DCIT, New Delhi v. M/s. Jaguar Buildcon Pvt. Ltd., New Delhi

ITA 284/DEL/2015 | 2012-2013
Pronouncement Date: 31-08-2021 | Result: Dismissed

Appeal Details

RSA Number 28420114 RSA 2015
Assessee PAN AACCJ2199J
Bench Delhi
Appeal Number ITA 284/DEL/2015
Duration Of Justice 6 year(s) 7 month(s) 17 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Jaguar Buildcon Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 31-08-2021
Assessment Year 2012-2013
Appeal Filed On 13-01-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI AMIT SHUKLA JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI ACCOUNTANT MEMBER I.T.A. NO.283/DEL/2015 & 284/DEL/2015 ASSESSMENT YEARS: 2011-12 & 2012-2013 DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-31 NEW DELHI. VS. M/S. JAGUAR BUILDCON PVT. LTD. 30 COMMUNITY CENTRE SAKET NEW DELHI. TAN/PAN: AACCJ2199J (APPELLANT) (RESPONDENT) APPELLANT BY: MS. SUNITA SINGH CIT-DR. RESPONDENT BY: SHRI RAKESH JOSHI CA DATE OF HEARING: 23 06 2021 DATE OF PRONOUNCEMENT: 31 08 2021 O R D E R PER AMIT SHUKLA JM: THE AFORESAID APPEALS HAVE BEEN FILED BY THE REVENU E AGAINST SEPARATE IMPUGNED ORDERS OF EVEN DATE 29.9 .2014 PASSED BY LD. CIT (APPEALS)-XXXIII NEW DELHI FOR T HE QUANTUM OF ASSESSMENT PASSED U/S. 153A FOR THE ASSE SSMENT YEAR 2012-13. SINCE COMMON ISSUES ARE INVOLVED IN B OTH THE APPEALS ARISING OUT OF ALMOST IDENTICAL SET OF FACT S THEREFORE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. IN THE ASSESSMENT YEAR 201 1-12 THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.103 80 00 000/- MADE U/S. 68 ON ACCOUNT OF UNEXP LAINED SHARE CAPITAL AND PREMIUM; AND IN THE ASSESSMENT YE AR ITA NO.283 & 284/DEL/2015 2 2012-13 THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.23 CRORE MADE U/S. 68 ON ACCOUNT OF UNEXPLAIN ED SHARE CAPITAL AND PREMIUM. 2. THE BRIEF FACTS AND BACKGROUND OF THE CASE ARE T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARE TRADIN G FUTURE OPTION COMMODITIES CONSULTANCY SERVICES AND HOTE L INDUSTRY. THE ASSESSEE-COMPANY IS UNDER CONSTRUCTIO N OF HOTELS AT MUMBAI AT SENAPATI BAPAT MARG MAHALAXMI MUMBAI. FOR THE ASSESSMENT YEAR 2011-12 THE ASSESS EE HAD FILED ITS RETURN OF INCOME U/S. 139(1) ON 26.09.201 1 DECLARING INCOME OF RS.53 21 14 645/- WHICH WERE DULY ASSESSE D U/S. 143(1) VIDE ORDER DATED 27.1.2012. ON 22.11.2011 T HE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT CON DUCTED SEARCH & SEIZURE OPERATIONS U/S 132 OF THE INCOME T AX ACT 1961 ON DIFFERENT CONCERNS AND PERSONS OF GURINDER JIT SINGH GROUP. IN THE SAID SEARCH OPERATIONS THE CASE OF T HE APPELLANT COMPANY WAS ALSO COVERED UNDER SEARCH U/S. 132 OF THE ACT. THE JURISDICTION OVER THE CASE BEFORE THE S EARCH ACTION WAS WITH ASSESSING OFFICER IN THE CHARGE OF CIT DELHI-II NEW DELHI. CONSEQUENT UPON SEARCH OPERATIONS THE C ASE OF THE APPELLANT WAS TRANSFERRED AND CENTRALIZED WITH THE DY. CIT CENTRAL CIRCLE-23 NEW DELHI ON 03.12.2012 BY THE CIT DELHI-II NEW DELHI U/S 127 OF THE ACT. THE DY. CIT CENTRAL CIRCLE-23 NEW DELHI INITIATED ASSESSMENT PROCEEDIN GS U/S 153A IN RESPECT OF 6 ASSESSMENT YEARS INCLUDING THE ASSESSMENT YEAR UNDER CONSIDERATION. ACCORDINGLY T HE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 153A WAS FILED BY THE ITA NO.283 & 284/DEL/2015 3 ASSESSEE WITH THE ACIT CIRCLE-23 NEW DELHI ON 17. 07.2013 DECLARING INCOME OF RS.53 21 14 645/-. THEREAFTER THE CIT (CENTRAL)-111 NEW DELHI ASSIGNED THIS CASE TO THE ACIT CENTRAL CIRCLE-19 NEW DELHI VIDE HIS ORDER U/S 127 OF THE ACT DATED 12.11.2013. THE ASSESSMENTS IN THE CASE OF TH E APPELLANT COMPANY HAVE BEEN FINALLY COMPLETED BY TH E ACIT CENTRAL CIRCLE-19 NEW DELHI. 3. THE ASSESSING OFFICER ON PERUSAL OF THE BALANCE- SHEET AS ON 31.3.2011 NOTICED THAT ASSESSEES SUBSCRIBED SHA RE CAPITAL HAS INCREASED TO RS.9 69 00 000/-. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS ISSUED RS.44 90 000 /- EQUITY SHARES AT FACE VALUE OF RS.10/- AND HAS FURTHER ISS UED RS. 51 90 000/- 1% CUMULATIVE REDEEMABLE PREFERENCE SHA RES AT FACE VALUE OF RS.10/- PER SHARE AND FURTHER PREMIUM OF RS.190/- PER SHARE. THUS THE SHARE CAPITAL WAS RAI SED BY RS.108 29 00 000/- WHICH WAS RECEIVED FROM VARIOUS PARTIES. THE DETAILS OF WHICH HAS BEEN INCORPORATED IN THE A SSESSMENT ORDER WHICH FOR THE SAKE OF READY REFERENCE IS REP RODUCED HEREUNDER:- NAME OF INVE STOR NO OF SHARE ALLOTTED FACE VALUE PREMIUM TOTAL 1 GODSEND BIO TECH LTD. 20 95 000 2 09 50 000 39 80 50 000 41 90 00 000 2 TVH TRADING CO. PVT. LTD. 13 20 000 1 32 00 000 25 08 00 000 26 40 00 000 3 TOPGRAIN MERCANTILE PVT. LTD. 17 75 000 1 77 50 000 33 72 50 000 35 50 00 000 4 GANESH BUILDCON PVT. LTD. 17 96 000 1 79 60 000 1 79 60 000 ITA NO.283 & 284/DEL/2015 4 5 FEELGOOD CREATIONS PVT. LTD. 13 47 000 1 34 70 000 1 34 70 000 6 BEYOND MANAGEMENT PVT 13 47 000 1 34 70 000 1 34 70 000 TOTAL 96 80 000 9 68 00 000 98 61 00 000 108 29 00 00 4. THE LD. ASSESSING OFFICER OBSERVED THAT COMPANY WAS INCORPORATED ONLY ON 26.8.2009 AND HAD SHOWN RECEIP T OF PREMIUM IN THE MONTH OF SEPTEMBER/OCTOBER 2010 AND ALL THE SHARE APPLICANTS I.E. INVESTORS ARE PRIVATE L IMITED COMPANIES OUT OF WHICH TWO WERE KOLKATA BASED COMPA NIES. AS PER THE ASSESSMENT ORDER NOTICES U/S. 133(6) WA S ISSUED TO THREE COMPANIES FROM WHOM THE RECEIPT OF SHARE P REMIUM WAS SHOWN. HOWEVER AS PER HIM NO REPLY WAS RECEIVE D ON THE DATE SPECIFIED BY HIM. THE ASSESSEE-COMPANY WAS ALS O REQUIRED TO SUBMIT ALL THE REQUISITE DETAILS LIKE C OPIES OF THEIR AUDITED REPORTS AUDITED FINANCIAL ACCOUNTS I.E. BALANCE SHEET PROFIT AND LOSS ACCOUNT AND SOURCE OF INVEST MENT MADE IN THE ASSESSEE-COMPANY DETAILS OF BUSINESS ACTIVI TIES AND REASON FOR INVESTING IN ASSESSEES COMPANY WITH HUG E PREMIUM ALONG WITH COPY OF BANK ACCOUNT. IN RESPONS E THE ASSESSEE HAD SUBMITTED ALL THE REQUISITE DETAILS AS ASKED BY HIM ALONG WITH RETURN OF INCOME OF THE PARTIES. THE ASSESSING OFFICER NOTICED FOLLOWING DETAILS OF INVESTMENTS SH OWN BY THESE COMPANIES AS ON 31.3.2010 AND 31.3.2011. NAME OF COMPANY INVESTMENT SHOWN 31/03/2010 INVESTMENT SHOWN 31/03/2011 DIFFERENCE M/S. TVH TRADING COMPANY (P) LTD. 48 52 00 000 48 52 02 000 2000 M/S. TOPGRAIN MERCANTILE P. LTD. 47 04 00 000 47 04 09 000 900 ITA NO.283 & 284/DEL/2015 5 M/S. GODSEND BIOTECH LIMITED 41 88 50 000 46 15 22 000 4 26 72 000 5. THUS ASSESSING OFFICER DEDUCED THAT THESE COMPA NIES DID NOT HAVE SUBSTANTIAL INCREASE IN THE INVESTMENT AS COMPARED TO THE PRECEDING YEAR AND ALSO IT IS NOT V ERIFIABLE WHETHER THESE COMPANIES HAVE MADE INVESTMENT IN THE ASSESSEE-COMPANY. HE FURTHER NOTICED THAT IN THE CA SE OF M/S. TOPGRAIN MERCANTILE (P) LTD. THE PAYMENT HAVE NOT BEEN MADE BY THE SAID COMPANIES BUT IT HAS BEEN RECEIVED BY T HE ASSESSEE FROM THE BANK ACCOUNT OF M/S. BRIDGE & BUI LDING CONSTRUCTION CO. PVT. LTD. HE ALSO SENT NOTICES U/S . 133(6) TO BANKS OF THE INVESTOR COMPANIES TO ASCERTAIN THE SO URCE OF FUND GIVEN TO THE ASSESSEE BY THESE THREE PRIVATE L IMITED COMPANIES. FROM THE PERUSAL OF THE BANK STATEMENTS HE OBSERVED THAT THE BANK STATEMENTS REFLECT THAT THES E COMPANIES HAVE BEEN RECEIVING FUNDS FROM VARIOUS PR IVATE LIMITED COMPANIES WHICH ARE AGAIN TRANSFERRED TO OT HER COMPANIES AND ROUTING OF TRAIL OF 3/4 LAYERS THE FUNDS HAVE ULTIMATELY REACHED TO THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE FILED HIS DETAILED REPLY THE RELEVANT PART OF WHICH HAS BEEN INCORPORATED IN THE ASSESSME NT ORDER IN PARAGRAPH 4.6. THE ASSESSING OFFICER IN HIS ORDE R HAS NOTED THAT THE ASSESSEE ATTENDED THE PROCEEDINGS WITH SHR I GOVIND AGARWAL EX-DIRECTOR OF M/S. TVH TRADING CO. PVT. L TD. M/S. TOPGRAIN MERCANTILE P. LTD. FOR PERSONAL EXAMINATIO N WHOSE STATEMENT WAS ALSO RECORDED. HOWEVER THE ASSESSING OFFICER HELD THAT HE DID NOT HAD LETTER OF THE AUTHORITY AN D HE WAS ITA NO.283 & 284/DEL/2015 6 ASKED TO GIVE THE DETAILS OF SHAREHOLDING PATTERN A ND SOURCE OF INVESTMENT MADE BY THESE TWO COMPANIES. IN RESPONSE TO WHICH HE SOUGHT TIME FOR THREE WEEKS TO SUBMIT THE DETAILS AS THE DETAILS WERE MAINTAINED IN KOLKATA AND MUMBAI O FFICE FOR WHICH HE SAID HE NEEDS TIME TO COLLECT THE SAME. IN THE CASE OF M/S. GODSEND BIOTECH LTD ADVOCATE MR. PRAVIN NAIL REPRESENTING THE SAID COMPANY HAD APPEARED WHO TOO REQUESTED FOR MORE TIME FOR FILING THE DOCUMENTS AS KED FOR. THEREAFTER HE HAS GIVEN HIS OBSERVATIONS AND FINDI NGS REGARDING ALL THREE COMPANIES. IN CASE OF ONE OF TH E COMPANY M/S. BRIDGE & BUILDING CONSTRUCTION CO. P. LTD. WHO HAS MADE THE PAYMENT ON BEHALF OF M/S. TOPGRAIN MERCANT ILE PRIVATE LIMITED HE OBSERVED THAT IT IS NOT WELL SUB STANTIATED AND CAME TO THE CONCLUSION THAT THE TRANSACTION OF SHARE CAPITAL AND SHARE PREMIUM IS NOT GENUINE. 6. THE ASSESSING OFFICER'S OBSERVATIONS AND HIS ALLEGATION IN THE ASSESSMENT ORDER AND ASSESSEES COUNTER ON SUCH OBSERVATION SHALL BE DISCUSSED IN DETAIL IN SUCCEED ING PARAGRAPH. FINALLY THE ASSESSING OFFICER HELD THAT THE AMOUNT OF RS.103 80 00 000/- APPEARING IN THE BOOKS OF THE ASSESSEE IN THE FORM OF SHARE CAPITAL AND PREMIUM A GAINST M/S. TOPGRAIN MERCANTILE PVT. LTD. M/S. GODSEND BI O TECH AND M/S. TVH TRADING PVT. LTD. IS AN UNEXPLAINED CR EDIT. ACCORDINGLY HE MADE THE ADDITION U/S.68 OF THE INC OME TAX ACT. ITA NO.283 & 284/DEL/2015 7 7. BEFORE THE CIT(A) THE ASSESSEE HAS FILED DETAIL ED SUBMISSION AND SUBMITTED THAT ALL THE REQUISITE DET AILS AND INFORMATION ALONG WITH SUPPORTING DOCUMENTS WERE FI LED BEFORE THE ASSESSING OFFICER. IN SUMS AND SUBSTANCE THE ASSESSEES ARGUMENTS HAVE BEEN INCORPORATED BY THE CIT (A) IN THE FOLLOWING MANNER:- I) DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT HAS FILED FOLLOWING DOCUMENTS TO ASSESSING OFFICER ESTABLISH THE GENUINENESS OF SHARE TRANSACTIONS AND IDENTITY & CREDITWORTHINESS OF THESE IMPUGNED SHARE HOLDERS: A) PHOTOCOPY OF SHARE APPLICATION FORMS DULY FILL ED IN AS SUBMITTED BY THE INVESTING COMPANIES TO THE ASSESSE E COMPANY WHILE APPLYING FOR SHARES. B) CERTIFIED TRUE COPY OF BOARD RESOLUTIONS PASSED BY BOARD OF DIRECTORS OF THE RESPECTIVE COMPANIES IN R ESPECT OF INVESTMENT TO BE MADE IN THE SHARES OF THE ASSESSEE COMPANY. C) PHOTOCOPIES OF PAN CARDS OF ALL THE INVESTING C OMPANIES AS ISSUED BY THE INCOME TAX DEPARTMENT GOVT. OF IN DIA. D) AUDIT REPORTS ALONGWITH PHOTOCOPIES OF FINAL ACC OUNTS I.E. BALANCE SHEETS PROFIT & LOSS ACCOUNTS COMPLETE WI TH THE SCHEDULES OF THE INVESTING COMPANIES. E) PHOTOCOPIES OF MEMORANDUM AND ARTICLES OF ASSOC IATION OF THE SAID COMPANIES WITH CERTIFICATES OF INCORPO RATION. F) BANK ACCOUNT STATEMENTS OF THE INVESTING COMPAN IES FOR THE RELEVANT PERIOD. G) ALLOTMENT ADVICE ISSUED BY THE ASSESSEE COMPANY GIVING DETAILS OF THE ALLOTMENT OF SHARES AGAINST T HE SHARE APPLICATION MONEY RECEIVED INDICATING FOLIO NO. CE RTIFICATE ITA NO.283 & 284/DEL/2015 8 NUMBER NUMBER OF SHARES ALLOTTED COMPLETE WITH DI STINCTIVE NUMBERS AND AMOUNT RECEIVED AGAINST SUCH SHARE ALLO CATION. H) PHOTOCOPY OF ACKNOWLEDGMENT PORTION OF INCOME T AX RETURNS (ITRS) ALONGWITH STATEMENT OF INCOME OF THE INVESTING COMPANIES. I) FRESH ADDRESSES (WHEREVER APPLICABLE) OF THE IN VESTING COMPANIES FOR FACILITATING DIRECT CORRESPONDENCE WI TH THEM ON INDEPENDENT LEVEL BY THE DEPARTMENT. J) COPIES OF EQUITY SHARE CERTIFICATES ISSUED TO TH E INVESTORS. K) COPY OF RETURN OF ALLOTMENTS (OF SHARES) FILED B Y THE ASSESSEE COMPANY WITH THE ROC IN FORM 2 (PURSUANT TO SECTION 75(1) OF THE COMPANIES ACT 1956). L) COPIES OFMCA21: COMPANY MASTER DETAILS AND COMPA NY/LLP MASTER DATA OF ALL THE INVESTING COMPANIES AS OBTAI NED FROM THE SITE OF MINISTRY OF COMPANY AFFAIRS. LD. AR ARGUED THAT THE CURRENT ADDRESS OF THESE SHA RE HOLDERS WERE PROVIDED TO THE ASSESSING OFFICER AS REPRODUCE D BY THE ASSESSING OFFICER IN PARA (3) OF THE ASSESSMENT ORD ER IN RESPONSE TO THE ASSESSING OFFICERS REQUIREMENT DURING ASSESS MENT PROCEEDINGS. BY PRODUCING ALL THE DETAILS THE APPEL LANT HAS DISCHARGED ITS ONUS CAST UPON IT U/S 68 OF L.T. ACT 1961. II) AS PER THE ASSESSMENT ORDER NOTICE U/S 133(6) WAS ISSUED TO THESE INVESTING COMPANIES. THE ONLY OBSERVATION OF THE ASSESSING OFFICER IS THAT THESE INVESTING COMPANIES HAVE NOT SUBMITTED THESE INFORMATION IN TIME. IT MEANS THE R EQUIRED IN FORMATION WERE SUBMITTED IN RESPONSE TO NOTICE U/S 133(6) BY THE INVESTING COMPANIES. THEREFORE EVEN AFTER INDE PENDENT VERIFICATION THERE WAS NO ADVERSE FINDING AGAINST THE DOCUMENTARY EVIDENCE EVEN THEN LD. ASSESSING ASKED THE ITA NO.283 & 284/DEL/2015 9 APPELLANT TO PRODUCE THE DIRECTORS OF THESE SHARE H OLDER COMPANIES. THE DIRECTORS AND THESE COMPANIES ARE ST ATIONED AT KOLKATA & MUMBAI. THEREFORE THE DIRECTORS OF THESE SHARE HOLDER COMPANIES COULD NOT BE PRODUCED. THE APPELLANT HAS TRIED ITS BEST TO PRODUCE THE AUTHORIZED REPRESENTATIVE OF FE W COMPANIES AS ACCEPTED BY THE LD. ASSESSING OFFICER ALSO. THE LD. ASSESSING OFFICER HAS NOT ISSUED ANY SUMMONS / COMMISSIONS TO THESE DIRECTORS THOUGH SPECIFICALLY REQUESTED BY THE APP ELLANT. FURTHER THE ASSESSING OFFICER HAS REQUESTED TO PRO DUCE THE DIRECTORS WITH ADEQUATE EVIDENCES. THE ASSESSING OF FICER WHILE GIVING THE OPPORTUNITY TO PRODUCE THE DIRECTORS HAS NOT MENTIONED WHAT DOCUMENTS ARE REQUIRED BY HIM TO ESTABLISH THE TRANSACTIONS IN ADDITION TO WHAT WAS ALREADY SUBMIT TED. III) ON THE ENQUIRY MADE BY KOLKATA INVESTIGATION DIRECTORATE ABOUT NONE EXISTENCE OF M/S BBCCPL LD. AR HAS MADE WRITTEN SUBMISSION AS UNDER:- A) IN PARA 5.1 AT PAGE 7 OF THE ORDER THE ASSESSIN G OFFICER HAS REFERRED TO HIS EFFORTS THROUGH INVESTIGATION WING KOLKATA TO GET THE BUSINESS ACTIVITIES OF M/S BBCCPL KOLKATA VERI FIED. HE HAS ALSO REFERRED TO THE WINGS REPORT TO THE EFFECT TH E SAID CONCERN DOES NOT EXIST AT THE GIVEN ADDRESS. FROM THIS REPO RT LD. AO PRESUMED THAT M/S BBCCPL WAS A MERE PAPER ENTITY. IT IS SUBMITTED THAT THE SAID BBCCPL KOLKATA IS TH E SHORT NAME OF M/S BRIDGE & BUILDING CONSTRUCTION COMPANY PVT. LTD. WHICH IS ACTUALLY ONE OF THE 7 COMPANIES WHICH PAID A PA RT OF SHARE APPLICATION MONEY TO THE APPELLANT COMPANY ON BEHAL F OF AND AT THE DIRECTION OF M/S TOPGRAIN MERCANTILE PRIVATE LT D. (I.E. THE ACTUAL INVESTING COMPANY). ITA NO.283 & 284/DEL/2015 10 AS PER THE INFORMATION AVAILABLE IN OUR RECORDS TH E SAID COMPANY EXISTS AT KOLKATA AT THE ADDRESS 90-B SHYA MA PRASAD MUKHERJEE ROAD KOLKATA-700 026. THE INVESTING COMP ANY M/S TOPGRAIN MERCANTILE PRIVATE LTD. HAS FURNISHED TO T HE AO A CERTIFIED COPY OF LEDGER ACCOUNT OF THE SAID PARTY. PERUSAL OF THE SAID LEDGER ACCOUNT SHOWS THAT THE INVESTING COMPAN Y HAD SOLD TO IT SHARES AGAINST WHICH M/S BRIDGE & BUILDING C ONSTRUCTION COMPANY PVT. LTD. TRANSFERRED THE SALE CONSIDERATIO N THEREOF AMOUNTING TO ' 57.30 CRORES TO THE APPELLANT COMPAN Y THROUGH RTGS AT THE DIRECTION OF M/S TOPGRAIN MERCANTILE PR IVATE LTD. AS AN EVIDENCE OF THE SAID RTGS TRANSFER THE INVESTIN G COMPANY HAS ALSO SENT TO THE AO A COPY OF BANK ACCOUNT STAT EMENT OF A/C NO. 253010200002103 OF M/S BBCCPL KOLKATA IN AXIS BANK. THE SAID BANK ACCOUNT STATEMENT SHOWS THAT CUSTOMER NO. OF M/S BBCCPL KOLKATA IS 2530026 73 AND ITS ADDRESS I S 90-B SHYAMA PRASAD MUKHERJEE ROAD KOLKATA WEST BENGAL- 700026. THE INVESTING COMPANY HAS ALSO FILED WITH T HE AO A COPY OF OD LIMIT ACCOUNT NO. 01052320005783 OF M/S BBCCPL KOLKATA IN SOME OTHER BANK (NAME IS NOT LEGIBLE IN THE PHOTOCOPY) ITS BRANCH BEING AT U.N. BRAHAMCHARI ST REET CONSLANTTA BUILDING II DR. U.N. BRAHAMCHARI STREET KOLKATA- 700017( PHONE NO. 2210 3838). THIS OD LIMIT ACCOUNT STATEMENT SHOWS THAT CUSTOMER ID OF M/S BRIDGE & BUILDING CON STRUCTION COMPANY PVT. LTD. IS 33816018 AND THAT ITS ADDRESS IS 90-B SHYAMA PRASAD MUKHERJEE ROAD KOLKATA WEST BENGAL- 700026. THE ABOVE EVIDENCE PROVES IN ADEQUATE MEASURE THAT M/S BBCCPL KOLKATA DOES EXIST AND IS VERY MUCH A GENUI NE ENTITY. IT FURTHER PROVES THAT THERE IS NOTHING ABNORMAL AB OUT THE IMPUGNED TRANSACTION BETWEEN THE INVESTING COMPANY AND M/S ITA NO.283 & 284/DEL/2015 11 BBCCPL KOLKATA. IT IS NOT KNOWN AS TO AT WHICH DEFUNCT/DISCARDED/OLD ADDRESS OF THE SAID PARTY TH E INVESTIGATION WING PEOPLE WERE SEARCHING FOR THE SA ID BBCCPL KOLKATA WHICH WAS EXISTING WELL BEFORE THEIR EYES! IN VIEW OF THE ABOVE FACTS IT IS SUBMITTED THAT TH ERE IS NO SUBSTANCE IN THE ASSERTION OF THE AO THAT M/S BRIDG E & BUILDING CONSTRUCTION COMPANY PVT. LTD. IS A NON-EXISTENT CO MPANY. ABOVE ALL THE AO IS NOT LEGALLY CORRECT IN TAKING COGNIZANCE OF ANY REPORT OF THE INVESTIGATION WING WITHOUT CONFRO NTING THE SAME TO THE ASSESSEE AND WITHOUT SEEKING ITS EXPLA NATION THEREON. THIS REPORT WAS NEVER CONFRONTED TO US. DE CIDING ANY ISSUE ON THE BASIS OF AN UN-CONFRONTED REPORT/EVIDE NCE WOULD BE AGAINST ALL CANONS OF NATURAL JUSTICE. IV) LD. AR ARGUED THAT THE ASSESSING OFFICER HAS WR ONGLY RELIED ON THE BANK ENQUIRY TO PROVE THAT THE ALLEGED SHARE HOLDER HAS RECEIVED FUND FROM VARIOUS COMPANY WHICH IN TURN RE CEIVED MONEY FROM LAYERS OF CONCERNS AND CONCLUDED ON THAT BASIS THAT ALL THESE LAYERS OF TRANSFER OF FUND THAT THESE ACC OMMODATION ENTRIES IN NATURE & NOT A GENUINE TRANSACTION. LD. AR ARGUED THAT ALL THE TRANSACTIONS WERE THROUGH BANKING CHAN NELS I.E. THROUGH CHEQUES. THEREFORE THE FUND FLOW IS PRECIS ELY TRACEABLE. THE ASSESSING OFFICER NOWHERE HAS FOUND THAT THERE IS CASH DEPOSIT IN BANK ACCOUNTS IN ANY ALLEGED LAYER OF TR ANSFER OF FUND. IF THERE WOULD HAVE BEEN CASH DEPOSIT IN ANY BANK A CCOUNTS IN ANY LAYER THAT COULD HAVE SUSPECTED THE PLOUGH BACK OF UNACCOUNTED MONEY OF THE APPELLANT. THE APPELLANT I N HIS REPLY IN RESPONSE TO LETTER OF THE ASSESSING OFFICER DT. 10.03.2014 HAS MADE SUBMISSION THAT THE ENTIRE TRANSACTION ARE THR OUGH BANKING CHANNEL IN FORM OF CHEQUES. IN ABSENCE OF SUCH CASH DEPOSIT IN ANY BANK ACCOUNT IN ANY LAYER BANK ENQUI RY PROVES ITA NO.283 & 284/DEL/2015 12 THAT ALL THE TRANSACTION ARE THROUGH TRACEABLE BANK ACCOUNTS OF IDENTIFIED & GENUINE CONCERNS. ALL THESE CONCERNS A RE TAXABLE IDENTITY. THERE IS NO STATEMENT OR EVIDENCE THAT EV EN THESE CONCERNS ARE BOGUS OR FICTITIOUS WHICH EXPLAINS THE SOURCE OF THE CAPITAL INTRODUCED IN MULTIPLE BACK LAYERS. THEREFO RE THESE BANK ENQUIRIES DO NOT IN ANY WAY GO AGAINST THE APPELLAN T & THE CONCLUSION ON THE BASIS OF THESE BANK ENQUIRIES ARE MERELY HYPOTHESIS OF THE ASSESSING OFFICER THAT THESE CONC ERNS ARE USED FOR ACCOMMODATION ENTRIES. V) LD. ASSESSING OFFICER HAS HELD THAT THESE INVES TMENT COMPANIES ACCOUNTS HAVE VERY MEAGER PROFIT ACCOUNTS & HAS CONCLUDED ON THIS BASIS THAT THE SUCH MEAGER INCOME CANNOT EXPLAIN SUCH SHARE INVESTMENT IN APPELLANT COMPANIE S. LD. AR ARGUED THAT THE SHARE INVESTMENT IN APPELLANT COMPA NY IS DULY DISCLOSED IN THE BALANCE SHEET OF SHARE INVESTMENT COMPANIES WHICH EXPLAINS THE SOURCE OF THESE INVESTMENTS. THE ASSESSING OFFICER HIMSELF HAS MADE BANK ENQUIRY OF THESE INVE STMENT COMPANIES. THE SOURCE OF SOURCE UPTO FOURTH LAYER H AS BEEN FOUND THROUGH BANKING CHANNEL & ALL THOSE ENTITIES ARE DISCLOSING THESE ENTRIES IN THE BALANCE SHEET FILED WITH INCOME TAX DEPARTMENT. FURTHER LD. AR ARGUED THAT IT IS N ORMAL PRACTICE IN FINANCE BUSINESS THAT IT BORROWS FUND & ADVANCES TO OTHERS. THEREFORE NECESSARILY THE INVESTMENT IS NOT OUT OF INCOME DECLARED BUT ALSO FROM ITS BORROWED FUND OR ITS OWN FUND. DECLARING LOW PROFIT CANNOT BE THE BASIS FOR CONCLU DING THAT THERE ENTRIES IN THE BALANCE SHEET FILED WITH THE INCOME TAX DEPARTMENT RE FICTITIOUS. HENCE LD.AR ARGUED THAT T HE ENTIRE BANK ENQUIRIES & ANALYSIS OF INCOME BY THE ASSESSIN G OFFICER IS NO WAY PROVES THAT THESE ARE FICTITIOUS ENTRIES. - - - - - - - - - - - - - - - - - - - - - - -. ITA NO.283 & 284/DEL/2015 13 7. THE LD. CIT (A) AFTER CONSIDERING THE FACTS AND MATERIAL BROUGHT ON RECORD AND OBSERVED THAT THE MAIN GROUN D TAKEN BY THE ASSESSING OFFICER FOR MAKING THE ADDITION IS IN THE FOLLOWING MANNER: A) THERE IS HARDLY ANY CHANGE IN INVESTMENT IN THE BALANCE SHEET OF M/S TVH TRADING CO. PVT. LTD. TOPGRAIN ME RCANTILE PVT. LTD. & GODSEND BIO TECH LTD. AS ON 31.03.2010 & 31. 03.2011 WHEREAS DURING THE FINANCIAL YEAR 2010-11 THERE C OMPANIES HAVE MADE MAJOR INVESTMENT IN APPELLANT COMPANY. B) THE ASSESSING OFFICER HAS RELIED ON THE ENQUIRY CONDUCTED BY THE INVESTIGATION WING OF KOLKATA THAT M/S BBCCPL I S NOT ANY EXISTING COMPANY WHICH HAS PAID THE SHARE CAPITAL & SHARE PREMIUM ON BEHALF OF M/S. TOPGARAIN MERCANTILE PVT. LTD. C) THEREFORE CONCLUDED THAT THESE SHARE CAPITAL I NTRODUCED ARE NOTHING BUT. IN SUPPORT OF THIS CONTENTION LD. ASSE SSING OFFICER HAS FURTHER TABULATED THE INCOME AS PER PROFIT & LO SS ACCOUNTS OF THESE SHARE HOLDERS WHICH ARE VERY MEAGER COMPARED TO THE SHARE INVESTMENT MADE. D) THE APPELLANT HAS FAILED TO PRODUCE THE DIRECTOR S OF THESE SHARE HOLDERS COMPANY AND APPLIED JUDICIAL PRONOUNC EMENTS OF VARIOUS COURTS INCLUDING THE CASE OF N.R. PORTFOLIO PVT. LTD. CITED SUPRA & OTHER DECISION WHERE IT HAS BEEN HELD THAT THE ASSESSEE BEING A PVT. LTD. COMPANY & SHARE ARE ISSUED TO KNO WN PERSON & NOT THOUGH PUBLIC OFFER THE CONTROLLING PERSON O F SUCH SHARE HOLDERS ARE WITHIN THE ARMS LENGTH OF THE ASSESSEE AND THE ASSESSEE HAS TO PRODUCE SUCH CONTROLLING PERSON TO DISCHARGE THE ONUS U/S 68 OF I.T. ACT. ITA NO.283 & 284/DEL/2015 14 8. THEREAFTER HE HAS SUMMARIZED THE ARGUMENTS OF T HE ASSESSEE IN THE FOLLOWING MANNER: A) THE APPELLANT HAS SUBMITTED DURING THE ASSESSMEN T PROCEEDINGS COMPLETE S DOCUMENTARY EVIDENCES INFORM OF SHARE APPLICATION AUDIT REPORT OF THESE SHAREHOLDERS PH OTOCOPY OF SHARE APPLICATION FORM BOARDS RESOLUTION TO INVES TMENT IN APPELLANTS COMPANY COPY OF INCOME TAX RETURN COP Y OF RETURN OF ALLOTMENT OF SHARES COPY OF BANK STATEMENT ETC. TO ESTABLISH THE GENUINENESS OF SHARE TRANSACTION. B) DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT HAS FILED CURRENT ADDRESS OF ALL THESE SHAREHOLDER COMPANIES. LD. ASSESSING OFFICER HAS STATED THAT NOTICE U/S 133(6) ISSUED. LD.AO HAS ONLY REMARKED THAT THE REPLY WAS NOT RECEIVED I NTIME. IT MEANS THAT THE INVESTORS HAVE REPLIED IN RESPONSE TO NOTICE U/S 133(6) C) LD. AO HAS REFERRED ENQUIRY CONDUCTED BY THE INV ESTIGATION WING ABOUT THE NONE EXISTENCE OF THE COMPANY M/S BB CCPL KOLKATA LD. AR ARGUED THAT THE CURRENT ADDRESSES OF M/S BBCCPL (BRIDGE & BUILDING CONSTRUCTION CO. PVT. LTD ) WAS 90B SHYAMA PRASAD MUKHERJEE ROAD KOLKATA AS MENTIONED IN BANK ACCOUNT NO. 253010200002103 IN AXIS BANK. THIS ADDR ESS WAS COMMUNICATED TO THE ASSESSING OFFICER. THIS PROVES THAT THE COMPANY EXISTED AT THE SAID ADDRESS. DURING THE ASS ESSMENT PROCEEDING THE CONTENTS OF REPORT WAS NOT CONFRONTE D TO THE APPELLANT. D) LD. AR ARGUED THAT ENQUIRY OF BANK ACCOUNT OF IN VESTING COMPANIES & THEIR TRAIL OF FUND RELIED BY THE ASSES SING OFFICER IN NO WAY PROVES THAT THE CAPITAL INTRODUCED BY THE SH ARE HOLDER COMPANIES ARE BOGUS. IN THE ENTIRE ANALYSIS OF FUND TRANSFER THE ITA NO.283 & 284/DEL/2015 15 ASSESSING OFFICER HAS NOT FOUND ANY CASH DEPOSIT IN ANY BANK ACCOUNTS. THEREFORE THERE IS NO POSSIBILITY OF INT RODUCING APPELLANTS OWN CASH TO CONVERT INTO SHARE CAPITAL. THE LD. ASSESSING OFFICERS RELIANCE THAT THESE INV ESTING COMPANIES HAVE DECLARED VERY MEAGER PROFIT ALSO IN NO WAY PROVE THAT THE TRANSACTION ARE IN GENUINE AS ALL THE FUND IN THESE INVESTING COMPANIES ARE PROPERLY REFLECTED IN THE B ALANCE SHEET FILED WITH INCOME TAX DEPARTMENT. IT IS NORMAL PRAC TICE IN FINANCE BUSINESS TO BOROUGH THE FUND & INVESTS THE SAME TWO OTHER. E) LD. AR ARGUED THAT THE APPELLANT HAS DISCHARGED ITS ONUS BY SUBMITTING ALL DOCUMENTARY ANY EVIDENCES IN SUPPORT OF GENUINENESS OF TRANSACTION & IDENTITY OF SHAREHOLDE RS & THEIR CAPACITY TO INVEST. THE APPELLANT HAS PROVIDED CURR ENT ADDRESS OF THE INVESTING COMPANIES AND ALL THESE INVESTING COM PANIES HAVE SUBMITTED ALL THE EVIDENCES REQUIRED BY THE ASSESSI NG OFFICER IN DEPENDENTLY IN RESPONSE TO NOTICE U/S 133(6) IN THE OFFICE OF THE ASSESSING OFFICER. THE LD. ASSESSING OFFICER HAS MA DE NO ENQUIRY TO DISPROVE THE EVIDENCE FILED INDEPENDENTLY BY THE SE COMPANIES AT THE NEW ADDRESSES. THEREFORE THE ASSESSING OFFI CER HAS NOT FOUND ANY ERROR IN THE SUBMISSION MADE BY THE APPEL LANT. IN THAT CASE THE ONUS TO DISPROVE THE DETAILS FILED BY THE APPELLANT LIED WITH THE ASSESSING OFFICER. IN THAT CIRCUMSTANCE O NUS WAS NOT ON THE ASSESSEE TO PRODUCE THE DIRECTOR OF THESE SHARE APPLICANT COMPANIES. THE DIRECTORS & THE INVESTING COMPANIES ARE STATIONED OUTSIDE DELHI NAMELY IN KOLKATA & MUMBAI. THE ASSESSING OFFICER HAS NOT ISSUED SUCH COMMISSION TO ENFORCE ATTENDANCE. UNDER THESE CIRCUMSTANCES RELIANCE OF T HE ASSESSING OFFICER TO DISCHARGE ONUS TO PRODUCE DIRECTORS U/S 68 AS PER VARIOUS JUDGMENT SUCH AS N.R. PORTFOLIO PVT. LTD. C ITED SUPRA & ITA NO.283 & 284/DEL/2015 16 OTHER DECISION ARE MISPLACED. IN THOSE CASES THE A SSESSING OFFICER HAS GIVEN ADVERSE FINDING ON THE INITIAL EV IDENCES PRODUCED BY THE APPELLANT THEN ONUS SHIFTED BACK T O THE ASSESSEE. F) LD AR ARGUED THAT TOTAL INVESTING SHOWN IN THE BALANCE SHEET IN ALLEGED SHARE HOLDER COMPANIES AS ON 31.03.2010 IN ALLEGED SHARE HOLDER COMPANIES AS ON 31.03.2011 ARE IN SAME LEVEL AS CLAIMED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DOES NOT AFFECT THE GENUINENESS OF INVESTMENT IN APPELLA NT COMPANY AS THESE SHARE HOLDER COMPANIES MIGHT HAVE CHANGED ITS INVESTMENT FROM ONE FORM TO ANOTHER. THIS ANALYSIS OF IS OF NO CONSEQUENCE TILL THE BALANCE SHEET OF THE SHARE HO LDER COMPANIES CONTAIN INVESTMENT IN APPELLANT COMPANIES . I AGREE WITH THESE ARGUMENTS OF LD. AR. LD. AR RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS SU CH AS STELLAR FINANCE & OTHER DECISION CITED SUPRA IN SUP PORT OF HIS ARGUMENT THAT THE APPELLANT HAS DISCHARGED ITS ONUS CAST UPON IT U/S.68. 9. AFTER CONSIDERING THE SUBMISSIONS AND EXPLANATIO N FILED BY THE ASSESSEE HE DELETED THE ADDITIONS ON THE GR OUND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEE HAD SUBMITTED ALL THE EVIDENCES TO PROVE THE IDENTI TY GENUINENESS AND CREDITWORTHINESS OF THREE PARTIES A ND REGARDING OTHER OBSERVATIONS OF THE AO HIS FINDINGS ARE AS UNDER: THE ASSESSING OFFICER HAS ISSUED NOTICES U/S 133(6 ) TO THESE SHARE HOLDER COMPANIES AND APPARENTLY RECEIVED THE REPLY ON THE ITA NO.283 & 284/DEL/2015 17 ASSESSING OFFICER AS HE HAS ONLY SAID THAT THE REPL Y WAS NOT RECEIVED IN TIME. IT MEANS THE REPLY MIGHT HAVE BEE N RECEIVED LATE. AT LEAST THERE IS NOT FINDING THAT THE REPLY WAS NOT RECEIVED. LD. ASSESSING OFFICER HAS RELIED ON THE REPORT OF T HE REPORT OF THE INVESTIGATION WING KOLKATA ON THE FINDING THAT M/S. BBCCPL IS NOT EXISTING. THE APPELLANT WAS NOT GIVEN AN OPPORT UNITY TO REBUT THE SAME. THE INVESTIGATION WING REPORT IS NOT PART OF THE ASSESSMENT ORDER. IT IS NOT CLEAR WHAT EVIDENCE OR STATEMENTS WERE GATHERED BY THE INVESTIGATION WING KOLKATA. I N ABSENCE OF SUCH DETAILS I DO NOT THINK THAT THIS COMMENTS PRO VE THE NON EXISTENCE OF M/S. BBCCPL. SECONDLY IN APPELLANT CO MPANY THE INVESTOR IS M/S. TOPGRAIN MERCANTILE PVT. LTD. THE PAYMENT IS MADE BY M/S. BBCCPL TO THE APPELLANT COMPANY ON BEH ALF OF M/S. TOPGRAIN MERCANTILE PVT. LTD. ON ACCOUNT OF CE RTAIN SALE OF INVESTMENT IN M/S TOPGRAIN MERCANTILE PVT. LTD. THE APPELLANT HAS GIVEN ALL DOCUMENTARY EVIDENCES IN SUPPORT OF G ENUINENESS OF M/S. TOPGRAIN MERCANTILE PVT. LTD. RELIANCE ON THE BANK ENQUIRY & CASH TRAIL BY THE AS SESSING OFFICER THAT THESE SHARE CAPITAL INTRODUCED IS AN A CCOMMODATION ENTRY IS ALSO NOT CONVINCING AS IN THE SAID ENQUIRY NO WHERE CASH DEPOSIT IN ANY BANK ACCOUNT HAS BEEN FOUND APP ARENTLY IN ANY LAYER OF THE FUND CIRCULATION. ALL THE TRANSFER OF FUND IS THROUGH BANK TRANSFER FROM SEPARATE ENTITIES I.E. I DENTIFIABLE ENTITIES & NO PERSON HAS BEEN EXAMINED TO GET ANY A DVERSE INFERENCE. IN THAT CASE TRANSFER OF FUND AT VARIOUS LAYERS DOES NOT PROVE THAT THESE TRANSFER OF FUND AMOUNTS TO ACCOMM ODATION ENTRIES. SIMILARLY DECLARATION OF SMALL PROFIT BY THE SHARE HOLDING COMPANIES RELIED BY THE ASSESSING OFFICER TO PROVE NON GENUINENESS OF THE TRANSACTION IS ALSO NOT CONVINCI NG AS THESE ITA NO.283 & 284/DEL/2015 18 SHARE INVESTMENTS ARE REFLECTED IN THE BALANCE SHEE T WHICH EXPLAINS THE SOURCE & THESE BALANCE SHEET HAVE BEE N FILED WITH THE INCOME TAX DEPARTMENT. THE APPELLANT HAS FILED ALL RELEVANT DOCUMENTARY EV IDENCE IN SUPPORT GENUINENESS OF SHARE CAPITAL AND CREDITWORT HINESS OF SHARE HOLDERS. THE ASSESSING OFFICER AS PER HIS VERSION HAS ISSUED NOTICE U/S 133(6) TO INVESTOR. THE ASSESSING OFFICER ONLY SAYS THAT REPLY IS NOT RECEIVED IN TIME. THERE IS N O ADVERSE FINDING EVEN AFTER THE ISSUANCE OF NOTICE U/S 133(6 ) I.E. EITHER THESE NOTICES ARE RETURNED BACK OR NOT REPLIED. THE REFORE WITHOUT DISPROVING THESE EVIDENCES FILED BY APPELLANT ONUS WILL NOT SHIFT BACK TO THE APPELLANT. UNDER THESE CIRCUMSTANCES E VEN THE DECISION OF HONABLE HIGH COURT OF DELHI IN THE CAS E OF N.R. PORTFOLIO PVT. LTD. WILL NOT HELP THE CASE AS IN THAT CASE THE ASSESSING OFFICER HAS MADE ENQUIRY TO DISPROVE APPA RENTLY THE EVIDENCES FILED BY THE ASSESSEE THEN THE DECISION WAS GIVEN THAT THE ONUS WAS SHIFTED BACK ON THE ASSESSEE TO P RODUCE DIRECTORS. IN PRESENT FACTS & CIRCUMSTANCES OF THE CASE THE D ECISION RELIED BY THE LD. AR NAMELY THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF STELLER FINANCE LTD. AND DECISION OF JU RISDICTIONAL HIGH COURT IN THE CASE OF NIPUAN AUTO (P) LTD CITED SUPRA APPEARS TO BE MORE APPLICABLE THAT THE APPELLANT HA S DISCHARGED ONUS CAST UPON IT U/S 68 TO PROVE THE SHARE CAPITAL . CONSIDERING ENTIRE FACTS & CIRCUMSTANCES OF THE CASE IN MY VIE W THE APPELLANT HAS DISCHARGED ITS ONUS TO PROVE THE SHAR E CAPITAL INTRODUCED. ACCORDINGLY I DELETE THE ADDITION MADE U/S 68 IN RESPECT OF SHARE CAPITAL ADDED FOR BOTH THE ASSESSM ENT YEARS. THESE GROUNDS OF APPEAL ARE ALLOWED. ITA NO.283 & 284/DEL/2015 19 10. WE HAVE HEARD RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES AS WELL AS RELEVANT MATERIAL PLACED ON RECO RD AND MATERIAL REFERRED TO BEFORE US AT THE TIME OF HEARI NG. THE LD. CIT-DR REFERRED TO THE VARIOUS OBSERVATIONS MADE BY THE ASSESSING OFFICER AND POINTED OUT THAT HE HAS NOT O NLY CONDUCTED DETAILED ENQUIRY BUT ALSO HAS COUNTERED E ACH AND EVERY EXPLANATION OF THE ASSESSEE AND AFTER EXAMINI NG THE PERSONS CALLED UPON BY HIM HAS REACHED TO THE CONCL USION THAT ASSESSEES EXPLANATION COULD NOT BE SUBSTANTIA TED HAVING REGARD TO THE NATURE AND SOURCE OF THE CREDIT APPEA RING IN THE ACCOUNT OF THE ASSESSEE. IN HIS WRITTEN SUBMISSION ALSO HE HAS REITERATED THE OBSERVATIONS MADE BY THE AO AND THE ENQUIRIES CONDUCTED BY HIM. 11. ON THE OTHER HAND LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE ASSESSEE- COMPANY HAS FILED VARI OUS EVIDENCES TO PROVE THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF THE INVESTORS/ SUBSCRIBERS TO T HE SHARE CAPITAL WHICH WERE AS UNDER: A) PHOTOCOPY OF SHARE APPLICATION FORMS DULY FILLED I N AS SUBMITTED BY THE INVESTING COMPANIES TO THE ASSESSEE COMPANY WHILE APPLYING FOR SHARES. B) CERTIFIED TRUE COPY OF BOARD RESOLUTIONS PASSED B Y BOARD OF DIRECTORS OF THE RESPECTIVE COMPANIES IN RESPECT OF INV ESTMENT TO BE MADE IN THE SHARES OF THE ASSESSEE COMPANY. C) PHOTOCOPIES OF PAN CARDS OF ALL THE INVESTING COM PANIES AS ISSUED BY THE INCOME TAX DEPARTMENT GOVT. OF INDIA. ITA NO.283 & 284/DEL/2015 20 D) AUDIT REPORTS ALONGWITH PHOTOCOPIES OF FINAL ACCO UNTS I.E. BALANCE SHEETS PROFIT & LOSS ACCOUNTS COMPLETE WITH THE SCHEDULES OF THE INVESTING COMPANIES. E) PHOTOCOPIES OF MEMORANDUM AND ARTICLES OF ASSOCI ATION OF THE SAID COMPANIES WITH CERTIFICATES OF INCORPORATION. F) BANK ACCOUNT STATEMENTS OF THE INVESTING COMPANIES F OR THE RELEVANT PERIOD. G) ALLOTMENT ADVICE ISSUED BY THE ASSESSEE COMPANY G IVING DETAILS OF THE ALLOTMENT OF SHARES AGAINST THE SHARE AP PLICATION MONEY RECEIVED INDICATING FOLIO NO. CERTIFICATE NUMBE R NUMBER OF SHA RES ALLOTTED COMPLETE WITH DISTINCTIVE NUMBERS AND AMOUNT RECEIVED AGAINST SUCH SHARE ALLOCATION. H) PHOTOCOPY OF ACKNOWLEDGMENT PORTION OF INCOME TAX RETURNS (ITRS) ALONGWITH STATEMENT OF INCOME OF THE INVESTING COMPANIES. I) FRESH ADDRESSES (WHEREVER APPLICABLE) OF THE INV ESTING COMPANIES FOR FACILITATING DIRECT CORRESPONDENCE WITH THEM ON INDEPENDENT LEVEL BY THE DEPARTMENT. J) COPIES OF EQUITY SHARE CERTIFICATES ISSUED TO THE I NVESTORS K) COPY OF RETURN OF ALLOTMENTS (OF SHARES) FILED BY T HE ASSESSEE COMPANY WITH THE ROC IN FORM 2 (PURSUANT TO SECTION 75( 1) OF THE COMPANIES ACT 1956). L) COPIES OF MCA21: COMPANY MASTER DETAILS AND COMPANY/LLP MASTER DATA OF ALL THE INVESTING COMPANIES AS OBTAINED FROM THE SITE OF MINISTRY OF COMPANY AFFAIRS . THESE DOCUMENTS HAVE ALSO BEEN PLACED IN THE PA PER BOOK BEFORE US. ITA NO.283 & 284/DEL/2015 21 12. LD. COUNSEL FURTHER SUBMITTED THAT THE ASS ESSING OFFICER HAS COMPLETELY IGNORED THESE DOCUMENTARY EV IDENCES ALL TOGETHER AND THERE IS NO WHISPER OF DISCUSSION BY HIM NOR THE SAME HAS BEEN REJECTED OR ANY ADVERSE VIEW HAS BEEN TAKEN. THE SECTION 68 CAST ONUS UPON THE ASSESSEE T O ESTABLISH IDENTITY CREDITWORTHINESS OF THE SHARE A PPLICANTS AND GENUINENESS OF THE TRANSACTION WHICH WAS DULY C OMPLIED WITH AND THE ONUS WAS DISCHARGED. HE HAS ALSO GIVEN HIS REBUTTAL TO THE VARIOUS OBSERVATIONS OF THE ASSESSI NG OFFICER WHICH ARE VERY RELEVANT ARE SUMMARIZED HEREUNDER: REPLY TO NOTICE ISSUED U/S 133(6) WAS NOT RECEIVED ON TIME . THE LD. AO ON PAGE 3 PARA 4 STATED THAT NOTICE U/S 133(6) DATED 27/01/2014 WAS ISSUED TO FILE REPLY BY 05/02/ 2014 HOWEVER REPLIES WERE NOT RECEIVED ON THE GIVEN DATE . IN THIS REGARD WE SUBMIT THAT AO SOUGHT LOT OF INFORMATION WITHIN A PERIOD OF ONE WEEK FROM THE PARTIES WHO ARE SITUA TED AT KOLKATA. IT IS NOT THE CASE THAT THE SAID NOTICE WA S NOT COMPLIED BY THESE PARTIES. THE LD. AO ON PAGE 15 PA RA 8.4 HAS ADMITTED THE FACT THAT THE DETAILS WERE RECEIVE D IN RESPONSE TO NOTICE U/S 133(6). MERELY NON-RECEIPT O N DETAILS WITHIN THE GIVEN PERIOD CANNOT BE THE REASO N TO SUSPECT THE TRANSACTION. THE RESPECTIVE PARTIES IN RESPONSE TO NOTICE U/S 133(6) FILED FOLLOWING DOCUMENTS WITH THE AO:- ITA NO.283 & 284/DEL/2015 22 (I) THEIR RESPECTIVE WRITTEN ACKNOWLEDGMENT TO THE EFFECT THAT EACH ONE OF THEM HAS MADE INVESTMENTS IN THE SHARES OF THE ASSESSEE COMPANY. (II) PAN DETAILS (III) ASSESSMENT DETAILS IN RESPECT OF INCOME TAX ASSESSMENTS. (IV) THEIR RESPECTIVE COMPLETE NAME AND ADDRESS. T HE ADDRESS OF M/S TOPGRAIN MERCANTILE PRIVATE LTD. AND THAT OF M/S TVH TRADING COMPANY PVT. LTD IS PD-107 APARNA APARTMENT KRISHNA PUR SAMAR PALLY NEAR MILAN BAZAAR KOLKATA-700 102. ADDRESS OF M/S GODSEND BIOTECH PRIVATE LTD. IS AMBIKA SILK MILLS COMPOUND PLOT NO. 11-12 SENAPATI BAPAT MARG MAHALAXMI MUMBAI-400013 (V) CERTIFIED COPY OF LEDGER ACCOUNT OF THE ASSESSEE COMPANY FOR THE F.Y. 2010-11 AS IT EXISTED IN THE BOOKS OF ACCOUNTS OF E ACH OF THE INVESTING COMPANY. (VI) COPY OF COVERING LETTER THAT OF RESOLUTION OF BOARD OF DIRECTORS AND THAT OF SHARE APPLICATION FORM DU LY FILLED IN AND SIGNED BY THE INVESTING COMPANIES. (VII) COPY OF AUDIT REPORT AS SIGNED BY THE QUALIFI ED AUDITORS IN RESPECT OF ALL THE INVESTING COMPANIES. (VIII) COPIES OF DULY AUDITED FINAL ACCOUNTS VIZ. BALANCE SHEETS AS ON 31.03.2011 AND P & L ACCOUNTS FOR THE PERIOD 2010-11 (RELEVANT TO A.Y. 2011-12) (IX) COPIES OF THEIR RESPECTIVE INCOME TAX RETURNS FOR THE A.Y. 2011 -12 ITA NO.283 & 284/DEL/2015 23 (X) COPY OF RESPECTIVE MEMORANDUM AND ARTICLE OF ASSOCIATION OF THE RESPECTIVE INVESTING COMPANY. (XI) SHARE APPLICATION MONEY IN RESPECT OF M/S TOPGRAIN MERCANTILE PRIVATE LTD. HAD BEEN PAID BY CERTAIN OTHER GROUP COMPANIES SUCH AS M/S BRIDGE & BUILDING CONSTRUCTION COMPANY PVT. LTD. M/S PANCHWATI COMMOTRADE PVT. LTD. M/S VIRAT SOLUTIONS & SERVICES PVT. LTD. AND M/S PASSIONATE AGENCIES PVT. LTD. ETC. ON ITS BEHALF AS WELL AS ON ITS ASKING. THE SA ID INVESTING COMPANY HAS SENT/CERTIFIED COPY OF LEDGER ACCOUNTS OF ALL SUCH SISTER CONCERNS AS WELL. THEREFORE THE ABOVE REASON ASSIGNED BY THE LD. AO IS WITHOUT ANY BASIS AND SUPPORT. THE AO HAS NOT COMMENTED ANYTHING ON THE ABOVE DOCUMENTS. IT IS WORTHWHILE TO NOTE THAT HE DID NOT FIND FAULT WITH THE EVIDENCE FILED BY THE INVESTOR COMPANIES AS DETAIL ED ABOVE. NEITHER DID HE REJECT THE SAME BEFORE TAKING AN ADVERSE VIEW IN THE MATTER. ONCE THE ASSESSEE COMPA NY HAS FILED THE NECESSARY DOCUMENTS TO ESTABLISH IDEN TITY CREDITWORTHINESS OF THE SHARE APPLICANTS AS ALSO THE GENUINENESS OF THE TRANSACTIONS AND THE INVESTOR COMPANIES HAS CONFIRMED IT IN THE INDEPENDENT ENQUI RY DONE BY THE AO THEN WHERE IS THE QUESTION OF ADDIT ION UNLESS AO CONDUCT FURTHER VERIFICATION OF THE DOCUM ENTS. THERE IS NO CHANGE IN THE TOTAL INVESTMENT AMOUNT O F THESE INVESTEE COMPANIES DURING THE YEAR . ITA NO.283 & 284/DEL/2015 24 LD AO ON PAGE 3 PARA 4.2 STATED THAT THERE IS NOMIN AL CHANGE IN THE FIGURE OF INVESTMENT AS PER BALANCE S HEET OF M/S TVH TRADING CO. P LTD AND TOPGRAIN MERCANTILE P LTD. AND BASED ON THIS AO HELD THAT IT IS NOT VERIFIABLE WHETHER THESE COMPANIES INVESTED IN THE SHARES OF ASSESSEE COMPANY OR NOT. THE LD AO COMPLETELY IGNORED THE CONFIRMATION AND OTHER DETAILS FILED BY THE ASSESSE E COMPANY AS WELL AS BY THE INVESTOR COMPANIES. THERE COULD BE NUMBER OF REASONS FOR NO CHANGE IN THE INVESTMENT FIGURE OF THESE COMPANIES I.E. THEY MAY HAVE SOLD OLD INVESTMENT AND INVESTED IN THE SHARES OF A SSESSEE COMPANY. THEREFORE MERELY THERE IS NO CHANGE IN FI GURE OF INVESTMENT AT CLOSING OF TWO YEARS COMPARISON CANN OT BE REASON TO CONCLUDE THAT THESE COMPANIES HAVE NOT IN VESTED IN THE SHARES OF ASSESSEE COMPANY. ESPECIALLY IN TH E CASE WHEN THE PARTIES HAVE CONFIRMED THE TRANSACTIONS AN D IN SUBSEQUENT PARA LD. AO HIMSELF ADMITTED RECEIPT OF SHARE APPLICATION MONEY THROUGH BANKING CHANNEL. DIRECTORS OF THE INVESTEE COMPANIES NOT PRODUCED BE FORE AO ALONGWITH ADEQUATE DOCUMENTS : INSTEAD OF CONSIDERING THE DOCUMENTARY EVIDENCE FIL ED BY THE ASSESSEE COMPANY AS WELL AS BY THE INVESTEE COMPANIES THE ASSESSING OFFICER DIRECTLY ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE INVESTING COMPANIES BEFORE HIM FOR PERSONAL EXAMINATION. ALL THE DIRECTORS ARE BASED IN WEST BENGAL AND MUMBAI. THES E DIRECTIONS TO PHYSICALLY MAKE THEM PRESENT AT DELHI WERE ITA NO.283 & 284/DEL/2015 25 TOTALLY UNJUSTIFIED AND HIGH-HANDED SINCE IT WAS NE XT TO IMPOSSIBLE TO MAKE THE DIRECTORS AGREEABLE TO COME ALL THE WAY TO DELHI FROM KOLKATA/MUMBAI TO PRESENT THEMSEL VES BEFORE THE ASSESSING OFFICER. THE AO MADE VIRTUALLY NO EFFORT ON HIS LEVEL TO ENSURE PRESENCE OF THE DIREC TORS OF INVESTING COMPANIES BEFORE HIM. HE ISSUED NO SUMMONS DESPITE THE FACT THAT THE APPELLANT HAD GIVEN HIS I N WRITING THAT HE SHOULD DIRECTLY ISSUE SUMMONS TO THE DIRECT ORS BUT HE REMAINED UNMOVED. THE MORE PRACTICAL AND BETTER COURSE HOWEVER AVAI LABLE WITH LD. ASSESSING OFFICER WAS TO ISSUE COMMISSION U/S 131 (1 )(D) OF THE ACT IN FAVOUR OF SOME LOCAL INCO ME TAX AUTHORITY TO CONDUCT ENQUIRIES AS NONE OF THEM WAS A LOCAL RESIDENT. NO PERSONS RESIDING AT A DISTANCE OF MORE THAN 1500 KMS. CAN LEGALLY BE PRESSURIZED TO MAKE PERSON AL ATTENDANCE AT DELHI. HOWEVER THE ASSESSEE MADE SINCERE EFFORTS TO MAKE THEM AGREE TO THE SAID EXERCISE BUT DID NOT SUCCEED IN B RINGING THEM OVER TO DELHI. WE SUCCEEDED IN PRODUCING BEFOR E THE AO SHRI GOVIND AGRAWAL EX-DIRECTOR AND AUTHORISED REPREHENSIVE OF TWO OF THE INVESTING COMPANIES NAME LY M/S TVH TRADING CO. PVT. LTD. AND M/S TOPGRAIN MERCANTILE PVT. LTD. WE ALSO PRODUCED BEFORE THE AO SHRI PRAVIN NAYAK ADVOCATE AND AUTHORISED REPRESENTATIV E OF M/S GODSEND BIOTECH LTD. THE AO RECORDED THE STATEM ENT OF PERSONS PRESENTED BEFORE HIM. THEY ACKNOWLEDGED THAT THESE COMPANIES HAD MADE INVESTMENT IN THE SHARES O F THE ITA NO.283 & 284/DEL/2015 26 APPELLANT COMPANY. THIS FACT WAS ACKNOWLEDGED BY TH E LD AO ON PAGE 6 PARA 4.7 OF HIS ORDER. HOWEVER HE HELD THAT THE DIRECTORS WERE NOT CARRYING ADEQUATE DOCUMENTS TO PROVE THE TRANSACTION GENUINE. WHILE DIRECTING THE APPELLANT TO PRODUCE THE DIRECTORS OF THE INVESTING COMPANIES THE AO DID NOT GIVE ANY SPECIFIC LIST OF DOCUMENTS/RECORDS WHICH THEY SHOULD PRODUCE BEFORE HIM AND WHICH WOULD BE REQUIRED TO SATISFY HIM ABOU T THE GENUINENESS OF TRANSACTIONS. HIS DIRECTION THAT THE Y BE PRESENT BEFORE HIM WITH ADEQUATE DOCUMENTS SHOWS THAT LD. ASSESSING OFFICER WAS HIMSELF NOT SURE ABOUT TH E EXACT EVIDENCE WHICH HE WOULD BE REQUIRING FROM THE INVES TING COMPANIES TO SATISFY HIM. FURTHER THESE INVESTEE COMPANIES HAVE ALREADY FILED THE DESIRED DOCUMENT I N RESPONSE TO NOTICE U/S 133(6) OF THE ACT. SO WHAT F URTHER DOCUMENTS REQUIRED BY AO HAS NOT BEEN MENTIONED IN THE ORDER. M/S BBCCPL WHO REMITTED FUNDS ON BEHALF OF TOPGRAI N MERCANTILE PVT. LTD IS A NON-EXISTING COMPANY : IN PARA 5.1 AT PAGE 7 OF THE ORDER THE ASSESSING O FFICER HAS REFERRED TO HIS EFFORTS THROUGH INVESTIGATION W ING KOLKATA TO GET THE BUSINESS ACTIVITIES OF M/S BBCCP L KOLKATA VERIFIED. HE HAS ALSO REFERRED TO THE WING S REPORT TO THE EFFECT THE SAID CONCERN DOES NOT EXIST AT TH E GIVEN ADDRESS. FROM THIS REPORT LD. AO PRESUMED THAT M/S BBCCPL WAS A MERE PAPER ENTITY. ITA NO.283 & 284/DEL/2015 27 IT IS SUBMITTED THAT THE SAID BBCCPL KOLKATA IS TH E SHORT NAME OF M/S BRIDGE FT BUILDING CONSTRUCTION COMPANY PVT. LTD. WHICH IS ACTUALLY ONE OF THE 7 COMPANIES WHICH PAID A PART OF SHARE APPLICATION MONEY TO THE APPEL LANT COMPANY ON BEHALF OF AND AT THE DIRECTION OF M/S TO PGRAIN MERCANTILE PRIVATE LTD. (I.E. THE ACTUAL INVESTING COMPANY). AS PER THE INFORMATION AVAILABLE IN OUR RECORDS TH E SAID COMPANY EXISTS AT KOLKATA AT THE ADDRESS 90-B SHYA MA PRASAD MUKHERJEE ROAD KOLKATA-700 026. THE INVESTI NG COMPANY M/S TOPGRAIN MERCANTILE PRIVATE LTD. HAS FURNISHED TO THE AO A CERTIFIED COPY OF LEDGER ACC OUNT OF THE SAID PARTY. PERUSAL OF THE SAID LEDGER ACCOUNT SHOWS THAT THE INVESTING COMPANY HAD SOLD TO IT SHARES A GAINST WHICH M/S BRIDGE & BUILDING CONSTRUCTION COMPANY PV T. LTD. TRANSFERRED THE SALE CONSIDERATION THEREOF AMO UNTING TO RS. 57.30 CRORES TO THE APPELLANT COMPANY THROUG H RTGS AT THE DIRECTION OF M/S TOPGRAIN MERCANTILE PR IVATE LTD. AS AN EVIDENCE OF THE SAID RTGS TRANSFER THE INVESTING COMPANY HAS ALSO SENT TO THE AO A COPY OF BANK ACCOUNT STATEMENT OF A/C NO. 253010200002103 OF M/S BBCCPL KOLKATA IN AXIS BANK. THE SAID BANK ACCOUNT STATEMENT SHOWS THAT CUSTOMER NO. OF M/S BBCCPL KOLKATA IS 253002673 AND ITS ADDRESS IS 90-B SHYAM A PRASAD MUKHERJEE ROAD KOLKATA WEST BENGAL- 700026 . THE INVESTING COMPANY HAS ALSO FILED WITH THE AO A COPY OF OD LIMIT ACCOUNT NO. 01052320005783 OF M/S BBCCP L KOLKATA IN SOME OTHER BANK (NAME IS NOT LEGIBLE IN THE ITA NO.283 & 284/DEL/2015 28 PHOTOCOPY) ITS BRANCH BEING AT U.N. BRAHAMCHARI ST REET CONSTANTTA BUILDING II DR. U.N. BRAHAMCHARI STREET KOLKATA-700017 (PHONE NO. 2210 3838). THIS OD LIMIT ACCOUNT STATEMENT SHOWS THAT CUSTOMER ID OF M/S. BRIDGE & BUILDING CONSTRUCTION COMPANY PVT. LTD. IS 338160 18 AND THAT ITS ADDRESS IS 90-B SHYAMA PRASAD MUKHERJ EE ROAD KOLKATA WEST BENGAL- 700026. THE ABOVE EVIDE NCE PROVES IN ADEQUATE MEASURE THAT M/S BBCCPL KOLKATA DOES EXIST AND IS VERY MUCH A GENUINE ENTITY. IT FU RTHER PROVES THAT THERE IS NOTHING ABNORMAL ABOUT THE IMP UGNED TRANSACTION BETWEEN THE INVESTING COMPANY AND M/S BBCCPL KOLKATA. IT IS NOT KNOWN AS TO AT WHICH DEFUNCT/DISCARDED/OLD ADDRESS OF THE SAID PARTY TH E INVESTIGATION WING PEOPLE WERE SEARCHING FOR THE SA ID BBCCPL KOLKATA WHICH WAS EXISTING WELL BEFORE THE IR EYES! IN VIEW OF THE ABOVE FACTS IT IS SUBMITTED THAT TH ERE IS NO SUBSTANCE IN THE ASSERTION OF THE AO THAT M/S BRIDG E & BUILDING CONSTRUCTION COMPANY PVT. LTD. IS A NON-EX ISTENT COMPANY. ABOVE ALL THE AO IS NOT LEGALLY CORRECT I N TAKING COGNIGENCE OF ANY REPORT OF THE INVESTIGATION WING WITHOUT CONFRONTING THE SAME TO THE ASSESSEE AND WITHOUT S EEKING ITS EXPLANATION THEREON. THIS REPORT WAS NEVER CONF RONTED TO US. DECIDING ANY ISSUE ON THE BASIS OF AN UN-CON FRONTED REPORT/EVIDENCE WOULD BE AGAINST ALL CANONS OF NATU RAL JUSTICE. ITA NO.283 & 284/DEL/2015 29 ALL THE COMPANIES HAVE RECEIVED FUNDS FROM OTHER COMPANIES IMMEDIATELY BEFORE ISSUE OF CHEQUES TO TH E ASSESSEE COMPANY AND ALSO ANALYZED FUNDS TRAIL AND CONCLUDED THAT THE APPELLANT COMPANY HAS PLOUGHED B ACK ITS OWN MONEY IN THE BOOKS OF ACCOUNT IN THE GARB O F SHARE APPLICATION MONEY: LD AO ON PAGE 11-13 STATED THAT IN CASE OF ALL THRE E COMPANIES FUNDS WERE RECEIVED FROM OTHER COMPANIES IMMEDIATELY BEFORE ISSUE OF CHEQUES TO THE APPELLAN T COMPANY. THE SAID ALLEGATION OF THE LD AO IS COMPLE TELY WRONG WHICH CAN BE VERIFIED THE FUND TRAIL GIVEN ON PAGE 18-40 OF THE ASSESSMENT ORDER. ON PAGE 18 LD AO STA TED THAT ASSESSEE HAS RECEIVED A SUM OF RS. 42 35 00 00 0/- ON 13/07/2010 FROM GODSEND BIO-TECH LTD. HE FURTHER ST ATED THAT M/S GODSEND BIO-TECH LTD RECEIVED FUND OF RS. 30.11 CRORE FROM VARIOUS PARTIES FROM 11 /06/2010 TO 12/07/2010 DETAILS OF WHICH ARE AS UNDER:- DETAILS OF FUNDS RECEIVED BY GODSEND BIO-TECH LTD. FROM VARIOUS PARTIES (PAGE 18 -25 OF ASSESSMENT ORDER) AMOUNT REED. DATE OF RECEIPT NAME OF PARTY 50 00 000 11.06.10 S TOCK NET INT 50 00 000 11.06.10 ARTILLEGENCE BIO 50 00 000 14.06 .10 - 50 00 000 14.06.10 - 50 00 000 14.06.10 - 50 00 000 14.06.10 - 50 00 000 14.06.10 - 50 00 000 14.06.10 - 55 00 000 14.06.10 - 45 00 000 14.06.10 - 50 00 000 15.06.10 OSHIN INVEST ITA NO.283 & 284/DEL/2015 30 50 00 000 15.06.10 ISHPAT SHEETS 50 00 000 15.06.10 NOVELTY T RADERS 50 00 000 15.06.10 ALBATROSS SHARE 50 00 000 16.06.10 ISHPAT SHEETS 50 00 000 16.06.10 ARTILLEGENCE BIO 50 00 000 17.06.10 50 00 000 17.06.10 NOVELTY TRADERS 50 00 000 17.06.10 ONE2 E SOLUTION 50 00 000 17.06.10 STOCKNET INT 50 00 000 17.06 .10 ISHPAT SHEETS 50 00 000 18.06.10 ALBATROSS SHARE 50 00 000_J 18.06.10 ISHPAT SHEETS 50 00 000 18.06.10 NOVELTY TRADERS 50 00 000 18.06.10 ONE2 E SOLUTION 50 00 000 21.06.10 OSHIN INVEST 50 00 000 22.06.10 ONE2 E SOLUTION 55 00 000 22.06.10 GROMO RE FUND 45 00 000 22.06.10 GROMORE FUND 50 00 000 25.06.10 NOVELTY TRADERS 50 00 000 25.06.10 OSHIN INVEST 50 00 000 25.06.10 ONE2 E SOLUTION 50 00 000 25.06.10 STOCKNET INT 1 00 00 000 28.06.10 OSHIN INVEST 50 00 000 28.06.10 NOVELTY TRADERS 50 00 000 28.06.10 STOCKNET INT 50 00 000 28.06.10 SIDH HOUSING 50 00 000 28.06.10 ISHPAT SHEETS 50 00 000 28.06.10 ARTILLEGENCE BIO 10 00 000 30.06.10 ALBATROSS SHARE 50 00 000 30.06.10 STOCKNET INT 50 00 000 30.06.10 OSHIN INVEST 40 00 000 30.06.10 GY ANESHWAR TRADING 50 00 000 2.07.10 OSHIN INVEST 50 00 000 2.07.10 NOVELTY TRADERS 50 00 000 2.07.10 ARTILLEGENCE BIO 1 00 00 000 2.07.10 OSHIN INVEST 50 00 000 6.07.10 OSHIN INVEST 50 00 000 6.07.10 NOVELTY TRADERS 50 00 000 6.07.10 ARTILLEGENCE BIO 50 00 000 6.07.10 GYANESHWAR TRADING 50 00 000 6.07.10 SIDH HOUSING 25 00 000 6.07.10 SIDH HOUSING 50 00 000 07.07.10 SIDH HOUSING 50 00 000 07.07.10 ONE2 E SOLUTION 50 00 000 07.07.10 ALBATROSS SHARE ITA NO.283 & 284/DEL/2015 31 50 00 000 07.07.10 ONE2 E SOLUTION 50 00 000 0 7.07.10 NOVELTY TRADERS 50 00 000 07.07.10 ALBATROSS SHARE 50 00 000 07.07.10 NOVELTY TRADERS 50 00 000 07.07.10 STOCKNET INT 50 00 000 07.07.10 OSHIN INVEST 50 00 000 07.07.10 ISHPAT SHEETS 50 00 000 07.07.10 ISHPAT SHEETS 25 00 000 07.07.10 OSHIN INVEST 50 00 000 08.07.10 ONE2 E SOLUTION 50 00 000 08.07.10 ALBATROSS SHARE 50 00 000 08.07.10 ALBATROSS SHARE 50 00 000 08.07.10 ISPAT SHEETS 50 00 000 08.07.10 OSHIN INVEST 50 00 000 08.07.10 SIDH HOUSING 50 00 000 09.07.10 GYANESHWAR TRADING 50 00 000 09.07.10 SIDH HOUSING 50 00 000 09.07.10 ISPAT SHEETS 50 00 000 09.07.10 ALBATROSS SHARE 50 00 000 09.07.10 ONE2 E SOLUTION 50 00 000 09.07.10 SIDH HOUSING 50 00 000 09.07.10 NOVELTY TRADERS 50 00 000 09.07.10 OSHIN INVEST 50 00 000 12.07.10 NOVELTY TRADERS 50 00 000 12.07.10 ALBATROSS SHARE 36 50 000 12.07.10 STOCKNET INT 301150000 TOTAL FROM THE ABOVE CHART IT IS VERY CLEAR THAT AS AGAIN ST THE PAYMENT BY GODSEND BIO-TECH LTD. OF RS. 42.35 CRORE TO ASSESSEE ON 14/07/2010 THE COMPANY WAS HAVING FUND S OF RS. 12.25 CRORE IN ITS BANK ACCOUNT AND THE BALA NCE AMOUNT WAS RECEIVED FROM VARIOUS PARTIES FROM 11/06/2010 TO 12/07/2010. FURTHER BANK STATEMENT FI LED BY THE COMPANY (PAGE 92 OF PAPER BOOK) ALSO SHOWS T HAT AS ON 01 /07/2010 THERE IS BANK BALANCE OF RS. 23.01 C RORE IN THE BANK ACCOUNT OF M/S GODSEND BIO-TECH LTD. AG AINST ITA NO.283 & 284/DEL/2015 32 WHICH THE FUNDS WERE TRANSFERRED TO THE ASSESSEE CO MPANY ON 14/07/2010. THEREFORE THE ALLEGATION OF AO THAT THE FUNDS WERE IMMEDIATELY TRANSFERRED TO ASSESSEE COMP ANY IS NOT CORRECT. IT WAS FURTHER NOTED FROM THE SAID MONEY TRAIL CHAR T THAT ON PAGE 27 OF THE ORDER THE AO CONTENDED THAT ASSE SSEE COMPANY RECEIVED FUNDS FROM TOPGRAIN MERCANTILE P L TD. ON 10/05/2010 WHICH WERE RECEIVED BY THIS COMPANY FROM OTHER PARTIES ON 01/10/2010. NOW HOW IT IS POS SIBLE TO RELEASE FUNDS ON 10/05/2010 AGAINST THE FUNDS RE CEIVED ON 01/10/2010. SAME SITUATION IS APPEARING ON PAGE 28 AS WELL. IT APPEARS THAT THE SO CALLED TRAIL CHART PREPARED BY AO HAS NO LEGS AND CONTENTION OF AO IS FAR FROM TRUTH AND IT PROVES NOTHING. THE ASSESSING OFFICER HAS FA ILED TO BRING OUT ANY MATERIAL TO SHOW THAT THE SAID FUNDS ORIGINATED FROM THE APPELLANT COMPANY AND ULTIMATEL Y CAME BACK TO IT UNDER THE GARB OF SHARE APPLICATION MONEY. ABOVE ALL THIS SO-CALLED CASH TRAIL HAS NO CASH AT ALL. IT MAY KINDLY BE VERIFIED FROM RECORD THAT ALL THE TRA NSACTIONS ARE THROUGH BANKING CHANNEL AND IN NONE OF THE ACCO UNTS OF THE PARTIES REFERRED TO BY THE AO THERE IS ANY CASH ENTRY. THIS TRANSFER OF MONEY FROM ONE HAND TO ANOT HER AND THAT TOO THROUGH THE BANKING CHANNEL PROVES NO THING SINCE MONEY HAS ESSENTIAL NATURE OF MOVEMENT. IT SE RVES AS A MEDIUM OF EXCHANGE. IT NEVER REMAINS STACKED A T A PLACE. IF IT BE SO THE PAPER CURRENCY WOULD BE WOR N OUT EATEN UP BY THE ANTS AND LOOSE ITS VALUE. ITA NO.283 & 284/DEL/2015 33 NOT ONLY THAT IN NONE OF THE BANK ACCOUNTS REQUISIT IONED BY THE AO U/S 133(6) THERE WERE ANY CASH DEPOSITS IT IS FURTHER TO BE NOTICED THAT THERE WERE NO DOUBTFUL E NTRIES OR TRANSACTIONS IN THE SAID ACCOUNTS AS NO SUCH THING HAS BEEN POINTED OUT BY THE ASSESSING OFFICER. ALL THES E BANK ACCOUNTS WERE JUST NORMAL BANK ACCOUNTS OF THE BUSINESS CONCERNS WHICH AS USUAL CONTAIN ENTRIES OF RECEIPT AND PAYMENTS. SO EXAMINATION OF THESE BANK ACCOUNTS LE ADS TO NOWHERE. IT DOES NOT HELP THE AO TO HOLD THE MON EY TO HAVE COME FROM THE COFFERS OF THE ASSESSEE COMPANY. UNLESS AND UNTIL THIS CHAIN OF TRAIL OF MONEY IS COMPLETED THE ALLEGATION OF PLOUGHING BACK OF TH E FUNDS AS MADE BY THE AO REMAINS AN ALLEGATION ONLY AND NO THING MORE THAN THAT. 13. THE LD. COUNSEL FURTHER SUBMITTED THAT ASSESSIN G OFFICER HAS NOT BROUGHT ANY ADVERSE MATERIAL ON REC ORD TO PROVE THAT THE SHARE APPLICATION MONEY AND PREMIUM RECEIVED BY THE ASSESSEE-COMPANY IS NOT GENUINE. IN FACT AS SESSEE HAD RECEIVED SHARE CAPITAL FROM OTHER COMPANIES ALSO WH EREIN THERE IS NO PREMIUM INVOLVED IT HAS BEEN ACCEPTED BY HIM SIMPLY BECAUSE ASSESSEE HAD RECEIVED HUGE PREMIUM T HAT DOES NOT MEAN IT IS TO BE DISBELIEVED. HE FURTHER S UBMITTED THAT PROVISO TO SECTION 68 WAS INTRODUCED W.E.F 1.4 .2010 AND THERE WAS NO BAR ON THE ISSUE OF SHARE AT PREMIUM. REGARDING ASSESSING OFFICER'S OBSERVATION THAT INVESTEE COMPA NIES HAVE ITA NO.283 & 284/DEL/2015 34 OFFERED PETTY INCOME IN THEIR RETURN OF INCOME IS N OT INCORRECT BECAUSE CRITERIA TO JUSTIFY THE CREDITWORTHINESS ARE THE SOURCE OF FUNDS AND NOT INCOME FOR A PARTICULAR YEAR. THES E COMPANIES HAVE SUFFICIENT OWN FUNDS TO INVEST IN TH E SHARE OF THE ASSESSEE COMPANY WHICH IS EVIDENT FROM THE FOLL OWING CHART AS PER BALANCE SHEET AS ON 31.03.2011. TVH TRADING CO P LTD TOPGRAIN MERCANTILE P LTD. GODSIND BIOTECH LTD. SHARE CAPITAL 1 95 12 000 189 20 000 97 24 000 RESERVE & SURPLUS 46 58 88 000 45 16 80 000 45 19 76 000 TOTAL OWN FUNDS 48 54 00 000 47 06 00 000 46 17 00 000 INVESTMENT IN SHARE OF ASSESSEE COMPANY 26 40 00 000 35 50 00 000 41 90 00 000 14. FURTHER ASSESSING OFFICER'S REMARK THAT KOLKATA IS A BREEDING PLACE OF PAPER COMPANIES AND THAT ALL THE INVESTING COMPANIES BASED ARE AT KOLKATA ARE THEREFORE NON- GENUINE COMPANIES SHOWS HIS PREJUDICED MIND. HE SEEMS TO H AVE FORGOTTEN THE FACT THAT KOLKATA IS A BIG CENTRE OF BUSINESS AND COMMERCE OF INDIA. HE FURTHER SEEMS TO HAVE CONVENI ENTLY IGNORED THE FACT THAT EVEN THE APPELLANT COMPANY IS A KOLKATA BASED COMPANY. AS PER HIS WAY OF THINKING THE APPE LLANT COMPANY TOO SHOULD BE A FICTITIOUS COMPANY. THERE I S NO LEGAL OR FACTUAL BASIS OF SUCH FINDING OF THE ASSESSING O FFICER REGARDING THE KOLKATA BASED COMPANIES. THIS FINDING OF HIS IS ENTIRELY BASED ON CONJECTURES SURMISES DOUBTS AND MERE HERESY. MOREOVER HE HAS NOT MADE ANY SUCH ADVERSE REMARKS AGAINST THE MUMBAI AND GUWAHATI BASED SHARE APPLICA NTS. ITA NO.283 & 284/DEL/2015 35 15. LD. COUNSEL HAS ALSO TRIED TO DISTINGUISH THE CASE LAWS CITED BY THE ASSESSING OFFICER IN THE FOLLOWING MA NNER:- (I) COMMISSIONER OF INCOME TAX V. M/S N.R. PORTFOLIO PVT . LTD.(DELHI HIGH COURT) IN THE CITED CASE THE FACTS WERE THAT THE ASSESSEE WAS A SHARE BROKER BUT HE HAD NOT TRADED IN ANY STOCKS & SHARES. THE ASSESSEE CONTINUED TO RECEIVE DIVIDENDS ON ITS INVESTMENTS BUT IT DID NOT PAY ANY DIVIDEND TO THE SO-CALLED SHARE HOLDERS FROM WHOM THE IMPUGNED SHARE CAPITAL HAD BEEN OBTAINED. THE ASSESSEES BANK ACCOUNT SHOWED L ARGE AMOUNT OF CASH DEBITS AND CREDIT ENTRIES. SUMMONS U /S 131 SENT BY THE ASSESSING OFFICER TO ALL THE SEVEN SHAR EHOLDERS WERE RECEIVED BACK UN-SERVED WITH THE RESULT THAT N OBODY ATTENDED. THE ASSESSEE TOO DID NOT ATTEND THE ASSES SMENT PROCEEDINGS AND THEREFORE RECEIVED AN ADVERSE ORDER . THE ASSESSMENT IN THE CITED CASE WAS COMPLETED U/S 147/ 144 OF THE I.T. ACT 1961 EX-PARTE. AS AGAINST THE ABOVE FACTS OF THE CITED CASE THE ASSESSEE DULY ATTENDED THE ASSESSME NT PROCEEDINGS AND FILED ALL THE DETAILS TO ESTABLISH THE IDENTITY CREDITWORTHINESS OF THE SHAREHOLDERS AND GENUINENES S OF THE TRANSACTIONS. SO THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 263 OF THE ACT. FURTHER THERE IS NO FINDING OF ANY CASH DEBITS AND CREDIT ENTRIES IN THE ACCOUNT OF THE ASS ESSEE. ALL THE SHAREHOLDERS RESPONDED TO THE NOTICES U/S 133(6) AN D CONFIRMED THE TRANSACTIONS. MOREOVER NO CONTRADICT ION WAS NOTICED BY THE AO IN THE DECLARED NATURE OF BUSINES S AND ITS ACTUAL BUSINESS ACTIVITIES AS WAS FOUND IN THE CIT ED CASE. CLEARLY THE FACTS OF THE CITED CASE ARE ENTIRELY D ISTINGUISHABLE FROM THE FACTS OF THE ASSESSEE. SO DECISION OF THE CITED CASE ITA NO.283 & 284/DEL/2015 36 (WHICH IS IN FAVOUR OF THE REVENUE) CANNOT BE MADE APPLICABLE TO THE CASE OF THE ASSESSEE. ( II) ONASSIS AXLES PRIVATE LIMITED V. CIT(ITA 31 /2013)(DELHI)- DECISION DATED 13.02.2014(2014) 44 TAXMANN.COM 408/(2014) 364 ITR 53 THE FACTS OF THE CITED CASE ARE THAT THE ASSESSEE R ECEIVED SHARE APPLICATION MONEY FROM THREE COMPANIES. THE A O ISSUED SUMMONS U/S 131 TO ALL THE THREE SHAREHOLDERS WHIC H CAME BACK UN-SERVED WITH REMARKS OF THE POSTAL AUTHORITI ES NO SUCH PERSON. THE AO INFORMED OF THIS TO THE ASSESS EE AND ASKED HIM TO EITHER PRODUCE THE SHAREHOLDERS/INVEST ORS OR TO PROVIDE THEIR CHANGED ADDRESSES. THE ASSESSEE DID N OT COMPLY. HE NEITHER FURNISHED NEW ADDRESSES OF THE I NVESTORS NOR PRODUCED THEM. RATHER HE CONTINUED TO SAY THAT ALL THE RELEVANT DETAILS RELATING TO SHARE CAPITAL HAVE ALR EADY BEEN FILED. THEN THE AO GOT ENQUIRIES CONDUCTED FROM MA HAMEDHA BANK LTD. NOIDA FROM WHICH BANK THE PAY ORDERS TO WARDS SHARE APPLICATION MONEY HAD BEEN GOT ISSUED AND IN WHICH BANK ALL THE THREE SHAREHOLDING COMPANIES HAD SHOWN THEIR ACCOUNTS AND THE ASSESSEE HAD CLAIMED THAT THE PAY ORDERS HAD BEEN MADE OUT OF FUNDS LYING IN THE SAID BANK A CCOUNTS OF THE INVESTING COMPANIES. FROM THE INFORMATION PROVIDED BY THE BANK IT WAS FOUND THAT TWO OF THE INVESTING COMPAN IES HAD OPENED BANK ACCOUNTS ON 31.03.2007 WHEREAS PAY ORDE RS TOWARDS SHARE APPLICATION MONEY WERE DATED 29.06.20 06(I.E. BEFORE OPENING OF ACCOUNT). IT MEANT THAT THE CLAIM OF THE ASSESSEE THAT THE PAY ORDERS WERE MADE OUT OF REGUL AR BANK ACCOUNTS OF THE INVESTING COMPANIES WAS PATENTLY WR ONG. MOREOVER IN THE BANK OF THE THIRD INVESTING COMPAN Y CASH OF ' ITA NO.283 & 284/DEL/2015 37 25.04 LAKHS HAD BEEN DEPOSITED BEFORE ISSUING PAY O RDER FOR ' 25 03 125/-. THESE FACTS LED TO BELIEVE THAT TRANSA CTIONS OF SHARE APPLICATION MONEY WERE SHAM. THERE ARE NO SUCH ADVERSE FACTS IN THE APPELLANTS CASE. SO THE CITED CASE LAW IS DISTINGUISHABLE ON THE BASIS OF HUGE VARIATION IN THE FACTS OF THE TWO CASES. THEREFORE RATIO OF THE CITED CASE IS NOT APPLICABLE TO OUR CASE. (III) CIT V. ODEON BUILDERS PVT. LTD.(DELHI) THE FACTS OF THE CITED CASE ARE QUITE DISTINGUISHAB LE FROM THE FACTS OF OUR CASE. THEREFORE ITS RATIO IS NOT APPL ICABLE TO THE CASE OF THE APPELLANT. (IV) CIT V. NIPUN BUILDERS & DEVELOPERS PVT. LTD. IN ITA NO. 120/2012(DELHI)- (2013) 30TAXMANN.COM292(DELHI)/ (2013) 214 TAXMAN 429(DELHI)/ (2013) 350 ITR 407(DELHI)/(2013) 256 CTR 34 THIS CASE LAW AT S.NO. (IV) AT PAGES 11 TO 14 OF TH E ASSESSMENT ORDER HAS BEEN QUOTED BY THE AO IN THE MOST CONFUSI NG MANNER. THE FIRST TWO PARAS GIVEN THEREUNDER AND TH E GIST OF CASES REPRODUCED THEREAFTER WHICH HAVE BEEN REFERRE D TO IN THE ABOVE JUDGMENT I.E. OF CIT V. DEVI PRASAD VISHWANAT H PRASAD [1969] 72 ITR 194(SC) CIT V. M. GANAPATHI MUDALIAR [1964] 53 ITR 623(SC)/A. GOVINDARAJULU MUDALIAR V. CIT [1958] 34 ITR 807 (SC) ONLY PERTAIN TO THE CITED CASE OF CIT V. N IPUN BUILDERS & DEVELOPERS PVT. LTD. ALL OTHER CASES MENTIONED UN DER THE BROAD HEAD NIPUN BUILDERS & DEVELOPERS PVT. LTD. WERE NOT PART OF THE SAID JUDGMENT AND HAVE BEEN MENTIONED H ERE CREATING A LOT OF UNNECESSARY CONFUSION. SURPRISING LY SOME OF THE SAID CITED CASES RATHER SUPPORT THE CASE OF THE ASSESSEE RATHER THAN THE REVENUE. ITA NO.283 & 284/DEL/2015 38 NONETHELESS THE FACTS OF THE CASE OF NIPUN BUILDER S & DEVELOPERS P. LTD. ARE THAT ON NOTICING THAT THE AS SESSEE HAD RECEIVED SHARE APPLICATION MONEY THE ASSESSING OFF ICER ISSUED SUMMONS U/S. 131 TO THE SHARE APPLICANTS. THESE ALL WERE RECEIVED BACK UNDELIVERED WITH THE REMARKS NO SUCH COMPANY. THEN THE AO SENT AN INSPECTOR AT THE GIVE N ADDRESSES OF THE INVESTING COMPANIES WHO CONFIRMED IN HIS REPORT THAT SHARE APPLICANTS DID NOT EXIST AT THE G IVEN ADDRESSES. THEREUPON THE AO ASKED THE ASSESSEE TO PRODUCE PRINCIPAL OFFICERS OF THE SUBSCRIBING COMPANIES. IN REPLY THE ASSESSEE POINTED OUT THAT THE REGISTERED OFFICES OF THE COMPANIES COULD BE FOUND IN THE WEBSITE WWW.MCA.GOV .IN. AND THAT THE A.O. MAY VISIT THE SITE FOR FURTHER VE RIFICATION. THE HONBLE HIGH COURT TOOK ADVERSE VIEW OF SUCH UNCOOP ERATIVE ATTITUDE OF THE ASSESSEE AS WELL AS THAT OF ITS EXT REME AND UNJUSTIFIED STAND AND REVERSED THE ORDER OF THE ITA T. 16. ONE VERY IMPORTANT FACT WHICH LD. COUNSEL POIN TED OUT THAT APART FROM VARIOUS EVIDENCES FILED BY THE ASSE SSEE THE ASSESSING OFFICER HAS GOT ALL THE RELEVANT DETAILS DIRECTLY FROM THE INVESTING COMPANIES AS REQUISITIONED U/S. 133(6 ) BY HIM WHICH IS A FACT AVAILABLE ON RECORD AND ALSO DISCUS SED IN THE LD. CIT (A) ORDER. THUS ALL THE PARTIES HAVE DIREC TLY CONFIRMED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF A SSESSMENT PROCEEDINGS ITSELF. APART FROM THAT LEGAL REPRESEN TATIVES OF THE MAIN INVESTING COMPANIES TOO WERE PRODUCED BEFORE T HE ASSESSING OFFICER WHO CONFIRMED THE TRANSACTION I N QUESTION AND THE DETAILS AS REQUIRED WERE ALSO FILED SUBSEQU ENTLY. THE ALLEGATION AND OBSERVATION OF THE ASSESSING OFFICER THAT NO ITA NO.283 & 284/DEL/2015 39 REPLY WAS FILED WHICH WAS ASKED BY THE REPRESENTATI VES OF THE COMPANIES IS TOTALLY ERRONEOUS. 17. FINALLY HE SUBMITTED THAT THE APPELLANT HAD FULLY DISCHARGED ITS ONUS BY FILING PLETHORA OF DOCUMENTS TO ESTABLISH THE IDENTITY CREDITWORTHINESS OF THE CRE DITORS AND GENUINENESS OF THE TRANSACTIONS. THE INVESTING PART IES ARE AVAILABLE AT THE GIVEN ADDRESSES; ARE REGULAR INCOM E-TAX ASSESSEES DULY REGISTERED CORPORATE ENTITIES REGU LARLY FILING STATUTORY RETURNS WITH THE ROC AND ARE MAINTAINING REGULAR BOOKS OF ACCOUNTS AND THEY MAKE ALL THE BUSINESS DE ALINGS THROUGH REGULARLY MAINTAINED BANK ACCOUNTS. THEIR A CCOUNTS ARE STATUTORILY AUDITED BY A QUALIFIED AUDITOR. THE DOCUMENTS FILED BY US BEFORE THE ASSESSING OFFICER FULLY ESTA BLISH THEIR IDENTITY. THEIR AUDITED BALANCE SHEETS FULLY ESTABL ISH THEIR FINANCIAL WORTH. SO THEIR CREDITWORTHINESS IS BEYO ND DOUBT. ALL THE INVESTING PARTIES HAVE CONFIRMED HAVING MAD E THE TRANSACTIONS WITH THE APPELLANT COMPANY IN RESPONSE TO NOTICES U/S 133(6). IN EXCHANGE TO THE SHARE APPLIC ATION MONEY SHARES HAVE DULY BEEN ALLOTTED TO EACH ONE O F THE INVESTOR. ASSESSEE HAS ALSO FILED COPIES OF SHARE C ERTIFICATES ISSUED TO THE INVESTORS. THE INFORMATION OF SUCH AL LOTMENT WAS DULY FILED WITH THE MINISTRY OF CORPORATE AFFAI RS IN THE STATUTORY RETURN MEANT FOR THAT PURPOSE AND IT MUST BE AVAILABLE ON THEIR SITE. SO GENUINENESS OF THE TRA NSACTIONS TOO IS ESTABLISHED. ITA NO.283 & 284/DEL/2015 40 18. IN COUNTER TO THE SUBMISSION MADE BY THE LD. CI T-DR HIS CONTENTIONS INCLUDING THE DECISIONS RELIED UPON BY HIM WERE AS UNDER: 10.1 LD CIT DR STATED THAT THE ASSESSEE HAS NOT SUB MITTED CURRENT POSITION OF THE SHAREHOLDING. IF THESE SHAR ES WERE BOUGHT BACK BY THE MANAGEMENT OF THE ASSESSEE COMPA NY IT CLEARLY PROVES THAT THE FUNDS INTRODUCED AS SHARE C APITAL ARE OWN FUND OF THE COMPANY. REPLY: WE HAVE FILED CURRENT POSITION OF SHAREHOLDE RS AND AS PER THE SAME THESE SHAREHOLDERS ARE STILL CONTINUIN G TO BE SHAREHOLDER OF THE COMPANY AND THERE IS NO SUCH BUY BACK BY THE COMPANY OR ITS MANAGEMENT. THEREFORE THE APPRE HENSION OF LD DR IS NOT CORRECT. 10.2. AS PER INFORMATION IN PUBLIC DOMAIN SHRI GU RINDER JIT SINGH MAIN PERSON OF THE ASSESSEE COMPANY SUBSEQUE NTLY BECOME DIRECTOR IN THESE INVESTEE COMPANY. THEREFOR E HE HAS INDIRECT CONTROL ON THESE COMPANIES. REPLY: SHRI GURINDER JIT SINGH IS DIRECTOR IN THESE COMPANIES SINCE 3RD JULY 2010 I.E. EVEN BEFORE THESE COMPANI ES BECOME SHAREHOLDER IN THE ASSESSEE COMPANY. THEREFORE ALL EGATION THAT HE BECOME DIRECTOR SUBSEQUENTLY TO GAIN INDIRE CT CONTROL IS NOT CORRECT. 10.3. LD DR RELIED UPON DECISION OF APEX COURT IN CASER OF NRA STEEL & IRON LTD. BEFORE THE BENCH. REPLY : THE SAID DECISION HAS NO APPLICABILITY ON F ACTS OF THE CASE. IN NRA STEEL THERE WAS NO RESPONSE OF NOTICES ISSUED U/S 133(6) OF THE ACT NEITHER ANY PERSON APPEARED BEFOR E AO AND AO HAS ENQUIRED ABOUT THE INVESTOR COMPANIES AND PR OVED THAT THE SAME ARE NON-EXISTING COMPANIES. FURTHER IN THI S CASE ALL ITA NO.283 & 284/DEL/2015 41 THE THREE PARTIES HAVE DULY REPLIED NOTICE ISSUED U /S 133(6) AND PROVIDED THE DESIRED DETAILS TO THE AO. AO HAS NOT ACTED UPON THE INFORMATION PROVIDED BY THE ASSESSEE AS WE LL AS BY THE INVESTOR COMPANIES. THERE IS NO FURTHER INVESTI GATION BY THE AO. THEREFORE THE RELIANCE OF APEX COURT DECISION IS NOT CORRECT. ON THE CONTRARY WE SUBMIT THAT AFTER NRA STEEL THE RE ARE NUMBER OF DECISION IN FAVOUR OF ASSESSEE WHEREIN IT WAS HELD THAT ONCE DETAILS PROVIDED TO THE AO ONUS IS ON THE AO TO FURTHER INVESTIGATE AND BRING MATERIAL TO PROVE THE TRANSACTION NON-GENUINE. WE RELY ON THE FOLLOWING DECISIONS IN THIS REGARD: -(2018) 257 TAXMAN 390 (DELHI) PCIT VS. HI-TECH RES IDENCY PVT. LTD. (2018) 257 TAXMAN 335 (SC) PCIT VS. HI-TECH RESIDEN CY PVT. LTD. - SLP DISMISSED. SECTION 68 ADDITION WAS MADE IN HANDS OF ASSESSEE C OMPANY SINCE ASSESSEE WAS NOT ABLE TO PRODUCE ANY OF DIREC TOR SHAREHOLDERS OR PRINCIPAL OFFICER OF COMPANIES TO W HOM SHARES WERE ALLOTTED LENDERS FROM WHOM UNSECURED LOANS WAS TAKEN - TRIBUNAL CONSIDERED SAID ISSUED IN DETAILED MANNER AND DELETED SAID ADDITION HOLDING THAT ASSESSEE HAD DIS CHARGED ITS ONUS OF ESTABLISHING IDENTITY GENUINENESS AND CREDITWORTHINESS OF BOTH INVESTORS AS WELL AS LENDE RS - WHETHER ON FACTS THERE WAS NO INFIRMITY IN SAID ORDER - HE LD YES -(2018) 90 TAXMANN.COM 424 (DELHI ) ACIT VS. SHYAM INDUS POWER SOLUTIONS P LTD. ASSESSEE-COMPANY WAS ENGAGED IN BUSINESS OF TRANSMI SSION AND DISTRIBUTION OF POWER WITH STATE ELECTRICITY BO ARDS - FROM INVESTIGATION/ENQUIRY CONDUCTED BY INVESTIGATION WI NG IN CASE OF SOME COMPANIES IT WAS REVEALED THAT ASSESSEE HA D RECEIVED MONEY THROUGH THOSE COMPANIES WHOSE BUSINESS ACTIV ITIES ITA NO.283 & 284/DEL/2015 42 WERE SUSPICIOUS AND WHICH WERE INDULGING IN ENTRY O PERATION - ASSESSEE COMPANY HAD RECEIVED UNSECURED LOAN AND SH ARE APPLICATION MONEY FROM THESE COMPANIES BUT FAILED T O SUBMIT DOCUMENTARY EVIDENCES IN RESPECT OF SHARE ALLOTMENT MADE TO THESE COMPANIES - ASSESSING OFFICER OBSERVED THAT I T CLEARLY INDICATED THAT THESE TRANSACTIONS WERE SHAM AND WER E MADE ONLY FOR ROUTING ACCOMMODATION ENTRIES OF SAID COMP ANIES AND MADE ADDITIONS UNDER SECTION 68 - ASSESSEE HAD FURN ISHED NAMES AND ADDRESSES OF SHARE APPLICANTS THEIR PAN AND CONFIRMATION WITH THEIR BANK ACCOUNT AND INCOME-TAX RETURNS - MOREOVER ASSESSING OFFICER HAD NOT AT ALL CARRIED OUT ANY INVESTIGATION TO SHOW THAT THOSE COMPANIES DID NOT EXIST BUT WERE PAPER COMPANY; THEY WERE NOT HAVING WORTH OF I NVESTING AND TRANSACTION LACKED GENUINITY - FURTHER INVESTIG ATION WING REPORT WAS NOT SHOWN TO ASSESSEE - WHETHER THUS A SSESSEE HAD DISCHARGED INITIAL ONUS CAST UPON HIM UNDER SECTION 68 AND NO ADDITION WAS CALLED FOR - HELD YES -(2018) PCIT VS. CHAIN HOUSE INTERNATIONAL P LTD. ( 408 ITR 561)(MP)- (2020) PCIT VS. CHAIN HOUSE INTERNATIONAL P LTD (113 TAXMANN.COM 32)(SC) - SLP DISMISSED. WHETHER ISSUING SHARE AT A PREMIUM IS A COMMERCIAL DECISION AND IT IS PREROGATIVE OF BOARD OF DIRECTORS OF A CO MPANY TO DECIDE PREMIUM AMOUNT AND IT IS WISDOM OF SHAREHOLD ER WHETHER THEY WANT TO SUBSCRIBE SHARES AT SUCH A PRE MIUM OR NOT AND ULTIMATELY THIS IS A MUTUAL DECISION BETW EEN BOTH COMPANIES - HELD YES - WHETHER IN DAY TO DAY MARKE T UNLESS AND UNTIL RATE IS FIXED BY ANY GOVERNMENT AUTHORITY OR UNLESS THERE IS ANY RESTRICTION ON AMOUNT OF SHARE PREMIUM UNDER ANY LAW PRICE OF SHARES IS DECIDED ON MUTUAL UNDERSTAN DING OF ITA NO.283 & 284/DEL/2015 43 PARTIES CONCERNED; THUS ONCE GENUINENESS CREDITWO RTHINESS AND IDENTITY OF INVESTORS ARE ESTABLISHED REVENUE SHOULD NOT JUSTIFIABLY PUT ITSELF IN ARMCHAIR OF A BUSINESSMAN OR IN POSITION OF BOARD OF DIRECTORS AND ASSUME ROLE OF ASCERTAINI NG HOW MUCH IS A REASONABLE PREMIUM HAVING REGARD TO CIRCU MSTANCES OF CASE - HELD YES - WHETHER THUS ONCE GENUINENE SS CREDITWORTHINESS AND IDENTITY OF INVESTORS ARE ESTA BLISHED NO ADDITION COULD BE MADE AS CASH CREDIT ON GROUND THA T SHARES WERE ISSUED AT EXCESS PREMIUM - HELD YES (2019) S/TREE LAXMI ESTATE (P.) LTD. IN ITA NO. 655 7/MUM 2017 (MUMBAI) IN THE ABOVE CASE THE BENCH HAD CONSIDERED THE DECI SION OF HON'BLE SUPREME COURT IN THE CASE OF NRA IRON & STE EL (P.) LTD. (SUPRA) AND HELD THAT THE FACTS OF THE CASE BEFORE THE HON'BLE SUPREME COURT ARE ENTIRELY DIFFERENT WHERE ON THE BASIS OF FACTS OF THAT CASE HON'BLE SUPREME COURT CAME TO TH E CONCLUSION THAT MERE FURNISHING OF CERTAIN DOCUMENT S IS NOT SUFFICIENT ENOUGH AND WHAT IS RELEVANT IS ALL THREE INGREDIENTS I.E. IDENTITY GENUINENESS OF TRANSACTIONS AND CRED ITWORTHINESS OF THE PARTIES SHOULD BE PROVED BEYOND DOUBT. WE FI ND THAT IN THE CASE BEFORE THE HON'BLE SUPREME COURT THE PARTI ES NEVER RESPONDED TO 133(6) NOTICES. THE AO HAS CARRIED OUT INQUIRIES BY ISSUING NOTICES U/S. 133(6) FOR WHICH NONE OF T HE COMPANIES HAVE REPLIED. NONE OF THE COMPANIES PRODUCED BANK S TATEMENTS TO ESTABLISH SOURCE OF FUNDS FOR MAKING SUCH HUGE I NVESTMENTS IN SHARES EVEN THOUGH THEY WERE DECLARING A VERY M EAGRE INCOME IN THE RETURN. NONE OF THE INVESTORS APPEARE D BEFORE THE AO BUT MERELY SENT RESPONSE THROUGH DAK. IN THIS C ASE FROM THE FACTS ON RECORD IT IS CLEAR THAT THE ASSESSEE HAS FILED COMPLETE SET OF DOCUMENTS BUT THE AO NEITHER CARRI ED OUT ANY ITA NO.283 & 284/DEL/2015 44 INVESTIGATION NOR ISSUED NOTICES U/S. 133(6) OR SUM MONS U/S. 131(1) TO EXAMINE THE VERACITY OF DOCUMENTS FURNISH ED BY THE ASSESSEE. UNLESS THE AO CARRIED OUT FURTHER INVEST IGATIONS TO ASCERTAIN TRUE NATURE OF TRANSACTIONS HE CANNOT CO ME TO THE CONCLUSION MERELY ON THE BASIS OF DOCUMENTS SUBMITT ED BY THE ASSESSEE. THEREFORE AFTER CONSIDERING RELEVANT FAC TS THE CO- ORDINATE BENCH CAME TO THE CONCLUSION THAT DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF NRA IRON & STEEL (P.) LTD. HAS NO APPLICATION WHERE THE AO HAS NOT CARRI ED OUT ANY INQUIRIES -(2010) 194 TAXMAN 43 (DELHI)/(201 1) 330 ITR 298 ( DELHI) IN THE CASE OF CIT VS. DWARKADHISH P. LTD. IT WAS HELD BY HONBLE DELHI HIGH COURT THAT IN AN Y MATTER THE ONUS OF PROOF IS NOT STATIC ONE. THOUGH IN SECT ION 68 PROCEEDINGS THE INITIAL BURDEN OF PROOF LIES ON TH E ASSESSEE YET ONCE HE PROVES THE IDENTITY OF THE CREDITORS/SHARE APPLICANTS BY EITHER FURNISHING THEIR PAN NUMBERS OR INCOME-TAX A SSESSMENT NUMBERS AND SHOWS THE GENUINENESS OF THE TRANSACTIO N BY SHOWING MONEY IN HIS BOOKS OF ACCOUNT EITHER BY ACC OUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE THEN THE O NUS OF PROOF WOULD SHIFT TO THE REVENUE. JUST BECAUSE CREDITORS/ SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN IT WOULD NOT GIVE THE REVENUE RIGHT TO INVOKE SECTION 68. ON E MUST NOT LOSE SIGHT OF THE FACT THAT IT IS REVENUE WHICH HA S ALL THE POWERS AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVE R IT IS A SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE SOURCE OF SOURCE. (PARA 8) (2014) 52 TAXMANN.COM 23(DELHI) CIT-XI V. RAMA KRIS HNA JEWELLERS. ITA NO.283 & 284/DEL/2015 45 IN THIS CASE VARIOUS ADDITIONS WERE MADE UNDER SEC TION 68 FOR RELEVANT YEARS AS CONFIRMATIONS BANK ACCOUNT STATE MENTS INCOME TAX RETURNS OF PERSONS WHO HAD GIVEN UNSECUR ED LOANS AND CASH CREDITS TO THE ASSESSEE WERE NOT BROUGHT O N RECORD- THE ASSESSEE BEFORE COMMISSIONER (APPEALS) HAD FILE D SEVERAL DETAILS INCLUDING THEIR PAN BANK STATEMENTS AND IN COME TAX RETURNS- COMMISSIONER (APPEALS) DELETED ADDITIONS B EING BASED ON NO MATERIAL- WHETHER THERE WAS NO REASON TO INTE RFERE WITH THE SAID FINDING- HELD YES [PARA 23] [2014] 49 TAXMANN.COM 13 (DELHI) CIT V. NIPUN AUTO (P) LTD. HONBLE DELHI HIGH COURT AVERRED IN THIS CASE THAT WHERE IDENTITY OF SHARE APPLICANTS HAD BEEN ESTABLISHED A ND THEIR BANK ACCOUNTS IT RETURNS AND BALANCE SHEET IN ADDI TION TO CONFIRMATION LETTERS WERE PRODUCED ADDITION UNDER SECTION 68 WAS TO BE DELETED. CIT VS. DIVINE LEASING AND FINANCE LTD. [2008] 299 ITR 0268(DELHI) IT WAS HELD BY HONBLE DELHI HIGH COURT THAT IF RE LEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBS CRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH THE COPY OF THE SHARE HOLDERS REGISTER SHARE APPLICATION FORMS SHARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE IN THE CASE OF THE APPELLANT A NUMBER OF DOCUMENTS AS ENUMERATED IN THE EARLIER PARAGRAPHS WERE FURNISHED TO AO WHICH CONSTITUTE ACCEPTABLE PROOF. [2008] 307 ITR 0334( DELHI) CIT V. VALUE CAPITAL SE RVICES P. LTD. IN THIS CASE HONBLE DELHI HIGH COURT RELYING ON THE DECISIONS IN THE CASE OF CIT V. STELLAR INVESTMENT LTD. (1991 ) 192 ITR ITA NO.283 & 284/DEL/2015 46 0287 (DELHI) AND CIT V. SOPHIA FINANCE LTD.[1994] 2 05 ITR 0098 (DEL) HELD THAT: IT IS QUITE OBVIOUS THAT IT IS VERY DIFFICULT FOR THE ASSESSEE TO SHOW THE CREDIT WORTHINESS OF STRANGERS. IF THE REV ENUE HAS ANY DOUBT WITH REGARD TO THEIR ABILITY TO MAKE THE INVESTMENT THEIR RETURNS MAY BE REOPENED BY THE DEPARTMENT. IN ANY CASE WHAT IS CLINCHING IS THE ADDITIONAL BU RDEN ON THE REVENUE. IT MUST SHOW THAT EVEN IF THE APPLICANT DO ES NOT HAVE THE MEANS TO MAKE THE INVESTMENT THE INVESTMENT MA DE BY THE APPLICANT ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED IN COME OF THE ASSESSEE. THIS HAS NOT BEEN DONE IN SO FAR AS THE P RESENT CASE IS CONCERNED AND THAT HAS BEEN NOTED BY THE TRIBUNA L ALSO UNDER THE CIRCUMSTANCES WE ARE OF THE VIEW THAT TH E TRIBUNAL HAS NOT COMMITTED ANY ERROR IN DELETING THE ADDITIO N [2013] 30 TAXMANN.COM 328 (DELHI) CIT V. GANGESHWAR I METAL (P) LTD. IT WAS HELD BY HONBLE DELHI HIGH COURT THAT WHERE THE ASSESSEE IN SUPPORT OF TRANSACTION OF RECEIPT OF SH ARE APPLICATION MONEY BROUGHT ON RECORD VARIOUS DOCUMEN TS SUCH AS NAMES AND ADDRESSES OF SHARE APPLICANTS THEIR CONFIRMATORY LETTERS COPIES OF BANK STATEMENTS ETC . SAID TRANSACTION WAS TO BE REGARDED AS GENUINE AND CONS EQUENTLY NO ADDITION COULD BE MADE IN RESPECT OF SAME UNDER SECTION 68. [2012] 19 TAXMANN.COM 26 (DELHI) CIT-II V. KAMDHENU STEEL ST ALLOYS LTD. HONBLE DELHI HIGH COURT HELD IN THIS CASE THAT ON CE ADEQUATE EVIDENCE/MATERIAL IS GIVEN WHICH WOULD PRIMA FACIE DISCHARGE BURDEN OF THE ASSESSEE IN PROVING IDENTITY OF SHARE HOLDERS ITA NO.283 & 284/DEL/2015 47 GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF SHAREHOLDER THEREAFTER IN CASE SUCH EVIDENCE IS TO BE DISCARDED OR IT IS PROVED THAT IT IS CREATED EVID ENCE REVENUE IS SUPPOSED TO MAKE THOROUGH INVESTIGATION BEFORE IT C OULD NAIL ASSESSEE AND FASTEN ASSESSEE WITH LIABILITY UNDER S ECTIONS 68 AND 69 WHERE ASSESSEE HAD GIVEN PARTICULARS OF REG ISTRATION OF INVESTING/APPLICANT COMPANIES; CONFIRMATION FROM SH ARE APPLICANTS; BANK ACCOUNT DETAILS; AND HAD SHOWN PAY MENT THROUGH ACCOUNT PAYEE CHEQUES ETC. IT COULD BE SA ID THAT ASSESSEE HAD DISCHARGED ITS INITIAL ONUS AND JUST B ECAUSE SOME OF CREDITORS/SHARE APPLICANTS COULD NOT BE FOU ND AT THE ADDRESS GIVEN IT WOULD NOT GIVE REVENUE A RIGHT TO INVOKE SECTION 68 WITHOUT ANY ADDITIONAL MATERIAL TO SUPPO RT SUCH A MOVE. CIT V. M/S VISHAL HOLDING & CAPITAL (P) LTD. ITA 10 31/2010 (DELHI) IN THIS CASE IT WAS HELD BY HONBLE DELHI HIGH COU RT THAT 'IN OUR OPINION THE AO HAS SIMPLY ACTED ON THE INFORMA TION RECEIVED FROM THE INVESTIGATION WING WITHOUT VERIFY ING THE DETAILS FURNISHED BY THE ASSESSEE. THE ASSESSEE HAS ALSO PRODUCED BEST POSSIBLE EVIDENCE TO SUPPORT ITS CLAI M. CONSEQUENTLY THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED. IN THE CASE OF THE APPELLANT AS WELL LD. AO HAS SI MPLY ACTED ON THE REPORT OF THE INVESTIGATION WING AND CONDUCT ED NO MEANINGFUL ENQUIRY AT HIS LEVEL. SO THERE WAS NO C ASE FOR MAKING THE ADDITION. CIT V. STELLER INVESTMENT LTD. [2001] 251 ITR 263/1 1 5 TAXMAN 99(SC) ITA NO.283 & 284/DEL/2015 48 IN THIS CASE HONBLE SUPREME COURT AFFIRMED THE VI EW OF DELHI HIGH COURT IN THE CASE OF CIT V. STELLER INVESTMENT LTD. [1991] 192 ITR 287/59 TAXMAN 568 THAT READS AS UNDER: 'IT IS EVIDENT THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE NEVER THELESS UNDER NO CIRCUMSTANCES CAN THE AMOUNT OF SHARE CAP ITAL BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IT MAY BE THAT THERE ARE SOME BOGUS SHAREHOLDERS IN WHOSE NAMES SH ARES HAD BEEN ISSUED AND THE MONEY MAY HAVE BEEN PROVIDE D BY SOME OTHER PERSONS. IF THE ASSESSMENT OF THE PERSON S WHO ARE ALLEGED TO HAVE REALLY ADVANCED THE MONEY IS SOUGHT TO BE REOPENED THAT WOULD HAVE MADE SOME SENSE BUT WE FA IL TO UNDERSTAND AS TO HOW THIS AMOUNT OF INCREASED SHARE CAPITAL CAN BE ASSESSED IN THE HANDS OF THE COMPANY ITSELF. THE ABOVE-CITED CASE RELATES TO CASH CREDIT ON ACCO UNT OF SUBSCRIPTION TO SHARES WHEREAS THE ASSESSEES CASE IS THAT . OF LOAN BY WAY OF SUBSCRIPTION TO OFCDS. THE NATURE OF BOTH THE RECEIPTS IS SIMILAR AS MONEY IS RECEIVE D IN BOTH CASES FROM THE SUBSCRIBERS. HENCE THE RATIO OF THE ABOVE CASE IS QUITE APPLICABLE TO THE INSTANT CASE. -[2002] 256 ITR 795(SC) CIT V. GUJARAT HEAVY CHEMIC ALS LTD. HONBLE SUPREME COURT EXPRESSED ITS OPINION IN THIS CASE THAT IN CASE WHERE THE SHARE APPLICANTS WERE TO BE CONSI DERED GENUINE THE RIGHT COURSE FOR THE ASSESSING OFFICER IS TO IDENTIFY THE REAL PERSON TO WHOM THE MONEY BELONGS AND ASSES S HIM TO TAX INSTEAD OF ASSESSING THE COMPANY AND AS SUCH TH ERE WAS NO JUSTIFICATION FOR ASSESSING THE COMPANY. (2014) 43 TAXMANN.COM 395 (GUJARAT) CIT -1 V. DHARA MDEV FINANCE (P) LTD. THE FOLLOWING QUESTIONS WERE HELD IN FAVOUR OF THE ASSESSEE: ITA NO.283 & 284/DEL/2015 49 VARIOUS ADDITIONS WERE MADE TO THE ASSESSEES INCOM E ON ACCOUNT OF CASH CREDITS- IT WAS FOUND THAT IN RESPE CT OF SAID CREDITS THE ASSESSEE HAD FILED PAN OF CREDITORS T HEIR CONFIRMATIONS AND THEIR BANK STATEMENTS WHICH ESTA BLISHED THEIR CREDIT WORTHINESS. MOREOVER THE TRANSACTIONS WERE MADE THROUGH BANKING CHANNELS. WHETHER ANY ADDITION COUL D NOT BE MADE TO ASSESSEES INCOME U/S 68- HELD YES (PARA 5) . WHETHER IN THE ABSENCE OF ANY CONTRARY MATERIAL AN Y ADDITION SHOULD NOT BE MADE TO THE ASSESSEES INCOME- HELD Y ES (PARA 9). (2014) 42 TAXMANN.COM 473 (GUJARAT) CIT -1 VS. APEX THERM PACKAGING (P) LTD. IT WAS HELD THAT WHERE NAME ADDRESS PAN COPY OF I. T. RETURNS BALANCE SHEET PETL ALE OF ALL CREDITORS/L ENDERS AS WELL AS THEIR CONFIRMATION HAD BEEN FURNISHED THE AO CO ULD NOT MAKE ADDITION ON ACCOUNT OF UNSECURED LOAN AND INTE REST THEREON. (2013) 37 TAXMANN.COM 340 (ALLAHABAD) CIT-1 LKO V . LUCKNOW PROPERTY MANAGEMENT GROUP IT WAS HELD BY HONBLE HIGH COURT THAT ADDITION AS CASH CREDIT WAS NOT SUSTAINABLE WHERE ASSESSEE-DEVELOPER RECEIV ED AMOUNTS FROM ALLOTTEES WHO WERE REGULARLY ASSESSED TO TAX. (2014) 41 TAXMANN.COM 550 (GUJARAT) CIT-1 VS. SHAI LESH KUMAR RASIKLAL MEHTA HONBLE GUJARAT HIGH COURT AVERRED THAT WHERE TRAN SACTIONS WERE ROUTED THROUGH BANK AND THE ASSESSEE HAD EXPLA INED THE SOURCE OF INCOME ADDITIONS U/S 68 COULD NOT BE MAD E. IN THE CASE OF CIT V. JITENDRA DOLEPATBHAI SHAH (20 14) 41 TAXMANN.COM 523 (GUJARAT) HONBLE HIGH COURT AVERR ED THAT THE SOURCE OF CREDIT HAS BEEN EXPLAINED BY THE ASS ESSEE WITH ITA NO.283 & 284/DEL/2015 50 DOCUMENTARY EVIDENCE AND THE DOCUMENTS WERE NOT FOU ND FALSE. ON PERUSAL OF THE IMPUGNED ORDER OF THE CIT( APPEALS) WE ARE CONVINCED THAT ON DOUBTS AND SUSPICION THE AO HAS TREATED SHORT TERM CAPITAL GAIN AS UNEXPLAINED CREDIT ON T HE BASIS OF DOUBTS AND SUSPICION THE CASH CREDITS CANNOT BE HE LD AS UNEXPLAINED. SIMILARLY IN THE CASE OF MOD CREATIONS PVT. LTD. V . IT0( DELHI HIGH COURT) IT WAS HELD THAT THE ASSESSEE HAD DIS CHARGED ITS INITIAL ONUS PLACED ON IT. IN THE EVENT THE REVENUE STILL HAD A DOUBT WITH REGARD TO THE GENUINENESS OF THE TRANSAC TIONS IN ISSUE OR AS REGARDS THE CREDITWORTHINESS OF THE CRE DITORS IT WOULD HAVE HAD TO DISCHARGE THE ONUS WHICH HAD SHIF TED ON TO IT. A BALD ASSERTION BY THE ASSESSING OFFICER THAT THE CREDITS WERE A CIRCULAR ROUTE ADOPTED BY THE ASSESSEE TO PL OUGH BACK ITS OWN UNDISCLOSED INCOME INTO ITS ACCOUNTS COULD BE OF NO AVAIL. THE REVENUE WAS REQUIRED TO PROVE THIS ALLEG ATION. AN ALLEGATION BY ITSELF WHICH IS BASED ON ASSUMPTION W ILL NOT PASS MUSTER IN LAW. THE REVENUE WOULD BE REQUIRED TO BRI DGE THAT THE SUSPICIONS AND PROOF IN ORDER TO BRING HOME THI S ALLEGATION. DECISION 19. AFTER CONSIDERING THE AFORESAID SUBMISSIONS A ND THE MATERIAL RELIED UPON BEFORE US WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS RECEIVED SHARE APPLIC ATION MONEY FROM SIX COMPANIES OUT OF WHICH FROM THREE COMPANIES ASSESSEE HAS RECEIVED PREMIUM FOR SUMS AGGREGATING TO RS.103 80 00 000/-. IN THE CASE OF G ANESH BUILDCON PVT. LTD. FEELGOOD CREATION PVT. LTD. AN D BEYOND MANAGEMENT PVT. LTD. FROM WHOM THE ASSESSEE HAS REC EIVED ITA NO.283 & 284/DEL/2015 51 SHARE APPLICATION MONEY OF RS.1 79 60 000/- RS.1 34 70 000/- AND RS.1 34 70 000/- RESPECTIVELY HAS BEEN ACCEPTED TO BE GENUINE. ASSESSING OFFICER HAS ONLY DISPUTED THE OTHER THREE COMPANIES AS DISCUSSED ABO VE MERELY BECAUSE THE ASSESSEE COMPANY HAS RECEIVED HU GE PREMIUM FROM SUCH PARTIES. IN SO FAR AS THE INITIAL ONUS CAST UPON THE ASSESSEE FOR PROVING THE NATURE AND SOURCE OF THE SHARE CAPITAL THE ASSESSEE HAD FILED VARIOUS DOCUM ENTS WHICH HAVE BEEN INCORPORATED IN THE FOREGOING PARAGRAPH VIZ. A) PHOTOCOPY OF SHARE APPLICATION FORMS DULY FILLED IN AS SUBMITTED BY THE INVESTING COMPANIES TO THE ASSESSEE COMPANY WHILE APPLYING FOR SHARES. B) CERTIFIED TRUE COPY OF BOARD RESOLUTIONS PASSED B Y BOARD OF DIRECTORS OF THE RESPECTIVE COMPANIES IN RESPECT OF INV ESTMENT TO BE MADE IN THE SHARES OF THE ASSESSEE COMPANY. C) PHOTOCOPIES OF PAN CARDS OF ALL THE INVESTING COM PANIES AS ISSUED BY THE INCOME TAX DEPARTMENT GOVT. OF INDIA. CL) AUDIT REPORTS ALONGWITH PHOTOCOPIES OF FINAL ACCO UNTS I.E. BALANCE SHEETS PROFIT & LOSS ACCOUNTS COMPLETE WITH THE SCHEDULES OF THE INVESTING COMPANIES. E) PHOTOCOPIES OF MEMORANDUM AND ARTICLES OF ASSOCI ATION OF THE SAID COMPANIES WITH CERTIFICATES OF INCORPORATION. F) BANK ACCOUNT STATEMENTS OF THE INVESTING COMPANIES F OR THE RELEVANT PERIOD. G) ALLOTMENT ADVICE ISSUED BY THE ASSESSEE COMPANY G IVING DETAILS OF THE ALLOTMENT OF SHARES AGAINST THE SHARE AP PLICATION MONEY RECEIVED INDICATING FOLIO NO. CERTIFICATE NUMB ER NUMBER OF SHARES ALLOTTED COMPLETE WITH DISTINCTIVE N UMBERS AND AMOUNT RECEIVED AGAINST SUCH SHARE ALLOCATION. ITA NO.283 & 284/DEL/2015 52 H) PHOTOCOPY OF ACKNOWLEDGMENT PORTION OF INCOME TAX RETURNS (ITRS) ALONGWITH STATEMENT OF INCOME OF THE INVESTING COMPANIES. I) FRESH ADDRESSES (WHEREVER APPLICABLE) OF THE INV ESTING COMPANIES FOR FACILITATING DIRECT CORRESPONDENCE WITH THEM ON INDEPENDENT LEVEL BY THE DEPARTMENT. J) COPIES OF EQUITY SHARE CERTIFICATES ISSUED TO THE I NVESTORS. K) COPY OF RETURN OF ALLOTMENTS (OF SHARES) FILED BY TH E ASSESSEE COMPANY WITH THE ROC IN FORM 2 (PURSUANT TO SECTION 7 5(1) OF THE COMPANIES ACT 1956). L) COPIES OF MCA21: COMPANY MASTER DETAILS AND COMPANY/LLP MASTER DATA OF ALL THE INVESTING COMPANIES AS OBTAINED FROM THE SITE OF MINISTRY OF COMPANY AFFAIRS 20. ONE OF THE MAIN ALLEGATION OF THE ASSESSING OF FICER IS THAT THE NOTICES SENT U/S.133(6) WERE NOT RECEIVED ON THE GIVEN DATE FOR WHICH IT HAS BEEN CLARIFIED BEFORE U S THAT WITHIN A SHORT SPAN ASSESSING OFFICER HAS SOUGHT LOT OF I NFORMATION DURING THE PERIOD OF ONE WEEK FROM THE PARTIES SITU ATED OUTSIDE DELHI. IN FACT ALL THE NOTICES WERE ULTIMA TELY DULY COMPLIED WITH BY THESE PARTIES WHO HAVE SENT ALL TH E REQUISITE DETAILS AS REQUIRED BY THE ASSESSING OFFICER IN HIS NOTICES U/S.133(6). THUS THERE CANNOT BE REASON OF COMPLIA NCE OF THE NOTICES HAVE BEEN MADE BEYOND THE DATES SPECIFIED B Y HIM AND AS HIS OBSERVATION LOSE ITS RELEVANCE. IN FACT THESE PARTIES HAVE SUBMITTED FOLLOWING DOCUMENTS WITH THE ASSESSI NG OFFICER DIRECTLY TO HIM IN THEIR REPLIES IN RESPONS E TO NOTICE U/S 133(6):- ITA NO.283 & 284/DEL/2015 53 (I) THEIR RESPECTIVE WRITTEN ACKNOWLEDGMENT TO THE EFFECT THAT EACH ONE OF THEM HAS MADE INVESTMENTS IN THE SHARES OF THE ASSESSEE COMPANY. (II) PAN DETAILS (III) ASSESSMENT DETAILS IN RESPECT OF INCOME TAX ASSESSMENTS. (IV) THEIR RESPECTIVE COMPLETE NAME AND ADDRESS. TH E ADDRESS OF M/S TOPGRAIN MERCANTILE PRIVATE LTD. AND THA T OF M/S TVH TRADING COMPANY PVT. LTD WAS PD-107 APARNA APARTMENT KRISHNA PUR SAMAR PALLY NEAR MILAN BAZAA R KOLKATA-700 102. ADDRESS OF M/S GODSEND BIOTECH PRIVA TE LTD. IS AMBIKA SILK MILLS COMPOUND PLOT NO. 11-12 SE NAPATI BAPAT MARG MAHALAXMI MUMBAI-400013 (V) CERTIFIED COPY OF LEDGER ACCOUNT OF THE ASSESSEE COMPANY FOR THE F.Y. 2010-11 AS IT EXISTED IN THE BOOK S OF ACCOUNTS OF EACH OF THE INVESTING COMPANY. (VI) COPY OF COVERING LETTER THAT OF RESOLUTION OF BOA RD OF DIRECTORS AND THAT OF SHARE APPLICATION FORM DULY FILL ED IN AND SIGNED BY THE INVESTING COMPANIES. (VII) COPY OF AUDIT REPORT AS SIGNED BY THE QUALIFIED AUDITORS IN RESPECT OF ALL THE INVESTING COMPANIES. (VIII) COPIES OF DULY AUDITED FINAL ACCOUNTS VIZ. BA LANCE SHEETS AS ON 31.03.2011 AND P & L ACCOUNTS FOR THE PE RIOD 2010-11 (RELEVANT TO A.Y. 2011-12) (IX) COPIES OF THEIR RESPECTIVE INCOME TAX RETURNS FOR THE A.Y. 2011 -12 (X) COPY OF RESPECTIVE MEMORANDUM AND ARTICLE OF ASSOCIATION OF THE RESPECTIVE INVESTING COMPANY. (XI) SHARE APPLICATION MONEY IN RESPECT OF M/S TOPGRA IN MERCANTILE PRIVATE LTD. HAD BEEN PAID BY CERTAIN OTHER GROUP ITA NO.283 & 284/DEL/2015 54 COMPANIES SUCH AS M/S BRIDGE & BUILDING CONSTRUCTION COMPANY PVT. LTD. M/S PANCHWATI COMMOTRADE PVT. LTD. M/S VIRAT SOLUTIONS & SERVICES PVT. LTD. AND M/S PASSI ONATE AGENCIES PVT. LTD. ETC. ON ITS BEHALF AS WELL AS ON ITS ASKING. THE SAID INVESTING COMPANY HAS SENT/CERTIFIED COPY OF LEDGER ACCOUNTS OF ALL SUCH SISTER CONCERNS AS WELL. 21. THUS THE REASON ASSIGNED BY THE ASSESSING OFFI CER DOES NOT HAVE MUCH CREDENCE TO DISLODGE THE EVIDENCES FI LED BY THESE PARTIES TO CORROBORATE THE ASSESSEES EXPLANA TION AND THE DOCUMENTS SUBMITTED BY THE ASSESSEE TO PROVE TH E NATURE AND SOURCE OF CREDIT. REGARDING VARIOUS OBSERVATION S AND ALLEGATION OF THE ASSESSING OFFICER THE LD. COUNSE L HAS GIVEN A VERY DETAIL REBUTTAL BASED ON DOCUMENTS ON RECORD A S INCORPORATED ABOVE IN THE FOREGOING PARAGRAPHS. FRO M BARE PERUSAL OF THE EXPLANATION DULY SUPPORTED BY THE DO CUMENTS WE FIND THAT WHATEVER SO CALLED INQUIRY WHICH WAS C ONDUCTED BY HIM HAS NOT LEAD TO ANY IOTA OF ADVERSE MATERIAL SO AS TO HOLD THAT THE TRANSACTION IS NOT GENUINE. THE ASSES SING OFFICER REQUIRED THE DIRECTORS/THE REPRESENTATIVES OF THE THREE COMPANIES WHICH WERE PRODUCED BEFORE HIM THE SAME WERE DULY COMPLIED WITH AND NOT ONLY THEY WERE PRODUCED BUT HAVE ALSO CONFIRMED THE TRANSACTION AND GIVEN THE REQUIR ED DOCUMENTS ON THE SUBSEQUENT DATES. ONCE THESE PARTI ES HAVE DIRECTLY CONFIRMED THE TRANSACTION WITH ALL THE DOC UMENTS AND THE AUTHORIZED REPRESENTATIVES HAVE DULY APPEARED B EFORE THE ASSESSING OFFICER THEN WITHOUT ANY SUBSTANTIAL GRO UND HE HAS DISBELIEVED ON A VERY TECHNICAL AND WHIMSICAL R EASONS. ITA NO.283 & 284/DEL/2015 55 HERE IN THIS CASE THE INVESTEE COMPANIES ARE BASED OUTSIDE DELHI AND IF HE WAS NOT SATISFIED WITH THE AUTHORIZ ED REPRESENTATIVE SENT BY THEM THEN AT LEAST HE COULD NOT HAVE ISSUED A COMMISSION U/S.133(1)(D) TO BE EXAMINED BY THE LOCAL INCOME TAX AUTHORITY. FURTHER THESE AUTHORIZ ED REPRESENTATIVE HAVE ADDUCED THE DOCUMENT BUT NOWHER E ASSESSING OFFICER HAS POINTED OUT WHAT WAS LACKING IN SUCH DOCUMENTS WHICH WAS ALREADY SUBMITTED BY THESE COMP ANIES IN REPLY TO THE NOTICE U/S.133(6) AND WHAT EXTRA HE WANTED TO EXAMINE HAS NOT BEEN MENTIONED. 22. REGARDING ONE OF THE COMPANIES I.E. M/S. BR IDGE AND BUILDING CONSTRUCTION PVT. LTD. WHO HAS MADE THE PA YMENT ON BEHALF OF M/S. TOPGRAIN MERCANTILE PVT. LTD. LD . COUNSEL EXPLANATION AS INCORPORATED ABOVE IS TESTIMONY TO I TSELF THAT M/S. TOPGRAIN MERCANTILE HAS FURNISHED A CERTIFIED COPY OF THE LEDGER ACCOUNT OF THE SAID PARTY WHICH SHOWS THAT I NVESTEE COMPANY HAS SOLD ITS SHARE AGAINST WHICH M/S. BRIDG E AND BUILDING CONSTRUCTION COMPANY HAD TRANSFERRED THE S ALE CONSIDERATION THEREOF AMOUNTING TO RS.57.30 CRORE T HROUGH RTGS AT THE DIRECTION OF M/S. TOPGRAIN MERCANTILE P VT. LTD. EVIDENCES TO THIS EFFECT OF RTGS TRANSFER AND COPY OF BANK STATEMENT OF THE SAID COMPANY WAS ALSO FILED BEFORE THE ASSESSING OFFICER. THE SAID BANK STATEMENT REVEALS THAT THERE WAS AN OD LIMIT AND THERE WAS ALSO MENTION OF CORRE CT ADDRESS. THUS WITHOUT ANY COGENT MATERIAL TO REBUT SUCH EVIDENCE ADVERSE INFERENCE CANNOT BE DRAWN THAT TR ANSACTION THROUGH THIS COMPANY IS SHAM. ITA NO.283 & 284/DEL/2015 56 23. ANOTHER ALLEGATION BY THE ASSESSING OFFICER W AS THAT THESE COMPANIES HAVE RECEIVED FUNDS FROM OTHER COMP ANIES BEFORE ISSUANCE OF CHEQUES THROUGH THE ASSESSEE COM PANY AND ALSO TRIED TO ANALYZE FUND TRAIL TO ASSUME THAT ASSESSEE- COMPANY HAD PLOUGHED BACK ITS OWN MONEY IN THE BOOK S OF ACCOUNT IN THE GARB OF SHARE APPLICATION MONEY. THE SAID ALLEGATION ITSELF IS BASED ON ERRONEOUS ASSUMPTION OF FACTS WHICH HAS BEEN DEMONSTRATED BY THE LD. COUNSEL FRO M THE DETAILS OF FUNDS CHART AS REPRODUCED ABOVE SPECIFI CALLY IN THE CASE OF PAYMENT MADE BY M/S. GODSONS PVT. LTD. TO T HE ASSESSEE. THE CHART CLEARLY INDICATES THAT AGAINST THE PAYMENT OF RS.42.2 CRORE TO THE ASSESSEE ON 14.07.2010 THE COMPANY WAS HAVING FUNDS OF RS.12.25 CRORE IN BANK ACCOUNT AND THE BALANCE AMOUNT WAS RECEIVED FROM VARIOUS PARTIES BE TWEEN 11.06.2010 TO 12.07.2010. FURTHER AS PER THE BANK S TATEMENT AS ON 01.07.2010 THERE WAS A BANK BALANCE OF RS.21. 01 CRORE IN THE BANK ACCOUNT OF M/S. GODSONS AND M/S. BIOTEC H LTD. AGAINST WHICH THE FUNDS WERE TRANSFERRED TO THE ASS ESSEE- COMPANY ON 14.07.2010. THUS THIS ALLEGATION OF THE ASSESSING OFFICER ALSO DOES NOT HAVE ANY BASIS. SIM ILARLY IN THE CASE OF FUNDS RECEIVED FROM M/S. TOPGRAIN MERCA NTILE COMPANY PVT. LTD. ON 10.05.2010 ALSO IT WAS DULY SH OWN THAT THIS COMPANY HAS RECEIVED FUNDS FROM OTHER PARTIES PRIOR TO DATE. NOWHERE IN THE SO CALLED ALLEGED CASH TRAIL T HERE IS AN ELEMENT OF CASH OR ANYTHING HAS BEEN BROUGHT ON REC ORD THAT ANY OF THE TRAILS ASSESSEES UNDISCLOSED CASH OR I NCOME HAS BEEN ROUTED. IN FACT NONE OF THESE BANK ACCOUNT ITA NO.283 & 284/DEL/2015 57 REQUISITIONING BY THE ASSESSING OFFICER U/S. 133(6) THERE WAS ANY CASH DEPOSITS. 24. IN SO FAR AS THE SOURCE OF THE FUND AND THE CREDITWORTHINESS OF THE PARTIES IT IS SEEN FROM TH E CHART REPRODUCED HEREINABOVE THAT THESE PARTIES HAD SUFFI CIENT OWN FUNDS TO INVEST AND THE SHARE OF ASSESSEE-COMPANY D ULY REFLECTED IN THEIR BALANCE SHEET AS ON 31.03.2011. 25. THUS ON THESE FACTS AND CIRCUMSTANCES OF TH E CASE AND MATERIAL ON RECORD IT CANNOT BE HELD THAT THE ONUS CAST UPON THE ASSESSEE TO PROVE THE IDENTITY CREDITWORTHINES S OF THE INVESTEE PARTIES OR GENUINENESS OF THE TRANSACTION HAS NOT BEEN EXPLAINED PROPERLY NOR THERE IS ANY ADVERSE FI NDING OR MATERIAL GATHERED FROM ANY INQUIRY THAT IT IS A BOG US TRANSACTION OR KIND OF ACCOMMODATION ENTRY. THUS W E DO NOT FIND ANY REASON TO TINKER AND DEVIATE FROM THE FIND ING OF THE LD. CIT (A) WHILE DELETING THE ADDITION. ACCORDINGL Y THE ORDER OF THE LD. CIT (A) IS CONFIRMED AND THE APPEAL FILE D BY THE REVENUE IS DISMISSED. 26. IN SO FAR AS THE APPEAL FOR THE ASSESSMENT YEAR 2012-13 IS CONCERNED THE FACTS ARE EXACTLY THE SAME AS HE RE IN THIS YEAR ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY OF RS.23 CRORE. OUT OF RS.23 CRORES RS. 4.50 CRORE WAS RECE IVED FROM M/S. TVH TRADING COMPANY AND RS.18.50 CRORE FROM VI SHAKA TECH PVT. LTD. ONE ADDITIONAL FACT IN THIS YEAR IS THAT SHARES COULD NOT BE ALLOTTED TO THESE PARTIES AND THE SHAR E ITA NO.283 & 284/DEL/2015 58 APPLICATION MONEY HAS BEEN TREATED AS ADVANCE RECEI VED AGAINST THE PROPERTY FOR WHICH THE ASSESSEE-COMPANY HAS FILED CONFIRMATION FROM THE SAID PARTIES TO THIS EFFECT. HERE IN THIS YEAR ALSO ALL THE PARTIES HAVE CONFIRMED AND GIVEN THE DETAILS TO THE ASSESSING OFFICER IN RESPONSE TO THE NOTICE U/S. 133(6) AND ASSESSING OFFICER HAS SIMPLY RELIED UPON THE FI NDING OF THE EARLIER YEAR. ADDITIONALLY IN THIS YEAR DIRECT OR OF M/S. TVH TRADING COMPANY PVT. LTD. HAD PERSONALLY APPEAR ED BEFORE THE ASSESSING OFFICER IN RELATION TO INVESTM ENT IN ASSESSMENT YEAR 2011-12 ALSO WHO HAS CONFIRMED THE TRANSACTION NOT ONLY FOR ASSESSMENT YEAR 2011-12 BU T ALSO FOR ASSESSMENT YEAR 2012-13. OUR FINDING GIVEN IN THE A PPEAL FOR ASSESSMENT YEAR 2011-12 WILL APPLY MUTATIS MUTANDIS IN THIS YEAR ALSO AS A FINDING OF THE LD. ASSESSING OFFICER AND THE LD. CIT (A) IS EXACTLY THE SAME. ACCORDINGLY APPEAL FO R THE ASSESSMENT YEAR 2012-13 IS ALSO DISMISSED. 27. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ABOVE DECISION WAS ANNOUNCED ON CONCLUSION OF VIRTU AL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 31/0 8/2021. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 31/08/2021 PKK: