DCIT, New Delhi v. M/s. Nipun Builders & Developers Pvt. Ltd., New Delhi

ITA 557/DEL/2010 | 2004-2005
Pronouncement Date: 08-07-2011 | Result: Dismissed

Appeal Details

RSA Number 55720114 RSA 2010
Assessee PAN AABCN7240B
Bench Delhi
Appeal Number ITA 557/DEL/2010
Duration Of Justice 1 year(s) 5 month(s) 3 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Nipun Builders & Developers Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 08-07-2011
Date Of Final Hearing 05-07-2011
Next Hearing Date 05-07-2011
Assessment Year 2004-2005
Appeal Filed On 05-02-2010
Judgment Text
ITA NOS. 557-558/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NOS. 557 & 558/DEL/2010 A.YRS. : 2004-05 & 2005-06 DCIT CIRCLE 13(1) ROOM NO. 406 C.R. BUILDING I.P. ESTATE NEW DELHI VS. M/S NIPUN BUILDERS & DEVELOPERS PVT LTD. 501 NIPUN TOWER PLOT NO. 15 COMMUNITY CENTRE KARKARDOOMA DELHI (PAN: AABCN 7240B) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSEESSEE BY : SH. AJAY VOHRA ADVOCATE AND SH. ROHIT GARG CA DEPARTMENT BY : MRS. SRUJANI MOHANTY SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE LD. COMMISSIONER OF INCOME T AX (APPEALS) FOR THE ASSESSMENT YEARS 2004-05 & 2005-06 RESPECTIVELY. ITA NO. 557/DEL/2010 2. THE ISSUES RAISED READ AS UNDER:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DE LETING THE ADDITION OF ` 1 47 00 000/- MADE ON ACCOUNT OF SHARE APPLICATION U/S 68 OF THE INCOME TAX ACT 1961. ITA NOS. 557-558/DEL/2010 2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DEL ETING THE ADDITION OF ` 3 67 500/- MADE ON ACCOUNT OF COMMISSI ON U/S. 68 OF THE INCOME TAX ACT 1961 HOLDING THAT SINCE THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 HAS BEEN DELETED THERE REMAINS NO JUSTIFICATION FOR SUSTAINING THIS ADDITION. 3. IN THIS CASE ASSESSING OFFICER NOTED THAT THERE WAS INFORMATION THAT ASSESSEE HAS RECEIVED AMOUNT FROM ENTRY OPERA TORS AS UNDER:- SL.NO. AMOUNT DATE OF ENTRY NAME OF THE ENTRY GIVER 1 600000/- 15/7/03 GLOBE TECH SOLUTIONS PVT. LTD. 2 900000/- -DO- KOHINOOR OIL MILLS LTD. 3 600000/- 17/7/03 RAPID IMPEX PVT. LTD. 4 1000000/- 27/12/03 NITI HOUSING DEVELOPMENT & FIN. COR. LTD. 5 500000/- 12/7/03 SHATTARCHI FIN & LEASING 6 1000000/- 12/7/03 POLO LEASINGH & FINANCE PVT. LTD. 7 800000/- 12/7/03 SATWANT SINGH SODHI CONST. 8 700000/- 12/7/03 SAHEB ENTERPRISES 9 800000/- 15/7/03 LABH TRONICS OVERSEAS PVT. LTD. 10 800000/- 15/7/03 SHASHI SALES AND MARKETING PVT. LTD. 11 500000/- 15/7/03 FAIR N SQUARE EXPORTS PVT. LTD. 12 500000/- 15/7/03 DIGNITY FINVEST PVT LTD. 13 800000/- 17/7/03 TASHI CONTRACTORS PVT. LTD. 14 600000/- 17/7/03 VPS VALUES & TUBES P LTD. 15 800000/- 17/7/03 NISHANT FINVEST 16 500000/- 22/7/03 DIVISION TRADING PVT. LTD. 17 50000/- 26/7/03 MESTRO MKT & ADVERTISING 18 700000/- 17/7/03 DINANATH LUHARIWAL SPL. MILL 19 600000/- 17/7/03 RIGHT CHOICE CONST. P LTD. 20 50000/- 26/7/03 DINANATH LUHARIWAL SPL. MILL 21 400000/- 12/7/03 ARUN FINVEST PVT. LTD. 22 600000/- 12/7/03 MV MARKETING PVT. LTD. 23 900000/- 15/7/03 EATHNIC CREATION PVT. LTD. ITA NOS. 557-558/DEL/2010 3 3.1 ASSESSING OFFICER NOTED THAT THE SUMMONS WERE ISSUE TO THESE PARTIES AND THE SAME WERE RETURNED BACK AS UN-SERVED . CONSIDERING THE ABOVE ASSESSING OFFICER OPINED THAT THESE COMP ANIES ARE NOT EXISTING AND HENCE HE ADDED THE AMOUNT U/S 68 OF THE IT ACT AMOUNTING TO ` 1 47 00 000/-. ASSESSING OFFICER F URTHER ADDED ` 3 67 500/- I.E. 2.5% OF ` 1 47 00 000/- AS COMMISSIO N PAID IN THESE TRANSACTIONS. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY CONSIDERED THE ISSUE. LD. CO MMISSIONER OF INCOME TAX (APPEALS) NOTED THAT ASSESSEE HAS SUBMITT ED THE FOLLOWING WITH REGARD TO THE SHARE APPLICATION MONEY. I) RETURN OF ALLOTMENT OF SHARES FILED WITH ROC. II) SHARE APPLICATION FORMS ALONG WITH MEMORANDUM AND ARTICLES OF ASSOCIATIONS. III) AFFIDAVIT FROM THE PARTIES. IV) CONFIRMATION OF THE INVESTOR PARTIES. V) COPIES OF THEIR BANK ACCOUNTS. 4.1 CONSIDERING THE ABOVE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- AFTER CAREFUL CONSIDERATION OF ABOVE FACTS I AM OF THE VIEW THAT IN VIEW OF VARIOUS JUDGEMENTS OF JURISDICTIONAL HIGH COURT AS WELL AS HONBLE SUPREME COURT NO ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY (RECEIVED FROM OTHER CORPORATE ENT ITIES/ PARTIES) CAN BE MADE IN THE HANDS OF THE APPELLANT C OMPANY. THE ASSESSING OFFICER HAS NOT AFFECTED ANY ENQUIRIES T O BRING OUT ANY ITA NOS. 557-558/DEL/2010 4 FACT WHICH COULD SUGGEST THAT THESE PARTIES HAVE GI VEN ACCOMMODATION ENTRIES TO THE APPELLANT AND THAT THE MONEY RECEIVED FROM THESE PARTIES IS APPELLANTS OWN UNDIS CLOSED INCOME. EVEN APPELLANT HAS NOT BEEN PROVIDED WITH A N OPPORTUNITY TO CROSS EXAMINE THE SO CALLED ENTRY PRO VIDERS. HE HAS SIMPLY RELIED UPON THE INFORMATION PROVIDED BY THE INVESTIGATION WING OF THE DEPARTMENT WITHOUT MAKING ANY CONCRETE EFFORT TO VERIFY THE FACTS STATED THEREIN. ON THE CONTRARY THE APPELLANT HAS FILED COPIES OF SHARE APPLICATION FORM WHICH CONTAINED NAMES ADDRESSES PAN BANK DETAILS CONF IRMATIONS OF THE INVESTORS COPY OF THE ANNUAL RETURNS AND RETUR NS OF ALLOTMENT FILED WITH THE REGISTRAR OF COMPANIES ETC. AND HENC E IN VIEW OF VARIOUS JUDICIAL PRONOUNCEMENTS NO ADDITION CAN BE MADE IN APPELLANTS HAND. IN THE CASE OF ADDL. C.I.T. VS. H ANUMAN PD. AGGARWAL 151 ITR 151 (PATNA) IT WAS HELD THAT ASSES SEE HAVING FURNISHED THE CORRECT NAME AND ADDRESS OF THE CREDI TOR HAVING CONFIRMATORY LETTER FROM THE CREDITOR AND ALL MATERIAL S SHOW PRIMA FACIE NOT ONLY IDENTITY OF THE CREDITOR BUT ALSO TH E GENUINENESS OF THE TRANSACTION NO ADVERSE INFERENCE CAN BE DRAWN. REFERENCE CAN ALSO BE MADE TO THE JUDGEMENT OF HONBLE APEX COURT IN THE CASE OF STELLAR INVESTMENT LTD. (2001) 251 ITR 263 (SC) WHEREIN IT WAS HELD THAT EVEN IF THE SUBSCRIBERS TO THE IN CREASED SHARE CAPITAL OF ASSESSEE COMPANY WERE NOT GENUINE THE A MOUNT COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF THE A SSESSEE COMPANY. THE ABOVE VIEW POINT OF THE HONBLE APEX C OURT HAS ALSO BEEN EXPRESSED BY JURISDICTIONAL DELHI HIGH COU RT IN THE CASE OF DIVINE LEASING AND FINANCE LTD. (2008) 299 ITR 268 (DEL0< A- ONE HOUSING COMPLEX LTD. VS. ITO 110 ITD 361 (DEL) C .I.T. V. ITA NOS. 557-558/DEL/2010 5 VALUE CAPITAL SERVICE PVT. LTD. 307 ITR 334 (DEL) AN D C.I.T. VS. GENERAL EXPORTS AND CREDITS LTD. (2008) 299 ITR 268 (DEL). IN THE CASE OF C.I.T. VS. LOVELY EXPORTS PVT. LTD. (2008) 299 ITR 268 (DEL) A-ONE DELHI HIGH COURT HELD THAT ONCE THE IDE NTITY OF THE SHARE HOLDER HAS BEEN ESTABLISHED EVEN IF THERE IS A CASE OF BOGUS SHARE CAPITAL IT CANNOT BE ADDED IN THE HA NDS OF THE COMPANY UNLESS ANY ADVERSE EVIDENCE IS ON RECORD. TH E HONBLE DELHI HIGH COURT IN THE CASE OF C I.T. VS. DIVINE LEA SING AND FINANCE LTD. (SUPRA) HAS LAID DOWN THE LAW ON THE SU BJECT AS TO WHAT IS THE EXTENT OF THE BURDEN THAT LIES ON THE ASSESSEE TO PROVE THE CASH CREDIT IN THE SHAPE OF SHARE CAPIT AL. THE HONBLE COURT HELD THAT IF THE RELEVANT DETAILS OF THE A DDRESS OR PAN IDENTITY OF THE CREDITOR/ SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONGWITH THE COPIES OF SHARE HOLDERS R EGISTER SHARE APPLICATION MONEY FORMS SHARE TRANSFER REGIST RAR ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EX PLANATION BY THE ASSESSEE. THE DEPARTMENT WOULD NOT BE JUSTIFIE D IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITORS / SUBSCRIBERS FAILS OR NEGLECTS TO RESPOND TO ITS NOTICES. THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR / SUBSCRIBER DENIE S OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE NOR SHOULD T HE ASSESSING OFFICER TAKE SUCH REPUDIATION AT FACE VALUE AND CO NSTRUE IT WITHOUT MORE AGAINST THE ASSESSEE. THE DEPARTMENT F ILED AN SLP AGAINST THE DECISION OF DELHI HIGH COURT IN THE CASE OF DIVINE LEASING AND FINANCE LTD. (SUPRA) WHERE THE APEX COUR T WHILE DISMISSING THE APPEAL FILED BY THE DEPARTMENT HELD AS FOLLOWS:- WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION F OR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS ITA NOS. 557-558/DEL/2010 6 RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSI NG OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO RE OPEN THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW. DELHI HIGH COURT IN THE CASE OF C.I.T. V. M/S PONDY M ETAL AND ROLLING MILL PVT. LTD. (ITA NO. 788/2006) DATED 19.2 .2007 HAS CONCURRED WITH THE FINDINGS OF THE APPELLATE TRIBU NAL DELHI BENCH F NEW DELHI THAT ONCE THE IDENTITY OF THE I NVESTOR HAS BEEN MANIFEST AND IS PROVED THE INVESTMENT CANNOT BE SAID TO BE THE UNDISCLOSED INCOME OF THE ASSESSEE. AT B EST THE AMOUNT COULD BE ADDED IN THE HANDS OF THE INVESTOR BUT IT CERTAINLY COULD NOT BE TREATED AS UNDISCLOSED INCO ME OF THE ASSESSEE. THE APPEAL FILED AGAINST THE SAID DECI SION WAS DISMISSED BY THE HONBLE SUPREME COURT IN C.C. 12860 /2007 DATED 8.1.2008. AS NO ADVERSE / INCRIMINATING MATE RIAL HAS BEEN GATHERED BY THE ASSESSING OFFICER DURING THE COURS E OF THE ASSESSMENT PROCEEDINGS HENCE I DO NOT SEE ANY JUST IFICATION ON THE PART OF THE ASSESSING OFFICER TO MAKE ANY ADDI TION ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM DIFF ERENT PARTIES ESPECIALLY WHEN THE ASSESSING OFFICER HAS BEEN PROVIDED WITH PAN AND OTHER DOCUMENTARY EVIDENCES TO PROVE TH E IDENTITY OF THE SHARE SUBSCRIBERS. IT HAS BEEN HELD IN PLETHORA OF JUDICIAL PRONOUNCEM ENTS THAT IF THE INFORMATION OR THE SOURCE OF THAT INFORMATION IS COLLECTED AT THE BACK OF THE ASSESSEE AND THE SAME IS NOT CONFRO NTED TO THE ASSESSEE OR THE ASSESSEE IS NOT GIVEN REASONABLE OP PORTUNITY TO REBUT THE SAME THEN THE SAID INFORMATION / MATERIAL C ANNOT BE ITA NOS. 557-558/DEL/2010 7 USED AGAINST THE ASSESSEE. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS GIVEN BY HO NBLE APEX COURT AND JURISDICTION HIGH COURT :- C. VASANTLAL & CO. V. C.I.T. (1962) 45 ITR 206 (SC) MEENGLAS TEA ESTATE VS. ITS WORKEN 1963-(050)-AIR- 1719-SC DHAKESWARI COTTON MILLS LTD. V. C.I.T. 26 ITR 775 78 2-3 (SC) MENKA GANDHI V. UOI (AIR 1978 SC 597) J.T. (INDIA) EXPORTS AND ANOTHER VS. UOI AND ANOTHE R (2003) 262 ITR 269 (DEL-FB) AS THE FACTS ARE PRESENT IN THE INSTANT CASE COUPLE D WITH THE FACT THAT THE APPELLANT HAS DISCHARGED THE INITIAL ONUS OF ESTABLISHING THE IDENTITY OF THE SUBSCRIBERS AND THE BONAFIDES O F THE TRANSACTIONS HENCE THE ASSESSING OFFICER IS NOT JU STIFIED IN IGNORING VARIOUS EVIDENCES PROVIDED TO HIM BY THE A PPELLANT. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE A SSESSING OFFICER TO ESTABLISH THAT THE AMOUNT OF SHARE APPLI CATION MONEY OF ` 1 47 00 000/- RECEIVED BY THE APPELLANT REPRES ENTS ITS OWN UNDISCLOSED INCOME. IN VIEW OF THE OUR AFORESAID DIS CUSSION I DELETE THE ADDITION OF ` 1 47 00 000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. 4.2 LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER HELD THAT SINCE HE HAS DELETED THE ADDITION OF ` 1 47 00 000/- MAD E ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE IT ACT THER E IS NO JUSTIFICATION ITA NOS. 557-558/DEL/2010 8 FOR MAKING AND SUSTAINING THE ADDITION OF ` 3 67 50 0/- ON ACCOUNT OF COMMISSION PAID. HENCE HE DELETE THE SAME ALSO. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT ASSESSEE IN THIS CASE HAS DULY SUBMITTED ALL THE DETAILS TO ESTABLISH THE IDENTITY OF THE PARTIES THE INCOME TAX PARTICULARS IN THE FORM OF PA N WERE ALSO PROVIDED BY THE ASSESSEE. THE ASSESSEE HAS FURTHER SUBMITTED RETURN OF ALLOTMENT OF SHARES FILED WITH ROC SHARE APPLICA TION FORMS ALONGWITH MEMORANDUM AND ARTICLES OF ASSOCIATION A FFIDAVITS FROM THE PARTIES CONFIRMATION OF THE PARTIES COPIES OF B ANK ACCOUNTS. IN THE BACKGROUND OF THE ABOVE DETAILS IT CAN BE SAID THA T ASSESSEE HAS SUBMITTED ENOUGH DETAILS TO ESTABLISH THE IDENTITY OF THE PARTIES. ASSESSING OFFICER HAS PRIMARILY RELIED UPON THE REP ORT OF THE INVESTIGATION WING WHICH CANNOT CONCLUSIVELY PROVE THAT ASSESSEE OWN MONEY WAS INVESTED IN THE FORM OF SHARE APPLICATION MO NEY. MOREOVER IT HAS BEEN POINTED OUT BY THE LD. COMMISSI ONER OF INCOME TAX (APPEALS) THAT ASSESSEE HAS NOT BEEN CONFRONTED WITH THE INFORMATION COLLECTED. IN THESE CIRCUMSTANCES WE FIND THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS QU ITE REASONABLE. ITA NOS. 557-558/DEL/2010 9 6.1 IN THIS REGARD WE PLACE RELIANCE OF THE HONBL E APEX COURT DECISION DELIVERED IN THE CASE OF CIT VS. LOVELY E XPORTS 216 CTR 195. IN THIS CASE IT WAS HELD THAT IF THE SHARE APPLICAT ION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLD ERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE D EPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS I N ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. 6.2 WE FURTHER PLACE RELIANCE UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. V G OURDIN HERBALS INDIA LTD. IN ITA NO. 665/2009 VIDE ORDER DATED 17.4.2009 WHEREIN IT HAS BEEN HELD AS UNDER:- THREE COMPANIES VIZ. M/S KUBERCO SALES PVT. LTD. M/ S GARG FINVEST PVT. AND M/S MAFICO LEASING AND CONSULTANTS PV T. LTD. HAD SUBSCRIBED TO THE SHARE CAPITAL ISSUED BY THE ASSE SSEE. THE ASSESSING OFFICER HAD SOME DOUBTS ABOUT THE SOURCE OF THE INVESTMENT MADE BY THOSE THREE COMPANIES AND THEREFO RE MADE CERTAIN INQUIRIES. IN RESPONSE THE ASSESSEE PRODUC ED THE COPY OF THE BANK ACCOUNTS OF ALL THE THREE COMPANIES THE IR CERTIFICATES OF INCORPORATION AND ALSO THE INCOME TAX RETURNS FI LED BY THEM. FROM THE ABOVE DOCUMENTS THE IDENTITY AND GENUINENESS OF THESE COMPANIES IS CLEARLY ESTABLISHED. THE ONLY GROUND FOR ITA NOS. 557-558/DEL/2010 10 MAKING ADDITION BY THE ASSESSING OFFICER WAS THAT T HE BANK ACCOUNTS OF THE THREE COMPANIES REVEALED THAT THE AMOUNTS IN CASH WERE DEPOSITED IN THOSE ACCOUNTS AND THUS CHEQ UES WERE ISSUED IN FAVOUR OF THE ASSESSEE COMPANY ALONGWITH SHARE APPLICATION MONEY. IN THESE CIRCUMSTANCES WE ARE OF THE OPINION THAT FOLLOWING THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF COMMISSI ONER OF INCOME TAX VS. LOVELY EXPORTS PVT. LTD. 216 CTR 195 THE ITAT HAS RIGHTLY HELD THAT THE ASSESSEE HAD DISCHARGED I TS BURDEN. IN CASE THOSE THREE COMPANIES HAD RECEIVED CERTAIN CAS H WHICH WERE DEPOSITED IN THE BANK ACCOUNTS IT WAS FOR TH E INCOME TAX DEPARTMENT TO TAKE ACTION AGAINST THE SAID COMPANIES. 6.3 WE FURTHER PLACE RELIANCE UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. DWARKADISH INVESTMENT P LTD. THE RELEVANT PARAS OF THIS JUDGEMENT OF HON BLE DELHI HIGH COURT I.E. PARA NO. 6 7 & 8 ARE REPRODUCED HEREIN BELOW:- 6. IN OUR OPINION AS SECTION 68 OF THE ACT 1961 HAS BEEN INTERPRETED AS RECENTLY AS 2008 BY A DIVISION BENCH OF THIS COURT IN DIVINE LEASING AND FINANCE LTD. (SUPRA) AFTE R CONSIDERING ALL THE RELEVANT JUDGEMENTS WE DO NOT HAVE TO ITA NOS. 557-558/DEL/2010 11 RECONSIDER ALL THE JUDGEMENTS REFERRED TO BY MR. SAH NI WHICH ARE PRIOR IN DATE AND TIME TO THE AFORESAID JUDGEMENT. IN FACT A SPECIAL LEAVE PETITION FILED A GAINST THE SAID DIVISION BENCH JUDGEMENT WAS DISMISSED BY THE SUPREME COURT BY WAY OF SPEAKING ORDER IN C.I.T. VS . LOVELY EXPORTS (P) LTD. 216 CTR 195 (SC). THE SUPREME COUR T IN LOVELY EXPORTS PVT. LTD. (SUPRA) HAS HELD AS UNDER:- CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT 1961. WE FIND NO MERIT IN THIS SPECIAL LE AVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGEMENT. 7. CONSEQUENTLY THE DOCTRINE OF MERGER WOULD APPLY AND THE JUDGEMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. ITA NOS. 557-558/DEL/2010 12 (SUPRA) WOULD COVER THE FIELD WITH REGARD TO INTERP RETATION OF SECTION 68 OF THE ACT. 8. IN ANY MANNER THE ONUS OF PROOF IS NOT A STATIC ONE. THOUGH IN SECTION 68 PROCEEDINGS THE INITIAL BURDE N OF PROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTIT Y OF THE CREDITORS/ SHARE APPLICANTS BY EITHER FURNISHING T HEIR PAN NUMBER OR INCOME TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRANSACTION BY SHOWING MONEY / HIS B OOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY A NY OTHER MODE THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVE NUE. JUST BECAUSE THE CREDITORS /SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN IT WOULD NOT GIVE THE R EVENUE THE RIGHT TO INVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE P OWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE SOURCE OF SOURCE. 6.4 ON EXAMINING THE PRESENT CASE ON THE ANVIL OF T HE ABOVE SAID HONBLE APEX COURT DECISION AND TWO HONBLE JURISDI CTIONAL HIGH COURT DECISIONS WE DO NOT FIND ANY INFIRMITY OR ILLEGA LITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ACCORDINGLY WE UPHOLD THE SAME. ITA NOS. 557-558/DEL/2010 13 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ITA NO. 558/DEL/2010 8. THE ISSUES RAISED READ AS UNDER:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DE LETING THE ADDITION OF ` 1 77 00 000/- MADE ON ACCOUNT OF SHARE APPLICATION U/S 68 OF THE INCOME TAX ACT 1961. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DEL ETING THE ADDITION OF ` 4 42 500/- MADE ON ACCOUNT OF COMMISSI ON U/S. 68 OF THE INCOME TAX ACT 1961 HOLDING THAT SINCE THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 HAS BEEN DELETED THERE REMAINS NO JUSTIFICATION FOR SUSTAINING THIS ADDITION. 9. IN THIS CASE ASSESSING OFFICER NOTED THAT ASSES SING OFFICER MADE THE ADDITION OF ` 1 77 00 000/- ON ACCOUNT SHARE AP PLICATION MONEY AND FURTHER FOUND THAT THE NAME OF THE PARTIES WERE IN T HE REPORT OF THE INVESTIGATION WING. ASSESSING OFFICER FURTHER NO TED THE SUMMONS WERE ISSUED TO THE CONCERNED PARTIES BUT NOT COMPLI ED WITH. HENCE HE MADE THE ADDITION OF ` 1 77 00 000/-. HE FURTHER ADDED 442500/- I.E. 2.5% OF ` 1 77 00 000/- AS COMMISSION PAID IN TH IS TRANSACTION. ITA NOS. 557-558/DEL/2010 14 10. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE ISSUE AND HELD AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. AUTHORISED REPRESENTATIVE OF THE APPELLANT COMPANY. IT IS NOT ICED THAT THE ASSESSING OFFICER HAS MADE ADDITION OF ` 1 77 00 00 0/- ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM M/ S ARUN FINVEST PVT. LTD. (` 14 00 000/-) M/S ETHNIC CREATION S PVT. LTD. (` 14 00 000/-) M/S MV MARKETING PVT. LTD. (` 14 00 000 /-) M/S SALWAN DEVELOPERS & PROMOTERS PVT. LTD. 14 00 000/-) M/S NITI HOUSING FINANCE AND DEV. CORPN. LTD. (` 60 00 000/- ) M/S RSG MARKETING PVT. LTD. (` 21 00 000/-) M/S JAI SHIV FABR ICATOR PVT. LTD. (` 40 00 000). I HAPPENED TO GO THROUGH THE L EDGER ACCOUNTS OF ABOVE MENTIONED SEVEN PARTIES AND IT IS NOTICED THAT IN THE CASE OF M/S ARUN FINVEST PVT. LTD. THE OPENING BALANC E AS ON 1.4.2004 IS ` 14 00 000/- AGAINST WHICH SHARES WORT H ` 1 40 000/- HAVE BEEN ISSUED ON 25.4.2004 AND THE BALANCE AMOUNT OF ` 12 60 000/- HAS BEEN TAKEN TO SHARE PREMIUM ACCOUNT. IN CASE OF M/S ETHNIC CREATIONS PVT. LTD. THERE IS A OPENING BA LANCE OF ` 14 00 000/- AS ON 1.4.2004 AGAINST WHICH THE APPELL ANT COMPANY ISSUED SHARE CAPITAL WORTH ` 1 40 000/- ON 25.5.20 04 AND THE BALANCE AMOUNT OF ` 12 60 000/- IS TAKEN TO SHARE P REMIUM ACCOUNT. IN THE CASE OF M/S MV MARKETING PVT. LTD THE OPENING BALANCE IS ` 14 00 000/- WITH SIMILAR DETAILS EXIST ING FOR ISSUE OF SHARE CAPITAL AND APPROPRIATION TO SHARE PREMIUM ACC OUNT AS IN THE CASE OF M/S ETHNIC CREATIONS PVT. LTD. AND M/S AR UN FINVEST PVT. LTD. IN THE CASE OF M/S SALWAN DEVELOPERS AND PR OMOTERS PVT. LTD. THE APPELLANT RECEIVED ` 14 00 000/- BY CHEQU E NO. 792585 ITA NOS. 557-558/DEL/2010 15 AND 792586 DATED 4.11.2003 WHICH MEANS THAT THE AMOU NT HAS BEEN RECEIVED DURING THE PERIOD RELEVANT TO ASSESSME NT YEAR 2004-05 AND NOT DURING THE YEAR UNDER CONSIDERATION . IN THE CASE OF M/S NITI HOUSING FINANCE & DEV. CORPN. LTD. M/S RSG MARKING PVT LTD. AND M/S JAISHIV FABRICATORS PVT. LTD THE OPENING BALANCES AS ON 1.4.2004 ARE AS ` 60 00 000/- ` 21 00 000/- AND ` 40 00 000/- RESPECTIVELY. AS THE AMOUNTS IN ALL T HE ABOVE MENTIONED SEVEN PARTIES HAVE BEEN RECEIVED DURING T HE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2004-05 HENCE NO ADDITION ON ACCOUNT OF ANY CASH CREDIT U/S 68 CAN BE MADE FOR A SSESSMENT YEAR 2005-06 I.E. YEAR UNDER CONSIDERATION. IN VIE W OF THIS I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITIO N AS NO ADDITION CAN BE MADE U/S 68 AS THE APPELLANT RECEIVED THE S HARE APPLICATION MONEY FROM THE ABOVE MENTIONED SEVEN PART IES IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2004-0 5. 11. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 12. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A CAT EGORICAL FINDING THAT THE AMOUNT FROM THE SEVEN PARTIES IN THIS CASE HAVE BEEN RECEIVED DURING THE PREVIOUS YEAR RELEVANT TO ASSES SMENT YEAR 2004- 05 HENCE NO ADDITION ON ACCOUNT OF ANY CASH CRED IT U/S 68 CAN BE MADE FOR ASSESSMENT YEAR 2005-06. ITA NOS. 557-558/DEL/2010 16 12.1 LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CONT ROVERT THIS FINDING. 12.2 ACCORDINGLY WE DO FIND ANY INFIRMITY OR ILLEGA LITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HENCE WE UPHOLD THE SAME. 13. IN THE RESULT BOTH THE APPEALS FILED BY THE R EVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/7/2011. SD/- SD/- [C.L. SETHI] [C.L. SETHI] [C.L. SETHI] [C.L. SETHI] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE:- 08/7/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT DELHI BENCHES