ACIT, New Delhi v. M/s Om Lagistics Ltd.,, New Delhi

ITA 3197/DEL/2009 | 2001-2002
Pronouncement Date: 16-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 319720114 RSA 2009
Assessee PAN AAACO4716C
Bench Delhi
Appeal Number ITA 3197/DEL/2009
Duration Of Justice 9 month(s) 3 day(s)
Appellant ACIT, New Delhi
Respondent M/s Om Lagistics Ltd.,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 16-04-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 16-04-2010
Date Of Final Hearing 14-01-2010
Next Hearing Date 14-01-2010
Assessment Year 2001-2002
Appeal Filed On 13-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 3197/DEL/2009 ASSESSMENT YEAR : 2001-02 ACIT CENTRAL CIRCLE 21 ROOM NO. 344 E-2 ARA CENTRE JHANDEWALAN EXT. NEW DELHI VS. M/S. OM LOGISTICS LTD. 130 TRANSPORT CENTRE PUNJABI BANGH NEW DELHI. (APPELLANT) (RESPONDENT) PAN : AAACO 4716 C APPELLANT BY : SHRI H.K. LAL SR. DR RESPONDENT BY : SHRI VED JAIN CA MS. RANO JAIN CA AND SHRI VENKTES H CHAURASIA CA O R D E R PER: C.L. SETHI J.M. IN THIS APPEAL FILED BY THE REVENUE AGAINST THE O RDER DATED 12.03.2009 PASSED BY THE LD. CIT(A) IN THE MATTER OF AN ASSESS MENT MADE U/S. 143(3)/147 OF THE INCOME TAX ACT 1961 (THE ACT) FOR THE A.Y. 2001-02 THE ONLY GROUND RAISED BY THE REVENUE IS AS UNDER:- THE LD. CIT(A) HAS ERRED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 1 06 50 000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAI NED INCREASE IN SHARE CAPITAL IGNORING THE FACT THAT TH E IDENTITY OF THE PERSONS CONTRIBUTING TO THE SHARE C APITAL IS NOT PROVED AND HENCE GENUINENESS AND CREDITWORTHIN ESS OF THE PERSONS NOT PROVED. ITA NO. 3197/DEL/2009 PAGE 2 OF 26 2. IN THIS CASE THE ASSESSEE FILED ITS RETURN OF I NCOME ON 30.10.2001 DECLARING TOTAL INCOME AT RS. 89 90 090/-. THE RET URN WAS INITIALLY PROCESSED U/S. 143(1) OF THE ACT ON 31.03.2003. SUBSEQUENTLY IN THE LIGHT OF THE INFORMATION RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT THE AO ISSUED A NOTICE U/S. 148 ON 07.11.2006 AFTER RECORD ING REASONS THEREOF AND TAKING PRIOR APPROVAL FROM THE ADDITIONAL COMMISSIO NER OF INCOME TAX. THE ASSESSEE VIDE ITS LETTER DATED 11.12.2006 SUBMI TTED THAT RETURN ALREADY FILED ON 30.10.2001 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. NOTICE U/S. 143(2) WAS ISSUED ON 2 6.02.2007 AND WAS DULY SERVED UPON THE ASSESSEE. IN THE COURSE OF ASSESSM ENT PROCEEDINGS THE ASSESSEES AUTHORIZED REPRESENTATIVE VIDE LETTER DA TED 07.03.2007 REQUESTED THE AO TO PROVIDE THE REASONS RECORDED FOR INITIATI NG PROCEEDINGS U/S. 148 OF THE ACT AND ACCORDINGLY THESE REASONS WERE PROVI DED TO THE ASSESSEE BY THE AO VIDE LETTER DATED 09.03.2007. THE ASSESSEE THEN FILED OBJECTIONS TO THE INITIATION OF PROCEEDINGS U/S. 147 OF THE ACT. THE OBJECTIONS SO FILED BY THE WERE CONSIDERED AND DISPOSED OFF BY THE AO VIDE ORD ER DATED 17.05.2007. 3. IT HAS BEEN FURTHER OBSERVED BY THE AO THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 12.10.1999 AND THE CURRENT ASSESSM ENT YEAR IS THE FIRST YEAR OF OPERATION OF ASSESSEE COMPANY. DURING THE YEAR THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF GO ODS. IT WAS NOTICED BY THE AO THAT DURING THE YEAR THE ASSESSEE COMPANY HA D SHOWN TO HAVE ITA NO. 3197/DEL/2009 PAGE 3 OF 26 RECEIVED SHARE CAPITAL AS WELL AS SHARE APPLICATION MONEY FROM VARIOUS PERSONS THE RESPECTIVE NAMES AND AMOUNTS HAVE BEEN LISTED AT PAGE TWO OF THE ASSESSMENT ORDER. 4. THE AO FURTHER OBSERVED THAT ONE MR. AJAY SINGHA L ONE OF THE SHARE APPLICANTS WAS THE DIRECTOR OF THE COMPANY AND AL L OTHER PERSONS FROM WHOM SHARE CAPITAL/SHARE APPLICATION MONEY WAS CLAI MED TO HAVE BEEN RECEIVED ARE OUTSIDE PARTIES. 5. THE AO THEN MENTIONED THAT VARIOUS ENQUIRIES/INV ESTIGATION WERE MADE OR CONDUCTED BY THE INVESTIGATION WING ON THE BASIS OF WHICH IT WAS FOUND OR REVEALED THAT THE FOLLOWING PARTIES OR PER SONS WERE NOT CARRYING ON ANY ACTUAL BUSINESS BUT WERE ENGAGED IN THE BUSINES S OF PROVIDING ACCOMMODATION ENTRIES:- 1. M/S. WELCOME COIR INDUSTRIES LTD. 2. M/S. SHIMMER MARKETING PVT. LTD. 3. M/S. MAA SHAKUMBHARI STONE CRUSHER PVT. LTD 4. M/S. SUMA FINANCE & INVESTMENT PVT. LTD. 5. M/S. ONYX EXIM & SALES PVT. LTD. 6. M/S. HOPEWIN ADMARK & CONSULTANCY SERVICE (P) LT D. 7. M/S. UMESHNEH SECURITIES PVT. LTD. 8. MS. KIRAN BANSAL 9. MR. SUBHASH GUPTA 10. MR. VISHAL AGGARWAL 11. MR. AMIT KUMAR SINGH AND 12. MR. S H. MALLICK. ITA NO. 3197/DEL/2009 PAGE 4 OF 26 6. THE AO THEN DISCUSSED THE MODUS OPERANDI AN ENTR Y OPERATOR USED TO EMPLOY FOR PROVIDING ACCOMMODATION ENTRIES TO THE B ENEFICIARIES. 7. IN THE LIGHT OF THE RESULT OF ENQUIRIES/INVESTIG ATION CONDUCTED BY THE INVESTIGATION WING THE AO ASKED THE ASSESSEE TO FI LE COPY OF BANK STATEMENT COPY OF ACKNOWLEDGMENT OF INCOME TAX RET URN AND CONFIRMATION LETTERS OF THE PARTIES OR PERSONS FROM WHOM THE ASS ESSEE HAVE CLAIMED TO HAVE BEEN RECEIVED SHARE CAPITAL/SHARE APPLICATION MONEY DURING THE YEAR UNDER CONSIDERATION. 8. HOWEVER IT WAS OBSERVED BY THE AO THAT THE ASSE SSEE MERELY SUBMITTED PHOTOCOPY OF THE ALLEGED SHARE APPLICATIO N FORMS AND COPY OF CHEQUES ALLEGEDLY GIVEN BY THE AFORESAID PARTIES TO THE ASSESSEE; THE ASSESSEE ALSO FILED CONFIRMATION OF FEW PARTIES ALONGWITH TH EIR SHARE APPLICATION FORMS. IT IS OBSERVED BY THE AO THAT CONFIRMATION LETTERS WERE BEARING NO DATE. 9. IT WAS THEN STATED BY THE AO IN THE ASSESSMENT O RDER THAT STATEMENT OF SHRI S H MALLICK SHRI VISHAL AGGARWAL SHRI UMESH GUPTA AND OTHER PERSONS WERE RECORDED ON OATH BY THEN ADDL. DIRECTO R OF INCOME TAX (INVESTIGATION) AND IN THOSE STATEMENTS THESE PAR TIES HAVE CATEGORICALLY DENIED OF EVER MAKING ANY INVESTMENT IN SHARE CAPIT AL OF COMPANIES. THESE PERSONS FURTHER STATED THAT THEY WERE ENGAGED IN TH E BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AND USED TO TAKE CASH FOR GIV ING CHEQUES/DRAFTS. ITA NO. 3197/DEL/2009 PAGE 5 OF 26 THESE PERSONS HAD GIVEN LIST OF INDIVIDUALS AND COM PANIES WHICH WERE BEING USED BY THEM IN THIS ACTIVITY OF PROVIDING AC COMMODATION ENTRIES. 10. THE AO THEN STATED THAT ENTIRE ALLEGED SHARE AP PLICATION MONEY OF RS. 63 50 000/- WAS RECEIVED BETWEEN 22.03.2001 TO 29.0 3.2001 AND ENTIRE SHARE CAPITAL WERE RECEIVED IN FEW DAYS IN THE MONT H OF MAY 2000. 11. THE AO THEN POINTED OUT THAT MOST OF THE SHARE APPLICANTS WERE HAVING A BANK ACCOUNT IN A COMMON BANK AND THEN HE LISTED THE NAMES OF PERSONS HAVING ACCOUNT IN THE COMMON BANK VIZ. STA TE BANK OF BIKANER AND JAIPUR NEW ROHTAK ROAD NEW DELHI (ELEVEN SHARE AP PLICANTS HAVING BANK ACCOUNT IN THIS BANK) FEDERAL BANK KAROL BAGH (SI X SHARE APPLICANTS HAVING BANK ACCOUNT IN THIS BANK) AND STATE BANK OF PATIA LA NARAINA (THREE SHARE APPLICANTS HAVING BANK ACCOUNT IN THIS BANK). 12. THE AO THEN POINTED OUT THAT COPY OF BANK STATE MENT OF ANY OF THE PARTIES WERE NOT FILED PURPOSEFULLY BY THE ASSESSEE AS IN ALL THESE BANK ACCOUNTS BALANCE WAS QUITE MEAGER AS COMPARE TO THE VOLUME AND VALUE OF THE TRANSACTION MADE IN THOSE ACCOUNTS. IN THOSE A CCOUNTS THE MONEY WAS MOSTLY DEPOSITED IN CASH AND IMMEDIATELY THEREAFTER THE FUND IS TRANSFERRED BY TRANSFER ENTRY OR CHEQUES AND AT THE SAME TIME M ONEY WAS ALSO WITHDRAWN IN CASH. IN THE LIGHT OF THESE FACTS THE AO THEN CALLED FOR THE BANK STATEMENT FROM THE CONCERNED BANK U/S. 133 (6) OF THE ACT AN D ON PERUSAL THEREOF IT WAS FOUND BY HIM THAT FUNDS WAS DEPOSITED IN THESE ACCOUNTS ON THE VERY DAY ITA NO. 3197/DEL/2009 PAGE 6 OF 26 ITSELF WHEN THE ALLEGED CHEQUE FOR CAPITAL OR SHARE APPLICATION MONEY WAS PRESENTED FOR COLLECTION. 13. THE AO THEN MADE REFERENCE TO CERTAIN OTHER ACC OUNTS BEING CURRENT NUMBER 553 IN THE FEDERAL BANK KAROL BAGH CURRENT ACCOUNT NO. 445 539 544 AND 569 IN THE SAME BANK AND THEN HE OBSERVED IN THESE CURRENT ACCOUNTS HUGE CASH WAS FIRST DEPOSITED AND THEN THE FUND WAS TRANSFERRED TO THE ACCOUNT OF THE FOLLOWING PARTIES: 1. SH. VISHAL AGGARWAL 2. SH. DEVI RAM GOYAL 3. SH. AMIT KUMAR SINGH 4. M/S. HOPEWIN ADMARK & CONSULTANCY SERVICE (P) LT D. 5. M/S. ONYX EXIM & SALES PVT. LTD. 6. M/S. SHIVAM SOFTECH LTD. 7. M/S. MAA SHAKUMBHARI STONE CRUSHERS (P) LTD. & 8. M/S. SHIMMER MARKETING (P) LTD. THE AO FURTHER STATED THAT CURRENT ACCOUNT NO. 553 WAS IN THE NAME OF M/S. GRADUATE UNITED SERVICES WITH THE ADDRESS AS 850 MANTOLA NEW DELHI 110055 WHICH IS ALSO THE ADDRESS OF M/S. H OPEWIN ADMARK AND CONSULTANCY (P) LTD. ONE OF THE SHARE APPLICANT TO THE ASSESSEE. 14. SINCE APPLICANTS WERE NOT PRODUCED BEFORE THE A O BY THE ASSESSEE THE AO ISSUED SUMMONS U/S. 131 TO THE FOLLOWING PERSONS : 1. M/S. SHIVAM SOFTECH LTD.. 2. M/S. MAA SHAKUMBHARI STONE CRUSHERS (P) LTD. & 3. M/S. WELCOME COIR INDUSTRIES LTD. ITA NO. 3197/DEL/2009 PAGE 7 OF 26 4. M/S. SHIMMER MARKETING (P) LTD. 5. SH. AMIT KUMAR SINGH 6. SH. VISHAL AGGARWAL 7. SH. SUBHASH GUPTA AND 8. MS. KIRAN BANSAL THESE PERSONS WERE REQUIRED BY THE AO TO APPEAR PE RSONALLY AND TO PRODUCE THEIR BANK STATEMENT INCOME TAX RETURNS B OOKS OF ACCOUNTS SHARE CERTIFICATE ALLEGEDLY ISSUED BY THE ASSESSEE AND SO URCE OF INVESTMENT IN THE SHARES. 15. FOR THE PURPOSE OF SERVICING OF SUMMONS AT THE ADDRESSES OF THE AFORESAID PARTIES THE AO DEPUTED MS. RENU KAMRA I NSPECTOR OF THE DEPARTMENT. THE INSPECTOR VISITED AT THE GIVEN ADD RESSES AND THEN SUBMITTED A REPORT THAT THESE PARTIES OR PERSONS WERE NOT AVA ILABLE AT THE ADDRESS/ES GIVEN BY THE ASSESSEE. THE AO APPRISED THE ASSESSE E ABOUT THE INSPECTORS REPORT AND ASKED THE ASSESSEE TO EITHER DEPUTE SOME ONE TO ACCOMPANY THE INSPECTOR OR TO GET THE SUMMONS OTHERWISE SERVED OR TO PRODUCE THE PARTIES FOR EXAMINATION AND VERIFICATION. THE ASSESSEE THE N INTIMATED THE AO THAT THE ASSESSEE HAS ALREADY FILED SHARE APPLICATION FO RMS WHEREIN NAME OF THE ASSESSEE FATHERS NAME BANK DETAILS PAN ETC. EST ABLISHING THEIR IDENTITY AND AS SUCH NO FURTHER PROVE OF IDENTITY IS REQUIR ED. HOWEVER THE ASSESSEE VIDE LETTER DATED 26.11.2007 PROVIDED NEW ADDRESS O F THE FOLLOWING PERSONS: 1. M/S. SHIVAM SOFTECH LTD. 2. M/S. SHIMMER MARKETING (P) LTD. ITA NO. 3197/DEL/2009 PAGE 8 OF 26 3. M/S. WELCOME COIR INDUSTRIES LTD. 4. M/S. MAA SHAKUMBHARI STONE CRUSHERS (P) LTD. 16. THE AO ALSO INTIMATED THE ASSESSEE THAT SUMMONS U/S. 131 OF THE ACT WERE ALSO ISSUED TO THE FOLLOWING PARTIES:- 1. M/S. HOPEWIN ADMARK & CONSULTANCY SERVICE (P) LT D. 2. M/S. SUMA FINANCE & INVESTMENT PVT. LTD. 3. M/S. UMESHNEH SECURITIES PVT. LTD. 4. M/S. RUBAL CHEMICALS (P) LTD. 17. HOWEVER THESE PARTIES WERE NOT FOUND AVAILABLE AT THE GIVEN ADDRESS AS REPORTED BY THE INSPECTOR. THE ASSESSEE WAS THE N INFORMED ABOUT THE REPORT OF THE INSPECTOR VIDE ORDER-SHEET ENTRY DATE D 07.12.2007 AND WAS AGAIN ASKED TO PRODUCE THESE PARTIES. THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THE PARTIES ON ITS OWN BUT REQUESTED THE AO TO SERVE THE NOTICE U/S. 131 OF THE ACT THROUGH REGISTERED POST VIDE LETTER DATED 14.12.2007. THE AO THEN DISCUSSED ABOUT THE POSITION OF LAW AS TO THE ASSESSEES BURDEN TO PROVE THE IDENTITY OF THE SHARE HOLDERS AS WELL AS THE GE NUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE PARTIES AND CAME TO CO NCLUSION THAT SHARE APPLICATION MONEY/SHARE CAPITAL RECEIVED FROM VARIO US PARTIES EXCEPT FROM THE DIRECTOR SHRI AJAY SINGHAL ARE BOGUS. HE THER EFORE MADE THE ADDITION OF RS. 1 06 50 000/- ON ACCOUNT OF UNEXPLAINED SHAR E CAPITAL AND SHARE APPLICATION RECEIVED BY THE ASSESSEE DURING THE YEA R UNDER CONSIDERATION. ITA NO. 3197/DEL/2009 PAGE 9 OF 26 18. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPE AL BEFORE THE LD. CIT(A). 19. BEFORE THE CIT(A) THE ASSESSEE MADE VARIOUS CO NTENTIONS AND SUBMISSIONS WHICH ARE SUMMARIZED AS UNDER:- (I) THAT THE STATEMENT OF SHRI S.H. MALLICK SHRI V ISHAL AGGARWAL SHRI UMESH GUPTA AND OTHERS RECORDED BY THE INVESTIGATION WING WERE RECORDED AT THE BACK OF TH E ASSESSEE AND THE ASSESSEE WAS NOT ALLOWED THE OPPO RTUNITIES TO CROSS EXAMINING THEM. FURTHER THE STATEMENTS W ERE NOT RECORDED BY THE AO. (II) IN THE ABSENCE OF ANY OPPORTUNITY BEING GIVEN TO THE ASSESSEE TO CROSS EXAMINE THE RESPECTIVE PERSONS WH OSE STATEMENT HAS BEEN RELIED UPON BY THE AO NO ADDITI ON CAN BE MADE IN THE HANDS OF THE ASSESSEE. (III) THE ASSESSEE HAS DISCLOSED ALL THE PARTICULAR S LIKE IDENTITY OF THE PAYER HIS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION BY FURNISHING THE COPY OF LEDGER ACCOUN TS OF SHARE APPLICATIONS IN THE BOOKS OF THE ASSESSEE CO PY OF BANK STATEMENT ALONGWITH COPY OF CHEQUES THROUGH WHICH T HE MONEY WAS RECEIVED COPY OF LEDGER ACCOUNT OF SHARE CAPITAL ITA NO. 3197/DEL/2009 PAGE 10 OF 26 BALANCE SHEET AND PROFIT & LOSS ACCOUNT ANNUAL RET URN FILED WITH THE REGISTRAR OF COMPANIES WHICH INCLUDES LIS T OF SHARE HOLDERS BOTH THE OLD AS WELL AS NEW AND COP Y OF FORM NO. 2 I.E. COPY OF RETURN OF ALLOTMENT OF SHARES AL ONGWITH THE LIST OF NEW SHARE HOLDERS WHICH WAS FILED AND REGI STERED WITH REGISTRAR OF COMPANIES ACKNOWLEDGMENT OF RETU RN OF INCOME OF THE SHARE APPLICANTS BALANCE SHEET PROF IT & LOSS ACCOUNT CIN IDENTIFICATION FROM WEBSITE OF ROC AF FIDAVIT FROM THE DIRECTORS AND CONFIRMATION LETTERS. THESE DETAILS WERE PLACED AT PAGES 235 TO 1062 OF THE PAPER BOOK FILED BEFORE THE CIT(A). (IV) THAT OUT OF FORTY FOUR SHARE APPLICANTS FROM W HOM SHARE CAPITAL/SHARE APPLICATION MONEY WAS RECEIVED THE A O HAD ISSUED NOTICE U/S. 131 TO JUST TWELVE PARTIES AND NO ENQUIRIES FROM ANY OTHER PARTY WAS EVER MADE BY THE AO AND THEREFORE THE ADDITION IN RESPECT OF OTHER PARTY T O WHOM NOTICES U/S. 131 WAS NOT ISSUED IS OTHERWISE NOT W ARRANTED. MOREOVER THERE IS NO ADVERSE INFORMATION FROM INVESTIGATION WING IN RESPECT OF OTHER SHARE-APPLIC ANTS OTHER THEN 12 SHARE HOLDERS MENTIONED IN THE REASONS RECO RDED FOR ISSUING NOTICE U/S. 148 OF THE ACT. ITA NO. 3197/DEL/2009 PAGE 11 OF 26 (V) THE DETAILS OF SHAREHOLDERS TO WHOM SHARE CAPIT AL OF RS. 47 10 000/- WERE ISSUED DURING THE YEAR ALONGWITH THE DETAILS ABOUT PAYMENT RECEIVED WERE DULY FURNISHED BEFORE THE AO. (VI) THE DETAILS WITH REGARD TO SHARE APPLICATION M ONEY AMOUNTING TO RS. 63 50 000/- WERE ALSO DULY SUBMITT ED ALONGWITH THE DETAILS OF ALLOTMENT OF SHARES TO THE SE SHARE APPLICANTS IN THE NEXT IMMEDIATE FINANCIAL YEAR. (VII) IN THE REASONS RECORDED BY THE AO FOR REOPENI NG THE ASSESSMENT ON THE BASIS OF INVESTIGATION REPORT SUB MITTED BY THE INVESTIGATION WING A REFERENCE OF EIGHT PARTIES OUT OF 44 PARTIES FROM WHOM THE ASSESSEE HAD ACCEPTED SHARE C APITAL OR SHARE APPLICATION MONEY DURING THE YEAR UNDER CONSIDERATION IS MADE AND THEREFORE THE AO EVEN OTHERWISE WAS NOT JUSTIFIED IN MAKING ADDITIONS IN RESPECT OF THE PARTIES WHOSE NAME WAS NOT STATED OR MENTIONED IN THE REPORT OF THE INVESTIGATION WING AND THEREFORE A PPLYING THE INFORMATION RECEIVED FROM INVESTIGATION WING TO ALL THE FORTY FOUR PARTIES WAS TOTALLY UNJUSTIFIED. 20. SEVERAL DECISIONS INCLUDING FOLLOWING DECISION WERE RELIED UPON BY THE ASSESSEE BEFORE THE CIT(A):- ITA NO. 3197/DEL/2009 PAGE 12 OF 26 (I) SATISH GUPTA VS. ITO ITAT DELHI BENCHES (SMC) IN ITA NO. 57 & 100/2004. (II) M/S. SMC SHARE BROKERS LTD. VS. DCIT CENTRAL CIRCLE ITAT NEW DELHI IN ITA NO. 250/DEL/2005. (III) CIT VS. M/S. SMC SHARE BROKERS LTD. 286 ITR 345 (DEL.) (IV) CIT VS. DIVINE LEASING AND FINANCE LTD. 299 IT R 268 (DEL.) (V) CIT VS. STALLER INVESTMENTS LTD. (2001) 251 ITR 263 (SC) (VI) CIT VS. LOVELY EXPORTS PVT. LTD. (2008) 216 CT R 195 (SC) (VII) CIT VS. SOFIA FINANCE LTD. (1993) 255 ITR 98 (DEL.) (VIII) CIT VS. VALUE CAPITAL SERVICES PVT. LTD. 307 ITR 334 (DEL.) 21. AFTER CONSIDERING THE AOS ORDER AND THE SUBMIS SIONS OF THE ASSESSEE AND PERUSING THE MATERIALS ON RECORD THE CIT(A) DE LETED THE ADDITION FOR THE FOLLOWING REASONS:- (A) THE ASSESSEE COMPANY HAS PROVIDED DOCUMENTARY EVIDENCES LIKE SHARE APPLICATION FORMS CONTAINING N AMES ADDRESSES PAN COPY OF RETURNS FILED AFFIDAVIT OF THE DIRECTOR OF THE COMPANY ETC. CONFIRMATION OF INVES TORS. (B) BANK STATEMENT OF THE PARTIES WERE OBTAINED BY THE AO DIRECTLY FROM THE BANK. ITA NO. 3197/DEL/2009 PAGE 13 OF 26 (C) THE AO HAS NOT DISPUTED THE IDENTITY OF SHARE A PPLICANTS. (D) THE AO HAD ISSUED SUMMONS ONLY TO ELEVEN PARTIE S OUT OF 44 PARTIES AND NO ENQUIRY WAS MADE AT ALL IN TH E CASE OF REMAINING 33 PARTIES. (E) WITHOUT CONDUCTING ANY ENQUIRY IN CASE OF REMAI NING 33 PARTIES AND IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD SUGGESTING THAT THE PARTIES HAS GIVEN ACCOMMODATION ENTRIES TO THE ASSESSEE THE AO WAS N OT JUSTIFIED IN MAKING ADDITION IN RESPECT OF REMAININ G 33 PARTIES. WITH REGARD TO THE 11 PARTIES IN WHOSE CA SE SUMMONS WERE ISSUED BUT NOT SERVED THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE MO NEY RECEIVED FROM THESE PARTIES WAS THE ASSESSEES OWN UNACCOUNTED MONEY. (F) THE AO HAS SIMPLY RELIED UPON THE INFORMATION R ECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT WITHOUT MAKING ANY CONCRETE EFFORTS TO VERIFY THE FACTS STA TED IN THE REPORT OF THE INVESTIGATION WING. (G) THE ASSESSEE HAS SUBMITTED ALL THE DETAILS INCL UDING CONFIRMATION FROM THE PARTIES WHICH GOES TO ESTABL ISH ITA NO. 3197/DEL/2009 PAGE 14 OF 26 THAT ASSESSEE HAVE BEE ABLE TO DISCHARGE THE BURDEN THAT LAY UPON THE ASSESSEE. (H) THE CIT(A) RELIED UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LT D. (SUPRA). THE CIT(A) HAS ALSO RELIED UPON THE FOLLO WING DECISION:- (I) CIT VS. DIVINE LEASING AND FINANCE LTD. 299 ITR 268 (DEL.) (II) CIT VS. VALUE CAPITAL SERVICES PVT. LTD. 307 I TR 334 (DEL.) (I) THE AO HAS RELIED UPON THE DECISION OF S.H. MAL LICK SHRI VISHAL AGGARWAL SHRI UMESH GUPTA AND OTHERS RECORDED BY THE INVESTIGATION WING OF THE DEPARTMEN T WITHOUT GIVEN ANY OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE AND THEREFORE ADDITION MADE ON THE BASIS OF STATEMENT IS NOT JUSTIFIED. IN THIS RESPECT THE C IT(A) MADE A REFERENCE TO THE DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. SMC BROKERS LTD. (SUPR A) (J) THE AO HIMSELF OBSERVED ON PAGE 7 OF THE ASSESS MENT ORDER THAT THE IDENTITY OF THE INVESTORS IS NOT IN QUESTION AND IT IS ONLY THE CREDITWORTHINESS OF THE PARTIES AND THE ITA NO. 3197/DEL/2009 PAGE 15 OF 26 GENUINENESS OF THE TRANSACTION THAT WAS NOT ESTABLI SHED AND IF THIS IS THE CASE THEN ACTION IN RESPECT OF SHARE APPLICATION MONEY PAID BY SHARE APPLICANTS SHOULD H AVE BEEN INITIATED IN CASE OF THE PAYERS AND NOT IN THE HANDS OF THE ASSESSEE COMPANY. (K) THE AO SHOULD PASSED A SPEAKING ORDER GIVING RE ASONS FOR THE CONCLUSION ARRIVED AT AFTER GIVING OPPORTUN ITIES OF BEING HEARD TO THE ASSESSEE AS SO HELD BY THE HONB LE DELHI HIGH COURT IN THE CASE OF I.T. (INDIA) EXPORT S AND ANOTHER VS. UNION OF INDIA & ANOTHER (2003) 263 ITR 269 (DEL.)(FB). 22. HENCE THE REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 23. THE LD. DR SHRI H.K. LAL HAS SUBMITTED THAT F URNISHING DETAILS OF THE SHARES APPLICANTS IS NOT SUFFICIENT IN THIS CASE WH EN ON AN ENQUIRY IT WAS FOUND BY THE AO THAT THE PERSONS WERE NOT EVEN AVAI LABLE AT THE ADDRESSES GIVEN. HE THEREFORE SUBMITTED THAT EXISTENCE OF THE PERSON WAS IN DOUBT AND THE ASSESSEE HAS NOT BEEN ABLE TO PROVE AND EST ABLISH THAT SUCH SHARE APPLICANTS ARE ACTUALLY IN EXISTENCE. HE FURTHER S UBMITTED THAT DESPITE SEVERAL OPPORTUNITIES WERE GIVEN BY THE AO TO THE A SSESSEE TO PROVE THE EXISTENCE OF THE SHARE APPLICANTS BY PRODUCING THEM BEFORE THE AO THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THOSE PERSONS AND THEN FAILED TO ITA NO. 3197/DEL/2009 PAGE 16 OF 26 FURNISH THE DETAILS OF THEIR PRESENT WHEREABOUTS. H E FURTHER POINTED OUT THAT WHEN ASSESSEE COULD BE ABLE TO FILE THE COPY OF INC OME TAX RETURNS AND AFFIDAVIT FROM THE DIRECTOR IT IS NOT UNDERSTOOD A S TO WHY THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE THOSE SHARE APPLICANTS OR TO FURNISH DETAILS ABOUT THEIR PRESENT WHEREABOUTS AND THEREFORE THE ASSE SSEES CONTENTION THAT IT IS BEYOND ASSESSEES CONTROL TO PRODUCE THEM BEFORE TH E AO FOR VERIFICATION IS NOT BELIEVABLE AND IT IS SEEMS TO BE A WELL THOUGH T STRATEGY SO THAT REAL STATE OF AFFAIRS BETWEEN THE ASSESSEE AND INVESTOR MAY NO T BE BROUGHT TO LIGHT. HE FURTHER CONTENDED THAT THE FACTS OF THE PRESENT CAS E ARE VERY PECULIAR WHERE THE DEPARTMENT HAS BEEN ABLE TO COLLECT INFORMATION BY WAY OF INVESTIGATION WING THAT THE SHARE APPLICANTS HAVE NOT REALLY INVE STED THEIR OWN MONEY TOWARDS SHARE CAPITAL OF THE COMPANY BUT IT IS THE ASSESSEES OWN MONEY WHICH HAS BEEN INTRODUCED IN THE GARB OF SHARE CAPI TAL ROUTED THROUGH BANKING CHANNELS BY ARRANGING AFFAIRS ON PAPERS. H E THEREFORE SUBMITTED THAT THE VARIOUS DETAILS FILED BY THE ASSESSEE ARE NOT ACCEPTABLE ON THEIR FACE VALUE UNLESS THEY ARE BEING COLLABORATED AND SUPPO RTED BY EXAMINING THE SHAREHOLDERS. THE LD. DR HAS RELIED UPON THE DECIS ION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. OMEGA B IOTECH LTD. ITA NO. 2860/DELHI/2009 OF ITAT DELHI BENCH B NEW DELHI ORDER DATED 31.1.2009 ITA NO. 3197/DEL/2009 PAGE 17 OF 26 24. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND REITERATED THE CONTENTIONS AND SUBMISSIONS THAT WERE MADE BEFORE T HE CIT(A). SINCE ASSESSEES CONTENTIONS AND SUBMISSIONS MADE BEFORE THE CIT(A) HAS ALREADY BEEN DISCUSSED ABOVE WE DONT FEEL IT NECESSARY TO REPEAT THEM AGAIN AT THIS PLACE AND WHILE DECIDING THE ISSUE ASSESSEES CON TENTIONS SHALL BE DULY CONSIDERED AND TAKEN INTO ACCOUNT BY US. 25. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE VOLUMINOUS PAPER BOOK FILED BY THE ASSESSEE 26. IN THE PRESENT CASE THE SUM OF RS. 47 10 000/- HAS BEEN CREDITED BY THE ASSESSEE TOWARDS SHARE CAPITAL BY ISSUING SHARE S TO 11 PARTIES INCLUDING THE DIRECTOR SHRI AJAY SINGHAL. THE ASSESSEE HAS ALSO SHOWN THE SUM OF RS. 63 50 000/- TOWARDS SHARE APPLICATION MONEY RECEIVE D DURING THE YEAR FROM 34 PARTIES. ON THE BASIS OF THE INFORMATION RECEIV ED FROM INVESTIGATION WING THE AO INITIATED PROCEEDINGS U/S. 147 OF THE ACT. IN THE ASSESSMENT ORDER THE AO HAS STATED THAT IN THE LIGHT OF THE I NVESTIGATION MADE BY THE INVESTIGATION WING IT WAS FOUND THAT FOLLOWING 12 PARTIES WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES:- 1. M/S. WELCOME COIR INDUSTRIES LTD. 2. M/S. SHIMMER MARKETING PVT. LTD. 3. M/S. MAA SHAKUMBHARI STONE CRUSHER PVT. LTD ITA NO. 3197/DEL/2009 PAGE 18 OF 26 4. M/S. SUMA FINANCE & INVESTMENT PVT. LTD. 5. M/S. ONYX EXIM & SALES PVT. LTD. 6. M/S. HOPEWIN ADMARK & CONSULTANCY SERVICE (P) LT D. 7. M/S. UMESHNEH SECURITIES PVT. LTD. 8. MS. KIRAN BANSAL 9. MR. SUBHASH GUPTA 10. MR. VISHAL AGGARWAL 11. MR. AMITKUMAR SINGH AND 12. MR. S H. MALLICK. 27. DURING THE COURSE ASSESSMENT PROCEEDINGS THE A O FIRST ISSUED SUMMONS U/S. 131 TO THE FOLLOWING PARTIES:- 1. M/S. SHIVAM SOFTECH LTD. 2. M/S. MAA SHAKUMBHARI STONE CRUSHERS PVT. LTD. 3. M/S. WELCOME COIR INDS. LTD. 4. M/S. SHIMMER MARKETING PVT. LTD. 5. SH. AMIT KUMAR SINGH 6. SH. VISHAL AGGARWAL 7. SH. SUBHASH GUPTA 8. MS. KIRAN BANSAL 28. THE AO ALSO LATER ISSUED SUMMONS U/S. 131 TO TH E FOLLOWING FOUR PARTIES:- 1. M/S. HOPEWIN ADMARK AND CONSULTANCY PVT. LTD. 2. M/S. SUMA FINANCE AND INVESTMENT PVT. LTD. 3. M/S. UMESHNEH SECURITIES PVT. LTD. 4. M/S. RUBAL CHEMICALS PVT. LTD. 29. IT IS THE ALLEGATION OF THE AO THAT THE PARTIES TO WHOM SUMMONS WERE ISSUED WERE NOT FOUND AVAILABLE AT THE ADDRESSES GI VEN BY THE ASSESSEE. THE ITA NO. 3197/DEL/2009 PAGE 19 OF 26 AO ALSO STATED THAT THE ASSESSEE HAS ALSO FAILED TO PRODUCE THESE PARTIES FOR HIS EXAMINATION AND VERIFICATION. HOWEVER THE AO HAS MADE THE ADDITION IN RESPECT OF SHARE CAPITAL/SHARE APPLICATION MONEY RE CEIVED FROM ALL 44 PARTIES EXCEPT THE DIRECTOR SHRI AJAY SINGHAL. THE AO REC EIVED ADVERSE INFORMATION IN RESPECT OF 12 PARTIES OUT OF WHICH T HE AO ISSUED SUMMONS TO TEN PARTIES. WITH REGARD TO THE REST 32 PARTIES IN RESPECT OF WHICH NO ADVERSE INFORMATION WERE RECEIVED FROM THE INVESTIGATION WI NG WE FIND THAT THE AO HAD ISSUED SUMMONS ONLY TO TWO PARTIES VIZ. (I) M/ S. SHIVAM SOFTECH LTD. AND (II) M/S. RUBAL CHEMICALS (P) LTD. AND NO ENQU IRY WHATSOEVER WERE CONDUCTED IN RESPECT OF THE REST 30 PARTIES. IN RE SPECT OF THESE 30 PARTIES THE ASSESSEE HAS FURNISHED ALL THE NECESSARY SUPPORTING EVIDENCES AND MATERIAL ESTABLISHING THEIR IDENTITY AND GENUINENESS OF THE TRANSACTION. THE ASSESSEE HAS FURNISHED ACKNOWLEDGEMENT RECEIPT OF RETURN OF INCOME FILED BY THOSE PARTIES. IN RESPECT OF THESE 30 PARTIES THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE AND ESTABLISH THAT THE SHARE APP LICATION MONEY PAID BY THEM WERE ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE COMPANY. THE INFORMATION OR MATERIALS COLLECTED BY THE INVESTIGA TION WING IN RESPECT OF 12 PARTIES HAVE NO LINK OR NEXUS IN ANY MANNER WITH TH E REMAINING AFORESAID 30 PARTIES AND THEREFORE ON THE BASIS OF THE INFORM ATION RECEIVED FROM INVESTIGATION WING IN RESPECT OF 12 PARTIES THE AO WAS TOTALLY UNJUSTIFIED IN MAKING THE ADDITION OF SHARE CAPITAL MONEY IN RESPE CT OF 30 PARTIES IN RESPECT ITA NO. 3197/DEL/2009 PAGE 20 OF 26 OF WHICH ALL THE DOCUMENTARY EVIDENCES SUCH AS SHAR E APPLICATION FORMS CONTAINING NAMES ADDRESSES AND PAN OF THE SHARE AP PLICANTS ALONGWITH THE COPY OF RETURN OF INCOME AND DETAILS OF THE MODE OF PAYMENTS WERE FURNISHED. FURTHER MERE BECAUSE THE SUMMONS ISSUE D U/S. 131 OF THE ACT TO THE AFORESAID TWO PARTIES VIZ. (I) M/S. SHIVAM SOF TECH LTD. AND (II) M/S. RUBAL CHEMICALS (P) LTD. IN RESPECT THEREOF NO ADV ERSE INFORMATION RECEIVED FROM THE INVESTIGATION WING COULD NOT BE SERVED AS THEY WERE NOT FOUND AVAILABLE THE ADDITION IN THE HANDS OF OTHER 30 PA RTIES IN RESPECT THEREOF NEITHER ANY SUMMONS WERE ISSUED NOR ANY ENQUIRY WAS MADE AND FURTHER NO ADVERSE INFORMATIONS WERE RECEIVED FROM THE INVE STIGATION WING IS NOT JUSTIFIED. IT HAS ALSO BEEN NOWHERE MENTIONED BY T HE AO THAT THE STATEMENT OF SHRI S.H. MALLICK SHRI VISHAL AGGARWAL SHRI UM ESH GUPTA AND OTHERS RECORDED BY THE INVESTIGATION WING HAVE IMPLICATED IN ANY MANNER THE AFORESAID 30 PARTIES. THEREFORE RELYING UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEASING AN D FINANCE LTD. (SUPRA) AND IN THE CASE OF CIT VS. VALUE CAPITAL SERVICES P VT. LTD. (SUPRA) AND THE RELYING UPON THE PROPOSITION OF THE HONBLE APEX CO URT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (SUPRA) WE ARE IN AGR EEMENT WITH THE LD. CIT(A) IN DELETING THE ADDITION IN SO FAR AS THE SH ARE CAPITAL/SHARE APPLICATION MONEY RECEIVED FROM THE PARTIES OTHER T HAN 12 PARTIES IN RESPECT OF WHICH INFORMATION WAS RECEIVED FROM INVESTIGATIO N WING AND TWO PARTIES ITA NO. 3197/DEL/2009 PAGE 21 OF 26 ON WHOM THE SUMMONS COULD NOT BE SERVED. THEREFORE THE ORDER OF THE CIT(A) TO THE EXTENT IT RELATES TO 30 PARTIES IS U PHELD. 30. COMING TO THE ADDITION ON ACCOUNT OF UNEXPLAINE D SHARE CAPITAL/SHARE APPLICATION MONEY RECEIVED FROM 12 PARTIES (NAMES O F 12 PARTIES HAVE ALREADY BEEN GIVEN IN PARA 5 OF OUR ORDER) IN RESPE CT OF WHICH THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING TH AT THEY WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES WE FIND THAT THE AO HAD ISSUED SUMMONS U/S. 131 TO 10 PARTIES OUT OF 12 PAR TIES WITH A VIEW TO EXAMINE AND VERIFY THE GENUINENESS OF THE TRANSACTI ON BUT THE SUMMONS SO ISSUED BY THE AO COULD NOT BE SERVED ON THOSE PERSO NS OR PARTIES AS THEY WERE NOT FOUND AVAILABLE AT THE GIVEN ADDRESS. THE REFORE IT IS NOT THE CASE WHERE THE AO HAS FAILED TO MAKE ANY ENQUIRY TO ASCE RTAIN THE FACTS CAME TO LIGHT FROM THE INVESTIGATION CONDUCTED BY THE INVES TIGATION WING. SINCE ALL THE 12 PERSONS WHOM NOTICES U/S. 131 WERE ISSUED B Y THE AO HAVE NOT APPEARED BEFORE THE AO FOR HIS EXAMINATION AND VERI FICATION IT WAS TOTALLY IMPRACTICABLE ON THE PART OF THE AO TO PROVIDE AN O PPORTUNITY TO CROSS EXAMINE THEM BY THE ASSESSEE. IT IS NOT THE CASE W HERE THESE PERSONS WERE EXAMINED BY THE AO AND THEIR STATEMENT WERE RECORDE D BY HIM AND THE AO THEN FAILED TO PROVIDE AN OPPORTUNITY TO THE ASSESS EE TO CROSS EXAMINE THEM. THE STAGE OF PROVIDING OPPORTUNITIES TO THE ASSESSE E TO CROSS EXAMINE THE PERSON DID NOT ARISE AT ALL IN AS MUCH APPEARANCE OF ALL THOSE PERSONS EVEN ITA NO. 3197/DEL/2009 PAGE 22 OF 26 BEFORE THE AO COULD NOT BE PROCURED DESPITE BEST E FFORTS MADE BY THE AO BY ISSUING SUMMONS U/S. 131 AND DEPUTING THE INSPECTOR TO SERVE THE SUMMONS ON THEM AT THE ADDRESSES GIVEN. THEREFORE IN THE LIGHT OF THESE PECULIAR CIRCUMSTANCES OF THE CASE THE CIT(A) WAS UNJUSTIFI ED IN DELETING THE ADDITION IN RESPECT OF SHARE CAPITAL OR SHARE APPLI CATION MONEY RECEIVED FROM 12 PARTIES ON THE GROUND THAT THE ASSESSEE WAS DEPR IVED FROM THE OPPORTUNITY TO CROSS EXAMINE THE CONCERNED PERSONS. THE FACT THAT THESE PERSONS WERE NOT FOUND AVAILABLE AT THE ADDRESSES G IVEN BY THE ASSESSEE WAS ALSO BROUGHT TO THE NOTICE OF THE ASSESSEE. THE AS SESSEE HAS NOT BROUGHT ANY MATERIAL TO PROVE THE ACTUAL PHYSICAL EXISTENCE OF THE SHARE APPLICANTS EXCEPT PROVING THEIR EXISTENCE ON PAPERS. WHEN ON AN ENQU IRY CONDUCTED BY THE INVESTIGATION WING IT WAS FOUND THAT ALL THESE PER SONS WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES VARIOU S DOCUMENTS IN THE NATURE OF CONFIRMATION LETTERS AND OTHER DETAILS SU BMITTED BY THE ASSESSEE CANNOT BE ACCEPTED ON THEIR FACE VALUE. THE CIT(A) HAS THEREFORE FAILED TO TAKE THE NOTE OF THIS FACT THAT WHEN THE SHARE APPL ICANTS WERE NOT FOUND AVAILABLE AT THE ADDRESSES GIVEN AND WERE NOT AVAIL ABLE FOR AOS EXAMINATION HOW MERELY ON THE BASIS OF PAPERS THE EXISTENCE OF SHARE APPLICANTS CAN BE ACCEPTED OR HOW IT CAN BE SAID TH AT THE AO HAS FAILED TO PROVIDE THE OPPORTUNITY TO THE ASSESSEE TO CROSS EX AMINED THEM. IN THE PRESENT CASE THE AO HAS NOT MERELY RELIED UPON THE INFORMATION RECEIVED ITA NO. 3197/DEL/2009 PAGE 23 OF 26 FROM THE INVESTIGATION WING BUT HAS ALSO TRIED TO FIND OUT WHETHER THE SHARE APPLICANTS ACTUALLY EXIST OR NOT OR WHETHER THEY AR E ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES TO THE PRESENT A SSESSEE. IT IS BEYOND THE AOS CONTROL TO PROVE THAT THE MONEY ACTUALLY EMANA TED FROM THE COFFERS OF THE ASSESSEE COMPANY UNLESS CONCERNED SHARE APPLIC ANTS ARE EXAMINED BY HIM. THEREFORE IN THE PRESENT CASE MERELY ON THE BASIS OF CERTAIN DOCUMENTS SUBMITTED BY THE ASSESSEE IN RESPECT OF 1 2 PARTIES IT CANNOT BE PROVED AND ESTABLISHED THAT THE SHARE APPLICANTS AR E IN EXISTENCE AND IT IS A NORMAL TRANSACTION OF RAISING SHARE CAPITAL MONEY F ROM THE ALLEGED SHARE APPLICANTS. HOWEVER AT THE SAME TIME IT IS TRUE TH AT INFORMATION RECEIVED FROM THE INVESTIGATION WING IS ALSO NOT SUFFICIENT TO PROVE AND ESTABLISH THAT THE ALLEGED SHARE CAPITAL OR SHARE APPLICATION MONE Y HAS ACTUALLY EMANATED FROM THE COFFERS OF THE PRESENT ASSESSEE COMPANY. IN ORDER TO DECIDE THIS ISSUE AS TO WHETHER THE SHARE CAPITAL OR SHARE APPL ICATION MONEY RECEIVED FROM TWELVE PARTIES REFERRED TO IN THE REPORT OF IN VESTIGATION WING IS UNACCOUNTED MONEY OF THE ASSESSEE COMPANY OR ANY OT HER PERSON IT IS NECESSARY TO MAKE FURTHER ENQUIRY AND VERIFICATION BY EXAMINING THE CONCERNED PARTIES AS WELL AS BY TAKING INTO ACCOUNT OTHER SURROUNDING CIRCUMSTANTIAL EVIDENCES. WE THEREFORE RESTORE T HE ISSUE LIMITED TO THE ADDITION ON ACCOUNT OF SHARE CAPITAL/ SHARE APPLICA TION MONEY RECEIVED FROM 12 PARTIES TO THE FILE OF THE AO FOR HIS FURTHER E XAMINATION AND VERIFICATION. ITA NO. 3197/DEL/2009 PAGE 24 OF 26 THE AO SHALL MAKE SUCH FURTHER ENQUIRIES AND INVEST IGATION AS HE MAY THINKS FIT AND PROPER. THE AO MAY ALSO MAKE ENQUIRY FROM THE REGISTRAR OF COMPANIES OR FROM THE RESPECTIVE AO ASSESSING THOSE 12 PARTIES IN ORDER TO FIND OUT AS TO WHETHER THESE PARTIES WERE ACTUALLY CARRYING ON ANY BUSINESS ACTIVITY AS CLAIMED BY THEM EITHER IN THE RETURN OF INCOME FILED BEFORE THE INCOME TAX DEPARTMENT OR IN THE RETURN FILED BEFORE THE ROC. NEEDLESS TO MENTION THAT THE AO SHALL PROVIDE REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE BY PUTTING ALL THE MATERIALS OR INFORM ATION THAT MAY BE GATHERED BY THE AO TO THE ASSESSEE FOR ASSESSEES COMMENTS A ND EXPLANATION. IN CASE ANY PERSON IS EXAMINED BY THE AO AND HIS STATEMENT IS INTEND TO BE USED BY THE AO AGAINST THE ASSESSEE THE AO SHALL PROVIDE T HE OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. THE ASSESSEE SHALL BE AT LIBERTY TO PLACE OR FURNISH ANY OTHER EVIDENCE OR MATERIAL BEFORE THE A O SO AS TO JUSTIFY THE IDENTITY AND EXISTENCE OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE SHARE TRANSACTION. WE ORDER ACCORDINGLY. 31. SIMILARLY THE ISSUE WITH REGARD TO THE ADDITIO N IN RESPECT OF TWO PARTIES VIZ. (I) M/S. SHIVAM SOFTECH LTD. AND (II) M/S. RUBAL CHEMICALS (P) LTD. WHOM SUMMONS WERE ISSUED BY THE AO BUT COULD NOT BE SERVED AS THEY WERE NOT FOUND AVAILABLE IS ALSO RESTORED BACK TO THE FILE OF THE AO FOR HIS FRESH ADJUDICATION. THE AO SHALL MAKE SUCH ENQUIRI ES AND INVESTIGATION AS NOTED ABOVE. ITA NO. 3197/DEL/2009 PAGE 25 OF 26 32. THE VIEW WE HAVE TAKEN ABOVE BY RESTORING THE M ATTER BACK TO THE FILE OF THE AO TO EXAMINE THE NATURE OF CREDIT OF SHARE APPLICATION MONEY RECEIVED FROM 12 PARTIES IN RESPECT OF WHICH AN INF ORMATION WAS RECEIVED FROM INVESTIGATION WING THAT THESE 12 PARTIES WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AND IN RESPECT OF OTHER TWO PARTIES ON WHOM SUMMONS COULD NOT BE SERVED HAS ALSO BEEN TAK EN BY THE CO-ORDINATE BENCH OF THE ITAT DELHI BENCH B NEW DELHI IN THE CASE OF ITO VS. OMEGA BIOTECH LTD. (SUPRA) WHICH WAS REFERRED TO B Y THE LD. DR. IN THAT CASE OF OMEGA BIOTECH LTD. (SUPRA) THE ISSUE REGAR DING SHARE CAPITAL RECEIVED FROM 5 COMPANIES IN RESPECT OF WHICH THE A O HAS RECEIVED INFORMATION FROM THE INVESTIGATION WING THAT THOSE 5 COMPANIES WERE NOT CARRYING ON ACTUAL BUSINESS BUT WERE ENGAGED IN TH E BUSINESS OF PROVIDING ACCOMMODATION ENTRIES HAS BEEN RESTORED BACK BY TH E TRIBUNAL TO THE FILE OF THE AO TO DECIDE THE MATTER AFRESH IN AS MUCH AS TH E SUMMONS ISSUED U/S. 131 OF THE ACT BY THE AO TO THOSE PARTIES COULD NOT BE SERVED UPON THEM AS THESE PARTIES WERE NOT FOUND AVAILABLE AT THE ADDRE SSES GIVEN. IT IS THUS CLEAR THAT THE FACTS OF THAT CASE IS IDENTICAL TO T HE FACTS OF THE PRESENT CASE IN SO FAR AS THE 12 PARTIES ARE CONCERNED IN RESPECT OF WHICH AN IDENTICAL INFORMATION HAS BEEN RECEIVED FROM INVESTIGATION WI NG THAT THESE 12 PARTIES WERE NOT CARRYING ON ACTUAL BUSINESS BUT WERE ENGAG ED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AND DURING THE COU RSE OF ASSESSMENT ITA NO. 3197/DEL/2009 PAGE 26 OF 26 PROCEEDINGS SUMMONS ISSUED U/S. 131 OF THE ACT TO THE TEN PARTIES OUT OF TWELVE PARTIES AND TO OTHER TWO PARTIES COULD NOT BE SERVED AS THEY WERE NOT FOUND AVAILABLE AT THE GIVEN ADDRESSES. 33. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 34. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 16 TH APRIL 2010. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER SD/- (C.L. SETHI) JUDICIAL MEMBER DATED: 16 TH APRIL 2010 *NITASHA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. BY ORDER DEPUTY REGISTRAR