DCIT, New Delhi v. M/s. Gulati Glass Industries P. Ltd., New Delhi

ITA 5656/DEL/2012 | 2004-2005
Pronouncement Date: 31-10-2013 | Result: Dismissed

Appeal Details

RSA Number 565620114 RSA 2012
Assessee PAN AAACG0381P
Bench Delhi
Appeal Number ITA 5656/DEL/2012
Duration Of Justice 11 month(s) 23 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Gulati Glass Industries P. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-10-2013
Date Of Final Hearing 18-09-2013
Next Hearing Date 18-09-2013
Assessment Year 2004-2005
Appeal Filed On 07-11-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR ITA NO. 5656/DEL/2012 ASSTT. YR: 2004-05 DCIT CIRCLE 12(1) VS. M/S DURATUF GLASS INDUSTR IES PVT. LTD. NEW DELHI. ( FORMERLY KNOWN AS GULATI GLASS INDU STRIES PVT. LTD) 25 PASCHIM VIHAR EXTN. OPP. ORDNANCE DEPOT ROHTAK ROAD NEW DELHI-63. PAN: AAACG 0381 P ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI SATPAL SINGH SR. DR RESPONDENT BY : SHRI KAPIL GOEL ADV. O R D E R PER R.P. TOLANI J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER D ATED 2-8-2012 RELATING TO A.Y. 2004-05. SOLE EFFECTIVE GROUND RAI SED IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 40 00 000/- MADE U/S 68 OF THE ACT IN RESPECT OF AL LEGED SHARE APPLICATION MONEY. 2. BRIEF FACTS ARE: THE ORIGINAL ASSESSMENT WAS FRA MED ON THE ASSESSEE U/S 115JB OF THE INCOME-TAX ACT. THEREAFTER THE AS SESSEES ASSESSMENT WAS REOPENED U/S 148 OF THE I.T. ACT ALLEGING THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES IN RESPECT OF SHARE APPLICATI ON MONEY FROM FOLLOWING THREE CORPORATE ENTITIES: ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 2 (I) SADGURU FINMAN (P) LTD. RS. 10 00 000/-; (II) ADONIS SECURITIES (P) LTD. RS. 15 00 000/-; AND (III) ADONIS FINANCIAL SERVICES LTD. RS. 15 00 000/-. 2.1. IN REASSESSMENT PROCEEDINGS ASSESSING OFFICER CALLED ON THE ASSESSEE TO JUSTIFY THEM IN TERMS OF SC. 68. ASSESSEE VIDE LETT ER DATED 8-11-2011 FILED FOLLOWING DOCUMENTS: (I) SHARE APPLICATION FORMS; (II) RESOLUTION OF BOARD OF DIRECTORS FOR MAKING THE INV ESTMENT; (III) MEMORANDUM OF ARTICLE AND ASSOCIATION WITH CERTIFIC ATE OF INCORPORATION AND MAIN OBJECTS OF THE COMPANIES; (IV) COPIES OF RETURNS OF INCOME OF THE INVESTORS ALONG WITH COPY OF PAN CERTIFICATE. (V) COPIES OF BANK STATEMENTS FROM WHERE THE MONEY CAME . (VI) CONFIRMATIONS. 2.2. ASSESSING OFFICER HOWEVER ON 8-11-2011 ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS OF THESE COMPANIES HOWEVER NO SUMMONS ON DIRECTORS WERE ISSUED. THE DIRECTORS COULD NOT ATTE ND AND ON 16-12-2011 THE ASSESSMENT ORDER WAS PASSED U/S 143(3) READ WITH SE CTION 147 HOLDING THAT THE ASSESSEE HAS FAILED TO FURNISH ANY SUBSTANTIVE EVIDENCE REGARDING THE CREDITWORTHINESS OF THE INVESTORS. THE ASSESSING OF FICER ADDED THE AFORESAID SUM OF RS. 40 00 000/- TO THE INCOME OF THE ASSESSE E U/S 68. 2.3. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL WH EREIN CIT(A) DELETED THE ADDITION BY FOLLOWING OBSERVATIONS: 6.3. FROM THE EVIDENCE PLACED ON RECORD IT IS OBSERVED T HAT SUBSCRIPTION OF SHARE CAPITAL WAS RECEIVED FROM THE 3 CORPORATE ENTITIES BY THE APPELLANT THROUGH CHEQUES AND THE SAID ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 3 CORPORATE ENTITIES ARE DULY REGISTERED WITH ROC AND SAME ARE ACTIVE AS PER THE WEBSITE OF THE MINISTRY OF CORPOR ATE AFFAIRS. IT HAS ALSO SUBMITTED BY THE APPELLANT THAT THESE COMP ANIES ARE HAVING PAN NUMBER AND ARE REGULARLY FILING ITS RETU RN OF INCOME. HOWEVER THE A.O. HAS NOT TRIED TO ASCERTAI N THE LATEST ADDRESS FROM THE APPELLANT FOR CONDUCTING FURTHER ENQUIRIES IN THE CASE OF THE INVESTOR COMPANY. IF THE APPELLANT HAS NOT BEEN ABLE TO PRODUCE THE SHAREHOLDER NOTHING PREVENTED T HE AO TO ISSUE NOTICE UNDER SECTION 133(6) OR SECTION 131 TO MAKE THE RELEVANT ENQUIRIES. 6.4. WITH REGARD TO THE VARIOUS EVIDENCES SUBMITTED BY T HE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS A.O. DISREGARDED THE SAI D EVIDENCE AND HAS EMPHASIZED THAT IDENTITY AND CREDITWORTHINESS WAS NOT PROVED AND HELD THAT T HE AMOUNT OF RS. 40 LACS RECEIVED AS SHARE APPLICATION MONEY FROM THEE- SAID INVESTOR COMPANIES CANNOT BE TREATED AS GENUIN E AND ARE ONLY AN ACCOMMODATION ENTRIES. 6.5. THE AO IN HIS ORDER HAS NOT BROUGHT ANY MATERIAL ON RECORDS TO SHOW THAT THE CONFIRMATION FILED BY THE INVESTOR COMPANIES WERE NOT GENUINE. IT IS ALSO SEEN THAT NO ENQUIRY WAS CONDUCTED TO EXAMINE THE CONTENTS OF THE INFORMATIO N FILED BY THE APPELLANT. 6.6. THE APPELLANT HAS CITED VARIOUS CASE LAWS ALSO IN I TS SUBMISSIONS WHEREIN IT HAS BEEN HELD THAT THE SHARE CAPITAL ISSUED CANNOT BE TREATED AS UNDISCLOSED INCOME OF T HE APPELLANT AND CANNOT BE ADDED UNDER SECTION 68 OF THE INCOME TAX ACT. THE FACTS OF THE CASES CITED BY THE APPELLANT ARE I DENTICAL WITH THAT OF THE INSTANT CASE. FURTHER THE RELIANCE IS ALSO PLACED ON THE DECISION OF APEX COURT IN THE CASE OF DIVINE LE ASING AND FINANCE LTD. 299 ITR 268 (SC). 6.7. THE APPELLANT IN ITS SUBMISSION HAS ALSO RELIE D UPON THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. L OVELY EXPORT 299 ITR 268 (SC) WHICH HAS CONFIRMED THE ORDER OF THE DELHI HIGH COURT THAT ONCE THE IDENTITY OF THE SHAREHOLDE RS HAVE BEEN ESTABLISHED EVEN IF THERE IS A CASE OF BOGUS SHARE CAPITAL IT CANNOT BE ADDED IN THE HANDS OF THE COMPANY UNLESS ANY ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 4 ADVERSE EVIDENCE IS NOT ON RECORD. IN THE INSTANT C ASE THE APPELLANT HAS PROVIDED EVIDENCE IN THE FORM OF PAN ROC DETAILS COPY OF IT RETURN FILED AND COPY OF CONF IRMATION AND AFFIDAVIT TO ESTABLISH THE GENUINENESS OF THE TRANS ACTION. 6.8. THERE ARE PLETHORAS OF JUDGMENTS OF VARIOUS J UDICIAL AUTHORITIES INCLUDING HON'BLE APEX COURT AND ALSO THE JURISDICTIONAL HIGH COURT WHEREIN IT HAS BEEN HELD THAT IN CASE OF MONEY RECEIVED TOWARDS SHARE CAPITAL ONLY THE I DENTITY OF THE SHAREHOLDERS NEEDS TO BE PROVED. ONCE IDENTITY OF T HE SHAREHOLDERS IS ESTABLISHED AND IT IS PROVED THAT T HE MONEY DID IN FACT COME FROM THEM IT IS NOT FOR THE ASSESSEE TO PROVE AS TO HOW THE SHAREHOLDERS CAME TO BE IN POSSESSION OF TH E MONEY. 6.9. APART FORM THE CASE LAWS RELIED UPON BY THE APPELLA NT I FIND THAT HON'BLE DELHI HIGH COURT IN THE CASE OF C LT VS. GANGOUR INVESTMENT LTD. (INCOME TAX ACT NO. 34/2007) DATED 30.1.2009 HAS HELD THAT REVENUE CAN MAKE ADDITION UNDER SECTION 68 OF THE ACT ONLY IF THE ASSESSEE IS UNABLE TO EXPLAI N THE CREDITS APPEARING IN ITS BOOKS OF ACCOUNTS. IN THE SAID CASE THE APPELLANT HAS DULY EXPLAINED THE SAID CREDIT EN TRIES IN THE FORM OF VARIOUS DOCUMENTARY EVIDENCES. THE SAID DOC UMENTARY EVIDENCE CONTAINED DETAILS WHICH SET OUT NOT ONLY THE IDENTITY OF THE SUBSCRIBERS BUT ALSO GAVE. INFORMATION WITH R ESPECT TO THEIR ADDRESS AS WELL AS PAN ASSESSMENT PARTICULARS ET C. BASED ON THESE FACTS THE HON'BLE DELHI COURT DISMISSED THE APPEAL OF REVENUE. 6.10. IN YET ANOTHER DECISION AS TO THE CORRECTNESS OF TR EATING SHARE APPLICATION MONEY ON PAR WITH CASH CREDIT TH E HON'BLE DELHI HIGH COURT IN CIT VS. VALUE CAPITAL SERVICES P. LTD. (200S) 307 ITR 334 (DELHI) FOUND AFTER REFERRING TO THE TWO OF THE DECISIONS OF THE DELHI HIGH COURT ON THE SUBJEC T THAT IN RESPECT OF SHARE CAPITAL AMOUNTS THEY CANNOT BE AS SESSED IN THE HANDS OF THECOL11PANY UNLESS THE DEPARTMENT IS ABL E TO SHOW THAT THE AMOUNT RECEIVED' TOWARDS SHARE CAPITAL AC TUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE COMPANY. 6.11. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. PRA DEEP GUPTA 207 CTR 115 WHICH HAS ALSO BEEN RELIED UPON BY THE ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 5 DELHI ITAT IN THE RECENT JUDGMENT IN THE CASE OF BA BITA GUPTA ITA NO. 2897/06 WHEREIN IT IS HELD THAT IN THE FACTS OF THE CASE BEFORE US IT MAY BE SEEN THAT FROM THE VERY BEGINNI NG LD. AO HAD SHIFTED ENTIRE BURDEN UPON THE ASSESSEE AND NO MATERIAL WAS BROUGHT BY HIM TO PROVE HIS ALLEGATION THAT THE IMPUGNED AMOUNT REPRESENTED ASSESSEE COMPANY'S UNDISCLOSED I NCOME. THEREFORE ON THIS GROUND ALONE THE ENTIRE ADDITION DESERVES TO BE DELETED AND MAY KINDLY BE HELD SO. 6.12. IN VIEW OF THE FACTUAL POSITION AS WELL AS TH E JUDICIAL PRONOUNCEMENT ON THE SUBJECT 'DISCUSSED ABOVE I A M OF THE CONSIDERED VIEW THAT THE APPELLANT HAS DISCHARGED T HE INITIAL ONUS OF ESTABLISHING THE BONA-FIDES OF THE TRANSACT IONS AND THE AO WAS NOT JUSTIFIED IN IGNORING VARIOUS EVIDENCES PRO VIDED TO HIM BY THE APPELLANT. NOTHING ADVERSE HAS BEEN BROU GHT ON RECORD BY THE AO TO ESTABLISH THAT THE AMOUNT OF SH ARE APPLICATION MONEY OF RS. 40 00 000 RECEIVED BY THE APPELLANT FROM THE SAID PARTIES REPRESENTS ITS OWN UNDISCLOSE D INCOME. IF THERE WAS DOUBT ABOUT THE SOURCE OF INVESTMENT O F THE SAID COMPANY THEN ADDITIONS SHOULD HAVE BEEN MADE IN TH E CASE OF INVESTOR COMPANY AND NOT IN THE HANDS OF THE APPELL ANT COMPANY. THE APPELLANT HAS RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN CIT VS DIVINE LEASING & FINANCE LTD. (CC 375/2008) DATED 21/01/2008 WHEREIN IT WAS HELD - 'WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FO R THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE- COMPANY FROM ALLEGED BOGU S SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AD THEN THE DEPARTMENT IS FREE TO PROCEED TO RE-OPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW.' RELIANCE IN THIS REGARD IS ALSO PLACED ON THE DECIS ION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. PONDY METAL AND ROLLING MILL PVT LTD (DELHI) (ITA NO. 788/2006) DAT ED 19.02.2007 WHEREIN THE HON'BLE COURT CONCURRED WIT H THE FINDINGS OF THE APPELLATE TRIBUNAL DELHI BENCH 'F' THAT ONCE THE IDENTITY OF THE INVESTOR HAS BEEN MANIFEST AND IS PROVED THE INVESTMENT CANNOT BE SAID TO BE THE UNDISCLOSED INC OME OF THE ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 6 ASSESSEE. AT BEST THE AMOUNT COULD BE ADDED IN THE HANDS OF THE INVESTOR BUT IT CERTAINLY COULD NOT BE TREATED AS U NDISCLOSED INCOME OF THE ASSESSEE. THE APPEAL FILED AGAINST TH E SAID DECISION WAS DISMISSED BY THE HON'BLE SUPREME COUR T IN C.C. 12860/2007 DATED 08/01/2008. 6.13. ON THE SIMILAR FACTS IN THE RECENT DECISION O F HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS GOEL SONS G OLDEN ESTATE PVT LTD(ITA 212/2012) DATED 11 TH APRIL 2012 HAVE DELETED THE ADDITION MADE BY HOLDING IN PARA 3 OF T HEIR ORDER AS UNDER: .. WE HAVE EXAMINED THE SAID CONTENTION AND FIND THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS FILED CONFIRMATION LETTERS FROM THE COMPANIES THEIR PAN NUMBER COPY OF BANK STATEMENT S AFFIDAVITS AND BALANCE SHEET. THEREAFTER THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO PRODUCE THE SAID DIRECTORS/ PARTIES. ASSESSEE EXPRESSED ITS INA BILITY TO PRODUCE THEM. THE ASSESSING OFFICER DID NOT CONSEQU ENT THERETO CONDUCT ANY INQUIRY AND CLOSED THE PROCEEDI NGS. THIS IS A CASE WHERE THE ASSESSING OFFICER HAS FAILED TO O CONDUCT NECESSARY INQUI RY VERIFICATION AND DEAL WITH THE MATTER IN DEPTH SPECI ALLY AFTE7 THE AFFIDAVIT/ CONFIRMATION ALONG WITH THE BANK STATEME NTS ETC WERE FILED. IN CASE THE ASSESSING OFFICER HAD CONDUCTED THE SAID ENQUIRIES AND INVESTIGATION PROB ABLY THE CHALLENGE MADE BY THE REVENUE WOULD BE JUSTIFIE D. IN THE ABSENCE OF THESE INQUIRIES AND NON-VERIFICATION OF THE DETAILS AT THE TIME OF ASSESSMENT PROCEEDINGS THE FACTUAL FINDINGS RECORDED BY THE ASSESSING OFFICER WERE INCOMPLETE AND SPARSE. THE IMPUGNED ORDER PASSED CANNOT BE TREATED AND REGARDED AS PERVERSE. THE APPEAL IS DISMISSED AS NO SUBSTANTIAL QUESTION OF L AW ARISES. 6.14. IN THE LIGHT OF THE ABOVE DISCUSSION AND IN V IEW OF THE RECENT DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF GOEL SONS GOLDEN ESTATE (SUPRA) I AM INCLINED TO A GREE WITH THE ARGUMENTS AND EVIDENCES PROVIDED BY THE APPELLA NT TO ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 7 SUBSTANTIATE THAT THE TRANSACTION REGARDING SHARE A PPLICATION MONEY RECEIVED BY IT WAS GENUINE TRANSACTIONS AND T HE SAME WAS NOT AN ACCOMMODATION ENTRY. I ALSO DO NOT FIND ANY EVIDENCE COLLECTED BY THE AD WHICH COULD PROVE OTHE RWISE. ACCORDINGLY THE AO WAS NOT JUSTIFIED IN TREATING T HE AMOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE APPELLAN T AS ITS UNDISCLOSED INCOME. IN VIEW OF OUR AFORESAID DISCUSSION I DELETE THE A DDITION OF RS. 40 00 000 MADE BY THE AO UNDER SECTION 68 OF T HE INCOME TAX ACT 1961. AGGRIEVED REVENUE IS BEFORE US. 3. LD. DR CONTENDS THAT: (I) WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO P RODUCE THE DIRECTORS OF THE COMPANY IT WAS THE DUTY OF THE AS SESSEE TO PRODUCE THEM. IN CASE OF NON-PRODUCTION OF DIRECTORS THE A SSESSING OFFICER HAS RIGHTLY DRAWN ADVERSE INFERENCE. (II) THE INFORMATION WAS PROVIDED BY THE INVESTIGATION W ING OF THE DEPARTMENT TO THE EFFECT THAT BY SYSTEMATIC PLAN TH E ACCOMMODATION ENTRIES ABOUT SHARE APPLICATION MONEY S WERE BEING RECEIVED IN THE BANK ACCOUNTS. (III) ASSESSING OFFICER AT PAGE 2 HAS REITERATED THE METH OD BY WHICH ACCOMMODATION ENTRIES WERE BEING TRANSACTED. (IV) SINCE THE ASSESSEE FAILED TO PRODUCE THE DIRECTORS THE AMOUNT HAS BEEN RIGHTLY ADDED AS UNDISCLOSED INCOME OF THE ASS ESSEE. 3.1. LD. DR ALSO RELIED ON THE RATIO OF DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOVA PROMOTERS 342 ITR 169. 4. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND VEHEMENTLY ARGUES THAT THE SHARE APPLICATION MONEYS IN QUESTION WERE RECEIVED BY THE ASSESSEE ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 8 IN OCTOBER 2003. THE SHARE APPLICATION MONEYS WERE ACCEPTED IN ORIGINAL ASSESSMENT WHICH WAS FAMED U/S 115JB; AFTER ABOUT E IGHT YEARS THE ASSESSMENT WAS REOPENED. THE ASSESSEE IN ORDER TO D ISCHARGE ITS BURDEN IN RESPECT OF PRIMARY ONUS AS CONTEMPLATED BY SEC. 68 IN RESPECT OF ABOVE SHARE APPLICANT SUBMITTED FOLLOWING DOCUMENTS: - AUDITED BALANCE SHEET AND PROFIT & LOSS A/C FOR THE YEAR ENDED 31-3-2004; - PROOF OF FILING OF RETURN; - MEMORANDUM AND ARTICLES OF ASSOCIATION; - CERTIFICATE OF INCORPORATION; - SHARE APPLICATION FORM; - RESOLUTION FOR INVESTMENT; - CERTIFICATE FOR SOURCES OF INVESTMENT MADE; - BANK STATEMENT FROM WHERE FUND INVESTED; - CONFIRMATION OF INVESTMENT; - PAN ALLOTTED FROM INCOME TAX DEPARTMENT. - COPY OF BANK STATEMENT OF M/S GULATI GLASS INDUSTRI ES PVT. LTD. IN WHICH PAYMENT WAS DEPOSITED. 4.1. THIS HAS NOT BEEN DISPUTED BY ASSESSING OFFICE R OR LD. DR. THE ASSESSEE IN FIRST APPEAL RELIED ON VARIOUS CASE LAW S WHICH DISCHARGE THE ONUS CAST ON ASSESSEE BY SEC. 68; THEY ARE REFERRED BY THE LD. CIT(A). THUS ASSESSEE IN TERMS OF EVIDENCE SUBMITTED DETAILS ABO UT THE IDENTITY GENUINENESS INCOME TAX RECORD; BANKING TRANSACTION S; ISSUE OF SHARE CERTIFICATES ETC. ASSESSING OFFICER HAS OFFERED NO COMMENTS ADVERSELY ON THE ENTIRE EVIDENCE. THIS VOLUMINOUS EVIDENCE HAS BEEN BRUSHED ASIDE ONLY ON THE ASSUMPTION THAT THE ASSESSEE FAILED TO PRODUCE THE DIRECTORS WITHOUT APPRECIATING THAT THEY WERE BEING CALLED WITHIN 8 D AYS AFTER A GAP OF ABOUT 8 YERS FROM THE RECEIPT OF SHARE APPLICATION MONEY. 4.2. LD. COUNSEL TOOK US THROUGH THE ASSESSMENT ORD ER PAGE 2 WHICH IS REFERRED BY LD. DR IT IS CONTENDED THAT IN THE ENT IRE PAGE ONLY THEORETICAL AND ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 9 GENERAL OBSERVATIONS ABOUT ACCOMMODATION ENTRIES SY STEM IS MENTIONED. NEITHER ANY SPECIFIC ALLEGATION/ EVIDENCE HAS BEEN BROUGHT AGAINST THE ASSESSEE NOR THE VERACITY OF EVIDENCE FILED BY THE ASSESSEE HAS BEEN REBUTTED. 4.3. ASSESSING OFFICER DID NOT INITIATE ANY INQUIRY WHATSOEVER AND AT THE FAG END OF ASSESSMENT ON 8-11-2011 ASKED THE ASSESS EE TO PRODUCE THE DIRECTORS AFTER EIGHT YEARS OF THE SAID INVESTMENT . ON 16-12-2011 THE ASSESSMENT WAS FRAMED MAKING THE ABOVE ADDITION NO COMMENT WHATSOEVER HAS BEEN OFFERED ABOUT THE VOLUMINOUS AND RELEVANT DOCUMENTS FILED BY THE ASSESSEE FOR DISCHARGE OF PRIMARY ONUS U/S 68. ASSE SSEE THEN RELIED ON THE FOLLOWING CASES LAWS: (I) CIT VS. OASIS HOSPITALITY P. LTD. 333 ITR 119 HOLD ING AS UNDER: WHEN THE MONEY IS RECEIVED BY CHEQUE AND IS TRANSM ITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS THE GENUINE NESS OF THE TRANSACTION WOULD BE PROVED. OTHER DOCUMENTS SHOWIN G THE GENUINENESS OF THE TRANSACTION COULD BE COPIES OF T HE SHAREHOLDER REGISTER SHARE APPLICATION FORMS SHARE TRANSFER R EGISTER ETC. AS FAR AS THE CREDITWORTHINESS OR FINANCIAL STRENGTH O F THE CREDITOR/ SUBSCRIBER IS CONCERNED THAT CAN BE PROVED BY PROD UCING THE BANK STATEMENT OF THE CREDITORS/ SUBSCRIBERS SHOWING THA T IT HAD SUFFICIENT BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAPITAL. ONCE THESE DOCUMENTS ARE PRODUCED T HE ASSESSEE WOULD HAVE SATISFACTORILY DISCHARGED THE ONUS CAST UPON HIM. (II) CIT VS. DWARKADISH INVESTMENT (P) LTD. 330 ITR 298 INTER ALIA HOLDING AS UNDER: IN ANY MATTER THE ONUS OF PROOF IS NOT A STATIC ON E. THOUGH IN SECTION 68 PROCEEDINGS THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTITY OF THE CR EDITORS/ SHARE APPLICANTS BY EITHER FURNISHING THEIR PAN NUMBERS O R INCOME-TAX ASSESSMENT NUMBERS AND SHOWS THE GENUINENESS OF TRA NSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 10 DRAFT OR BY ANY OTHER MODE THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVENUE. JUST BECAUSE THE CREDITORS/ SHARE APPL ICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN IT WOULD NOT GIVE TH E REVENUE THE RIGHT TO INVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWERS AND WHEREWI THAL TO TRACE ANY PERSON. MOREOVER IT IS SETTLED LAW THAT THE AS SESSEE NEED NOT TO PROVE THE SOURCE OF SOURCE . (III) CIT VS. FAIR FINVEST LTD. [ ITA 232/2012- ORDER DAT ED ---- ] HOLDING AS UNDER: 6. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF TH E PARTIES. IN THIS CASE THE DISCUSSION BY THE CIT(APPEALS) WOULD REVEAL THAT THE ASSESSEE HAS FILED DOCUMENTS INCLUDING CERTIFIE D COPIES ISSUED BY THE REGISTRAR OF COMPANIES IN RELATION TO THE SHARE APPLICATION AFFIDAVITS OF THE DIRECTORS FORM 2 FI LED WITH THE ROC BY SUCH APPLICANTS CONFIRMATIONS BY THE APPLICA NT FOR COMPANY'S SHARES CERTIFICATES BY AUDITORS ETC. UNF ORTUNATELY THE ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF T HE INVESTIGATION REPORT AND THE STATEMENT OF MR. MAHES H GARG. TO ELEVATE THE INFERENCE WHICH CAN BE DRAWN ON THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CONCLUSIONS WOULD BE IMPROPER MORE SO WHEN THE ASSESSEE PRODUCED MATERI AL. THE LEAST THAT THE ASSESSING OFFICER OUGHT TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY IF NECESSARY INVOKING HIS POWERS UNDER SECTION 131 SUMMONING THE SHARE APPLICANTS OR DIRECTORS. NO EFFORT WAS MADE IN THAT REGARD. IN TH E ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UN TRUSTWORTHY OR LACKED CREDIBILITY THE ASSESSING OFFICER MERELY CONCLUDED ON THE BASIS OF ENQUIRY REPORT WHICH COLLECTED CERTAI N FACTS AND THE STATEMENTS OF MR. MAHESH GARG THAT THE INCOME S OUGHT TO BE ADDED FELL WITHIN THE DESCRIPTION OF SECTION 68. 7. HAVING REGARD TO THE ENTIRETY OF FACTS AND CIRCU MSTANCES THE COURT IS SATISFIED THAT THE FINDING OF THE TRIBUNAL IN THIS CASE ACCORDS WITH THE RATIO OF THE DECISION OF THE SUPRE ME COURT IN ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 11 LOVELY EXPORTS (SUPRA). 8. THE DECISION IN THIS CASE IS BASED ON THE PECULI AR FACTS WHICH ATTRACT THE RATIO OF LOVELY EXPORTS (SUPRA). WHERE THE ASSESSEE ADDUCES EVIDENCE IN SUPPORT OF THE SHARE APPLICATIO N MONIES IT IS OPEN TO THE ASSESSING OFFICER TO EXAMINE IT AND REJECT IT ON TENABLE GROUNDS. IN CASE HE WISHES TO RELY ON THE R EPORT OF THE INVESTIGATION AUTHORITIES SOME MEANINGFUL ENQUIRY OUGHT TO BE CONDUCTED BY HIM TO ESTABLISH A LINK BETWEEN THE AS SESSEE AND THE ALLEGED HAWALA OPERATORS; SUCH A LINK WAS SHOWN TO BE PRESENT IN THE CASE OF NOVA PROMOTERS & FIN/EASE (P) LTD. (SUPRA) RELIED UPON BY THE REVENUE. WE ARE THEREFOR E NOT TO BE. UNDERSTOOD TO CONVEY THAT IN AN CASES OF SHARE CAPI TAL ADDED UNDER SECTION 68 THE RATIO OF LOVELY EXPORTS (SUPR A) IS ATTRACTED IRRESPECTIVE OF THE FACTS EVIDENCE AND MATERIAL. NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL IS ACCORDINGLY DISMISSED. (IV) CIT VS. GANGESHWARI METAL PVT. LTD. ( ITA 597/2012 ORDER DATED 21-01-2013 DELHI HIGH COURT) IN WHICH THE SCOPE OF NOVA PROMOTERS CASE HAS BEEN EXPLAINED AND DISTING UISHED. THE HONBLE COURT DECIDED THE CASE IN FAVOUR OF THE ASS ESSEE BY FOLLOWING OBSERVATIONS: 8. MR. SABHARWAL APPEARING ON BEHALF OF THE REVEN UE/ APPELLANT SOUGHT TO PLACE RELIANCE ON A DIVISION BE NCH DECISION OF THIS COURT IN CIT V. NOVA PROMOTERS AND FINLEASE (P) LTD. (2012) 342 ITR 169 (DEL). HOWEVER ON GOING THROUGH THE SAID DECISION IN NOVA PROMOTERS A ND FINLEASE (P) LTD. (SUPRA) ITSELF THIS COURT HAS OBS ERVED IN THE CONTEXT OF LOVELY EXPORTS (P) LTD. (SUPRA) AS UNDER:- 'THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 12 AS THEIR NAMES AND ADDRESSES INCOME TAX FILE NUMBERS THEIR CREDITWORTHINESS SHARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICE R AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC.68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE SUCH AS THE PRESENT ONE WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF-CONFESSE D 'ACCOMMODATION ENTRY PROVIDERS WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OR SH ARE SUBSCRIPTION AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE AGAIN SUCH AS THE PRESENT ONE WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH 'ENTRY PROVIDERS'. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE- MEDITATED PLAN -A SMOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSE SSEE EXCLU DES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO' PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 13 EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. 9. AS CAN BE SEEN FROM THE ABOVE EXTRACT TWO TYPES OF CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARRIES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER SITS BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EV IDENCE OR MATERIAL IN HIS POSSESSION AND THEN COMES FORWARD TO MERELY REJECT THE SAME ON THE PRESUMPTIONS. THE PRE SENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESS ING OFFICE AFTER NOTING THE FACTS MERELY REJECTED THE SAME. T HIS WOULD BE APPARENT FROM THE OBSERVATIONS OF THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER TO THE FOLLOWING EF FECT:- IN VESTIGATION MADE BY THE INVESTIGATION WING OF THE DEPARTMENT CLEARLY SHOWED THAT THIS WAS NOTHING BUT A SHAM TRANSACTION OF ACCOMMODATION ENTRY. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAID AMOUNT OF RS.L 11 50 000/- MAY NOT BE ADDED TO ITS INCOME. IN RESPONSE THE ASSESSEE HAS SUBMITTED THAT THERE IS NO SUCH CREDIT IN THE BOOKS OF THE ASSESSEE. RATHER THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARE. IT WAS STATED THAT THE ACTUAL AMOUNT RECEIVED WAS RS.55 50 000/- AND NOT RS.L 11. 50 000/- AS MENTIONED IN THE NOTICE. THE ASSESSEE HAS FURNISHED DETAILS OF SUCH RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE AMOUNT IS FOUND CORRECT. AS SUCH THE UNEXPLAINED AMOUNT IS TO BE TAKEN AT RS.55 50 000/-. THE ASSESSEE HAS FURTHER TRIED TO EXPLAIN THE SOURCE OF THIS AMOUNT OF RS.55 50 000/- BY FURNISHING COPIES OF SHARE APPLICATION MONEY BALANCE SHEET ETC. OF THE PARTIES MENTIONED ABOVE AND ASSERTED THAT THE ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 14 QUESTION OF ADDITION IN THE INCOME OF THE ASSESSEE DOES NOT ARISE. THIS EXPLANATION OF THE ASSESSEE HAS BEEN DULY CONSIDERED AND FOUND NOT ACCEPTABLE. THIS ENTRY REMAINS UNEXPLAINED IN THE HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATION WING OF THE DEPARTMENT. AS SUCH ENTRIES OF RS. 55 50 000/- RECEIVED BY THE ASSESSEE ARE TREAT ED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO ITS INCOME. SINCE I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURAT E PARTICULARS OF ITS INCOME PENALTY PROCEEDINGS UNDER SECTION 271(1(C) ARE BEING INITIATED SEPARATELY. 10. THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LT D. (SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT DECIDED IN FAVOUR OF THE REVENUE IN THAT CASE . HOWEVER THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE AND FALL IN THE SECOND CATEGORY AND ARE MORE IN LINE WITH FACTS OF LOVELY EXPORTS (P) LTD. (SUPRA). THERE WAS A CLEAR LACK OF INQUIRY ON THE PART OF TH E ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED A LL THE MATERIAL WHICH WE HAVE ALREADY REFERRED TO ABOVE. I N SUCH AN EVENTUALITY NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT. CONSEQUENTLY THE QUESTION I S ANSWERED IN THE NEGATIVE. THE DECISION OF THE TRIBU NAL IS CORRECT IN LAW. 4.4. LD. COUNSEL THUS CONTENDS THAT IN THIS CASE NO INQUIRY HAS BEEN MADE BY THE ASSESSING OFFICER AS INDICATED BY THE HONBL E DELHI HIGH COURT IN THE CASES OF FAIR FINVEST LTD. (SUPRA) AND GANGESHWARI METAL PVT. LTD. (SUPRA). THEREFORE THE RATIO OF DECISION IN THE CASE OF NOV A PROMOTERS (SUPRA) CITED BY THE LD. DR WILL NOT BE APPLICABLE TO THIS CASE A S THE FACTS ARE TOTALLY DISTINGUISHABLE. IN THE CASE OF NOVA PROMOTERS THE ASSESSING OFFICER REFUTED THE EVIDENCE FILED BY THE ASSESSEE WITH COGENT REAS ONS. IN THIS CASE EXCEPT ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 15 ASKING THE ASSESSEE TO PRODUCE THE DIRECTORS 8 DAYS PRIOR TO FRAMING THE ASSESSMENT NO INQUIRY WHAT-SO-EVER HAS BEEN INITIAT ED BY ASSESSING OFFICER. NEITHER ANY SUMMONS U/S 131 NOTICE U/S 133(6) OR A NY CROSS INQUIRY OF THE INVESTORS WHOSE ENTIRE INCOME-TAX RECORD WAS FURNIS HED BY THE ASSESSEE WAS EVER CONDUCTED BY THE ASSESSING OFFICER. IN THESE C IRCUMSTANCES THE RATIO OF HONBLE DELHI HIGH COURT IN THE CASE OF FAIR FINVES T LTD. (SUPRA) GANGESHWARI METAL PVT. LTD. (SUPRA) IS SQUARELY APP LICABLE. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT DISPUTED THAT THE ASSESSEE SUBMI TTED PLETHORA OF THE EVIDENCE INCLUDING INCOME TAX RECORD AS MENTIONED A BOVE TO SUBSTANTIATE THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF THE T RANSACTIONS QUA THE SHARE APPLICANTS. ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS OF THESE COMPANIES 8 DAYS PRIOR TO THE FRAMING OF THE ASSESSMENT QUA TRANSACTIONS WHICH WERE 8 YEARS PRIOR. ASSESSING OF FICER AT PAGE 2 OF HIS ORDER HAS MERELY GIVEN SOME GENERAL OBSERVATIONS AB OUT THE MODUS OPERANDI OF THE ENTRY OPERATORS BUT NO WHERE POINTED OUT T HE ASSESSEES INDULGENCE THEREIN. FROM ASSESSMENT ORDER IT EMERGES THAT NO INQUIRY WHATSOEVER WAS CARRIED OUT BY THE ASSESSING OFFICER. THERE IS NO R EFERENCE TO ANY ISSUANCE OF SUMMONS U/S 131 OR NOTICE U/S 133(6). IN THE ABSENC E OF ANY INQUIRY OR ANY ADVERSE REPORT BASED THEREOF THE PLETHORA EVIDENCE FURNISHED BY THE ASSESSEE CANNOT BE BRUSHED ASIDE IN A SUMMARY MANNER. THE CA SE LAW CITED BY THE LD. DR IN THE CASE OF NOVA PROMOTERS (SUPRA) IS QUITE D ISTINGUISHABLE FROM THE FACTS OF THE ASSESSEES CASE AS FULL FLEDGED FURTHE R ENQUIRY WAS CONDUCTED IN THAT CASE. IN OUR CONSIDERED VIEW THE RATIO OF HON BLE DELHI HIGH COURTS JUDGMENTS IN THE CASES OF FAIR FINVEST LTD. (SUPRA) GANGESHWARI METAL PVT. LTD. (SUPRA) ARE FULLY APPLICABLE TO FACTS OF ASSES SEES CASE. IN THE ABSENCE OF ITA 5656/DEL/2012 DCIT VS. GULATI GLASS INDUSTRIES P. LTD. 16 ANY INQUIRY OR CROSS VERIFICATION MADE BY THE ASSES SING OFFICER WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) WHICH IS UPHELD. 6. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 31-10-2013. SD/- SD/- ( T.S. KAPOOR ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31-10-2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR