY AND TIME THE ASSESS EE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE SHARE APPLICATION MONEY OF RS. 15 00 000/- RECEIVED DURING THE MONTH OF FEB & MARC H 2006 FROM SG GLOBAL EXPORTS LTD. LUDHIANA AND RS. 25 00 000/- FROM M/S NP WOOLEN MILLS PVT. LTD. LUDHIANA IN THE MONTH OF MARCH 200 6. THUS AN ADDITION OF RS. 40 00 000/- IS BEING MADE TO THE TOTAL INCOM E OF THE ASSESSEE U/S 68 OF THE I.T.ACT ON ACCOUNT OF UNEXPLAINED SHARE A PPLICATION MONEY.' 3. THE ASSESSEE CHALLENGED THE ADDITION OF RS. 40 LAKHS ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY RECEIVED FROM T WO COMPANIES. BEFORE LD. CIT(A) THE ASSESSEE EXPLAINED THAT THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY RECEIVED SHARE APPLICATION MON EY FROM TWO COMPANIES NAMELY M/S S.G. GLOBAL EXPORTS LIMITED AN D M/S NP WOOLEN MILLS LIMITED OF RS.15 00 000/- AND RS. 25 00 000/- LACS RESPECTIVELY. THE ASSESSING OFFICER OBSERVED IN THE BODY OF THE O RDER THAT STATEMENTS OF TWO DIRECTORS SH. PANKAJ SINGHANIA AND SH. SANJE EV SINGHANIA WERE RECORDED WHO DEPOSED THAT THEY WERE COMMISSION AG ENTS AND WERE PROVIDING ACCOMMODATING ENTRIES. ASSESSING OFFICER ON THE BASIS OF THEIR 6 STATEMENTS CONCLUDED THAT THE SHARE APPLI CATION MONEY RECEIVED FROM THESE COMPANIES WAS NOT GENUINE AND MADE AN AD DITION OF RS.40 00 000/- TO THE INCOME OF THE ASSESSEE U/S 6 8 OF THE IT ACT. AT THE OUTSET IT IS SUBMITTED THAT THE ASSESSING OFFICER HAS ERRED IN MAKING THE IMPUGNED ADDITION FOR THE REASON THAT IT IS AN ESTA BLISHED LEGAL PRINCIPLE THAT ONCE THE AMOUNT IS RECEIVED AS SHARE APPLICATI ON MONEY AND THE ASSESSEE HAS GIVEN THE NAMES OF THE SHAREHOLDERS N O ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT IN THE HANDS OF TH E COMPANY. IF IT IS ALLEGED BY THE DEPARTMENT THAT THE SHAREHOLDERS ARE BOGUS THEN THE DEPARTMENT IS FREE TO PROCEED TO RE-OPEN THEIR INDI VIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. RELIANCE IS PLACED ON THE DECI SION OF THE APEX COURT IN THE CASE OF M/S LOVELY EXPORTS (P) LIMITED REPOR TED IN 216 CTR 195(SC). THIS DECISION OF THE APEX COURT HAS BEEN R ECENTLY FOLLOWED BY THE JURISDICTIONAL BENCH OF ITAT IN THE CASE OF M/S BECKONS INDUSTRIES PRIVATE LIMITED. COPY OF THIS DECISION IS PLACED IN THE PAPER-BOOK AT PAGES 26-35 . RELIANCE IS FURTHER PLACED ON THE DECISION OF THE J URISDICTIONAL HIGH COURT REPORTED IN 33 DTR 163 IN THE CASE OF CIT VS G.P. INTERNATIONAL LIMITED. WITHOUT PREJUDICE TO THE ABOVE LEGAL POSIT ION IT IS SUBMITTED THAT THE ASSESSEE VIDE ITS REPLY DATED 25 ?H OCTOBER 2010 AND 10 TH DECEMBER 2010 PLACED IN THE PAPER-BOOK AT PAGES 1-25 BROUGHT ON RECORD THE CONFIRMATIONS OF THE COMPANIES HAVING PAID SHARE AP PLICATION MONEY TO M/S MOTIA DEVELOPERS PRIVATE LIMITED. IT WAS ALSO B ROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT SH. PANKAJ SINGHANIA OF S.G. GLOBAL EXPORTS LIMITED WAS NOT A DIRECTOR OF THE COMPANY ON THE DA TE OF HIS RECORDING OF THE STATEMENT. THUS HIS STATEMENT COULD NOT BE REL IED UPON. FURTHER NO CROSS EXAMINATION OF THESE PERSONS WERE ALLOWED BY THE ASSESSING OFFICER 7 WHO WAS THE WITNESSES OF THE DEPARTMENT. RELIANCE I S PLACED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN CASE O F CIT VS. SHAM LAL REPORTED IN 127 ITR 816 WHEREBY THE HON'BLE HIGH CO URT ANNULLED THE ASSESSMENT BASED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. THUS ON LEGAL AS WELL AS FACTUAL MATRIX OF THE CASE THE AD DITION MERITS DELETION. 4. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF THE ASSES SEE MATERIALS ON RECORD AND REMAND REPORT CALLED FROM T HE ASSESSING OFFICER DELETED THE ENTIRE ADDITION. HIS FINDINGS IN PARA 5 TO 6 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND IT IS SEEN THAT THE AO HAS TREATED THE SHARE APPLICATION MONEY RECE IVED FROM THE IMPUGNED CORPORATE ENTITIES AS UNACCOUNTED INCO ME OF THE ASSESSEE COMPANY ON THE GROUND THAT A STATEMENT HAD BEEN GIVEN BY SH. PANKAJ / SANJEEV SIRAHANIA DURING THE COURSE OF SEARCH/SURVEY IN THEIR OWN CASE STATING THEY WERE I N THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES THERE A RE TWO ISSUES THAT ARISE OUT OF THE ASSESSMENT ORDER PASSE D BY THE AO. FIRSTLY WHETHER THE SHARE APPLICATION RE CEIVED FROM AN IDENTIFIABLE CORPORATE ENTITY CAN BE TREATED AS UNE XPLAINED U/S 68 IN VIEW OF THE JUDGEMENT OF APEX COURT IN THE C ASE OF LOVELY EXPORTS (P) LTD. 216 CTR 195. SECONDLY WHET HER THE AO WAS REQUIRED TO AFFORD AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE PERSON WHOSE STATEMENT HAS BEEN USED BY THE ASSESSING OFFICER TO COME TO THE CONCLUSION THAT ENTRIES OF SHARE APPLICATION MONEY WERE BOGUS. I WOULD TAKE UP THE SECOND ISSUE BEFORE DISCUSSING THE FIRST ONE. WHILE IT HAS BEEN HELD IN SEVERAL JUDGMENTS THAT THE CIT(A) HAS PLENA RY JURISDICTION AND CAN DO WHAT THE AO FAILED TO DO (E .G. IN THE JUDGMENT IN THE CASE OF CIT VS. NIRBHERAM DALURAM 2 24 ITR 8 610 (SC) THE JURISDICTION DOES NOT EXTEND TO CORRE CTION OF ERRORS RELATING TO DENIAL OF NATURAL JUSTICE. THE P RINCIPLE OF AUDI ALTERAM PARTEM STATE THAT NO PERSON WILL BE PU NISHED UNLESS HE IS INFORMED OF THE CHARGES THAT LIE AGAIN ST HIM HE IS CONFRONTED WITH ALL THE MATERIALS THE PROSECUTION W ANTS TO RELY ON THE PROVE THE CHARGES AND HE IS GIVEN A FAIR AN D REASONABLE OPPORTUNITY OF DEFENDING HIMSELF. IT HAS BEEN HELD BY THE HON'BLE APEX COURT THAT THESE PRINCIPLES MUST BE RE AD INTO THE STATUTE UNLESS THERE IS A MANDATE TO THE CONTRARY [ SAHARA INDIA (FIRM VS. CIT 300 ITR 403 (SC)]. EVEN IF AN ADVERSE INFERENCE IS SOUGHT TO BE DRAWN FROM SOME INFORMATION SUBMITT ED BY THE ASSESSEE HIMSELF HE IS REQUIRED TO BE INFORMED OF THE PROPOSED INFERENCE FROM THIS MATERIAL SO THAT HE CAN DEFEND HIMSELF [CIT VS. ASHISH RAJPAL 23 DTR (DEI) 266] AND IT IS NOT S UFFICIENT THAT A POST-DECISIONAL OPPORTUNITY IS AVAILABLE TO THE ASSESSEE. THIS PRINCIPLE HAS BEEN HELD TO BE VALUABLE AND ADD ITIONS MADE IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE A RE LIABLE TO BE SET ASIDE E.G. IN THE CASE OF KISHINCHAND CHELLARAM (SUPRA) RELIED UPON BY THE APPELLANT IN WHICH CASE THE ADDI TION WAS DELETED SINCE THE MATERIAL RELIED UPON BY THE ITO W AS NOT CONFRONTED TO THE ASSESSEE. THE PRINCIPLES OF NATUR AL JUSTICE HAVE ALSO BEEN INCORPORATED IN THE INCOME TAX ACT I N SUB- SECTION (3) OF SECTION 142 AND THE AO IS REQUIRED T O CONFRONT THE ASSESSEE WITH THE MATERIAL WHICH HAS BEEN COLLE CTED BY THE AO AND IS PROPOSED TO BE USED IN ASSESSMENT. THE OB JECT OF THIS PRINCIPLE IS TO GIVE THE ASSESSEE AN OPPORTUNITY OF GIVING HIS EXPLANATION AND DISABUSING THE AO OF ANY WRONG IMPR ESSION THAT HE MIGHT HAVE FORMED AGAINST THE ASSESSEE. WHE N THE MATERIAL RELIED UPON IS NOT ENCLOSED WITH THE SHOW CAUSE NOTICE THERE IS NO SUFFICIENT [APPROPRIATE AUTHORI TY VS. VIJAY KUMAR SHARMA 249 ITR 554 (SC)] DEFECT ON ACCOUNT OF DENIAL OF NATURAL JUSTICE CANN OT BE CURED BY APPELLATE AUTHORITY AS HELD BY THE HON'BLE SUPR EME COURT IN THE CASE OF TIN BOX CO VS. CIT 249 ITR 216. IT W AS HELD IN 9 THIS CASE THAT THE FACT THAT THE ASSESSEE COULD PLA CE EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNAL WAS OF NO CONSEQUENCE FOR IT WAS THE ASSESSMENT ORDER T HAT MATTERED AND THAT ORDER MUST BE MADE AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. THE ORDER CURING THE D EFECT CAN BE PASSED ONLY BY THE PERSON WHO PASSED THE ORIGINAL O RDER AND IN THE LEASE OF TIN BOX CO (SUPRA) THE HON'BLE APE X COURT REMANDED THE MATTER TO THE AO TO DECIDE THE MATTER AFRESH. THE CIT(A) NOW HAS NO POWER TO SET-ASIDE THE ASSESSMENT TO THE FILE OF THE AO. IN THE REMAND REPORT THE AO HAS ACCEPTED * THAT SOME OF THE MATERIAL RELIED UPON MAY NOT HAVE BEEN CONFRONTED TO THE ASSESSEE WHICH IMPLIES THAT THE APPELLANT'S CONTENTION THAT HE WAS NOT CONFRONTED IN THIS REGARD IS CORREC T. IN MY OPINION UNDER THESE CIRCUMSTANCES THE INFERENCES DRAWN FROM SUCH MATERIAL CANNOT BE UPHELD. SECTION 143(3) OF THE ACT EMPOWERS THE AO TO MAKE AN ORDER OF ASSESSMENT AFTER HEARING THE EVIDENCE WHICH THE ASSESSEE MAY PRODUCE AND SUCH OTHER EVIDENCE THAT THE AO MAY REQUIRE ON SPEC IFIED POINTS TAKING INTO ACCOUNT ALL THE RELEVANT MATERIA L WHICH HE HAS GATHERED. THUS SECTION 143(3) SPECIFICALLY REQ UIRES THE AO TO ASK THE ASSESSEE TO PRODUCE EVIDENCE ON SPECI FIED POINTS. THIS READ WITH SECTION 142(3) NATURALLY R EQUIRES THE AO TO GIVE THE ASSESSEE AN OPPORTUNITY TO REBUT ANY EVIDENCE OR ISSUE WHICH THE AO MAY HAVE IN HIS POSSESSION OR MAY BE CONSIDERING AND WHICH HE PROPOSES TO USE AGAINST TH E ASSESSEE. AS NOTED EARLIER EVEN IF THE INFORMATION GIVEN BY THE ASSESSEE IS PROPOSED TO BE USED AGAINST HIM TH E ASSESSEE SHOULD BE MADE KNOWN OF ANY PROPOSED USAGE OF THE INFORMATION AGAINST HIMSELF SO THAT A COGENT REBUTT AL CAN BE MADE. IT IS APPARENT THAT THE AO HAS NOT CONFRONTED THE EVIDENCE APART FROM HANDING OVER THE STATEMENT OF SH. PANKAJ / SANJEEV SINGHANIA AND INSTEAD OF ENSURING THAT SH. PANKAJ / SANJEEV SINGHANIA ARE MADE AVAILABLE FOR C ROSS EXAMINATION TO THE ASSESSEE THE ONUS OF PRODUCING THE 10 CURRENT DIRECTORS OF THE IMPUGNED COMPANIES WAS CAS T UPON THE ASSESSEE ON THE PRETEXT THAT THE CONFIRMATION H AD BEEN FILED BY HIM ONLY. IT NEEDS TO BE APPRECIATED THAT ENTIRE CASE OF THE ASSESSING OFFICER IS BASED UPON THE CONFESSI ONAL STATEMENT OF SH PANKAJ/SANJEEV SINGHANIA AND IT IS ON THE BASIS OF.THIS STATEMENT THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE COMPANY WAS ALLEGED TO BE ACCOMMODATION AND THEREFORE THIS EVIDENCE COLLECTED AT THE BACK OF THE ASSESSEE TO BE CONFRONTED PROPERLY IN T ERMS OF ALLOWING HIM TO CROSS EXAMINE THE PERSONS WHO MADE THE IMPUGNED STATEMENT SO THAT ASSESSEE COULD DEFEND H IS CASE ON THE BASIS OF EVIDENCE IN HIS POSSESSION. THE DEN IAL OF THE OPPORTUNITY TO CROSS EXAMINE HAS ONLY LED TO ONE I NESCAPABLE CONCLUSION THAT STATEMENT RELIED UPON CANNOT TREATE D AS AN EVIDENCE AGAINST THE ASSESSEE. 6. SECONDLY THE JUDGEMENT OF APEX COURT IN T HE CASE OF LOVELY EXPORTS (P) LTD. IS APPLICABLE TO THE FACTS OF THE CASE AS THE ASSESSEE HAS CLEARLY IDENTIFIED THE SHARE AP PLICANT AND THE NECESSARY EVIDENCE FOR THE SAME HAD BEE N FILED DURING THE COURSE OF ASSESSMENT PROCEEDING A ND THE AO HAS NOT CONTROVERTED THE CLAIM OF THE ASSESSEE ON T HIS ISSUE. FURTHER CONFIRMATION FROM BOTH THE COMPANIES HAS BE EN FILED WHEREIN THE FACT OF APPLICATION FOR SHARES OF THE C OMPANY HAS BEEN ACCEPTED AND PAN OF THE SHARE APPLICANT HAD AL SO BEEN PROVIDED TO THE AO. IN THE CIRCUMSTANCES IF THE AO HAD ANY DOUBTS AS TO THE GENUINENESS OF SAID COMPANIES T HE CORRECTIVE ACTION IN TERMS OF ASSESSING THE SAI D ALLEGED UNACCOUNTED INVESTMENT COULD BE TAKEN IN THE CASE O F SAID COMPANIES. THE BURDEN CAST UPON BY SECTION 68 IN VI EW OF .THE JUDGEMENT OF HON'BLE APEX COURT IN THE CASE OF LOVE LY EXPORTS (P) LTD. HAS BEEN DISCHARGED BY THE ASSESSEE COMPAN Y. AS SUCH THE ADDITION MADE BY THE AO IS DIRECTED TO BE DELET ED. IN THE RESULT THE APPEAL IS ALLOWED. 11 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES PERUSED THE MATERIALS ON RECORD. THE LD. DR RELIED ON THE O RDER OF THE ASSESSING OFFICER. THE LD. DR SUBMITTED THAT THE DIRECTORS OF THE TWO ENTITIES IN THEIR STATEMENTS HAVE CATEGORICALLY STATED THAT THEY HAV E PROVIDED SIMPLY ACCOMMODATION ENTRIES RECORDED DURING THE COURSE O F SEARCH U/S 132(4) OF THE I.T. ACT. THE COPIES OF THEIR STATEMENTS WERE PROVIDED TO THE ASSESSEE CALLING EXPLANATION OF THE ASSESSEE WHY THE ADDITIO N SHOULD NOT BE MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT. IT IS NOTED IN T HE ASSESSMENT ORDER THAT AFTER CONSIDERABLE GAP OF MORE THAN ONE AND A HALF MONTH THE ASSESSEE FILED CONFIRMATIONS FROM PRESENT DIRECTORS OF BOTH THESE COMPANIES CONFIRMING THE SHARE APPLICATION MONEY INVESTED IN THE ASSESSEE COMPANY. THE ASSESSEE WAS THEREFORE DIRECTED TO PRODUCE TH E DIRECTORS FOR CROSS EXAMINATION SINCE THEY HAVE RETRACTED FROM THE EARL IER STATEMENT MADE U/S 132(4) OF THE I.T. ACT. THE LD. DR SUBMITTED THAT S INCE THE ASSESSEE FAILED TO PRODUCE BOTH THESE DIRECTORS WHO HAD MADE STATEM ENTS U/S 132(4) OF THE I.T. ACT THEREFORE THE ADDITION WAS CORRECTLY MAD E. THE LD. DR RELIED UPON THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF NAVDEEP DHINGRA VS CIT 56 TAXMAN.COM 75. THE LD. DR ALSO RELIED UPON THE DECISION OF SUPREME COURT IN THE CASE OF B. KI SHORE KUMAR VS. DCIT 62 TAXMAN.COM 215. THE LD. DR ALSO RELIED UPON THE DECISION OF SUPREME COURT IN THE CASE OF NAVODAYA CASTELS (P) LTD VS. C IT 56 TAXMAN.COM 18 ON THE PROPOSITION THAT CERTIFICATE OF INCORPORATIO N PAN ETC. ARE NOT SUFFICIENT FOR THE PURPOSE OF IDENTIFICATION OF SUB SCRIBER COMPANY WHEN THERE IS A MATERIAL TO SHOW THAT SUBSCRIBER WAS A P APER COMPANY AND NOT A GENUINE INVESTOR. 12 6. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT SHRI PANKAJ SINGHANIA / SANJEEV SINGHANIA HAVE ALREADY RESIGNED AS A DIRECTOR FROM M/S S.G. GLOBAL EXPORT (P) LTD AND M/S N.P. WO OLEN MILLS (P) LTD AT THE TIME OF SEARCH ON 24.7.2008 THEREFORE THEI R STATEMENTS ARE NOT ADMISSIBLE AGAINST THE ASSESSEE. HE HAS FURTHER SUB MITTED THAT ASSESSEE REQUESTED THE ASSESSING OFFICER TO PRODUCE BOTH OF THEM FOR THEIR CROSS EXAMINATION ON THEIR STATEMENT RECORDED DURING THE COURSE OF SEARCH BUT THESE PERSONS WERE NOT PRODUCED FOR CROSS EXAMINATI ON ON BEHALF OF THE ASSESSEE THEREFORE THEIR STATEMENTS CANNOT BE REL IED UPON IN EVIDENCE AGAINST THE ASSESSEE AS RECORDED AT THE BACK OF THE ASSESSEE. HE RELIED UPON THE DECISION OF SUPREME COURT IN THE CASE OF KISHIN CHAND CHELLA RAM [1980] 125 ITR 713 (SC) . HE HAS SUBMITTED THAT THIS WAS THE ONLY BASIS OF MAKING ADDITION AGAINST THE ASSESSEE THEREFORE TH E ADDITION HAVE BEEN RIGHTLY DELETED BY THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE EVEN ON MERITS SUBMITTED THAT ASSESSEE FURNISHED CONFIRM ATION FROM M/S S.G. GLOBAL EXPORT LIMITED DULY SIGNED BY THE DIRECTOR SHRI SANJEEV GUPTA AND IN CASE OF M/S N.P. WOOLEN MILLS (P) LTD CONFIRMAT ION WAS FILED BY THE DIRECTOR MANISH SHARMA COPIES OF WHICH ARE FILED AT PAGES 8 & 9 OF THE PAPER BOOK TO SHOW THAT GENUINE SHARE APPLICATION M ONEY HAVE BEEN RECEIVED BY THE ASSESSEE THROUGH BANKING CHANNEL AN D THEY HAVE DISCLOSED THEIR PAN NUMBERS AS WELL. THE ASSESSEE ALSO FILED FORM NO. 32 AND FORM NO. 23AC OF THESE TWO COMPANIES TO SHOW THAT THESE COMPANIES GENUINELY EXIST ON WHICH THE ASSESSING OFFICER DID NOT MAKE A NY ADVERSE COMMENTS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVE N THE ISSUE ON MERITS IS COVERED BY THE JUDGEMENT OF THE HON'BLE SUPREME COU RT IN THE CASE CIT 13 VS. LOVELY EXPORTS PVT. LTD CIT VS. 216 CTR 195. HE HAS RELIED UPON THE FOLLOWING DECISIONS IN WHICH THE HON'BLE HIGH COURT FOLLOWING THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS . LOVELY EXPORTS PVT. LTD. 319 ITR (ST.) 5 (SC) HAVE TAKEN A VIEW IN FAVOUR OF THE ASSESSEE. (I) JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CI T VS. VALUE CAPITAL SERVICES P. LTD [2008] 307 ITR 334 (DELHI) IN WHICH IT WAS HELD AS UNDER :- IN RESPECT OF AMOUNTS SHOWN AS RECEIVED BY THE ASS ESSEE TOWARDS SHARE APPLICATION MONEY FROM 33 PERSONS TH E ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE ALL THESE PERSONS. WHILE ACCEPTING THE EXPLANATION AND THE STATEMENTS GIVEN BY THREE PERSONS THE ASSESSING OFF ICER FOUND THAT THE RESPONSE FROM THE OTHERS WAS EITHER NOT AVAILABLE OR WAS INADEQUATE AND ADDED AN AMOUNT OF RS. 46 LAKHS PERTAINING TO 30 PERSONS TO THE INCOME OF THE ASSESSEE. THE COMMISSIONER (APPEALS) UPHELD THE DEC ISION OF THE ASSESSING OFFICER. ON APPEAL THE TRIBUNAL S ET ASIDE THE ORDER OF THE COMMISSIONER (APPEALS) AND DELETED THE ADDITIONS. ON FURTHER APPEAL : HELD DISMISSING THE APPEAL THAT THE ADDITIONAL BU RDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE AP PLICANTS DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT THE INVESTMENT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TR EATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. NO SUBSTANT IAL QUESTION OF LAW AROSE. (II) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. GP INTERNATIONAL LTD. [2010] 325 IT R 25 (P&H) IN WHICH IT WAS HELD AS UNDER :- 14 HELD DISMISSING THE APPEAL (I) THAT DURING THE PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 250 OF THE ACT THE ASSESSEE FURNISHED A CONFIRMATION CERT IFICATE FROM A ALONG WITH PAN NUMBER. THE ASSESSEE HAD CONFIRMED THAT THE LIABILITY WAS STILL OUTSTANDING. HENCE SECTION 41(1) WAS NOT APPLICABLE. (III) THAT AT THE TIME OF THE ORIGINAL ASSESSMENT THE ASSESSEE HAD SUPPLIED THE LIST OF THE PERSONS TO WHOM THE SHARES WERE SOLD ALONG WITH THEIR ADDRESSES. THE AS SESSING OFFICER DID NOT DOUBT THE IDENTITY OF THE PERSONS F ROM WHOM THE ASSESSEE HAD SHOWN RECEIPT OF APPLICATION MONEY . MERELY BECAUSE SOME OF THE PERSONS DID NOT RESPOND TO THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 133(6) OF THE ACT IT COULD NOT BE TAKEN THAT THE TRANSACT ION WAS NOT GENUINE. THE AMOUNT COULD NOT BE TAKEN AS UNEXP LAINED INCOME IN THE HANDS OF THE ASSESSEE. (III) DECISION O F DELHI HIGH COURT IN THE CASE OF CIT VS. DWARKADHISH INVESTMENT P. LTD & DWARKADHISH CAPITAL P. LTD (2011) 330 ITR 298 (DELHI) IN WHICH IT WAS HELD AS UNDER :- IN ANY MATTER THE ONUS OF PROOF IS NOT A STATIC O NE. THOUGH IN SECTION 68 OF THE INCOME-TAX ACT 1961 THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTIT Y OF THE CREDITORS/SHARE APPLICANTS BY EITHER FURNISHING THE IR PAN NUMBER OR INCOME-TAX ASSESSMENT NUMBER AND SHOWS THE GENUI NENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVENUE. JUST BECAUSE THE CREDITORS/SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN IT WOULD NOT GIVE THE REVENUE THE RIGHT TO INVOKE SECTION 68 . O NE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE SOURCE OF SOURCE. 15 THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF FINANCING AND TRADING OF SHARES. FOR THE ASSESSMENT YEAR 2001 -02 ON SCRUTINY OF ACCOUNTS THE ASSESSING OFFICER FOUND A N ADDITION OF RS. 71 75 000 IN THE SHARE CAPITAL OF THE ASSESSEE. THE ASSESSING OFFICER SOUGHT AN EXPLANATION OF THE ASSESSEE ABOUT THIS ADDITION IN THE SHARE CAPITAL. THE ASSESSEE OFFERED A DETAIL ED EXPLANATION. HOWEVER ACCORDING TO THE ASSESSING OFFICER THE AS SESSEE FAILED TO EXPLAIN THE ADDITION OF SHARE APPLICATION MONEY FROM FIVE OF ITS SUBSCRIBERS. ACCORDINGLY THE ASSESSING OFFICER MAD E AN ADDITION OF RS. 35 50 000 WITH THE AID OF SECTION 68 OF THE ACT 1961 ON ACCOUNT OF UNEXPLAINED CASH CREDITS APPEARING IN TH E BOOKS OF THE ASSESSEE. HOWEVER IN APPEAL THE COMMISSIONER OF I NCOME-TAX (APPEALS) DELETED THE ADDITION ON THE GROUND THAT T HE ASSESSEE HAD PROVED THE EXISTENCE OF THE SHAREHOLDERS AND TH E GENUINENESS OF THE TRANSACTION. THE INCOME-TAX APPELLATE TRIBUN AL CONFIRMED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) AS IT WAS ALSO OF THE OPINION THAT THE ASSESSEE HAD BEEN ABLE TO PROVE THE IDENTITY OF THE SHARE APPLICANTS AND THE SHARE APPL ICATION MONEY HAD BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES. ON APPEAL TO THE HIGH COURT : HELD DISMISSING THE APPEALS THAT THE DELETION OF ADDITION WAS JUSTIFIED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE AS SESSING OFFICER INQUIRED INTO THE GENUINENESS OF THE SHARE APPLICAT ION MONEY RECEIVED BY THE ASSESSEE FORM TWO COMPANIES IN A SUM OF RS. 40 LAKHS I.E. M/S S.G. GLOBAL EXPORT LIMITED AND M/S N.P. WOOLEN MILLS (P) LTD LUDHIANA. THE ASSESSING OFFICER NOTED THAT INVESTIGATION WING CON DUCTED A SEARCH ON SHRI PANKAJ SINGHANIA AND SHRI SANJIV SINGHANIA DIRECTO RS OF M/S S.G. GLOBAL EXPORT LTD AND M/S N.P. WOOLEN MILLS (P) LTD AND TH EIR STATEMENTS WERE RECORDED U/S 132(4) OF THE I.T. ACT ON 24.7.2008 IN WHICH THEY HAVE DEPOSED THAT THEY WERE PROVIDING SIMPLY ACCOMMODATI ON ENTRIES AS A 16 COMMISSION AGENTS TO VARIOUS PARTIES WHO APPROACH T HEM. THEIR STATEMENTS ARE REPRODUCED IN THE ASSESSMENT ORDER. COPIES OF T HEIR STATEMENTS HAVE BEEN PROVIDED TO THE ASSESSEE TO EXPLAIN GENUINENES S OF THESE SHARE APPLICATION MONEY RECEIVED IN A SUM OF RS. 40 LAKHS . THE ASSESSEE FILED CONFIRMATION FROM BOTH THESE COMPANIES COPIES OF W HICH ARE FILED AT PAGES 8 & 9 OF THE PAPER BOOK WHICH PROVED THAT THE SHARE APPLICATION MONEY FROM BOTH THESE COMPANIES HAVE BEEN RECEIVED THROUG H BANKING CHANNEL IN WHICH THEY HAVE CONFIRMED GIVING ON SHARE APPLICATI ON MONEY TO THE ASSESSEE. PAN NUMBERS OF THE PARTIES HAVE ALSO BEEN GIVEN. BOTH THESE CONFIRMATIONS HAVE BEEN SIGNED BY SHRI SANJEEV GUPT A AND MANISH SHARMA THE EXISTING DIRECTORS WHICH IS ALSO SUPPORTED BY THE STATUTORY CONFIRMATION TO SHOW THAT BOTH THE COMPANIES WERE E XISTING COMPANIES. THE ASSESSEE EXPLAINED THAT SHRI PANKAJ SINGHANIA A ND SHRI SANJEEV SINGHANIA ARE NOT DIRECTORS OF THOSE COMPANIES THE REFORE THEIR STATEMENTS MAY NOT BE RELEVANT EVIDENCE AND THE SOME ARE NOT A DMISSIBLE. THE ASSESSEE ALSO EXPLAINED THAT THE STATEMENTS OF THOS E PERSONS WERE RECORDED DURING THE SEARCH AT THE BACK OF THE ASSESSEE THER EFORE THESE PERSONS MAY BE PRODUCED FOR CROSS EXAMINATION ON BEHALF OF THE ASSESSEE. THE ASSESSING OFFICER HOWEVER DID NOT DO SO AND OBSERVED THAT D URING THE COURSE OF SEARCH NO WORTH OF THESE CONCERNS WERE FOUND AND S TATEMENTS OF PANKAJ SINGHANIA AN SANJEEV SINGHANIA WERE RECORDED IN WHI CH THEY CONFIRMED GIVEN ACCOMMODATION ENTRIES TO THE PARTIES AND THAT THEY WERE DIRECTORS AT THE TIME OF GIVING SHARE APPLICATION MONEY TO ASSES SEE THEREFORE THEIR STATEMENTS ARE RELEVANT. THE ASSESSING OFFICER DID NOT PRODUCE THOSE DIRECTORS FOR CROSS EXAMINATION. THE ADDITION WAS C ONFIRMED. IT MAY BE NOTED HERE THAT THE REVENUE DEPARTMENT DURING THE C OURSE OF SEARCH IN THE 17 CASE OF SHRI PANKAJ SINGHANIA AND SANJEEV SINGHANIA DIRECTORS OF THE ABOVE THESE TWO COMPANIES RECORDED THEIR STATEMENTS U/S 132(4) OF THE ACT ON 24.7.2008 IN WHICH THEY HAVE CONFIRMED OF GIVING ACCOMMODATION ENTRIES TO THE PARTIES BY TAKING CASH. THEIR STATEM ENTS WERE THEREFORE RECORDED AT THE BACK OF THE ASSESSEE. THE ASSESSEE ASKED FOR THE CROSS EXAMINATION OF STATEMENTS OF THESE TWO PERSONS AND REQUESTED THE ASSESSING OFFICER TO PRODUCE THOSE PERSONS FOR CROS S EXAMINATION ON BEHALF OF THE ASSESSEE BUT THE REQUEST OF THE ASSESSEE WAS NOT ALLOWED AND ASSESSEE WAS DIRECTED TO PRODUCED THOSE DIRECTORS FOR CROSS-EXAMINATION. 8. THE LD. CIT(A) IN HIS FINDINGS ALSO RECORDED THA T THE ASSESSING OFFICER IN THE REMAND REPORT HAS ACCEPTED THAT SOME OF THE MATERIAL WAS ALSO NOT CONFRONTED TO THE ASSESSEE. IT WAS THEREF ORE FOUND THAT ASSESSING OFFICER HAS NOT CONFRONTED THE EVIDENCE APART FROM HANDING OVER THE STATEMENTS OF SHRI PANKAJ SINGHANIA AND SHRI SANJEE V SINGANIA AND INSTEAD OF ENSURING THE PRESENCE OF THESE PERSONS FOR CROSS EXAMINATION THE ONUS OF PRODUCING WAS PUT UPON THE ASSESSEE ON PRETEXT THAT THE ASSESSEE FILED THE FRESH CONFIRMATION FROM THE DIRECTORS. THE LD. CIT(A) THEREFORE RIGHTLY HELD THAT THE ENTIRE CASE OF THE ASSESSING OFFICER IS BASED UPON CONFESSIONAL STATEMENT OF SHRI PANKAJ / SANJEEV SIN GHANIA AND IT IS ON THE BASIS OF THEIR STATEMENTS THAT ADDITION HAS BEEN MA DE BECAUSE IN THEIR STATEMENTS THEY HAVE STATED THAT THEY HAVE PROVIDED ONLY ACCOMMODATION ENTRIES. IT IS THEREFORE CLEAR THAT THE ASSESSING OFFICER DENIED OPPORTUNITY TO CROSS EXAMINATION THE STATEMENTS OF THOSE TWO PE RSONS AT THE ASSESSMENT STAGE. THEREFORE THEIR STATEMENTS RECORDED AT THE BACK OF THE ASSESSEE CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. WE RELY UPON THE DECISION 18 OF THE HON'BLE SUPREME COURT IN THE CASE OF KISHINC HAND CHELLA RAM (SUPRA). WE ALSO RELY UPON THE DECISION OF HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. RAMESH CHANDRA SHUKLA IN (MAIT) NO. 71 OF 2003 DECIDED ON 1.4.2005 IN WHICH IT WAS HELD IT IS NOW WELL SETTLED THAT WHERE THE ASSESSEE REQUESTS THE ASSESSING OFFICER T O ISSUE SUMMONS TO ENFORCE ATTENDANCE OF THE CREDITORS TO ESTABLISH TH E GENUINENESS AND CAPACITY OF THE CREDITOR IT IS DUTY OF THE ASSESSI NG OFFICER TO ENFORCE ATTENDANCE OF THE CREDITOR BY ISSUING SUMMONS. IF T HE ASSESSING OFFICER DOES NOT CHOOSE TO ISSUE SUMMONS AND EXAMINE THE CR EDITORS HE CANNOT SUBSEQUENTLY TREAT THE LOANS STANDING THE NAME OF T HE SUCH CREDITORS AS NON-GENUINE NOR ADD THE AMOUNT THEREOF TO THE ASSES SEES INCOME. THE HON'BLE DELHI HIGH COURT IN THE CASE OF SMC SHARE B ROKERS LTD (2007) 288 ITR 345 (DEL) HELD THAT ASSESSING OFFICER DID NOT ALLOW CROSS- EXAMINATION OF PERSON SEARCHED PRINCIPLE OF NATURA L JUSTICE NOT FOLLOWED. SUCH STATEMENT CANNOT BE RELIED UPON. FROM THE ABOV E DISCUSSION IT IS CLEAR THAT WHEN STATEMENT OF THE PERSONS NAMELY PAN KAJ SINGHANIA / SANJIV SINGANIA WERE RECORDED AT THE BACK OF THE ASSESSEE AND ASSESSEE HAS NOT BEEN ALLOWED TO CROSS-EXAMINE THEIR STATEMENTS THE IR STATEMENTS CANNOT READ IN EVIDENCE AGAINST THE ASSESSEE. THE LD. CIT( A) WAS THEREFORE JUSTIFIED IN HOLDING THAT THESE STATEMENTS CANNOT B E TREATED AS EVIDENCE AGAINST THE ASSESSEE. ON THIS GROUND ITSELF THE DE PARTMENTAL APPEAL STANDS DISMISSED. 10. EVEN ON MERITS THE ASSESSEE FILED CONFIRMATION FROM BOTH THE COMPANIES THROUGH THEIR NEW DIRECTORS IN WHICH THE Y HAVE CONFIRMED GIVING OF SHARE APPLICATION MONEY TO THE ASSESSEE C OMPANY THROUGH 19 BANKING CHANNEL DISCLOSING THEIR PAN NUMBERS SUPPOR TED BY THE STATUTORY FORMS THEREFORE IT IS PROVED ON RECORD THAT BOTH THE LENDER COMPANIES EXISTS GENUINELY AND MADE INVESTMENTS IN SHARE APPL ICATION MONEY. NO EVIDENCE HAVE BEEN BROUGHT ON RECORD TO PROVE THAT IT WAS UNACCOUNTED MONEY OF THE ASSESSEE WHICH IS INVESTED IN SHARE AP PLICATION MONEY. THE DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE SQUARELY APPLY TO THE FACTS OF THE CASE. THE DECISION CITED BY LD. DR THA T THE ASSESSEE FAILED TO PRODUCE THE DIRECTORS WHO HAVE MADE STATEMENTS IN C ASE OF THE ASSESSEE ON FILING FRESH CONFIRMATION WOULD AMOUNT TO RETRACTIO N IS NO MORE RELEVANT BECAUSE THEIR STATEMENTS CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE BECAUSE ASSESSING OFFICER DID NOT ALLOW CROSS EXAMI NATION ON BEHALF OF THE ASSESSEE AT ASSESSMENT STAGE. NO INFIRMITY HAVE BEE N POINTED OUT IN FINDINGS ON MERIT RECORDED BY LD. CIT(A) FOLLOWING DECISION OF HON'BLE SUPREME COURT IN CASE OF LOVELY EXPORTS (P) LTD. (S UPRA). THEREFORE THE TOTALITY OF FACTS AND CIRCUMSTANCES CLEARLY PROVES THAT LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIALS ON RECOR D HAS CORRECTLY DELETED THE ADDITION. WE DO NOT FIND ANY MERIT IN THE APPEA L OF THE REVENUE THE SAME IS ACCORDINGLY DISMISSED. 11. IN THE RESULT DEPARTMENTAL APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH SA INI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 ST OCTOBER 2016 RKK 20 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR