The ACIT, 1(2), Bhopal v. M/S. GAJANAN DISTRIBUTORS AND DEVELOPERS PVT. LTD., Bhopal

ITSSA 211/IND/2013 | 2008-2009
Pronouncement Date: 17-11-2014 | Result: Dismissed

Appeal Details

RSA Number 21122716 RSA 2013
Assessee PAN AABCG8894Q
Bench Indore
Appeal Number ITSSA 211/IND/2013
Duration Of Justice 1 year(s) 3 month(s) 25 day(s)
Appellant The ACIT, 1(2), Bhopal
Respondent M/S. GAJANAN DISTRIBUTORS AND DEVELOPERS PVT. LTD., Bhopal
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 17-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 17-11-2014
Assessment Year 2008-2009
Appeal Filed On 22-07-2013
Judgment Text
INDORE IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE . . BEFORE SHRI P.K.BANSAL (AM) AND SHRI MUKUL SRAWAT (J M) ./ I.T.(SS)A NOS. 206 TO 211 /IND/2013 ( / ASSESSMENT YEA RS:2003 - 04 TO 2008 - 09 ) ASST. COMMISSIONER OF INCOME TAX - 1(2) BHOPAL. / VS. M/S. GAJANNAN DISTRIBUTORS AND DEVELOPERS PVT LTD. 71 - H SHAKTI NAGAR BHOPAL ./ ./ PAN/GIR NO. : AABCG 8894 Q ( / APPELLANT ) .. ( / RESPONDENT ) C. O.NOS.96 TO 101/IND/2013 (ARISING OUT OF ./ I.T.(SS)A NOS . 206 TO 211 /IND/2013 ) ( / ASSESSMENT YEARS:2003 - 04 & 2008 - 09 ) IT (SS) A NO.164 TO 167/IND/2003 ASSESSMENT YEARS: 2003 - 04 TO 2006 - 07 M/S. GAJANNAN DISTRIBUTORS AND DEVELOPERS PVT LTD. 71 - H SHAKTI NAGAR BHOPAL / VS. ACIT - 1(2) BHOPAL ./ ./ PAN/GIR NO. : AABCG 8894 Q ( / APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI B.K.NEMA/SHRI K.P. DIWANI / REVENUE BY : SHRI LALCHAND CIT (DR) / DATE OF HEARING : 17.9.2014 / DATE OF PRONOUNCEMENT : 17.11.2014 2 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 2 / O R D E R PER BENCH: ALL THESE APPEALS OF THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASESSEE ARISE OUT OF COMMON ORDER OF LD CIT(A) BILASPUR CAMP AT BHOPAL DATED 18.3.2013 FOR THE ASSESSMENT YEARS 2002 - 03 TO 2008 - 09. HOWEVER THE ASSESSEE HAS FILED CROSS APPEALS ONLY IN RESPECT OF ASSESSMENT YEAR 2003 - 04 TO 2006 - 07 RESPECTIVELY. F OR THE SAKE OF CONVENIENCE ALL THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER. 2. THE O NLY GROUND IN THE APPEALS FILED BY THE REVENUE RELATING TO ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 RELATE TO DISALLOWANCE OF SALARY PAID TO GAURAV SHARMA AND SMT. SHASHI SHARMA. 3. AT THE OUTSET LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE VEHEMENTLY CONTEND ED THAT THE TAX EFFECT IN EACH OF THE APPEAL IS LESS THAN RS.4 LAKHS THEREFORE NO APPEALS SHOULD HAVE BEEN FILED BY THE REVENUE IN VIEW OF INSTRUCTION NO.3/2011 AS WELL AS INSTRUCTION NO.5/2014 DATED 10.7.2014. 4. LD D.R. ON THE OTHER HAND CONTENDED THAT SINCE ALL THESE APPEALS FILED BY THE REVENUE ALTHOUGH RELATE TO ONE ISSUE BUT HAS BEEN DISPOSED OF BY A COMPOSITE ORDER THEREFORE THESE APPEALS SHOULD NOT BE DISMISSED SEPARATELY IN LIMINE DETERMINING THE TAX EFFECT IN RESPECT OF EACH ASSESSMENT YE AR FOR THE GROUNDS OF APPEAL TAKEN BY THE REVENUE. 5. IN THE REJOINDER LD A .R. DRAWN OUR ATTENTION TOWARDS BOARD INSTRUCTION NO.5/2014 DATED 10.7.2014 AND CONTENDED THAT EVEN IF THE TOTAL TAX EFFECT IN ALL THESE APPEALS BY THE REVENUE ARE TAKEN INTO ACCOU NT THE TAX EFFECT WILL BE LESS THAN S.4 LAKHS. HE ALSO CONTENDED THAT INSTRUCTION WILL APPLY TO ALL THE PENDING ASSESSMENT YEAR S AND FOR THIS PROPOSITION RELIANCE WAS PLACED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SURESHCHANDRA DURG APRASAD KHATOD (HUF (2012) 253 CTR 492 (GUJ) AS W ELL AS THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS M/S. P. S. JAIN & CO. IN ITA NO.179/1991 DATED 02.08.2010. 5 . WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTAN CES OF THE CASE. WE NOTED THAT IN EACH OF THE ASSESSMENT YEAR IN THE GROUND TAKEN BY THE 3 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 3 REVENUE THE QUANTUM OF DISALLOWANCE WHICH HAS BEEN DISPUTED BY THE REVENUE COMES TO RS.13 10 000/ - AS DETAILED BELOW: A.Y. 2003 - 04 : RS.1 40 000/ - A.Y. 2004 - 05 : RS.1 80 000/ - A.Y. 2005 - 06 : RS.1 80 000/ - A.Y. 2006 - 07 : RS.3 00 000/ - A.Y. 2007 - 08 : RS.1 20 000/ - A.Y. 2008 - 09 : RS.3 90 000/ - TOTAL: RS.13 10 000/ - WE FIND THAT THE TAX EFFECT OF THIS INCOME FOR ALL THE ASSESSMENT YEARS WILL COME TO RS.3 93 000/ - . THUS THE TOTAL TAX EFFECT IN ALL THE APPEALS FILED BY THE REVENUE IN RESPECT OF GROUND OF APPEAL TAKEN IS LESS THAN RS.4 LAKHS. IT IS AN UNDISPUTED FACT THAT THE BOARD HAS ISSUED INSTRUCTION NO.5/2014 F. NO.279/MISC.142/2007 - ITJ (PT) DAT ED 10.7.2014. THE RELEVANT INSTRUCTION READS AS UNDER: REFERENCE IS INVITED TO BOARDS INSTRUCTION NO 3/2011 DATED 09/02/2011 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FILING DEPARTMENTAL APPEALS (IN INCOME - TAX MATTERS) BEFORE APPELLATE TRIBUNAL HIGH COURTS AND SUPREME COURT WERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE INSTRUCTION IT HAS BEEN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE APPELLATE TRIBUNAL HIGH COURTS AND SUPREME COURT KEEPING IN VIEW THE MONET ARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH APPEALS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: - S NO. APPEALS IN INCOME - TAX MATTERS MONETARY LIMITS (IN RS) 1 BEFORE APPELLATE TRIBUNAL 4 00 000/ - 2 U/S 260A BEFORE HIGH COURT 10 00 000/ - 3 BEFORE SUPREME COURT 25 00 000/ - IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCRIBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE TAX EFFECT MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL 4 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 4 INCOME BEEN REDUCED BY THE AMOUNT OF INCOM E IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS DISPUTED ISSUES). HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEAB ILITY OF INTEREST IS THE ISSUE UNDER DISPUTE THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF IN THE CASE OF AN ASSESSEE THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR APPEAL CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS HENCEFORTH APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESS MENT YEAR. HOWEVER IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN I F THE TAX EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR IF IT IS DECIDED TO FILED APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER / JUDGMENT INVOLVES M ORE THAN ONE ASSESSEE EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 6. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A COURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONETARY LIMIT SPECIFIED ABOVE THE COMMISSIONER OF INCOME - TAX S HALL SPECIFICALLY RECORD THAT EVEN THOUGH THE DECISION IS NOT ACCEPTABLE APPEAL IS NOT BEING FILED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION. FURTHER IN SUCH CASES THERE WILL BE NO PRES UMPTION THAT THE INCOME - TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUES. THE INCOME - TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING AN APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR IF THE TAX EFFECT EXCEEDS THE SPECIFIED MONETARY LIMITS. 7. IN THE PAST A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE B O ARD WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FR OM THE TRIBUNAL OR THE COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER CASE FOR THE SAME OR ANY OTHER ASSESSMEN T YEAR BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES. THE DEPARTMENTAL REPRESENTATIVES/COUNSELS MUST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF THE TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT F ILED OR NOT ADMITTED ONLY FOR THE REASO N OF THE TAX EFFECT BEING LESS THAN THE 5 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 5 SPECIFIED MONETARY LIMIT AND THEREFORE NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH C ASES DO NOT HAVE ANY PRECEDENT VALUE. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THIS INSTRUCTION MAY HAVE TO BE PRODUCED IN COURTS THE JUDICIAL FOLDERS IN THE OFFICE OF CSIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RETRIEVAL. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT. (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE ARE UNDER CHALLENGE OR (B) WHERE BOARDS ORDER NOTIFICATION INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES OR WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT. 9. THE PROPOSAL FOR FILING SPECIAL LEAVE PETITION UNDER ARTICLE 136 OF THE CONSTITUTION BEFORE THE SUPREME COURT SHOULD IN ALL CASES BE SENT TO THE DIRECTORATE OF INCOME - TAX (LEGAL & RESEARCH) NEW DELHI AND THE DECISION TO FILE SPECIAL LEAVE PETITION SHALL BE IN CONSU LTATION WITH THE MINISTRY OF LAW AND JUSTICE. 10. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SHALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TAX. FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY TH E RELEVANT PROVISIONS OF STATUTE & RULES. FURTHER FILING OF APPEAL IN CASES OF INCOME TAX WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12 A OF THE IT ACT 1961 SHALL NO T BE GOVERNED BY THE LIMITS SPECIFIED IN PAR A 3 ABOVE AND DECISION TO FILE APPEAL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 11. THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON OR AFTER 10TH JULY 2014. HOWEVER THE CASES WHERE APPEALS HAV E BEEN FILED BEFORE 10TH JULY 2014 WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 12. THIS ISSUE UNDER SECTION 268A (1) OF THE INCOME - TAX ACT 1961. 6. WE NOTED THAT HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS M/S. P. S. JAIN & CO. (SUPRA) ON THE QUESTION AS TO WHETHER BOARD CIRCULAR WILL APPLY TO THE PENDING APPEALS HAS HELD AS UNDER: 6 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 6 THIS COURT CAN VERY WELL TAKE JUDICIAL NOTICE OF THE FACT THAT BY PASSAGE OF TIME MONEY VALUE HAS GONE DOWN THE COST OF LITIGATION EXPENSES HAS GONE UP THE ASSESSEES ON THE FILE OF THE DEPARTMENTS HAVE BEEN INCREASED CONSEQUENTLY THE BURDEN ON THE DEPARTMENT HAS ALSO INCREASED TO A TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPER IOR COURTS ARE CHOCKED WITH HUGE PENDENCY OF CASES. IN THIS VIEW OF THE MATTER THE BOARD HAS RIGHTLY TAKEN A DECISION NOT TO FILE REFERENCES IF THE TAX EFFECT LESS THAN RS. 2 LAKHS. THE SAME POLICY FOR OLD MATTERS NEEDS TO BE ADOPTED BY THE DEPARTMENT. IN OUR VIEW THE BOARDS CIRCULAR DATED MARCH 27 2000 IS VERY MUCH APPLICABLE EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDECIDED. THE DEPARTMENT IS NOT JUSTIFIED IN PROCEEDING WITH THE OLD REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL. THUS THERE IS NO JUSTIFICATION TO PROCEEDS WITH DECADES OLD REFERENCES HAVING NEGLIGIBLE TAX EFFECT. SIMILARLY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SURESHCHANDRA DURGAPRASAD KHATOD (HUF) (2012) 253 CTR 492 (GUJ) HAS SPECIFICALLY CONSIDERED INSTRUCTION NO. 3/2011 AND HELD THAT THE SAME WOULD APPLY TO PENDING CASES AS WELL EVEN THOUGH THERE WAS A SPECIFIC CONDITION IN THAT INSTRUCTION ALSO THAT THE SAME WOULD APPLY TO APPEALS FILE D ON OR AFTER FEBRUARY 2011. HONBLE HIGH COURT HAS CONSIDERED THIS ISSUE AS U NDER: - 6. THE QUESTION ABOUT APPLICABILITY OF INSTRUCTION NO.3 OF 2011 HAD BEEN CONSIDERED AND DECIDED BY THE AURANGABAD BENCH OF THE BOMBAY HIGH COURT IN TAX APPEAL NO. 78 OF 2007 THE COMMISSIONER OF INCOME TAX V. SMT. VIJAYA V. KAVEKAR DECIDED ON 29.7. 2011. THE DIVISION BENCH AFTER CONSIDERING EARLIER INSTRUCTIONS AND VARIOUS DECISIONS OF THE COURTS ON INSTRUCTIONS RELYING ON THE DECISION IN COMMISSIONER OF INCOME TAX VS. MADHUKAR K. INAMDAR (HUF) REPORTED IN (2010) 229 CTR (BOM) 77 HAS HELD IN PARAG RAPHS 9 10 11 14 AND 17 AS UNDER: '9. AS STATED EARLIER THE INCOME TAX ACT WAS AMENDED AND SECTION 268A HAS BEEN INTRODUCED ON THE STATUTE BOOK WITH RETROSPECTIVE EFFECT. SECTION 268A CARVES OUT AN EXCEPTION FOR FILING OF APPEALS AND REFERENCES UNDER SECTION 260 A OF THE ACT. THE LEGISLATURE HAS PRESCRIBED THAT THE CBDT IS EMPOWERED TO ISSUE CIRCULARS AND INSTRUCTIONS FROM TIME TO TIME WITH REGARD TO FILING OF APPEALS DEPENDING ON THE TAX EFFECT INVOLVED. THEREAFTER IN 2008 CBDT INSTRUCTION NO. 5 OF 2008 DATED 15TH MAY 2008 WAS ISSUED. THIS COURT IN THE CASE OF 'COMMISSIONER OF INCOME TAX V/S MADHUKAR K. INAMDAR (HUF) REPORTED IN '(2010) 229 CTR (BOM) 77 INTERPRETED THE AFORESAID CIRCULAR. THE CIRCULAR WAS ISSUED IN SUPERSESSION OF ALL EARLIER I NSTRUCTIONS ISSUED BY THE BOARD. THE MONETARY LIMIT WAS INCREASED AND APPEALS WERE TO BE FILED UNDER SECTION 260A THEREAFTER ONLY IN CASES 7 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 7 WHERE THE TAX EFFECT EXCEEDED RS. 4 LACS. PARAGRAPH 11 OF THAT INSTRUCTION STIPULATED THAT IT WAS APPLICABLE TO APP EALS FILED ON OR AFTER 15TH MAY 2008. IT WAS FURTHER PROVIDED THAT IN CASES WHERE APPEALS WERE FILED BEFORE 15TH MAY 2008 THEY WOULD BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT WHICH WERE OPERATIVE AT THE TIME WHEN SUCH APPEALS WERE FILED. THE INST RUCTION WAS ISSUED UNDER SECTION 268A(1) OF THE ACT. THE ARGUMENT OF THE LEARNED COUNSEL FOR THE REVENUE IN THAT CASE WAS THAT THE INSTRUCTION ISSUED ON 15TH MAY 2008 DID NOT PRECLUDE THE DEPARTMENT FROM CONTINUING WITH THE APPEALS AND/OR PETITIONS FILED PRIOR TO 15TH MAY 2008 IF THEY INVOLVED A SUBSTANTIAL QUESTION OF LAW OF A RECURRING NATURE NOTWITHSTANDING THE FACT THAT THE TOTAL CUMULATIVE TAX EFFECT INVOLVED IN THE APPEALS WAS LESS THAN RS. 4 LACS. IT WAS SUBMITTED SUCH APPEALS WHICH WERE FILED PRIOR TO THE ISSUANCE OF INSTRUCTION AND WHERE SUBSTANTIAL QUESTIONS OF LAW WERE RAISED WERE REQUIRED TO BE DECIDED ON MERITS. THE COURT WHILE CONSIDERING THE ISSUE OBSERVED THAT PARAGRAPH 5 OF THE CIRCULAR MADE IT CLEAR THAT NO APPEALS WOULD BE FILED IN THE CASES INVOLVING TAX EFFECT LESS THAN RS. 4 LACS NOTWITHSTANDING THE ISSUE BEING OF RECURRING NATURE. RELYING ON THE JUDGEMENT IN CIT V/S POLYCOTT CORPORATION THE COURT OBSERVED AS FOLLOWS: '6THE AFORESAID JUDICIAL VERDICT MAKES IT CLEAR THAT THE CI RCULAR DT. 15TH MAY 2008 IN GENERAL AND PARA (5) THEREOF IN PARTICULAR LAY DOWN THAT EVEN IF THE SAME ISSUE IN RESPECT OF SAME ASSESSEE FOR OTHER ASSESSMENT YEARS IS INVOLVED EVEN THEN THE DEPARTMENT SHOULD NOT FILE APPEAL IF THE TAX EFFECT IS LESS TH AN RS. 4 LAKHS. IN OTHER WORDS EVEN IF THE QUESTION OF LAW IS OF RECURRING NATURE EVEN THEN THE REVENUE IS NOT EXPECTED TO FILE APPEALS IN SUCH CASES IF THE TAX IMPACT IS LESS THAN THE MONETARY LIMIT FIXED BY THE CBDT.' 7. ONE FAILS TO UNDERSTAND HOW THE REVENUE ON THE FACE OF THE ABOVE CLEAR INSTRUCTIONS OF THE CBDT CAN CONTEND THAT THE CIRCULAR DT. 15TH MAY 2008 ISSUED BY THE CBDT IS APPLICABLE TO THE CASES FILED AFTER 15TH MAY 2008 AND IN COMPLIANCE THEREOF THEY DO N OT FILE APPEALS IF THE TAX EFFECT IS LESS THAN RS. 4 LAKHS; BUT THE SAID CIRCULAR IS NOT APPLICABLE TO THE CASES FILED PRIOR TO 15TH MAY 2008 I.E. TO THE OLD PENDING APPEALS EVEN IF THE TAX EFFECT IS LESS THAN RS. 4 LAKHS. IN OUR VIEW THERE IS NO LOGIC BEHIND THIS BELIEF ENTERTAINED BY THE REVENUE.' THE COURT HAS FURTHER HELD THAT THE PREVAILING INSTRUCTIONS FIXING THE MONETARY LIMIT FOR THE TAX EFFECT WOULD HOLD GOOD EVEN FOR PENDING CASES. ACCORDINGLY THE COURT DISMISSED ALL THE APPEALS HAVING A TA X EFFECT OF LESS THAN RS. 4 LACS. 10. THE NEW CBDT INSTRUCTIONS HAVE BEEN ISSUED ON 9TH FEBRUARY 2011 BEING INSTRUCTION NO. 3 OF 2011. THE MONETARY LIMIT HAS BEEN RAISED AGAIN AND CLAUSE 3 OF THE INSTRUCTIONS PROVIDES THAT APPEALS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT 8 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 8 DOES NOT EXCEED THE MONETARY LIMITS PRESCRIBED HENCEFORTH. THE MONETARY LIMITS PRESCRIBED FOR FILING AN APPEAL UNDER SECTION 260A BEFORE THE HIGH COURT HAS BEEN RAISED TO RS. 10 LACS. THIS INSTRUCTION IS IDENTICAL TO THE CBDT I NSTRUCTION NO. 5 OF 2008. CLAUSE 10 OF THIS CIRCULAR INDICATES THAT MONETARY LIMITS WOULD NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TAX. IT FURTHER PROVIDES THAT WHERE THE TAX EFFECT IS NOT QUANTIFIABLE THE DEPARTMENT SHOULD TAKE A DECISION TO FILE APPEALS ON MERITS OF EACH CASE. CLAUSE 11 AGAIN PROVIDES THAT THE INSTRUCTION WOULD APPLY TO APPEALS FILED ON OR AFTER ....2011 AND APPEALS FILED BEFORE ...... 2011 WOULD BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT OPERATIVE AT THE TIME WHEN SUCH APPEALS WERE FILED. 11. IN OUR OPINION WHEN A SIMILAR CLAUSE HAS BEEN INTERPRETED BY THE DIVISION BENCH OF THIS COURT IN CIT VS. MADHUKAR INAMDAR (SUPRA) THE SAME PRINCIPLES MUST APPLY IN THE PRESENT CASES ALSO AS WE HAVE FOUND THAT THE INSTRUCTIONS OF 15TH MAY 2008 IS PARA - MATERIAL WITH THE INSTRUCTION OF 9TH FEBRUARY 2011. 14. SIMILARLY THE DELHI HIGH COURT IN THE CASE OF 'COMMISSI ONER OF INCOME TAX V/S DELHI RACE CLUB LTD.' DECIDED ON MARCH 03 2011 BY RELYING ON ITS EARLIER JUDGEMENT 'COMMISSIONER INCOME TAX DELHI - III V/S M/S P.S. JAIN AND CO. DECIDED ON 2ND AUGUST 2010 HAS HELD THAT THE CBDT CIRCULAR RAISING THE MONETARY LIMIT OF THE TAX EFFECT TO RS. 10 LACS WOULD BE APPLICABLE TO PENDING CASES ALSO. 17. IT IS TRUE THAT THIS JUDGEMENT IN CHHAJER'S CASE (SUPRA) WAS NOT BROUGHT TO THE NOTICE OF THE DIVISION BENCH WHILE DECIDING EITHER MADHUKAR'S CASE (SUPRA) OR THE CASE OF PO LYCOT CORPORATION (SUPRA). HOWEVER THE INSTRUCTION OF 2005 WHICH WAS CONSIDERED IN CHHAJER'S CASE HAS ALSO BEEN INTERPRETED IN POLYCOT CORPORATION (SUPRA). THE CONSISTENT VIEW OF THE COURT HAS BEEN THAT THE CBDT INSTRUCTION WOULD APPLY TO PENDING CASES AS WELL. THE MAIN OBJECTIVE OF SUCH INSTRUCTIONS IS TO REDUCE THE PENDING LITIGATION WHERE THE TAX EFFECT IS CONSIDERABLY SMALL. THEREFORE IN OUR OPINION THE TAX APPEALS ARE REQUIRED TO BE DISMISSED AS THEY ARE NOT MAINTAINABLE IN VIEW OF THE PROVISIONS O F SECTION 268A OF THE INCOME TAX AND THE CBDT INSTRUCTION NO. 3 OF 2011.' 7. THE SAME VIEW HAS BEEN TAKEN BY THE KARNATAKA HIGH COURT IN ITA NO.3191 OF 2005 IN THE COMMISSIONER OF INCOME - TAX VS. M/S. RANKA & RANKA DECIDED ON 2.11.2011 WHEREIN THE DIVI SION BENCH HAS CONSIDERED INSTRUCTION NO.3 AND THE NATIONAL LITIGATION POLICY HAD HELD AS UNDER: '(I) INSTRUCTION NO.3/11 IS ALSO APPLICABLE TO THE PENDING APPEALS. (II) AS THE TAX EFFECT IN THE INSTANT CASE IS LESS THAN RS.10 LAKHS THE APPEAL STAND S DISMISSED ON THE GROUND OF MONETARY LIMIT WITHOUT EXPRESSING ANY OPINION ON THE MERITS OF THE CLAIM MAKING IT CLEAR THAT THE DEPARTMENT IS AT LIBERTY TO 9 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 9 PROCEED AGAINST THE ASSESSEE IN FUTURE IF THERE ANY AMOUNT DUE FROM THE ASSESSEE ON SIMILAR ISSUE AND IF IT IS ABOVE THE MONETARY LIMIT PRESCRIBED.' 7. WE FIND FROM THE ABOVE CASE LAW OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SURESHCHANDRA DURGAPRASAD KHATOD (HUF) (SUPRA) THAT IN THE SIMILAR SITUATION AND EXACTLY IDENTICAL INSTRUCTIONS WERE APPLIED TO THE APPEALS FILED RETROSPECTIVELY. HONBLE GUJARAT HIGH COURT HAS DISCUSSED THAT ALMOST ALL HIGH COURTS ARE OF THE UNANIMOUS VIEW CONSIDERING THE MAIN OBJECTIVE OF SUCH INST RUCTIONS THAT TO REDUCE THE PENDING LITIGATION WHERE THE TAX EFFECT IS CONSIDERABLE LOW OR SMALL THE APPEAL IS NOT MAINTAINABLE. 8. ON QUERY FROM THE BENCH THE LD. DR COULD NOT POINT OUT ANY OF THE EXCEPTIONS AS PROVIDED IN THE CIRCULAR AS UNDER: (A) THAT THIS IS A LOSS CASE HAVING TAX EFFECT MORE THAN THE PRESCRIBED LIMIT WHICH SHOULD BE TAKEN INTO ACCOUNT (B) THAT THIS IS A COMPOSITE ORDER FOR MANY ASSESSMENT YEARS WHERE TAX EFFECT WILL BE MORE THAN THE PRESCRIBED LIMIT AS PER PARA 5 OF ABOVE INSTR UCTIONS (C) THAT THIS IS A CASE WHERE IN THE CASE OF REVENUE WHERE CONSTITUTIONAL VALIDITY OF THE PROVISION OF THE ACT OR I.T. RULES 1962 ARE UNDER CHALLENGE (D) THAT BOARDS ORDER NOTIFICATION INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES (E) THAT REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT AND THE SAME IS UNDER CHALLENGE. THE LD. DR COULD NOT POINT OUT ANY OF THE EXCEPTIONS AS PROVIDED ABOVE. ACCORDINGLY THIS BEING A LOW TAX EFFECT CASE WE DISMI SS THE APPEAL S OF THE REVENUE IN LIMINE WITHOUT GOING INTO MERITS. 9. COMING TO THE CROSS OBJECTIONS FILED BY THE ASSESSEE IN EACH OF THE ASSESSMENT YEAR S LD A.R. WAS FAIR ENOUGH TO CONCEDE THAT THE CROSS OBJECTIONS FILED ARE SUPPORTIVE TO THE ORDER OF LD CIT(A) IN RESPECT OF GROUND OF APPEAL TAKEN BY THE REVENUE. SINCE WE HAVE ALREADY DISMISSED THE APPEALS FILED BY THE REVENUE IN ALL HE ASSESSMENT YEARS THEREFORE CROSS OBJECTIONS FILED BY THE ASSESSEE IN OUR OPINION HAVE BECOME INFRUCTUOUS. WE 10 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 10 ACCORDINGLY DISMISS THE CROSS OBJECTIONS FILED BY THE ASSESSEE IN ALL THE ASSESSMENT YEARS AS INFRUCTUOUS. 10. IN THE RESULT APPEALS FILED BY THE REVENUE A ND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. 11. NOW WE TAKE UP THE APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2003 - 04 TO 2006 - 07. 12. IN ALL THE ASSESSMENT YEARS THE ASSESSEE HAS TAKEN FOLLOWING COMMON GROUNDS OF APPEAL EXCEPT CHANGE IN FIGURE IN GROUND NO.4.. 13. BOTH PARTIES AGREED THAT THESE APPEALS BE DECIDED ON THE BASIS OF FACTS RELATING TO ASSESSMENT YEAR 2003 - 04. 14. GROUNDS OF APPEAL TAKEN IN ASSESSMENT YEA R 2003 - 04 ARE AS UNDER: 1. THE NOTICE ISSUED U/S 153C OF IT ACT 1961 IS ILLEGAL INVALID AND BAD IN LAW. THUS CONSEQUENT ASSESSMENT FRAMED THERE UPON IS LIABLE TO BE CANCELLED. 2. THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT ASSESSING OFFICER HAS V ALIDLY ASSUMED JURISDICTION U/S 1 53C OF IT ACT 1961. 3. THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT TH E SHARE CAPITAL CONTRIBUTION OF THE CORPORATE SHARE HOLDERS IS LIABLE TO BE ASSESSED AS UNEXPLAINED INCOME AT THE HANDS OF ASSESSEE COMPANY. 4. THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL CONTRIBUTION RECEIVED DURING THE PREVIOUS YEAR AT RS 20 00 000/ - IS UNJUSTIFIED UNWARRANTED AND EXCESSIVE. 5. THE LEARNED AUTHORITIES OUGHT TO HAVE ACCEPTED SHARE CAPITAL CONTRIBUTION RECEIVED DURING THE YEAR AND NO ADDITION FOR THE SAME OUGHT TO HAVE BEEN MADE FOR DETERMINING ASSESSABLE INCOME AT THE HANDS OF ASSESSEE. 6. THE ASSESSEE DENIES LIABILITY TO BE ASSESSED TO INTEREST U/S 234A 234B AND 2340 OF THE LT. ACT 1961. WITHOUT PREJUDICE THE LEVY OF INTEREST U/S 234A 234B AND 234C IS UNJUSTIFIED UNWARRANTED AND EXCESSIVE. 15. IN GROUND NO.4 FOR ASSESSMENT YEAR 2004 - 05 RS.10 00 000/ - IN A.Y. 20 05 - 06 RS.50 00 000/ - IN A.Y. 2006 - 07 - S.80 00 000/ - BE READ IN PLACE OF RS.20 00 000/ - 11 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 11 16. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY INCORPORATED ON 11.12.2002 . REGULAR BOOKS OF ACCOUNT AS REQUIRED UNDER THE DIFFERENT STATUTE ARE MAINTAINED AUDITED AND ANNUAL RETURNS AS REQUIRED UNDER THE COMPANIES ACT WERE REGULARLY FILED ALONGWITH AUDITED BALANCE SHEET PROFIT AND LOSS ACCOUNT AND AUDIT REPORT FOR ALL THESE ASSESSMENT YEARS UNDER SECTION 139(1) OF THE AC T AS DETAILED BELOW: ASST. YEAR DATE OF FILING OF RETURN TAXABLE INCOME 2003 - 04 24.10.2003 RS.1 84 785/ - 2004 - 05 27.10.2004 RS.1 65 407/ - 2005 - 06 2.9.2005 ( - ) RS.4 60 449/ - 2006 - 07 31.7.2006 ( - ) RS.15 66 696/ - 17. DURING EACH OF THE ASSESSMENT YEAR S ASSESSEE HAS RECEIVED FOLLOWING SHARE CAPITAL BY WAY OF SHARE APPLICATION MONEY: ASST. YEAR AMOUNT 2003 - 04 RS.23 99 000/ - 2004 - 05 RS.35 00 000/ - 2005 - 06 RS.55 00 000/ - 2006 - 07 RS.1 05 00 000/ - 18. THE DETAILS OF THE SHARE CAPITAL ISSUED AS WELL AS SHARE PREMIUM WERE AVAILABLE IN THE AUDITED BALANCE SHEET. INTIMATION UNDER SECTION 143(1) DATED 7.1.2004 FOR ASSESSMENT YEAR 2003 - 04 WAS DULY RECEIVED BY THE ASSESSEE. SMT. SHASHI SHARMA AND SHRI GAURAV SHARMA ARE THE DIRECTORS OF THE ASSESSEE COMPANY. SEARCH ACTION UNDER SECTION 132 WAS CONDUCTED IN THE RESIDENTIAL AND OFFICE PREMISES OF DR. YOGIRAJ SHARMA SHRI ASHOK NANDA & OTHERS. DURING THE COURSE OF SEARCH ACTION CERTAIN LOSE PAPERS/DOCUMENTS BE LONGING TO THE ASSESSEE WERE FOUND AND SEIZED. ON THE BASIS OF SOME OF THE SEIZED PAPERS THE ASSESSING OFFICER RECORDED THE REASONS AND ISSUED NOTICE UNDER SECTION 153C R.W.S 153A OF THE ACT ON 10.7.2008. IN RESPONSE THERETO ASSESSEE FILED RETURNS SHOWI NG THE SAME INCOME AS HAS BEEN SHOWN IN THE ORIGINAL RETURNS. AFTER ISSUING NOTICE AND QUESTIONNAIRE THE AO COMPLETED THE ASSESSMENTS FOR DIFFERENT ASSESSMENT YEARS MAKING CERTAIN ADDITIONS AND ASSESSING THE INCOME OF THE COMPANY AS WELL AS SHARE APPLICA TION MONEY IN THE HANDS OF DR. YOGIRAJ SHARMA SUBSTANTIVELY AND PROTECTIVELY IN THE HANDS OF THE ASSESSEE ON THE PLEA THAT 12 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 12 MR GAURAV SHARMA WAS 23 YEARS OF AGE AND WAS A STUDENT AND WAS STUDYING FROM THE YEAR MAY 2005 TO TILL NOVEMBER 2006. THEREFORE HE SHOULD NOT HAVE LOOKED AFTER THE AFFAIRS OF THE COMPANY. SIMILARLY ST. SHASHI SHARMA WIFE OF DR. YOGIRAJ SHARMA DEVOTED MOST OF HER TIME IN TAKING CARE OF HER AILING DAUGHTER AND IN HOUSEHOLD WORKS. THEREFORE BOTH SON AS WELL AS WIFE OF DR. YOGIRAJ SH ARMA SHOULD NOT HAVE BECOME THE DIRECTORS OF THESE COMPANIES. THE ASSESSING OFFICER THEREFORE TOOK THE VIEW THAT WHATEVER INVESTMENT BY WAY OF SHARE CAPITAL WAS BROUGHT IN THESE COMPANIES THE MONEY BELONG TO DR. YOGIRAJ SHARMA AND ASSESSED THE CAPITAL CON TRIBUTION RECEIVED BY THESE COMPANIES SUBSTANTIALLY IN THE HANDS OF DR. YOGI RAJ SHARMA AND PROTECTIVELY IN THE HANDS OF ASSESSEE COMPANY. WHEN THE MATTER WENT IN APPEAL BEFORE CIT(A) CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE DELETING THE ADDITION SUBSTANTIALLY IN THE HANDS OF DR. YOGI RAJ SHARMA. 19. THE ISSUE INVOLVED IN GROUND NOS.1 AND 2 RELATE TO THE VALIDITY OF PROCEEDINGS INITIATED UNDER SECTION 153C OF THE ACT TAKEN IN EACH OF THE ASSESSMENT YEAR S . 20. LD A.R. IN THIS REGARD VEHEMENTLY CONTENDED THAT NOTICE UNDER SECTION 153C HAS BEEN ISSUED IN EACH OF THE ASSESSMENT YEAR S IN PURSUANCE TO ACTION U/S.132(1) TAKEN IN THE PREMISES OF DR. YOGIRAJ SHARMA SHRI ASHOK NANDA & OTHERS ON 7.9.2007. THE AO HAS DISCUSSED THE LO O SE PAPERS/DOCUMENTS BELONGING TO THE ASSESSEE FOUND DURING THE SEARCH ACTION FROM THE PREMISES AT PAGES 1 - 2 OF THE ASSESSMENT ORDER. ON THE BASIS OF THESE DOCUMENTS JURISDICTION TO ISSUE NOTICE U/S.153C HAS BEEN ASSUMED IN THE CASE OF THE ASSESSEE AND NOTICE UNDER SECTION 1 53C HAS BEEN ISSUED TO THE ASSESSEE ON 10.4.2008 FOR EACH OF THE ASSESSMENT YEARS . THE DOCUMENTS SEIZED WOULD INDICATE THAT NO DOCUMENT IS IN THE NATURE OF INCRIMINATING MATERIAL TO SHOW THAT THERE IS UNDISCLOSED INCOME ASSESSABLE AT THE HANDS OF THE ASSE SSEE. THE DOCUMENTS SEIZED ARE RECORDED DOCUMENTS VERIFIABLE WITH REFERENCE TO RETURNS SUBMITTED BY THE ASSESSEE IN THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS. IN THE ABSENCE OF DOCUMENTS BEING OF INCRIMINATING NATURE NO VALID ASSUMPTION OF JURISDICT ION UNDER SECTION 153C OF THE INCOME TAX ACT 1961 CAN BE ASSUMED BY THE ASSESSING OFFICER. IN THIS REGARD RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: 1) ITAT ORDER IN ITA NO.4514 & 45L5/DEL/2012 IN THE CASE OF THERAPEUTIC INDIA (P) LTD. VIDE ORD ER DATED 31/5/2013. 2) ITAT ORDER IN ITA NO.5460 TO 5465/DEL/2012 IN THE CASE OF V.K. FISCAL SERVICES PVT. LTD. VIDE ORDER DATED NOVEMBER 2013. 13 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 13 3) ITAT ORDER IN ITA NO.1344/DEL/2012 IN THE CASE OF M/S. DSL PROPERTIES (P) LTD. VIDE ORDER DATED 22/3/ 2013. 4) ITAT ORDER IN ITA NO.917 TO 922/PN/2010 IN THE CASE OF BHARATI VIDYAPEETH VIDE ORDER DATED 28/4/2011. 5) ITAT ORDER IN ITA NO.114 TO 117!PN/2010 IN THE CASE OF SINHGAD TECHNICAL EDUCATION SOCIETY VIDE ORDER DATED 28/1/2011. (THE COPIES OF DECISIONS ARE PLACED BEFORE US IN THE PAPER BOOK VOL - I) 21. IT WAS CONTENDED THAT NO ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF SEIZED DOCUMENTS REFERRED TO ASSESSMENT ORDER ON THE BASIS OF WHICH NOTICE UNDER SECTION 1 53C HAS BEEN IS SU ED IN THE CASE OF ASSESSEE. THEREFORE THE DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH WERE NOT INCRIMINATING DOCUMENTS. THEREFORE THE ASSESSMENT FRAMED ON THE BASIS OF INVALID ASSUMPTION OF JURISDICTION IS LIABLE TO BE CANCELLED. IT WAS FURTHER SUBMITTED THAT ON PERUSAL OF PROVISIONS OF SECTION 132(1) OF THE I.T.ACT 1961 WHICH LAYS DOWN THAT SEIZURE OF BOOKS OF ACCOUNTS DOCUMENTS MONEY BULLION JEWELLERY OR VALUABLE ARTICLES OR THINGS SHOULD BE SUCH WHICH IS IN THE NATURE OF UNDISCLOSED INCOME/ASSETS. IN THIS REGARD RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: I) SRIRAM JAISWAL VS. UNION OF INDIA & ORS.176 ITR 261 (ALL.) II) OMPARKASH JINDAL & ANR. VS.UNION OF INDIA & ORS 104 ITR 389 (P&H) 22. THE DOCUMENTS WHICH FALL FOR CONSIDERATION U/S 132(1)(III) AND LIABLE TO BE SEIZED ALONE CAN BE BASED FOR ASSUMING VALID JURISDICTION U/S 153C OF I T. ACT 1961. THESE DOCUMENTS I N THE CASE OF ASSESSEE COMPANY DID NOT INDICATE ANY UNDISCLOSED ASSETS/ INCOME. THE SHARE CAPITAL ISSUED BY THE ASSESSEE AS WELL AS SHARE PREMIUM RECEIVED BY THE ASSESSEE WERE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND HAVE SHOWN IN THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ENCLOSED AONGWITH INCOME TAX RETU RNS FILED BY THE ASSESSEE UNDER SECTION 139(1) OF THE ACT. NO ADDITION HAS BEEN MADE ON THE BASIS OF DOCUMENTS FOUND FROM 71 - H SHAKTI NAGAR BHOPAL AND OFFICE OF HIPL AT A - 5 KASTURBA NAGAR BHOPAL. AS REGARDS TO DOCUMENTS FOUND FROM A - 70 SHAKTI NAGAR BH OPA L THESE DOCUMENTS PERTAIN S TO SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE COMPANY FROM OPTIMA TEXTILES INDUSTRIES LTD DURING THE YEAR ENDING 31/03/2006. THE AFORESAID TRANSACTION IS AVAILABLE IN REGULAR BOOKS OF ACCOUNT AND WAS NOT IN THE NATURE OF ANY INCRIMINATING MATERIAL TO ASSESS THE SAME AS UNDISCLOSED INCOME IN THE HANDS OF ASSESSEE. THE DOCUMENT S FOUND ARE NOT RELATED TO ASSESSMENT YEARS 2003 - 04 2004 - 05 AND 2005 - 06. THUS THERE WAS NO SC OPE OF ISS UE OF NOTICE U/S 153C OF INCOME TAX ACT 1961 IN RESPECT OF 14 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 14 ASSESSMENT Y EAR S 2003 - 04 TO 2005 - 06. THE A SSESSMENT SO FRAMED DESERVES TO BE CANCELLED. FOR THIS PROPOSITION OF LAW RELIANCE WAS ON THE FOLLOWING DECISIONS: 1. BHARATI VIDAPEETH (IT A NO.917 TO 922/PN/2010) 2. SINHGAD TECHNICAL EDUCATION SOCIETY (ITA NO.114 TO 117/PN/2010) 23. ON THE OTHER HAND LD DEPARTMENTAL REPRESENTATIVE RELIED ON ORDER OF LD CIT(A) AND VEHEMENTLY CONTENDED THAT AS PER PROVISIONS OF SECTION 153C(1) OF THE ACT THAT IF THE DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JU RISDICTION OVER SUCH OTHER PERSON IN WHOSE CASE SEARCH HAS BEEN CONDUCTED AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THER EFORE HE VEHEMENTLY CONTENDED THAT SECTION 153(1) GIVE JURISDICTION TO THE ASSESSING OFFICER TO ISSUE NOTICE U/S.153C OVER THE ASSESSEE. LD D.R. SUBMITTED THAT THIS FACT IS NOT DENIED BY THE ASSESSEE THAT DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND AND S E IZED. ONCE THE DOCUMENTS BELONGING TO THE ASSESSEE ARE FOUND AND SEIZED AT THE PLACES IN WHOSE CASE THE SEARCH HAD TAKEN PLACE THE AO GOT THE VALID JURISDICTION. SECTION DOES NOT TALK OF INCRIMINATING DOCUMENTS BEING FOUND DURING THE COURSE OF SEARCH . IN RESPECT OF DECISIONS RELIED BY LD A.R LD D.R. CONTENDED THAT THESE DECISIONS ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 24. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AS WELL AS CASE LAWS AS HAS BEEN RELIED UPON BEFORE US. 25. WE NOTED THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION CARRIED OUT UNDER SECTION 132 OF THE ACT AT THE RESIDENTIAL AND OFFICE PREMISES OF DR. YOGIRAJ SHARMA SHRI ASHOKA NANDA AND OTHERS ON 7.9.2007 FOLLOWING LO O SE PAPERS/DOCUMENTS BELONGING TO THE ASSESSEE COMPANY WERE FOUND AND SEIZED : 1. A - 70 SHAKTI NAGAR BHOPAL RESIDENCE OF DR. YOGIRAJ SHARMA LPS 1/8 PAGE 47 IS THE CH NO.335492 & 335493 DT.7.2.2006 FAVOURING GAJANNAN DISTRIBUTORS & DEVELOPERS PVT LTD OF THE UTI BANK INDORE A.C NO.043010200021997 OF OPTIMATE TEXTILES IND. THERE IS ALSO THE CH. NOS.384935 384933 384934 389432 & 384931 15 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 15 OF TOTAL AMOUNT RS.25 00 000/ - FAVOURING GAJANNAN DISTRIBUTORS & DEVELOPERS PVT LTD. OF THE UTI BANK INDORE ACCOUNT OF SPECTRUM CHEMICALS PVT. LTD. 2. 71 - H SHAKTI NAGAR BHOPAL RESIDENCE OF SHRI ASHOK NANDA LPS - III/2 3/NB - 88 NEW BAHAR DUPLEX SAHARA STATES - GAJANAN DISTRIBUTORS & DEVELOPERS PVT. LTD. LPS - III/17 VEHICLE FINANCE BY GAJANAN DISTRIBUTORS & DEVELOPERS PVT. LTD. MP04HB9267 AGREEMENT NO. 10668252. LPS - III/1 3/NB NEW BAHAR DUPLEX SAHARA STATES - GAJANAN DISTRIBUTORS & DEVELOPERS PVT. LTD. RS. 15.30 LACS. 3. OFFICE OF HIPL AT A 5 KASTURBA NAGAR BHOPAL LPS 1/3 CANARA BANK & PNB A/C FD - M13 10474 DATED 25.05.2007. LPS 1 / 15 CONTAINING PURCHASE OF IMMOVABLE PROPERTIES. LPS 1/5 PAGE 34 CONTAINING PURCHASE OF IMMOVABLE PROPERTIES. 26. THEREFORE AFTER BEING SATISFIED AND RECORDING THE SATISFACTION THE AO IN THE CASE OF DR. YOGIRAJ SHAMA REFERRED TO THESE DOCUMENTS TO THE ASSESSING OFFICER OF THE ASSESSEE AND NOTICE U/S.153C R.W. S 153A WAS ISSUED TO THE ASSESSEE ON 10.4.2008. WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 153A. THE PROVISIONS OF SECTION 153A 153B & 153C WERE I NSERTED BY THE FINANCE ACT 2003 W.R.E.F 1.6.2003. ORIGINALLY SECTION 153A OF THE ACT DID NOT HAVE ANY SUB - SECTION. HOWEVER SUB - SECTION (2) TO SECTION 153A WAS INSERTED BY THE FINANCE AC T 2008 W. E.F FROM 1.6.2003. SECTION 153A PROVIDES FOR AN ASSESSME NT IN CASE OF A PERSON IN WHOSE CASE SEARCH IS INITIATED U/S.132 OF THE ACT OR BOOKS OF ACCOUNT OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY 2003. SECTION 153B PROVIDES FOR TIME LIMIT FOR COMPLETION OF ASS ESSMENT UNDER SECTION 153A AND SECTION 153C OF THE ACT . SECTION 153C PROVIDES FOR ASSESSMENT OF INCOME OF PERSON OR OTHE R THAN PERSON IN RESPECT OF WHOM WARRANT OR AUTHORISATION IS ISSUED U/S.132 OF THE ACT. 27. SECTION 153A AND SECTION 153C ARE EXTRACTED BELOW: 153A. ASSESSMENT IN CASE OF SEARCH OR REQUISITION. - (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECTION 153 IN THE CASE OF A PERSON WHERE A SEARCH 16 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 16 IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY 2003 THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX AS SESSMENT YEARS REFERRED TO IN CLAUSE (B) IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT IF ANY RELATING TO ANY ASSESSMENT YEAR FALLING WIT HIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SUB - SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A AS THE CASE MAY BE SHALL ABATE. (2) IF ANY PROCEEDING INITIATED OR ANY OR DER OF ASSESSMENT OR REASSESSMENT MADE UNDER SUB - SECTION (1) HAS BEEN ANNULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING THEN NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1) OR SECTION 153 THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YE AR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB - SECTION (1) SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER: PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT IF SUCH ORDER OF ANNULMENT IS SET ASIDE. EXPLANATION. FOR THE REMOVAL OF DOUBTS IT IS HEREBY DECLARED THAT (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION SECTION 153B AND SECTION 153C ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. XX XX XX XX 153C.ASSESSMENT OF INCOME OF ANY OTHER PERSON. - (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECTION 153 WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT O R DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE 17 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 17 PERSON REFERRED TO IN SECTION 153A THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A : PROVIDED THAT IN CASE O F SUCH OTHER PERSON THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO SUB - SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE B OOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. (2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED AS REFERRED TO IN SUB - SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A AND IN RESPECT OF SUCH ASSESSMENT YEAR (A) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB - SECTION (1) OF SECTION 142 HAS BEEN ISSUED TO HIM OR (B) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHE R PERSON BUT NO NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS EXPIRED OR (C) ASSESSMENT OR REASSESSMENT IF ANY HAS BEEN MADE BEFORE THE DATE OF RECEIVING THE BO OKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOME OF SUCH OTHER PERSON OF SUCH ASSESSMENT YEA R IN THE MANNER PROVIDED IN SECTION 153A. 28. IN OUR OPINION THE ASSESSING OFFICER ASSUMED JURISDICTION FOR FRAMING THE ASSESSMENT U/S.153C OF THE ACT WHERE THE ASSESSING OFFICER IS SATISFIED TH A T ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON IN WHOSE CASE SEARCH IS CONDUCTED U/S.132 OF THE ACT. THEREFORE FOR INITIATING A CTION U/S.153C OF THE ACT AND FRAMING ASSESSMENT U/S.153A OF THE ACT THE PRE - REQUISITE IS THAT THE SATISFACTION OF THE ASSESSING OFFICER THAT THE MONEY DOCUMENTS AND PAPERS ETC BELONGS TO A PERSON OTHER THAN THE PERSON IN WHOSE CASE SEARCH IS CONDUCTED U/S.132 OF THE ACT. THE AO NOTED IN THE ASSESSMENT ORDER AT PAGES 1 & 2 AS REPRODUCED BY US HEREINABOVE AND HAS CATEGORICALLY LAID DOWN THAT DURING THE COURSE OF SEARCH THESE LO O SE PAPERS/DOCUMENTS BELONGING TO THE 18 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 18 ASSESSEE WERE FOUND AND SEIZED. IT IS NOT DENIED BY LD A.R. EVEN THOUGH HE HAS VEHEMENTLY CONTENDED THAT THESE DOCUMENTS ARE NOT INCRIMINATING DOCUMENTS THAT THESE DOCUMENTS OR PAPERS DOES NOT BELONG TO THE ASSESSEE. LD A.R. CONTENDED THAT THE TRANSACTION RELATING TO CHEQUES AS HAS BEEN FOUND AND SEIZED ARE ALREADY RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY. SIMILARLY THE TRANSACTION UNDE R THE AGREEMENT FOR VEHICLE FINANCE ETC. ARE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT BUT IT CANNOT BE SAID THAT THESE TRANSACTION DID NOT BELONG TO THE ASSESSEE. 29. IT IS APPARENT FROM THE LANGUAGE OF SECTION THAT THE SECTION DOES NOT REQUIRE THAT THE DOCUMENTS BELONGING TO THE ASSESSEE MUST BE INCRIMINATING DOCUMENTS. SECTION 153C GIVES THE JURISDICTION TO THE ASSESSING OFFICER ONCE THE DOCUMENTS BELONGING TO THE ASSESSEE ARE FOUND IN THE CASE OF THE ASSESSEE IN WHOSE CASE THE SEARCH HAD TAKEN PL ACE. 30. WE HAVE GONE THROUGH THE VARIOUS DECISIONS AS HAS BEEN RELIED UPON BY LD A.R. IN THIS REG A RD WE NOTED THAT IN THE CASE OF ACIT VS. THERAPEUTIC INDIA (P) LTD. (ITA NO.4514 & 4515/DEL/2012) DELHI H BENCH VIDE ITS ORDER DATED 31.5.2013 HAS IN TER ALIA HELD AS UNDER: THUS THERE IS NOTHING INCRIMINATING IN THESE DOCUMENTS WHICH CAN LEAD TO FORMING OF THE SATISFACTION ON PART OF THE AO T O INITIATE PROCEEDINGS U/S 153C OF THE ACT. I N THE SPIRIT OF ENACTMENT OF SECTION 153C IT WOULD BE IMP LICIT AND INHERENT REQUIREMENT THAT THERE MUST BE EXISTENCE OF PRIMA FACIE UNRECORDED UNACCOUNTED TRANSACTION RECORDED IN THE DOCUMENTS BELONGING TO THE ASSESSEE BEFORE THE SAID PROVISION CAN BE INVOKED IN CASE OF A THIRD PARTY WHO HAS NOT BEEN SUBJECT ED TO SEARCH U/S 132 OF THE IT ACT. ANY OTHER INTERPRETATION OF SECTION 153C WOULD RESULT IN UNINTENDED CONSEQUENCES IN CASE OF THIRD PARTIES TO THE SEARCH IN ANY CASE THE AUDITED ACCOUNTS BALANCE SHEET & P & L ACCOUNT/ ACKNOWLEDGMENT OF RETURNS LIST OF DIRECTORS CANNOT BE SUCH AS ENVISAGED U/S 153C OF THE IT ACT UNLESS THESE ARE PRIMA FA CIE INDICATIVE OF UNACCOUNTED/UNRECORDED TRANSACTIONS. IN VIEW THEREOF IT IS HELD THAT SINCE THERE IS NO VALID SATISFACTION U/S 153C IN THIS CASE THEREFORE THE ASSESS MENT PROCEEDINGS ITSELF ARE LIABLE TO BE QUASHED AND GROUND NOS 3 & 4 ARE ACCORDINGLY ALLOWED IN FAVOUR OF THE APPELLANT. 31. THIS DECISION IN OUR OPINION WILL NOT HELP THE ASSESSEE AS IN THAT CASE THE COPY AUDITED ACCOUNTS BALANCE SHEET AND PROFIT AND LOSS ACCOUNT/ ACKNOWLEDGEMENT OF RETURNS AND LIST OF DIRECTORS OF THE ASSESSEE COMPANY WERE FOUND DURING THE COURSE OF SEARC H CARRIED OUT AT GOPAL ZARDA GROUP ON 15.1.2009. SINCE THESE DOCUMENTS ARE PUBLIC DOCUMENTS AND ARE AVAILABLE AT PUBLIC DOMAIN THEREFORE THE TRIBUNAL HAS TAKEN THE VIEW THAT ON THE BASIS OF THESE DOCUMENTS EVEN THOUGH THEY BELONG TO THE ASSESSEE THERE CANNOT BE ANY PRIMA 19 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 19 FACIE UNACCOUNTED AND UNRECORDED TRANSACTION. THE DOCUMENTS AS IS APPARENT FROM THE ASSESSMENT FOUND IN THE CASE OF THE ASSESSEE ARE NOT AUDITED BALANCE SHEET PROFIT AND LOSS ACCOUNT ACKNOWLEDGEMENT RETURNS OR LIST OF DIRECTORS BUT THE DOCUMENTS FOUND RELATE TO FINANCIAL TRANSACTION. THIS DECISION GOT SUPERSEDED BY THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF SSP AVIATION LTD. V. DY. CIT (2012) 20 TAXMANN.COM 214 (DELHI). 32. IN THE CASE OF V.K.FISCAL SERVICES PVT LT D. VS DCIT (ITA NOS.5460 TO 5465/DEL/2012) ORDER DATED NO VEM BER 2013 THE DELHI TRIBUNAL H BENCH TOOK THE VIEW AT PARA 13 THAT SINCE THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION THE AO SHOULD HAVE DROPPED THE PROCEEDINGS INITIATED UNDER SECTION 153C OF THE ACT. IN THIS CASE THE TRIBUNAL HAS NOTED THAT NO BOOKS OF ACCOUNT BELONGING TO THE ASSESEE WERE FOUND AND SEIZED IN THE PREMISES OF T HE OTHER PERSONS. WHAT WAS FOUND WAS IN THE HARD DISK WAS ONLY A CONFIRM ATION OF ACCOUNT THAT AN ATTACHED ANNEXURES. THESE DOCUMENTS WERE HELD BY THE TRIBUNAL NOT TO BE BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE ASSESSEE. IN VIEW OF THIS FACT THE TRIBUNAL HAS TAKEN THE VIEW THAT THE AO SHOULD HAVE DROPPED THE PROCEEDING S INITIATED UNDER SECTION 153C OF THE ACT. THE TRIBUNAL DID NOT TOOK THE VIEW THAT THE PROCEEDINGS INITIATED U/S.153C WAS WITHOUT JURISDICTION. THUS TH IS DECISION WILL NOT ALSO ASSIST THE ASSESSEE. 33. WE HAVE GONE THROUGH THE DECISION OF ITAT DELHI B BENCH IN THE CASE OF M/S. DSL PROPERTIES (P LTD VS DCIT (SUPRA) WHEREIN THE TRIBUNAL AT PARA 17 HELD AS UNDER: AT THE TIME OF HEARING BEFORE US THE LEARNED COUNSEL FOR THE ASSESEE HAS VEHEMENTLY CONTENDED THAT THE PHOTOCOPY OF THE AUDITED PROFIT & LOSS ACCOUNT AND BALANCE SHEET WAS BELONGING TO THE SHAREHOLDER/DIRECTOR FROM WHOM THE SAME WAS FOUND AND NOT TO THE ASSESSEE. WE AGREE WITH THIS CONTENTION OF THE LEARNED COUNSEL. WHEN A COMPANY SUPPLIES PHOTOCOPY OF ITS PROFIT & LOSS ACCOUNT AND B ALANCE SHEET TO ITS SHAREHOLDERS/DIRECTORS SUCH PHOTOCOPY OF THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET BELONG TO SUCH SHAREHOLDER/DIRECTOR AND NOT TO THE ASSESSE COMPANY. IF THE ARGUMENT OF THE REVENUE IS ACCEPTED THEN IF DURING THE COURSE OF SEARC H OF ANY PERSON THE PHOTOCOPY OF THE PROFIT AND LOSS ACCOUNT/BALANCE SHEET OF ANY LISTED COMPANY SAY RELIANCE INDUSTRIES TATA MOTORS OR BAJAJ AUTO IS FOUND THEN AS PER THE INTERPRETATION OF SECTION 153C BY THE DEPARTMENT THE ASSESSING OFFICER WOUL D BE ENTITLED TO TAKE ACTION UNDER SECTION 153C IN THE CASE OF SUCH LISTED COMPANY. THAT INTERPRETATION WOULD LEAD TO ABSURD RESULTS. THEREFORE WE HOLD THAT THE UNDERLYING CONDITION FOR INVOKING THE JURISDICTION UNDER SECTION 153C IS NOT SATISFIED IN THE CASE OF THE ASSESSEE. 20 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 20 34. IN THIS CASE WE NOTED THAT DURING THE COURSE OF SEARCH AT CHAURASIA GROUP OF CASES PHOTOCOPY OF THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE ASSESSEE WERE FOUND AND SEIZED. ASSESSEE CONTENDED THAT PHOTOCOPY OF THE BALANCE SHEET WAS GIVEN BY THE COMPANY TO ITS DIRECTORS OR SHAREHOLDERS. UNDER THESE CIRCUMSTANCES THE TRIBUNAL TOOK THE VIEW THAT SINCE THE PHOTOCOPY OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET ARE GIVEN AS REQUIRED UNDER THE COMPANIES ACT BY THE ASSE SSEE COMPANY TO ITS SHAREHOLDERS/DIRECTORS THEREFORE THESE DOCUMENTS DO NOT BELONG TO THE ASSESSEE COMPANY BUT BELONG TO THE SHAREHOLDERS OR DIRECTORS. ON THESE FACTS THE TRIBUNAL TOOK THE VIEW THAT THE CONDITIONS STIPULATED UNDER SECTION 153C ARE NOT SATISFIED. THIS IS NOT FACT IN THE CASE OF THE ASSESSEE THAT DOCUMENTS FOUND DO NOT BELONG TO THE ASSESSEE. THUS THIS DECISION WILL ALSO NOT HELP THE ASSESSEE. 35. WE HAVE ALSO GONE THROUGH THE DECISION OF ITAT PUNE BENCH IN THE CASE OF BHARATI VID YA PEETH (SUPRA). WE NOTED THAT IN PARA 23 THE TRIBUNAL HAS CATEGORICALLY HELD THAT FOR ASSESSMENT YEAR 2005 - 06 THE SEIZURE OF ONLY AN INWARD REGISTER FOR APPLICATIONS RECEIVED UNDER MANAGEMENT QUOTA FOR ADMISSION IN MDS COURSE AND THERE ARE NO FINANCIAL T RANSACTIONS OF ANY KIND AND THEREFORE THE TRIBUNAL TOOK THE VIEW THAT NOTICE U/S.1 5 3C OF THE ACT IS INVALID. WHILE HOLDING SO THE TRIBUNAL HAS REL IED ON THE DECISION OF ITAT KOL KAT T A BENCH IN THE CASE OF LMJ INTERNATIONAL LTD 119 TTJ (KOL) 214 IN WHIC H IT HAS BEEN HELD WHERE NOT H ING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEARS THE ASSESSMENTS FOR SUCH YEARS CANNOT BE DISTRIBUTED; ITEMS OF REG U LAR ASSESSMENT CANNOT BE ADDED BACK IN THE PROCEEDINGS UNDER SECTION 153C WHEN NO INCRIMINATING DOCUMENTS WERE FOUND IN RESPECT OF THE DISALLOWED AMOUNTS IN THE SEARCH PROCEEDINGS. WE NOTED THAT ON THE ISSUE WHETHER ANY ADDITION CAN BE MADE IN THE ASSESSMENT MADE U/S.153A WHEN NO INCRIMINATING DOCUMENTS IS FOUND DURING THE COURSE OF SEARCH A SPECIAL BENCH WAS CONSTITUTED IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD VS. DCIT (2012) 137 ITD 287 (SB)(MUM) ON THE FOLLOWING QUESTION: WHETHER ON THE FACTS AND IN LAW THE SCOPE OF ASSESSMENT U/S 153A ENCOMPASSES ADDITIONS NOT BASED ON ANY IN CRIM INATING MATERIAL FOUND DURING T HE COURSE OF SEARCH? BEFORE THE SPECIAL BENCH LD SR. COUNSEL RELIED ON THE DECISION OF LMG INTERNATIONAL LTD (SUPRA) AS IS APPARENT FROM PARA 16 OF THAT ORDER. WE NOTED THAT IN THE SAID JUDGMENT IN 21 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 21 PARA 52 OF ITS ORDER THE TRIBUNAL HAS HELD THAT SECTION 153A COMES INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. ON THE SATISFACTION OF THIS CONDITION THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSONS REQUI RING HIM TO FURNISH THE RETURN OF INCOME OF SIX YEARS IMMEDIATELY PRECE E DING THE YEAR OF SEARCH. THIS FINDING IMPLIED THAT THE PROCEEDINGS U/S.153A IS NOT TO BE RESTRICTED TO THE YEARS FOR WHICH INCRIMINATING MATERIAL IS FOUND DURING THE SEARCH. ULTIMATE LY IN RESPECT OF QUESTION REFERRED TO THE SPECIAL BENCH THE SPECIAL BENCH IN PARA 58 OF ITS ORDER HELD AS UNDER: 8. THUS QUESTION NO.1 BEFORE US IS ANSWERED AS UNDER : A) IN ASSESSMENTS THAT ARE ABATED THE AO RETAINS THE ORIGINAL JURISDICTION A S WELL AS JURISDICTION CONFER RED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF T HE S IX ASSESSMENT YEARS SEPARATELY. B) IN OTHER CASES IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONT EXT OF RELEVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT OTHER DOCUMENTS FOUND IN T HE COURSE OF SEARCH BUT NOT PRODUC ED IN T HE COURSE OF ORIGINAL ASSESSMENT AND; ( II) UNDISCLOSED INCOME O R PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 36. IN VIEW OF THE DECISION OF SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD(SUPRA) NO DOUBT THE ADDITION IN THE CASE OF THE ASSESSEE CAN BE MADE BY THE ASSESSING OFFICER ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH BUT THE AO GOT JURISDICTION FOR INITIATING PROCEEDINGS U/S.153 C R.W. SECTION 153A AGAINST THE ASSESSEE IN VIEW OF DOCUMENTS ETC BELONGING TO THE ASSESSEE ARE FOUND IN THE CASE OF THE PERSON IN WHOS E CASE SEARCH HAD TAKEN PLACE. THUS THIS DECISION WILL ALSO NOT HELP THE ASSESSEE. 37. WE HAVE ALSO GONE THROUGH THE DECISION OF ITAT PUNE IN THE CASE OF SINGHAD TECHNICAL EDUCATION SOCIETY (SUPRA) IN WHICH THE TRIBUNAL HAS RELIED ON THE DECISION IN T HE CASE OF LMG INTERNATIONAL LTD (SUPRA) AND TOOK THE VIEW THAT THE JURISDICTION U/S.153C CAN BE BASED ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS. WE HAVE ALREADY MENTIONED THAT I N THIS DECISION IS CONTRARY TO THE DECISION OF SPECIAL BENCH BUT THIS DECIS ION HAS BEEN RENDERED BY THE TRIBUNAL PRIOR TO THE DECISION OF THE SPECIAL BENCH. IN VIEW OF THE DECISION OF SPECIAL BENCH THIS DECISION WILL NOT HELP TO THE ASSESSEE. THIS DECISION WILL ASSIST THE ASSESSEE ONLY TO THE EXTENT THAT WHILE FRAMING THE ASSE SSMENT THE AO CAN MAKE ADDITION IN THE ASSESSMENT WHICH HAS ALREADY BEEN COMPLETED ONLY IF INCRIMINATING DOCUMENTS ARE FOUND. THE DECISION OF SPECIAL BENCH IS BINDING ON US. 22 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 22 38. WE NOTED THAT THE ISSUE IS COVERED BY THE DECISION OF HONBLE DELHI HIGH CO URT IN THE CASE OF SSP AVIATION LTD VS DCIT (2012) 252 CTR (DEL) 291. PARA 15 OF THIS JUDGMENT READS THAT THE SATISFACTION THAT IS REQUIRED TO BE REACHED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON IS THAT THE VALUABLE ARTICLE O R BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. THE LAST LINE STATES THAT THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICL ES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST BE SHOWN TO SHOW TO CONCLUSIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME. THE FACTS OF THIS CASE ARE THAT THERE HAD BEEN A SURVEY IN P GROUP OF COMPANIES. IN THE COURSE OF SEARCH CERTAIN DOCUMENTS WERE FOUND SHOWING THAT THE ASSESSEE ACQUIRED CERTAIN DEVELOPMENT RIGHTS FROM P GROUP OF COMPANIES. A SAT ISFACTION WAS RECORDED B Y THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE U/S 153C. THEREAFTER THE PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE U/S 153A AND THE ASSESSEE WAS DIRECTED TO FILE RETURNS FOR THE SIX ASSESSMENT YEARS. ASSESSMENTS WERE COMPLETED U/S 143(3) READ WI TH SECTION 153C. AS THE APPEALS WERE PENDING BEFORE THE CIT(A) THE ASSESSEE FILED WRIT PETITION BEFORE THE HONBLE HIGH COURT CONTENDING THAT THE AO HAD ILLEGALLY ASSUMED JURISDICTION U/S 153C READ WITH SECTION 153A AND THAT THERE WAS NO UNDISCLOSED INCOM E TO BE ASSESSED IN THE ASSESSEES HANDS. DISMISSING THE PETITION THE HONBLE HIGH COURT HELD THAT THE SATISFACTION THAT IS REQUIRED TO BE REACHED BY THE AO HAVING JURISDICTION OF THE PERSON SEARCHED IS THAT THE VALUABLE ARTICLES OR BOOKS OF ACCOUNT ETC . SEIZED DURING THE SEARCH BELONG TO A PERSON OTHER THAN THE PERSON SEARCHED AND THERE WAS NO REQUIREMEN T IN SECTION 153C(1) THAT THE AO SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLES OR BOOKS OF ACCOUNT ETC. BELONGING TO THE OTHER PERSON MUST CON CLUSIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME. 39. NO CONTRARY DECISION OF ANY OTHER HONBLE HIGH COURT WAS BROUGHT TO OUR KNOWLEDGE. WE THEREFORE CONFIRM THE ORDER OF LD CIT(A) DISMISSING THE GROUND RELATING TO THE JURISDICTION. GROUND NOS.1 & 2 IN ALL THE ASSESSMENT YEARS STAND DISMISSED. 40. GRO UND NOS.3 TO 5 RELATE TO THE ADDITION MADE IN RESPECT OF SHARE CAPITAL CONTRIBUTION RECEIVED BY THE ASSESSEE DURING EACH OF THE ASSESSMENT YEAR S . 23 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 23 41. THE BRIEF FACTS RELATING TO THESE GROUNDS FOR ASSESSMENT YEARS 2003 - 04 TO 2006 - 07 ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY HAVING TWO DIRECTORS SMT SHASHI SHARMA WIFE OF DR. YOGIRAJ SHARMA AND GAURAV SHARMA SON OF DR. YOGIRAJ SHARMA. THE ASSESS ING OFFICER TOOK THE VIEW THAT NO SUBSTANTIAL BUSINESS WAS CARRIED ON BY THE ASSESSEE COMPANY AND AS PER THE ENQUIRIES IN RESPECT OF INTRODUCTION OF SHARE CAPITAL IN THESE COMPANIES DURING THE AFORESAID ASSESSMENT YEAR. IT WAS NOTED THAT THESE COMPANIES H AVE RECEIVED HUGE SHARE CAPITAL FROM INDORE BASED AND KOLKATA BASED COMPANIES. THE AO ON THE BASIS OF DETAILED ENQUIRIES MADE THE ADDITIONS ON ACCOUNT OF UNDISCLOSED SHARE CAPITAL IN ASSESSEE COMPANY PROTECTIVELY AND SUBSTANTIVELY IN THE HANDS OF DR. YO GIRAJ SHARMA. WHEN THE MATTER WENT ON APPEAL BEFORE LD CIT(A) LD CIT(A) DIRECTED THE ASSESSING OFFICER TO ASSESS SHARE CAPITAL IN THE HANDS OF THE ASSESSEE AS THE INCOME OF THE RESPECTIVE YEAR AND DELETED SUBSTANTIVE ADDITION IN THE HANDS OF DR. YOGIRAJ SHARMA INTER ALIA OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FINDINGS OF AO IN ASSESSMENT ORDER. (I) THE FINDINGS OF THE AO ARE BASED ON VARIOUS INCRIMINATING DOCUMENTS FOUND AND SEIZED IN COURSE OF SEARCH ACTION I N THE RESIDENTIAL PREMISES OF THE DR. YOGIRAJ SHARMA SHRI SUNIL AGRAWAL SHRI RAJESH JAIN AND SURVEY CONDUCTED IN THE PREMISES OF OTHER RELATED PERSONS STATEMENT RECORDED DURING SEARCH AND SURVEY ACTION AND POST SEARCH ENQUIRIES CONDUCTED BY THE INVESTIG ATION WING. THE FINDINGS OF THE AO ARE SPECIFIC SUFFICIENT TO PROVE THE EXISTENCE OF ACCOMMODATION OF ENTRY PROVIDERS NAMELY SHRI SUNIL AND JAIN AND SHRI RAJESH JAIN AND ACCOMMODATION ENTRIES PROVIDED BY THEM FOR APPELLANT M/S. GAJANAN DEVELOPERS AND DIS TRIBUTORS PVT. LTD. IN EXCHANGE OF COMMISSION THEY CHARGED FROM THE COMPANY FOR PROVIDING SUCH SERVICES. THE INCRIMINATING PAPER IN LPS - 5 IS EVIDENCE OF ACCOMMODATION ENTRIES GIVEN THROUGH THE BANK ACCOUNT OF SPECTRUM CHEMICALS PVT. LTD. AND OPTIMATE TEXT ILE LIMITED ALSO WORKING OUT OF COMMISSION ON THE BASIS OF AMOUNT MONTH AND DATES. M/S. DAZZAL CONFINDIVE LIMITED IS CONTROLLED BY SHRI SUNIL AGRAWAL. THE HUGE CASH DEPOSITS FOUND IN THE BANK ACCOUNT OF THE COMPANY IS UTILIZED FOR PROVIDING ACCOMMODATIO N ENTRIES THOUGH SHRI AGRAWAL FAILED TO FURNISH THE NAME OF THE BENEFICIARIES WHO DEPOSITED CASH IN THE BANK ACCOUNT. ON OBSERVING THE TRAIL IT IS FOUND THAT SHRI SUNIL AGRAWAL USED TO RECEIVE CASH THROUGH SHRI VINAY GANDHI FROM SHRI GAURAV SHARMA WHICH WERE DEPOSITED IN THE BANK ACCOUNTS OF HIS EMPLOYEES AND ACQUAINTANCE AND THEIR CONCERNS NAMELY ASHMIT SAGAR RAKESH SHARMA RIBEKA GARG SATYAM KANUNGO VINISHA GARG ETC.. THE PAGE NO. 2 3 AND 6 OF LPS - 4 SIGNIFIES THE ROLE OF REGULATING AND CONTROLLIN G THE BANK ACCOUNTS OF THE EMPLOYEES. IT CAN BE SEEN IN THE TRAIL THAT CASH DEPOSITED IN THESE ACCOUNTS WERE UTILIZED FOR SUBSEQUENT ISSUE OF CHEQUES TO CONCERNS RELATED / ASSOCIATED WITH SHRI SUNIL AGRAWAL LIKE OPTIMATE TEXTILES INDUSTRIES LIMITED SPECT RUM CHEMICALS PVT. LTD. M/S. RAPID COMMERCIAL AND FINLEASE PVT. LTD. M/S. RCG FINANCE PVT. LTD. HINDUSTAN CONTINENTAL LIMITED. THE INCOME RETURNED BY THE EMPLOYEES IS NEGLIGIBLE 24 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 24 AND QUITE DISPROPORTIONATE TO CASH DEPOSITS AND VOLUME OF TRANSACTIONS IN THEIR RESPECTIVE BANK ACCOUNTS. SIMILARLY SHRI RAJESH JAIN IS AN ENTRY PROVIDER FROM MUMBAI AND KOLKATA BASED COMPANIES AND HE PROVIDED ENTRIES TO APPELLANT COMPANIES M/S. GAJANAN DISTRIBUTORS & DEVELOPERS PVT. LTD. AND SHREE VIGHNESH DISTRIBUTORS AND D EVELOPERS PVT. LTD. FROM HIS PAPER COMPANIES JUBILANT MULTITRADE PVT. LIMITED DIMPLE MULTITRADE PVT. LTD. ORCHID CONSULTANCY PVT. LTD. COMFORT COMMERCIAL PVT. LTD. HILTON INFRASTRUCTURE PVT. LTD. MIDTOWN TRADING PVT. LTD. ETC. HAVING NO BUSINESS PRE MISES FOR BUSINESS BUT WITH BANKS FOR ROUTING OF FUNDS. NO ATTEMPT WAS MADE AT ANY STAGE BY THE APPELLANT COMPANY TO PROVE THAT THE MATERIALS GATHERED AND USED AGAINST HIM ARE FALSE. IN THE CASE OF AGRAWAL COAL CORPORATION PVT. LTD. VS. ACIT REPORTED I N 142 TTJ 409 HONBLE ITAT INDORE BENCH INDORE HAS HELD THAT THE OPTIMATE TEXTILES INDUSTRIES LIMITED IS A PAPER COMPANY. SIMILARLY M/S. ORCHID CONSULTANCY PVT. LTD. IS A COMPANY CONTROLLED BY SHRI RAJESH JAIN OPERATING IN PAPER FROM 911 9 TH FLOOR N AVJEEVAN - 3 LAMINGTON ROAD MUMBAI AND THE AO HAS DISCUSSED THE ISSUE AT LENGTH IN HER ORDER OF ASSESSMENT. ACCORDINGLY THE ARGUMENT THAT THE AO HAD NOT ADVERSE FINDINGS ON GENUINENESS OF SHARE APPLICATION MONEY RECEIVED FROM M/S. ORCHID CONSULTANCY PVT. LTD. IS MISPLACED. (II) INSPITE OF THE COMPANY SHOWING ONLY LOSS OR MINOR PROFIT IT RECEIVED SHARE APPLICATION MONEY FROM THE COMPANIES LISTED ABOVE. THE SHARE APPLICATION MONEY HAD FINALLY BEEN ADJUSTED IN BOTH THE COMPANIES I.E. IN SHREE VIGHNESH WAREH OUSE AS WELL AGAINST SHARE ALLOTTED AT PREMIUM OF RS. 90 PER SHARE AGAINST FACE VALUE OF RS. 10 PER SHARE. TILL DATE NO DIVIDEND HAS BEEN GIVEN TO THE SHAREHOLDERS. THIS FACT LEADS TO A QUESTION WHY ANY PRUDENT SHARE HOLDER WHO IS UNRELATED TO THE COMPA NY AND ITS DIRECTOR WHICH IS NOT DOING ANY SUBSTANTIAL BUSINESS ACTIVITY AND THATS TOO AT A HUGE PREMIUM. NO BOOKS OF ACCOUNT BANK DETAILS NATURE OF BUSINESS ACTIVITIES OF THE ABOVE COMPANIES AND EVEN THEIR CONFIRMATION WERE PRODUCED FOR VERIFICATION B EFORE THE AO. IT WAS NOTICED FROM THE RETURN OF INCOME OF M/S. JUBILANT THAT IT HAD FILED RETURNS OF NEGLIGIBLE INCOME COMPARED TO HUGE ASSET HOLDINGS (I.E. INVESTMENTS) WHICH SHOWS THAT THE MAIN BUSINESS OF THE COMPANY WAS EARNING FROM INVESTMENT BUT TH E COMPANY WAS NOT EVEN EARNING INCOME AT THE RATE OF BANK INTEREST OF 5% ON ITS INVESTMENTS. NO GENUINE BUSINESS CONCERN WOULD OPERATE IN SUCH A MANNER OVER SEVERAL YEARS. A PERUSAL OF THE BALANCE SHEET OF APPELLANT M/S. GAJANAN DISTRIBUTORS & DEVELOPER S PVT. LTD. IN THE RELEVANT ASSESSMENT YEARS SHOWS THAT THE COMPANY HAD INVESTED IN PURCHASE OF AGRICULTURAL LAND OF SUBSTANTIAL WHICH HAD NO CONNECTION WITH ANY BUSINESS ACTIVITY OF THE COMPANY OR AS LOANS TO THE DIRECTORS WHICH MAKES IT CLEAR THAT THE C OMPANY HAS JUST BEEN USED TO CREATE A VEIL FOR INVESTMENT IN VARIOUS ASSETS OUT OF UNDISCLOSED INCOME. SINCE REAL ESTATE HAS BEEN PURCHASED BY THE COMPANY THE AMOUNT APPEARING AS SHARE APPLICATION MUST HAVE ORIGINATED SOMEWHERE. THE AO HAD ALSO GIVEN HI S FINDINGS THAT THE ASSESSEE - COMPANY HAS EARNED INCOME FROM INTEREST AND BUS RUNNING AND COULD NOT HAVE GENERATED THE UNACCOUNTED FUNDS. 25 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 25 (III) THERE IS NO EVIDENCE ADDUCED BY THE LD. AR WHICH REQUIRES VETTING IN ORDER TO FORM BEDROCK OF THE APPELLATE ORDER EXCEPT HIS HARPING UPON THE CONTENTION THAT SHARE APPLICATION MONIES TO THE ALLEGED COMPANY HAVE CAME THROUGH THE ACCOUNT PAYEE CHEQUES AND THE COMPANIES WHICH SUBSCRIBED TO THE SHARES OF THE ALLEGED COMPANY ARE BORN ON THE FILE OF REGISTER OF COMPANIES. THESE ARGUMENTS ARE AT BEST NEUTRAL. EVERY COMPANY INCORPORATED UNDER COMPANIES ACT 1956 HAS TO COMPLY THE STATUTORY FORMALITIES. THE COMPANIES WHO INTRODUCED FAKE CAPITALS WERE ALSO COMPLYING WITH SUCH FORMALITIES WHICH DO NOT ADD ANY CREDIBILITY OF EV IDENTIARY VALUE. IN ANY CASE SUCH ARGUMENT DOES NOT IF SO FACTO PROVE THAT THE TRANSACTIONS ARE GENUINE. ON THE WHOLE THESE ARGUMENTS ARE BASED ON IRRELEVANT MATERIAL WHICH CANNOT IGNORE THE RELEVANT MATERIAL COLLECTED AND BROUGHT TO RECORD BY THE AO IN HER ORDER OF ASSESSMENT. THE LD. ARS ARGUMENT THAT THERE WAS DENIAL OF OPPORTUNITY TO CROSS EXAMINE THE PERSONS WHOSE STATEMENT WERE RECORDED AND USED AGAINST DR. YOGIRAJ SHARMA IS ALSO MISPLACED. IT IS EVIDENT FROM THE RECORD THAT THE AO SENT COPY O F THE STATEMENTS OF DIFFERENT PERSONS AS MENTIONED ABOVE AND CALLED FOR COMMENT IF ANY OR CROSS EXAMINATION OF THE DEPONENTS BY THE APPELLANT COMPANIES OR SHRI GAURAV SHARMA IF NEEDED. THERE WAS NO RESPONSE TO SUCH OFFER THOUGH RECORDS REVEALED THAT TH E OFFER WAS DULY WITHIN THE KNOWLEDGE OF THE APPELLANT OR SHRI GAURAV SHARMA. IN THE LIGHT OF THIS THE ARGUMENT OF THE LD. AR LOSES FORCE. IT IS BECAUSE OF BLOCKING ANY FURTHER ENQUIRY THE APPELLANT COMPANIES OR SHRI GAURAV SHARMA AVOIDED THE OFFER. O NCE THE OPPORTUNITY GIVEN AT THE ASSESSMENT STAGE WAS NOT AVAILED TO CROSS EXAMINE THE DEPONENTS THE GRIEVANCE OF THE APPELLANT COMPANY CANNOT RIGHTLY BE MAPPED OR PLOTTED WITHIN THE TERRAIN OF PRINCIPLES OF NATURAL JUSTICE. THE APPELLANT COMPANY CANNOT PLEAD BACK OF ADEQUATE TIME IN DISCHARGING THE ONUS. (IV) THE LD. AR HEAVILY RELIED ON RATIO OF THE CASE IN CIT VS. LOVELY EXPORT PVT. LTD. REPORTED IN 319 ITR (ST) 5 (SC) . THE RELIANCE IS ALSO MISPLACED SPECIALLY DUE TO MIS - UNDERSTANDING AND MIS - APPREC IATION OF THE BACK GROUNDS OF THE FACTS OF THE CASE IN LOVELY EXPORT PVT. LTD. 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 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 AO AND THE AO HAS NOT CONDUCTED ANY ENQUIRY INT O 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 SECTION 68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICA NTS IN ACCORDANCE WITH LAW. I AM AFRAID THAT I CANNOT APPLY THE RATIO TO A CASE SUCH AS THE PRESENT ONE WHERE THE AO IS IN POSSESSION OF MATERIAL THAT DIS - CREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE COMPANY AND ALSO ESTABLISHES THE L INK BETWEEN SELF - CONFESSED ACCOMMODATION ENTRY PROVIDERS WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION AND THE 26 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 26 ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE AGAIN SUCH AS THE PRESENT ONE WHERE THE INVOLVEMENT OF THE DR.YOGIRAJ SINGH IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE AO AS A RESULT OF SEARCH AND SEIZURE OPERATION AND ENQUIRIES MADE BY THE INVESTIGATION WING IN TO THE ACTIVITIES OF SUCH ENTRY PROVIDERS. THE EXISTENCE WITH THE AO OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE - MEDICATED PLAN - SMOKE - SCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE DR. YOGIR AJ SHARMA IN THE GUISE OF HIS SON EXCLUDES THE APPLICABILITY OF THE RATIO. THE RATIO IS ATTRACTED TO A CASE WHERE IT IS SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM U/S 68 TO PROVE AND ESTABLISH THE IDENTITY AND CREDI TWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE THE AO CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE 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 ME DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. IN THIS REGARD I DERIVED SUPPOR T FROM THE JUDGMENT OF THE CASE IN CIT VS. NOVA PROMOTERS AND FINLEASE (P) LTD. 342 ITR 169 (DEL.); ITA NO. 124 TO 127/IND/2011 DATED 31 - 01 - 2012 OF ITAT INDORE BENCH INDORE IN LUNKAD GROUP OF CASES AND IN THE CASE OF AGRAWAL COAL CORPORATION PVT. LTD. RE PORTED IN 118 ITJ 717 / 142 TTJ 409 ETC.. (V) IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE I FIND THAT AO IS JUSTIFIED IN TREATING THE SHARE APPLICANTS AS PAPER COMPANIES. THE NEXT QUESTION THAT IS REQUIRED TO BE DECIDED IS AT WHOSE HANDS THE BOGU S SHARE APPLICATION MONIES OUGHT TO BE ASSESSED WHETHER IN THE HANDS OF THE APPELLANT COMPANIES RECEIVING BOGUS SHARE CAPITAL OR IN THE HANDS OF THE DR. YOGIRAJ SHARMA. THE INVESTMENTS IN SHARE APPLICATION MONEY THROUGH ACCOMMODATION ENTRIES ARE OBVIOU SLY NOT OUT OF THE UNDISCLOSED SOURCE OF M/S. GAJANAN DISTRIBUTORS & DEVELOPERS PVT. LTD. OR SHREE VIGHNESH WAREHOUSE AND DISTRIBUTORS PVT. LTD. FOR THE REASON ALREADY DISCUSSED ABOVE. IT IS THE NAME OF SHRI GAURAV SHARMA WHICH IS APPEARING IN THE STATEME NT OF ENTRY PROVIDERS. THEY HAVE ADMITTED TO HAVE RECEIVED CASH FROM SHRI GAURAV SHARMA. BUT AS DISCUSSED ABOVE SHRI GAURAV SHARMA HAS NO SUCH BUSINESS ACTIVITIES KNOWN TO THE DEPARTMENT. HE HAS NO ACTIVITIES TO EARN UNACCOUNTED MONIES AND IT IS FOR T HIS REASON THE AO HAS RULED OUT ANY SUSPICION WHICH WOULD HAVE WARRANTED PROTECTIVE ASSESSMENTS OF THE ALLEGED BOGUS SHARE CAPITAL IN HIS HANDS. ON THE OTHER HAND IT IS SEEN THAT DR. YOGIRAJ SHARMA HAS UNACCOUNTED INCOME WHICH CAN BE TRACED BACK TO EARLY YEARS PRECEDING THE ASSTT. YR. 2007 - 08 AND 2008 - 09. THERE ARE AMPLE EVIDENCE OF CLOSE CONNECTION OF DR. YOGIRAJ SHARMA WITH THE SUPPLIERS NAMELY SHRI ASHOK NANDA AND SHRI YOGESH PATARIYA. THERE ARE VARIOUS BUSINESS CONCERNS OF SHRI ASHOK NANDA INCLUDING NETAM INDUSTRIES AND SHRI UMESH KAJVE WHOSE NAME IS LANDED IN THE CASE OF NETAM INDUSTRIES WAS THE DIRECTOR OF THE DIMPLE MULTITRADE PVT. LTD.. SHRI NANDA IS THE SHARE HOLDER OF THE COMPANIES OF SHRI GAURAV SHARMA AND ALSO MANAGING DIRECTOR. SHRI YOGESH PATARIYA IS A CLOSE FAMILY FRIEND OF THE DR. YOGIRAJ SHARMA. HE IS PROPRIETOR OF RADIATION IMAGE COMMUNICATION GLOBAL ENTERPRISES AND OTHERS. BOTH OF THEM GET HUGE SUPPLY ORDERS FROM THE DEPARTMENT OF HEALTH. THE LOOSE PAPERS IN PAGE NO. 27 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 27 81 - 84 OF LPS - 2/30 SEIZED FROM A - 70 SHAKTI NAGAR BHOPAL ARE COPIES OF DD NO. 476319 476320 DATED 28 - 03 - 2007 FOR RS. 2.20 LACS EACH 476313 476314 DATED 28 - 03 - 2007 FOR RS.1.50 LAKHS EACH 476315 476316 DATED 28 - 03 - 2007 OF RS. 3.00 LAKHS EACH 476317 4756318 DATED 2 8 - 03 - 2007 FOR RS. 1.50 LAKHS EACH OF BANK OF BARODA HABIBGANJ BRANCH BHOPAL IN FAVOUR OF RAPID COMMERCIAL AND FINLEASE PVT. LTD. THE JOTTINGS IN PAGE NO. 81 RELATE TO PLANNING OF INVESTMENT IN SHARE APPLICATION MONEY IN GAJANAN DEVELOPERS AND DISTRIBUTO RS AND SHRI VIGHNESH WAREHOUSE. THE PAPER WAS WRITTEN IN THE HAND WRITING OF SHRI YOGESH PATARIYA. IT WAS DATED 26 - 03 - 2007 AND THE JOTTINGS THEREIN ARE PLAN OF INVESTMENTS IN FAKE SHARE APPLICATION MONEY OF THE ALLEGED COMPANIES THROUGH RAPID COMMERCIAL AND FINLEASE PVT. LTD. OPTIMATE TEXTILE INDUSTRIES SPECTRUMS CHEMICALS ETC. HAVE DIRECT NEXUS WITH THE COPY OF THE DRAFT DISCUSSED ABOVE. THE DRAFTS WERE BASICALLY PAYMENTS MADE TO THE TWO SHARE HOLDING COMPANIES OF INDORE FROM ACCOUNT IN BANK OF BAROD A HABIBGANJ AND THE COPY OF THE SAME WAS FOUND AT THE RESIDENCE OF DR. YOGIRAJ SHARMA. ON FURTHER ENQUIRIES IT IS LEARNT THAT SHRI SUNIL KUMAR DESHMUKH HAVING ACCOUNT NO.6485 SHRI MAHENDRA SURYAWANSHI HAVING ACCOUNT NO.6493 WHO ARE ALSO SHARE HOLDERS I N THE ALLEGED COMPANY SHRI PRAVEEN JARWADE HAVING ACCOUNT NO. 6481 AND SHRI RAMESH PRAJAPATI HAVING ACCOUNT NO. 6487 HAVE MADE THE PAYMENTS FROM THEIR RESPECTIVE ACCOUNTS MAINTAINED AT BANK OF BARODA HABIBGANJ BRANCH. THEY ARE THE LOW PAID EMPLOYEES OF SHRI YOGESH PATARIYA AND THEY HAVE ADMITTED THAT THEIR BANK ACCOUNTS WERE MAINTAINED AND CONTROLLED BY SHRI PATARIYA. THERE ARE EVIDENCES OF PAYMENTS RECEIVED BY DR. YOGIRAJ SHARMA ON SPECIFIC PERCENTAGE OVER THE VALUE OF WORK ORDERS OF SUPPLY AND DISBURS EMENT MADE TO SHRI NANDA AND SHRI PATARIYA MADE AS DISCUSSED IN SEPARATE PARA OF THE APPELLATE ORDER. SHRI L. MANISH ANOTHER SHARE HOLDER IS ALSO REGULAR SUPPLIER OF HEALTH DEPARTMENT. SHRI MAHESH SHARMA AND SMT. MALTI SHARMA OTHER SHAREHOLDERS IN THE ALLEGED COMPANY ARE CLOSE RELATIVES OF THE DR. YOGIRAJ SHARMA. INCRIMINATING DOCUMENTS AND PASSBOOKS OF THE AFORESAID EMPLOYEES OF SHRI YOGESH PATARIYA INCLUDING PASSBOOKS AND OTHER DOCUMENTS OF SHRI MAHESH SHARMA AND SMT. SHASHI SHARMA WERE FOUND IN POS SESSION OF THE DR. YOGIRAJ SHARMA IN HIS RESIDENCE AT A - 70 SHAKTI NAGAR BHOPAL. THUS SHRI ASHOK NANDA SHRI SUNIL KUMAR DESHMUKH SHRI MAHENDRA SURYAVANSHI SHRI MANISH SHRI MAHESH SHARMA SMT. SHASHI SHARMA ARE THE SHARE HOLDERS OTHER THAN THE ALLEGE D PAPER COMPANIES WHEREIN SMT. SHASHI SHARMA AND SHRI GAURAV SHARMA ARE THE DIRECTORS WITH CERTAIN SHARE HOLDINGS. (VI) THE SUBSCRIBING COMPANIES ARE FOUND TO BE FICTITIOUS OR NON - EXISTENT THEREFORE ONE FACT IS OOZING OUT THAT M/S. GAJANAN DISTRIBUTO RS AND DEVELOPERS PVT. LTD. AND M/S. SHREE VIGHNESH WAREHOUSE AND DISTRIBUTORS PVT. LTD. HAVE TO DISCHARGE THE ONUS TO ESTABLISH THE CREDITS OF AMOUNTS RECEIVED FROM THE ALLEGED SUBSCRIBING COMPANIES IN THEIR BOOKS OF ACCOUNT TO OBVIATE THE MISCHIEF OF S ECTION 68 OF INCOME TAX ACT. THE LAW IS WELL SETTLED THAT ONUS TO PROVE THE SOURCE OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HIM WHERE THE NATURE AND SOURCE OF A RECEIPT WHETHER IT BE OF MONEY OR OTHER PROPERTY CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE FOR WHICH I AM SUPPORTED BY THE DECISION 28 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 28 OF HONBLE APEX COUR T RASHAN DI HATTI V/S CIT REPORTED IN 107 ITR 938 AND KELA KHAN MOHD. HANIF REPORTED IN 50 ITR 1. IN THE PRESENT CASE IN HAND THE COMPANIES RECEIVING THE ACCOMMODATION ENTRIES HAVE GROSSLY FAILED TO ESTABLISH THREE INGREDIENTS OF SECTION 68 OF THE ACT. AS DISCUSSED ABOVE THE HONBLE TRIBUNAL INDORE BENCH INDORE IN THE CASE OF AGARWAL COAL CORPORATION PVT. LTD. HAS FOUND THAT THE IDENTITY OF SHAREHOLDERS LIKE OPTIMATE TEXTILE INDUSTRIES LTD. AND HINDUSTAN CONTINENTAL LTD. IS NOT PROVED AND THEREFORE THE INITIAL ONUS HAS NOT BEEN DISCHARGED BY THE ASSESSEE SPECIALLY WHEN THE ASSESSEE WAS CONFRONTED WITH FINDINGS OF COMMISSION SUMMONS RETURNED UNSERVED AND THE ADDRESS GIVEN BY THE ASSESSEE ITSELF THAT TOO AT FOUR PLACES WERE FOUND TO BE FICTITIOUS. TH E ASSESSEE HAS NOT GIVEN SATISFACTORY EVIDENCE TO DISCHARGE THE ONUS. IT HAS MERELY GIVEN THE NAMES OF THE FICTITIOUS PARTIES AND THIS IS NOT SUFFICIENT COMPLIANCE. THUS THE ASSESSMENT OF SHARE APPLICATION MONEY IN THE HANDS OF THE ASSESSEE COMPANY HAS BEEN A UPHELD BY THE HONBLE TRIBUNAL. SIMILARLY THE HONBLE TRIBUNAL INDORE BENCH INDORE UPHELD THE ASSESSMENT OF ACCOMMODATION ENTRIES RECEIVED AS SHARE APPLICATION MONEY IN THE LUNKAD GROUP OF CASES IN ITA NO. 124 TO 127/IND/2011 DATED 31.01.2012. M/S. GAJANAN DISTRIBUTORS & DEVELOPERS PVT. LTD. AND M/S. SHREE VIGHNESH WAREHOUSE AND DISTRIBUTORS PVT LTD. HAVE CLAIMED TO HAVE RECEIVED SHARE APPLICATION MONEY FROM THE SAME OPTIMATE TEXTILE INDUSTRIES LTD. THE RATIO OF THE CASES DISCUSSED ABOVE IS S QUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ENTRIES OF SHARE APPLICATION MONEY ARE ULTIMATELY APPEARING IN THE BOOKS OF ACCOUNT OF THE COMPANIES AND THE AFFAIRS OF THE COMPANIES ARE UNDER CONTROL OF DR. YOGIRAJ SHARMA. FROM THE PER USAL OF THE MATERIAL AVAILABLE ON RECORD AND DISCUSSION MADE ABOVE I FIND THAT LOOKING TO THE PECULIARITY OF THE CASE THE PROPOSITION LAID DOWN IN CIT V/S GUJARAT HEAVY CHEMICALS LTD. 256 ITR 795 IS DISTINGUISHABLE. IN VIEW OF THE OVERALL FACTS AND IN G IVEN CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE I FIND THAT THE ASSESSMENT OF SHARE CAPITAL RECEIVED FROM THE FICTITIOUS SUBSCRIBING COMPANIES THROUGH ACCOMMODATION ENTRIES OUGHT TO BE ASSESSED SUBSTANTIVELY IN THE HANDS OF M/S. GAJANAN DISTRIBUTORS & D EVELOPERS PVT. LTD. AND SHREE VIGHNESH WAREHOUSE AND DISTRIBUTORS PVT. LTD. ACCORDINGLY THE AO IS DIRECTED TO ASSESS THE SAME IN THE HANDS OF THE COMPANIES AS INCOME OF THE YEAR. THE SUBSTANTIVE ASSESSMENT OF THE SUM IN THE HANDS OF DR. YOGIRAJ SHARMA I S VACATED . 42. LD A.R. BEFORE US CONTENDED THAT THE ASSESSEE HAS RECEIVED SHARE APPLICATION DURING THE YEAR BUT ALL THE SHARE APPLICATION MONEY WAS NOT TREATED BY THE AO TO BE OF UNDISCLOSED NATURE AND TAXED SUBSTANTIVELY IN THE HANDS OF DR. YOGIRAJ SHA RMA. IT IS ONLY THE SHARE APPLICATION MONEY RECEIVED FROM THE FOLLOWING PERSONS/CONCERNS WHICH WERE TAKEN TO BE OF UNDISCLOSED NATURE AS DETAILED BELOW: 29 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 29 A.Y. 2003 - 04 : NAME OF THE SHAREHOLDER ADDRESS DATE OF ALLOTMENT NO. OF SHARE FACE VALUE SHARE APPLICATION TOTAL AMOUNT JUBILANT MULTITRADE PVT. LTD. SAFEX GHAT KOPAR ANDHERI LINK ROAD ASALPHA SAK INOKA ANDHERI EAST MUMBAI 31 - 12 - 02 1000000 1000000 DIMPLE MULTITRADE PVT. LTD. ROOM NO.5 3 RD FLOOR HANUMAN BUILDING 2 PICKET ROAD MUMBAI 31 - 01 - 03 1000000 1000000 A.Y. 2004 - 05 : NAME OF THE SHAREHOLDER ADDRESS DATE OF ALLOTMENT NO. OF SHARE FACE VALUE SHARE APPLICATION TOTAL AMOUNT JUBILANT MULTITRADE PVT. LTD. SAFEX GHAT KOPAR ANDHERI LINK ROAD ASALPHA SAK INOKA ANDHERI EAST MUMBAI 06 - 09 - 03 1000000 A.Y. 2005 - 06 : NAME OF THE SHAREHOLDER ADDRESS DATE OF ALLOTMENT NO. OF SHARE FACE VALUE SHARE PREMIUM SHARE APPLICATION TOTAL AMOUNT OPTIMATE TEXTILE INDUSTRIES LTD. 2 DEVKARAN MENTION IIND FLOOR 63 PRINCE STREET MUMBAI 31 - 03 - 05 66000 10 2640000 660000 3300000 RAPID COMMERCIAL & FINLEASE PVT. LTD. 20 DAWA ZAZAR 4 TH FLOOR 1314 RNT MARG INDORE 31 - 03 - 05 34000 10 1360000 340000 1700000 A.Y. 2006 - 07 : NAME OF THE SHAREHOLDER ADDRESS DATE OF ALLOTMENT NO. OF SHARE FACE VALUE SHARE CAPITAL SHARE PREMIUM TOTAL AMOUNT OPTIMATE TEXTILE INDUSTRIES LTD. 2 DEVKARAN MENTION IIND FLOOR 63 PRINCE STREET MUMBAI 31 - 02 - 06 25000 10/90 2500000 2250000 2500000 SPECTRUM CHEMICALS PVT. LTD. 2 DEVKARAN MENTION IIND FLOOR 63 PRINCE STREET MUMBAI 21 - 02 - 06 25000 10/90 250000 2250000 2500000 OPTIMATE TEXTILE INDUSTRIES LTD. 2 DEVKARAN MENTION IIND FLOOR 63 PRINCE STREET MUMBAI 21 - 02 - 06 20000 10/90 200000 1800000 2000000 RAPID COMMERCIAL & FINLEASE PVT. LTD. 20 DAWA ZAZAR 4 TH FLOOR 1314 RNT MARG INDORE 31 - 03 - 06 10000 10 100000 900000 1000000 8000000 43. THE ADDITIONS HAVE BEEN MADE ON ACCOUNT OF SHARE CAPITAL CONTRIBUTIONS FROM AFORESAID PARTIES ON THE BASIS OF VARIOUS OBSERVATIONS MADE IN THE ASSESSMENT ORDER. THE AO OBSERVED THAT VARIOUS CORPORATE SHAREHOLDERS HAVE SUBMITTED INCOME TAX RETURNS. THE AO HAS ALSO ANALYSED THE BANK STATEMENTS OF SUCH CORPORATE SHAREHOLDERS AND EXAMINED 30 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 30 CREDITS AND WITHDRAWALS FROM BANK ACCOUNTS OF CORPORATE SHARE - HOLDERS. THE A.O. HAS REFERRED TO DETAILS OBTAINED FROM THE REGISTRAR OF COMPANIES IN RESPECT TO CERTAIN CORPOR ATE SHARE - HOLDERS. ALL THE SHARE CAPITAL CONTRIBUTIONS ARE THROUGH PROPER BANKING CHANNEL AND ALL CORPORATE SHARE - H OLDERS ARE ASSESSED TO TAX. M OST OF THE SHARE - HOLDERS HAD ALSO CONTRIBUTED FOR SHARE CAPITAL IN THE CASE OF FLEXI TUFF INTERNATION AL LTD. ONE OF THE ASSESSEE AT I NDORE. THE A.O. HAS ALSO REFERRED IN THE CASE OF THE ASSESSEE IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2005 - 06 THE ASSESSMENT ORDER MADE IN THE CASE OF FLEXI TUFF INTERNATIONAL LTD. . FOR THIS OUR ATTENTION IS DRAWN TOWARDS PAGE 12 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2005 - 06. IT WAS POINTED OUT THAT THE AO HAS OBSERVED THAT THE COMPAN IES SUBSCRIBING TO SHARE CAPITAL IN THE CASE OF ASSESSEE COMPANY ARE SAME AS THAT IN THE CASE OF M/S. FLEXI TUFF INTERNATIONAL LTD . WHEREIN SUCH SHARE - HOLDERS HAVE BEEN HELD TO BE BOGUS. THE A.O. HAS OBSERVED THAT THE ASSESSMENT ORDER IN THE CASE OF SAID COMPANY HAS BEEN PASSED ON 31/03/2006. THE ASSESSMENT ORDER IN THE CASE OF ASSESSEE COMPANY HAS BEEN PASSED BY THE A.O. ON 31/12/ 2009. IT WAS SUBMITTED THAT THE ASSESSMENT MADE IN THE CASE OF M/S. FLEXI TUFF INTERNATI ONAL LTD. ON 31/03/2006 WAS DULY CONSIDERED BY THE HONBLE ITAT INDORE BENCH INDORE IN ITA NO. 530/LND/2006 . WHEN THE MATTER TRAVELLED TO THE TRIBUNAL IN THE CASE O F FLEXI TUFF INTERNATIONAL LTD (SUPRA) THE TRIBUNAL HAS DISPOSED OFF THAT MATTER VIDE ITS ORDER DATED 22/12/2006. THE AO WHILE RELYING ON THE DECISION OF ITAT INDORE BENCH IN THE CASE OF FLEXI TUFF INTERNATIONAL LTD (SUPRA ) HAS IGNORED THE DECISION OF ITA T EVEN THOUGH THAT ORDER WAS AVAILABLE AT THE TIME OF PASSING THE ASSESSMENT ORDER FOR REASON S BEST KNOW N TO HER. THE ITAT IN THAT CASE AFTER CONSIDERING THE ENTIRE FACTS HAS CONCLUDED THAT THE VARIOUS SHAREHOLDERS IN THE CASE OF AFORESAID COMPANY ARE PERS ON WHOSE IDENTITY HAS BEEN ESTABLISHED AND THUS ADDITION MADE UNDER SECTION 68 OF L.T. ACT 1961 WAS DIRECTED TO BE DELETED. IN THIS REGARD OUR ATTENTION WAS DRAWN TO THE DECISION OF ITAT INDORE BENCH IN THE CASE OF ACIT VS. M/S. KALANI INDUSTRIES LTD. A ND MS. FLEXITUFF INTERNATIONAL LTD. 8(2007) 8 ITJ 165 (IND. TRIB) ORDER DATED 22.12.2006 COPY OF WHICH IS AVAILABLE AT PAGES 44 TO 131 OF PB (VOL - III). SPECIFIC ATTENTION WAS DRAWN TO PAGES 51 110 114 118 AND 119 TO DEMONSTRATE THAT THE VARIOUS COMPA NIES WHO HAVE CONTRIBUTED THE SHARE CAPITAL WITH THE ASSESSEE COMPANY ARE THE SAME COMPANIES FROM WHOM THE SHARE CAPITAL CONTRIBUTION WAS HELD TO BE NOT LIABLE TO BE ASSESSED UNDER SECTION 68 OF THE I.T.ACT 1961. THUS IT WAS CONTENDED THAT THERE IS NO J USTIFICATION FOR MAKING ANY ADDITION U/S.68 OF THE ACT IN RESPECT OF SHARE CAPITAL RECEIVED BY THE ASSESSEE IN EACH OF THE ASSESSMENT YEAR. IN RESPECT OF SHARE APPLICATION MONEY GIVEN BY JUBILANT MULTITRADE PVT LTD. (JMPL) AND DIMPLE MULTITRADE PVT LTD (D MPL) DURING THE ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 IT WAS SUBMITTED THAT 31 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 31 M/S. JMPL HAS FILED RETURN OF INCOME AND SHOWN ITS REGISTERED OFFICE AT 911 9 TH FLOOR NAVJEEVAN LAMINATAN ROAD MUMBAI AND HE IS MAINTAINING BANK ACCOUNTS FROM WHERE CHEQUES HAVE BEEN ISSUED TO THE ASSESSEE. THE AO OBSERVED THAT SURVEY CONDUCTED BY THE ITO INVESTIGATION UNIT - III MUMBAI FOUND THAT THE AFORESAID PREMISES WERE USED FOR RECEIVING MAIL MESSAGING FACILITY. THE AO FURTHER OBSERVED THAT RETURN FOR ASSESSMENT YEAR 2008 - 09 FOR JMPL IS SIGNED BY ONE SHRI RAJENDRA PRASAD AGARWAL AND THE STATEMENT OF RAJENDRA PRASAD AGARWAL WAS RECORDED BY THE AO ON 4.12.2009. THE AO HAS FIL ED THE DETAILS OF FILING OF THE RETURN FOR THE ASSESSMENT YEARS 2003 - 04 TO 2007 - 08 AND REFLECTED SAME IN THE ASSESSMENT ORDER OF THE ASSESSEE INDICATING THE INCOME AND INVESTMENT. CONCLUSION OF THE AO IS MERE INFERENCE AND THERE ARE NO LEGAL DOCUMENTS FOR RECORD TO SHOW THAT JMPL HAS NOT MADE CAPITAL CONTRIBUTION WITH THE ASSESSEE COMPANY OR DR. YOGIRAJ SHARMA HAS ANY NEXUS OR CONNECTION TO THESE COMPANIES. THE CONCLUSION OF THE AO IS ON MERELY SUSPICION CONJECTURE AND SURMISES. SIMILARLY IN RESPECT OF CAPITAL CONTRIBUTION MADE BY DMPL THE FACTS AND OBSERVATIONS OF THE AO ARE SIMILAR. IT IS NO WHERE CONNECTED WITH DR. YOGIRAJ SHARMA. THEY ARE INDEPENDENT AND HAVING INDEPENDENT IDENTITY. JMPL HAS MADE CAPITAL CONTRIBUTION OF RS.10 00 000/ - EACH IN AS SESSMENT YEAR 2003 - 04 AND 2004 - 05. SIMILARLY DMPL HAS MADE CAPITAL CONTRIBUTION IN THE ASSESSEE COMPANY FOR A SUM OF RS.10 00 000/ - FOR ASSESSMENT YEAR 2003 - 04. OUR ATTENTION WAS DRAWN TOWARDS ASSESSMENT ORDER AS WELL AS THE ORDER OF LD CIT(A) AND SPECI FICALLY POINTED OUT THAT NONE OF THE PERSONS RELATING TO VARIOUS COMPANIES WHO HAVE CONTRIBUTED THE SHARE CAPITAL DENIED THAT THEY HAVE NOT GIVEN CHEQUES FOR CAPITAL CONTRIBUTION TO THE ASSESSEE COMPANY. NO DOUBT THEY HAVE STATED IN THE STATEMENT THAT THE Y HAVE TAKEN THE CASH FROM SHRI GAURAV SHARMA BUT ALL THE STATEMENTS HAVE BEEN RECORDED AT THE BACK OF THE ASSESSEE. THE ASSESSEE HAS NOT BEEN GIVEN THE COPY OF THE STATEMENT FOR ITS REBUTTAL . EVEN NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE FOR CROSS EXAMIN ATION OF THESE PERSONS. THE STATEMENT RECORDED AT THE BACK OF THE ASSESSEE CANNOT BE RELIED. IN THIS REGARD RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM 125 ITR 713 (SC) AND THAT OF DAULAT RAM RAWATM AL (1973) 87 ITR 349 (SC). ALL THESE STATEMENT RECORDED AT THE BACK OF THE ASSESSEE HAVE BEEN UTILISED BY THE AO ADVERSELY JUST FOR THE PURPOSE OF MAKING THE ADDITION. ATTENTION WAS DRAWN TOWARDS THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF HEIRS AND LRS OF LATE LAXMIBHAI S PATEL 327 ITR 290 (GUJ) FOR THE PROPOSITION THAT THE ADDITION MADE BEING NOT IN ACCORDANCE WITH LAW IS LIABLE TO BE DELETED. RELIANCE WAS ALSO MADE ON THE WRITTEN SUBMISSION MADE BEFORE LD CIT(A). OUR ATTENTION WAS DRAWN TOWARDS REMAND REPORT GIVEN BY THE ASSESSING OFFICER ON THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE 32 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 32 CIT(A). FROM THE REMAND REPORT COPY OF WHICH IS AVAILABL E AT PAGE 71 TO 74 OF PB (VOL - IV ). ATTENTION WAS DRAWN TO PAGE 39 (PAGE 73 OF PB) IN THE CASE OF DR. YOGIRAJ SHARMA AT VOL - 4 AND THUS IT WAS CONTENDED THAT THE AO IN THE REMAND REPORT HAS NOT DISPUTED THE CLAIM OF THE ASSESSEE. AS REGARDS TO THE FACT THAT VARIOUS PERSONS OF WHOSE STATEMENTS RECORDED WERE USED AGAINST THE ASSESSEE WERE NOT CROSS EXAMINED. THE AO IN THE REMAND REPORT HAD REQUESTED THE CIT(A) TO GRANT SUCH OPPORTUNITY DURING THE APPELLATE PROCEEDINGS. THE RELEVANT OBSERVATIONS OF THE AO READ AS UNDER: AS REGARDS THE CLAIM OF THE AS SESSEE REGARDING INADEQUATE OPPORTUNITY PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO THE DENIAL OF OPPORTUNITY TO CROSS EXAMINE THE PERSONS WHOSE STATEMENT WERE RECORDED AND USED AGAINST THE ASSESSEE IT IS REQUESTED THAT SINCE THE HON BLE CIT(A) HAS THE POWERS COTERMINOUS WITH THE AO. IT IS REQUESTED THAT HE MAY KINDLY GRANT SUCH OPPORTUNITY DURING THE APPELLATE PROCEEDINGS OR IF DEEMED FIT DIRECT THE UNDERSIGNED TO PROVIDE SUCH OPPORTUNITY TO THE ASSESSEE. 44. OUR ATTENTION WAS DRAWN TOWARDS PAGE 26 OF THE ORDER OF LD CIT(A) AND SUBMITTED THAT LD CIT(A) HAS REFERRED TO LPS - 4 FOR CONCLUDING THAT IT IS INCRIMINATING PAPER WHICH IS EVIDENCE OF ACCOMMODATION ENTRIES GIVEN THROUGH BANK ACCOUNTS OF THE CORPORATE SHAREHOLDERS. THE SAID LPS - 4 HAS BEEN A SCANNED COPY AND REFERRED TO THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006 - 07 AT PAGES 14 & 15. FROM THIS PAPER IT IS EVIDENT THAT THE ENTRIES STATED THEREIN DATED 24.7.2007 AND 1.9.2007 AND THESE HAVE BEEN SEIZED FROM THE RESIDENCE OF SHRI SUNIL AGARWAL DURING THE COURSE OF SEARCH ON 7.9.2007. THESE LO O SE PAPERS DOES NOT RELATE TO PERIOD TO WHICH ASSESSEE COMPANY HAS RECEIVED SHARE CAPITAL CONTRIBUTION FROM THE VARIOUS SHAREHOLDERS. BY REFERRING TO PAGE 15 OF THE ASSESSMENT ORDER IT WAS CONTENDED THAT THE AO HIMSELF OBSERVED THAT PAGES 2 3 & 6 OF LPS - 4 SHOW THE DETAILS OF BALANCE OF THE AMOUNT PRESENT IN THE DIFFERENT BANK ACCOUNTS ON 24.7.2007 AND 1.9.2007. THE LIST INDICATE THAT SUNIL AGARWAL WAS MONITORING THE BALANCE OF AMOUNT IN VARIOUS ACCOUNTS WHICH HE WAS USING FOR PROVIDING SHARE CAPITAL/CAPITAL GAIN ACCOMMODATION ENTRIES. THE LOSE PAPERS CANNOT BE REGARDED TO BE INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH. OUR ATTENTION WAS DRAWN TOWARDS PAGE 27 OF LD CIT(A) ORDER SUB - PARA 2 IN WHICH IN THE LAST LINE HE HAS OBSERVED THAT THE AO HAS GIVEN FINDING THAT THE ASSESSEE HAS EARNED INCOME FROM INTEREST AND BUS RUNNING AND COULD NOT HAVE GENERATED THE UNACCOUNTED FUNDS. ON THE FACE OF SUCH FINDINGS OF THE AO THERE I S NO JUSTIFICATION TO MAKE THE ADDITION IN RESPECT OF ANY CORPORATE SHAREHOLDERS AT THE HANDS OF THE ASSESSEE. ATTENTION WAS DRAWN TO PAGE 30 OF LD CIT(A) ORDER IN WHICH HE HAS DISCUSSED LOSE PAPERS 33 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 33 PAGES 81 TO 84 OF LPS - 2 /30 SEIZED FROM A - 70 SHAKTI NA GAR BHOPAL. REFERRING TO THESE PAGES IT WAS POINTED OUT THAT IT CONTAINS ALL THE DETAILS DATED 28.3.2007 WHICH ARE RELEVANT FOR THE ASSESSMENT YEAR 2007 - 08 AND IS NOT RELATED TO ANY OF THE IMPUGNED ASSESSMENT YEARS IN WHICH SHARE CAPITAL CONTRIBUTION HAS BEEN RECEIVED BY THE ASSESSEE COMPANY. RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT HEAVY CHEMICALS LTD. 256 ITR 795 (SC). RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: I) (2013) 356 ITR 65 (MP) CIT VS. PEOPLES GENERAL HOSPITAL LTD. II) ITAT ORDER IN ITA NO.545/IND/2010 IN THE CASE OF M/S. RAJSHREE FINSEC PRIVATE LTD. VIDE ORDER DATED 6/2/2012 III) (2013) 214 TAXMAN 423 (DELHI) CIT VS. GANGESHWARI METAL PVT. LTD. IV) (2008) 216 CTR (SC) 19 5 CIT VS. LOVELY EXPORTS (P) LTD. V) HONBLE MUMBAI HIGH COURT ORDER IN ITA NO.2182 OF 2009 IN THE CASE OF M/S. CREATIVE TELEFILMS LTD. VI) (2009) 221 CTR (DEL.) 511 CIT VS. VALUE CAPITAL SERVICES (P) LTD. VII) HONBLE BOMBAY HIGH COURT ORDER IN ITA NO.16 OF 2012 IN THE CASE OF GOA SPONGE AND POWER LTD. VIII) CIT VS. MITACHEM INDUSTRIES (2000) 245 ITR 160 (MP) IX) CIT VS. DWARKADHIS INDUSTRIES PVT LTD. (2011) 330 ITR 298 (DEL). IT WAS VEHEMENTLY SUBMITTED THAT THE ISSUE INVOLVED IN THESE GROU NDS IN ALL THE ASSESSMENT YEARS IS DULY COVERED IN FAVOUR OF THE ASSESSEE. IT WAS CONTENDED THAT THE HONBLE ITAT IN THE CASE OF M/S. RAJSHREE FINSEC PRIVATE LD (SUPRA) HAS FOLLOWED THE DECISION OF HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS LTD (S UPRA) AND HAS ALSO CONSIDERED THE DECISION OF AGRAWAL COAL CORPORATION OF ITAT INDORE BENCH IN THE AFORESAID JUDGEMENT. THE DISCUSSION AND ENQUIRY MADE BY A.O. AMPLY DEMONSTRATED IDENTITY OF CORPORATE SHAREHOLDERS BEYOND DOUBT. A.O. HAS MADE ADDITION AS H E WAS NOT SATISFIED ABOUT THE CREDITWORTHINESS OF SUCH COMPANIES AND DEPOSITS IN THE BANK ACCOUNT OF SUCH COMPANIES. THE A.O. HAS EXAMINED BANK ACCOUNT OF ALL THE CORPORATE SHAREHOLDERS ROC DETAILS DIRECTORS AND OFFICE OF SUCH COMPANIES. IN VIEW THERE OF AMPLE LEGAL EVIDENCE IS ON RECORD TO DEMONSTRATE AS TO IDENTITY OF SHAREHOLDERS. ATTENTION WAS INVITED TO PROVISO TO SEC. 68 INTRODUCED W.E.F. ASSESSMENT YEAR 2013 - 14 TO DISCHARGE THE ONUS TO EXPLAIN SHARE CAPITAL. THE PROVISIONS OF SEC. 68 CLEARLY 34 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 34 DEMON STRATES THAT PRIOR TO ASSESSMENT YEAR 2013 - 14 THE ASSESSEE IF NOT ESTABLISHING THE IDENTITY OF SHAREHOLDERS NO ADDITION IN RESPECT TO SHARE CAPITAL CAN BE MADE AT THE HANDS OF COMPANY RECEIVING SHARE APPLICATION MONEY. 45. IT WAS SUBMITTED THAT IT IS SET TLED PROPOSITION OF LAW THAT ASSESSEE CANNOT BE ASKED TO EXPLAIN SOURCE OF SOURCE S . THE EVIDENCE ON RECORD CLEARLY DEMONSTRATES THAT THE MONEY HAS FLOWN FROM THE ACCOUNTS OF CORPORATE SHAREHOLDERS TO ASSESSEE. THE DEPOSIT IN BANK ACCOUNT OF CORPORATE SHARE HOLDER IS THE RESPONSIBILITY OF SHAREHOLDER TO EXPLAIN THE SAME TO REVENUE AUTHORITIES. ASSESSEE CANNOT BE SADDLED WITH LIABILITY ON A.O. DOUBTING THE DEPOSIT OF CORPORATE SHAREHOLDERS. THERE IS NO ADVERSE EVIDENCE EXCEPT FOR THE STATEMENT OF FEW PERSONS W HICH WERE NOT CROSS EXAMINED BY ASSESSEE AND WHOSE STATEMENT HAVE BEEN RECORDED AT THE BACK OF THE ASSESSEE . THE ASSESSEE HAS NO TRANSACTION WITH SUCH PERSON BUT THEY ARE HAVING TRANSACTIONS WITH PERSON WHO HAD MADE SHARE APPLICATION WITH ASSESSEE COMPANY. EVEN IF ANY ADVERSE VIEW IS REQUIRED TO BE TAKEN IN RESPECT TO STATEMENT THE SAME CAN BE TAKEN ONLY IN THE CASE OF COMPANIES SUBSCRIBING SHARE CAPITAL AND NOT IN THE CASE OF ASSESSEE IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS(SUPRA) . 46. LASTLY IT WAS SUBMITTED THAT IN THE COURSE OF SEARCH NO INCRIMINATING EVIDENCE HAS BEEN FOUND TO DOUBT THE GENUINENESS OF SHARE CAPITAL CONTRIBUTION. THE SHARE CAPITAL CONTRIBUTION WAS DISCLOSED BY THE ASSESSEE COMPANY IN ITS REGULA R RETURN OF INCOME. IN THE ABSENCE OF INCRIMINATING EVIDENCE HAVING BEEN FOUND IN THE COURSE OF SEARCH SHARE CAPITAL CONTRIBUTION RECEIVED IN THE COURSE OF REGULAR ASSESSMENT HAS ACHIEVED FINALITY AND CANNOT BE ASSESSED TO TAX IN THE PROCEEDINGS UNDER SEC TION 153C/143(3) OF THE I.T.ACT 1961. 47. ON THE OTHER HAND LD D.R. RELIED ON THE ORDERS OF AUTHORITIES BELOW. 48. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY CONSIDERED THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE DECISIONS RELIED UPON BY LD COUNSEL FOR THE ASSESSEE. WE NOTED THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 11.12.2002. IT IS SUBMITTED THAT THE RETURN FOR THE IMPUGNED ASSESSMENT YEARS DURING WHICH ASSESSEE HAS RECEIVED SHARE CAPITAL DETAILS OF WHICH ARE AS UNDER: A.Y. 2003 - 04 : NAME OF THE ADDRESS DATE OF NO. OF FACE SHARE TOTAL 35 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 35 SHAREHOLDER ALLOTMENT SHARE VALUE APPLICATION AMOUNT JUBILANT MULTITRADE PVT. LTD. SAFEX GHAT KOPAR ANDHERI LINK ROAD ASALPHA SAK INOKA ANDHERI EAST MUMBAI 31 - 12 - 02 1000000 1000000 DIMPLE MULTITRADE PVT. LTD. ROOM NO.5 3 RD FLOOR HANUMAN BUILDING 2 PICKET ROAD MUMBAI 31 - 01 - 03 1000000 1000000 A.Y. 2004 - 05 : NAME OF THE SHAREHOLDER ADDRESS DATE OF ALLOTMENT NO. OF SHARE FACE VALUE SHARE APPLICATION TOTAL AMOUNT JUBILANT MULTITRADE PVT. LTD. SAFEX GHAT KOPAR ANDHERI LINK ROAD ASALPHA SAK INOKA ANDHERI EAST MUMBAI 06 - 09 - 03 1000000 A.Y. 2005 - 06 : NAME OF THE SHAREHOLDER ADDRESS DATE OF ALLOTMENT NO. OF SHARE FACE VALUE SHARE PREMIUM SHARE APPLICATION TOTAL AMOUNT OPTIMATE TEXTILE INDUSTRIES LTD. 2 DEVKARAN MENTION IIND FLOOR 63 PRINCE STREET MUMBAI 31 - 03 - 05 66000 10 2640000 660000 3300000 RAPID COMMERCIAL & FINLEASE PVT. LTD. 20 DAWA ZAZAR 4 TH FLOOR 1314 RNT MARG INDORE 31 - 03 - 05 34000 10 1360000 340000 1700000 A.Y. 2006 - 07 : NAME OF THE SHAREHOLDER ADDRESS DATE OF ALLOTMENT NO. OF SHARE FACE VALUE SHARE CAPITAL SHARE PREMIUM TOTAL AMOUNT OPTIMATE TEXTILE INDUSTRIES LTD. 2 DEVKARAN MENTION IIND FLOOR 63 PRINCE STREET MUMBAI 31 - 02 - 06 25000 10/90 2500000 2250000 2500000 SPECTRUM CHEMICALS PVT. LTD. 2 DEVKARAN MENTION IIND FLOOR 63 PRINCE STREET MUMBAI 21 - 02 - 06 25000 10/90 250000 2250000 2500000 OPTIMATE TEXTILE INDUSTRIES LTD. 2 DEVKARAN MENTION IIND FLOOR 63 PRINCE STREET MUMBAI 21 - 02 - 06 20000 10/90 200000 1800000 2000000 RAPID COMMERCIAL & FINLEASE PVT. LTD. 20 DAWA ZAZAR 4 TH FLOOR 1314 RNT MARG INDORE 31 - 03 - 06 10000 10 100000 900000 1000000 8000000 49. THE ASSESSEE HAS RECEIVED SHARE CAPITAL DURING THE IMPUGNED ASSESSMENT YEARS WHICH WERE ADDED IN T HE HANDS OF THE ASSESSEE U/S.68 AS DETAILED IN THE PRECEEDING PARAGRAPH PROTECTIVELY BUT SUBSTANTIALLY IN THE ASSESSMENT OF DR. YOGIRAJ SHARMA. WHEN THE 36 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 36 MATTER WENT BEFORE THE CIT(A) THE CIT(A) DIRECTED THE AO TO MA KE THE ADDITION SUBSTANTIALLY IN THE HANDS OF THE ASSESSEE. 50. WE ALSO NOTED THAT NOTICE UNDER SECTION 143(2) IN EACH OF THE ASSESSMENT YEAR S IN RESPECT OF RETURNS FILED BY THE ASSESSEE U/S.139(1) COULD HAVE BEEN ISSUED AS PER THE PROVISO TO SECTION 143 (2)(1) BEFORE THE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED BY THE ASSESSEE AS PER THE PROVISION PREVAILING DURING THE IMPUGNED ASSESSMENT YEARS . THE RETURN S FOR ASSESSMENT YEAR S 2003 - 04 2004 - 05 2005 - 06 & 2006 - 07 RESPECTIVELY WERE FILED IN THE MONTH OF OCTOBER 2003 OCTOBER 2004. SEPTEMBER 2005 AND JULY 2006. THEREFORE NOTICE S U/S.143(2) COULD HAVE BEEN ISSUED BY THE AO WITHIN 12 MONTHS BY OCTOBER 2004 OCTOBER 2005 SEPTEMBER 2006 AND JULY 2007 FOR THE ASSESSMENT YEARS 2003 - 04 TO 2006 - 07 RESPECTIVELY. AFTER THE EXPIRY OF 12 MONTHS THE AO COULD NOT HAVE ISSUE D NOTICE S U/S.143(2) AFTER THE AFORESAID DATES AND THEREFORE THE AO COULD NOT HAVE TAKEN THE SCRUTINY ASSESSMENT. IT IS AN UNDISPUTED FACT THAT SHARE CAPITAL CONTRIBUTION TOWARDS SHARE CAPITAL BY THESE COMPANIES WERE DULY SHOWN BY THE ASSESSEE IN THE AUDITED PROFIT AND LOSS ACCOUNT BALANCE AND ANNEXURES THERETO FILED ALONGWITH INCOME TAX RETURNS U/S.139(1) OF THE ACT PRIOR TO SEARCH HA D TAKEN PLACE IN THE CASE OF DR. YOGIRAJ SHARMA ON 7.9.2007. IN THE ASSESSMENT U/S.153C R.W.S 153A THE AO MADE THE ADDITION U/S.68 OF THE ACT ON ACCOUNT OF CAPITAL CONTRIBUTION MADE BY VARIOUS COMPANIES DULY DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE . NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH RELATING TO CAPITAL CONTRIBUTION. WE NOTED THE AO NOWHERE HAS REFERRED TO PAGE 2 3 6 AND PAGE 5 OF LPS - 4 WHICH HAS BEEN SCANNED AT PAGES 14 & 15 OF THE ASSESSMENT ORDER. FROM THESE PA GES IT IS APPARENT AND MENTIONED BY THE AO THAT THESE PAGES SHOW DETAILS OF BALANCE OF AMOUNT IN THE DIFFERENT BANK ACCOUNT S AS ON 24.7.2007 AND 1.9.2007 AND THE LIST INDICATE THAT SHRI S.K.AGARWAL WAS MONITORING THE BALANCE IN THESE VARIOUS ACCOUNTS. TH E DETAILS OF THESE PAGES DOES NOT RELATE TO THE ASSESSEE RELATING TO IMPUGNED ASSESSMENT YEAR. IN OUR OPINION THE IMPUGNED QUANTUM ADDITION MADE IN EACH OF THE ASSESSMENT YEAR S ARE MERELY BASED ON THE ENTRIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND A RE NOT BASED ON UNACCOUNTED BOOKS OF ACCOUNT OF THE ASSESSE E OR BOOKS NOT PRODUCED BEFORE THE AO EARLIER OR THE INCRIMINATING MATERIAL GATHERED BY THE INVESTIGATION WING OF THE REVENUE. 51. THE ONLY QUESTION BEFORE US ARISES WHETHER IN RESPECT OF COMPLETE D ASSESSMENT S ANY ADDITION CAN BE MADE WHEN THERE IS NO INCRIMINATING MATERIAL BEING FOUND IN THESE 37 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 37 ASSESSMENT YEARS. IN OUR OPINION THE ISSUE IS DULY COVERED BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD(SUPRA) 137 ITD (SB) 26 IN WHICH THE QUESTION NO.1 BEFORE THE SPECIAL BENCH WAS ANSWERED AS UNDER: A) IN ASSESSMENTS THAT ARE ABATED THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICT ION CONFERRED ON HIM U/S 153A FOR W HICH ASSESSMENTS SHALL BE MADE FOR EACH OF T HE SIX ASSESSMENT YEARS SEPARATELY. B) IN OTHER CASES IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONT EXT OF RELEVANT PROVISIONS M EANS (I) BOOKS OF ACCOUNT OTHER DOCUMENTS FOUND IN T HE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND; ( II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 52. SIMILAR VIEW HAS BEEN TAKEN IN TH E FOLLOWING CASES: 53. WE NOTED THAT HONBLE DELHI HIGH COURT IN THE CASE OF CHETANDAS LAXMANDAS 254 CTR (DEL) 392 HAS TAKEN SIMILAR VIEW. IN PARA 11 OF THIS JUDGEMENT THE HONBLE HIGH COURT HELD THAT OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER TH IS SECTION ONLY ON THE BASIS OF THE SEIZED MATERIAL. EVEN WE NOTED THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA 352 ITR 493 (DEL) UNDER PARA 20 IT HAS BEEN OBSERVED AS UNDER: EVEN IF ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESPECT OF ONE OR ANY OF THE SIX RELEVANT ASSESSMENT YEARS EITHER U/S143(1)(A) OR 143(3)PRIOR TO THE INITIATION OF SEARCH STILL THE AO IS EMPOWERED TO REOPEN THOSE PROCEEDINGS U/S 153A WITHOUT ANY FETTERS AND REASSESS TOTAL INCOME TAKING NOTE OF U NDISCLOSED INCOME IF ANY UNEARTHED DURING THE SEARCH. '20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT TO BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESPECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS EITHER UNDER SECTION 143(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN EXISTENCE HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF THE SEARCH/REQUISITION THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME TAKING NOTE OF THE UNDISCLOSED INCOME IF ANY UNEARTHED DURING THE SEAR CH. 54. THE ABOVE OBSERVATIONS OF HONBLE HIGH COURT WHICH ARE THOUGH OBITER DICTA MAKE IT POINT CLEAR THAT WHERE AN ASSESSMENT OR DER HAS ALREADY BEEN PASSED FOR A YEAR OF YEARS WITHIN THE RELEVANT SIX ASSESSMENT YEARS THEN THE AO IS DULY BOUND TO REOPEN THOSE 38 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 38 PROCEEDINGS AND REASSESS THE TOTAL INCOME BUT BY TAKING NOTE OF THE UNDISCLOSED INCOME IF ANY UNEARTHED DURING THE SEARCH . THE EXPRESSION UNEARTHED DURING THE SEARCH IS QUITE SIGNIFICANT TO DENOTE THAT IN RESPECT OF COMPLETED OR NON - PENDING ASSESSMENT THE AO IS ALBEIT DUTY BOUND TO ASSESS OR REASSESS THE TOTAL INCOME BUT IF THERE IS SCOPE FOR ADDITIONS IN SUCH ASSESSMENT ON THE BASIS OF INCOME UNEARTHED DURING THE SEARCH HE CAN MAKE THE ADDITION. IN OTHER WORDS THE DETERMINATION OF TOTAL INCOME IN RESPECT OF THE ASSESSMENT YEARS FOR WHICH THE ASSESSMENTS ARE ALREADY COMPLETED ON THE DATE OF SEARCH SHALL NOT BE IN FLUENCED BY THE ITEMS OF INCOME OTHER THAN THOSE BASED ON THE MATERIAL UNEARTHED DURING THE COURSE OF SEARCH. HOWEVER THE SCOPE OF SUCH DETERMINATION OF TOTAL INCOME IS DIFFERENT IN RESPECT OF THE YEARS FOR WHICH THE ASSESSMENTS ARE PENDING VIS - VIS THE Y EARS FOR WHICH ASSESSMENTS ARE NON - PENDING. THE TOTAL INCOME SHALL BE DETERMINED IN RESPECT OF ASSESSMENT YEAR FOR WHICH ORIGINAL ASSESSMENTS HAVE ALREADY BEEN COMPLETED ON THE DATE OF SEARCH BY RESTRICTING ADDITIONS ONLY TO THOSE WHICH FLOW FROM INCRIMIN ATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IF NO INCRIMINATING MATERIAL IS FOUND IN RESPECT OF SUCH COMPLETED ASSESSMENT THEN THE TOTAL INCOME IN THE PROCEEDINGS U/S 153A SHALL BE COMPUTED BY CONSIDERING THE ORIGINALLY DETERMINED INCOME IF SOME IN CRIMINATING MATERIAL IS FOUND IN RESPECT OF SUCH ASSESSMENT YEARS FOR WHICH THE ASSESSMENT IS NOT PENDING THEN THE TOTAL INCOME WOULD BE DETERMINED BY CONSIDERING THE ORIGINALLY DETERMINED INCOME PLUS INCOME EMANATING FROM THE INCRIMINATING MATERIAL FOU ND DURING T HE COURSE OF SEARCH. IN RESPECT OF ASSESSMENT PENDING ON THE DATE OF SEARCH WHICH GOT ABATE IN TERMS OF SECOND PROVISO TO SECTION 153A(1) THE TOTAL INCOME SHALL BE COMPUTED AFRESH UNINFLUENCED BY THE FACT WHETHER OR NOT THERE IS ANY INCRIMIN ATING MATERIAL. THIS POSITION OF LAW WHICH IS PRONOUNCED IN OUR OPINION WILL APPLY IN ALL THESE DECISIONS. 55. WE HAVE ALREADY OBSERVED THAT NO INCRIMINATING MATERIAL HAS BEEN FOUND RELATING TO THE YEAR IN WHICH THE ASSESSEE COMPANY HAS RECEIVED SHARE CAPITAL. THEREFORE IN OUR OPINION NO ADDITION ON ACCOUNT OF THE SHARE CAPITAL CAN BE SUSTAINED. ACCORDINGLY ON THIS BASIS ITSELF WE DELETE THE ADDITION ON ACCOUNT OF SHARE CAPITAL IN EACH OF THE ASSESSMENT YEARS. 56. EVEN ON MERIT WE NOTE THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF ITAT INDORE BENCH IN THE CASE OF AC IT VS. KALAN INDUSTRIES LTD (SU P R A) & M/S. FLEXI TUFF INTERNATIONAL LTD (SUPRA). WE NOTED FROM PAGE 172 OF THE ORDER OF THE TRIBUNAL THAT M/S RAPID COMMERCIAL & FIN LEASE LTD. AND M/S. OPTIMATES TEXTILES INDUSTRIES LTD. ARE THE SAME 39 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 39 PARTIES WHO HAVE INVESTED IN THE ASSESSEE COMPANY BY MAKING CONTRIBUTION TOWARDS THE SHARE CAPITAL WHICH WAS TREATED BY THE AO TO BE NON - GENUINE. WE NOTE D THAT THIS TRIBUNAL DELETED THE ADDITION MADE BY THE AO IN THE CASE OF M/S. FLEXI TUFF INTERNATIONAL LTD (SUPRA). THE ASSESSING OFFICER HERSELF HAS OBSERVED THAT SIMILAR PARTIES HAVE CONTRIBUTED THE CAPITAL IN THE CASE OF THE ASSESSEE. EVEN WE NOTED THAT THE ASSESSING OFFICER WHILE M AKING THE ADDITION IN THE CASE OF THE ASSESSEE RELYING ON THE ORDER IN THE CASE OF M/S. FLEXI TUFF INTERNATIONAL LTD FOR THE ASSESSMENT YEAR 2003 - 04 PASSED ON 31.3.2006 BUT IGNORED THE FACT THAT THE ADDITION MADE IN THE CASE OF M/S. FLEXI TUFF INTERNATIO NAL LTD (SUPRA) IN RESPECT OF CAPITAL CONTRIBUTION MADE BY THESE COMPANIES HAVE ALREADY BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER DT.22.12.2006. WE ARE BOUND TO FOLLOW THE DECISION OF THE COORDINATE BENCH. LD D.R. DID NOT DISPUTE THIS FACT. WE ALSO NO TED THAT ALL THE ADDITION IN RESPECT OF SAID CONTRIBUTION HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF STATEMENT OF THIRD PARTY RECORDED AT THE BACK OF THE ASSESSEE BY ADI OR BY THE STATEMENT RECORDED U/S.131. IN EACH OF THE STATEMENT NONE OF TH E PERSON HAS DENIED THAT THEY HAVE ISSUED CHEQUE TO THE ASSESSEE TOWARDS THE CAPITAL CONTRIBUTION BUT THE PERSONS HAVE STATED THAT THEY RECEIVED CASH FROM SHRI GAURAV SHARMA AND IN LIEU OF THE CASH RECEIVED THEY HAVE CONTRIBUTED IN THE CAPITAL OF THESE CO MPANIES. THE STATEMENT SO RECORDED WAS NOT PLACED BY THE AO BEFORE THE ASSESSEE FOR HIS REBUTTAL . THERE IS NO OPPORTUNITY FOR CROSS EXAMINATION WAS GIVEN BY THE ASSESSEE. THIS FACT IS APPARENTLY CLEAR NOT ONLY FROM THE ASSESSMENT ORDER BUT ALSO FROM THE REMAND REPORT SENT BY THE ASSESSING OFFICER IN WHICH THE AO HAS REQUESTED THE CIT(A) TO GIVE AN OPPORTUNITY TO THE ASSESSEE. THE RELEVANT PARAGRAPH OF THE REMAND REPORT ARE REPRODUCED AS UNDER: AS REGARDS THE CLAIM OF THE ASSESSEE REGARDING INADEQUATE OPPORTUNITY PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO THE DENIAL OF OPPORTUNITY TO CROSS EXAMINE THE PERSONS WHOSE STATEMENT WERE RECORDED AND USED AGAINST THE ASSESSEE IT I S REQUESTED THAT SINCE THE HONBLE CIT(A) HAS THE POWERS COTERMINOUS WITH THE AO. IT IS REQUESTED THAT HE MAY KINDLY GRANT SUCH OPPORTUNITY DURING THE APPELLATE PROCEEDINGS OR IF DEEMED FIT DIRECT THE UNDERSIGNED TO PROVIDE SUCH OPPORTUNITY TO THE ASS ESSEE. 57. THIS IS SETTLED LAW IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM (SUPRA) THAT NO ADDITION CAN BE MADE ON THE BASIS OF THE STATEMENT OF THE THIRD PARTY RECORDED AT THE BACK OF THE ASSESSEE ON WHICH TH E ASSESSEE HAS RELIED . SIMILARLY ON THE BASIS OF THE LAW PRONOUNCED BY THE HONBLE SUPREME COURT IN THE CASE OF RAWATMAL DAULATRAM THE BURDEN OF PROOF WAS ON THE DEPARTMENT TO PROVE THAT THE AMOUNT BELONGED TO THE ASSESSEE AS THE REVENUE HAS ALLEGES THA T THE SHARE CAPITAL BROUGHT IN BY 40 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 40 THE SHAREHOLDER IS NOT GENUINE . LETTERS OF MANAGER IN THE ABSENCE OF SAME BEING SUPPLIED TO THE ASSESSEE COULD NOT BE USED AGAINST THE ASSESSEE. IN THIS CASE WE NOTED THAT THERE WAS SEARCH & SEIZURE ACTION IN THE CAS E OF DR. YOGIRAJ SHARMA BUT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH WHICH MAY PROVE THAT DR. YOGIRAJ SHARMA ASSESSEE OR GAURAV SHARMA HAS GIVEN CASH OR THE FUNDS IN LIEU OF CHE Q UES FOR THE PURPOSE OF CONTRIBUTING IN THE CAPITAL OF THE ASSESSEE. MERELY A THIRD PARTY HAS STATED IN THEIR STATEMENT RECORDED AT THE BA N K OF THE ASSESSEE THAT THEY HAVE ISSUED CHEQUES AFTER RECEIVING CASH FROM SHRI GAURAV SHARMA THE ADDITION CANNOT BE SUSTAINED. EVEN NO EVIDENCE IS BROUGHT ON RECORD THAT THESE PART IES WERE CARRYING ON ENTRY OPERATION BUSINESS AND WERE FILING RETURNS SHOWING THE INCOME FROM ENTRY OPERATION BUSINESS TO SUBSTANTIATE THEIR STATEMENTS. THE CASE IS DULY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPOR TS (SUPRA) IN WHICH THE HONBLE SUPREME COURT TOOK THE VIEW THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM THE ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR IN DIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. EVEN HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PEOPLES GENERAL HOSPITAL LTD. (2013) 356 ITR 65 (MP) FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS LTD (SUPRA) HELD THAT IF THE IDENTITY OF THE PERSON PROVIDING SHARE APPLICATION MONEY IS ESTABLISHED THEN THE BURDEN WAS NOT ON THE ASSESSEE TO PROVE CREDITWORTHINESS OF SAID PERSON. HOWEVER THE DEP ARTMENT CAN PROCEED AGAINST THE SAID PERSONS IN ACCORDANCE WITH LAW. 58. IN THE CASE BEFORE US WE NOTED THAT ALL THE COMPANIES WHO HAS CONTRIBUTED TOWARDS THE SHARE CAPITAL OF THE ASSESSEE ARE DULY REGISTERED UNDER THE COMPANIES ACT WITH THE REGISTRAR OF COMPANIES. IT IS NOT A CASE WHERE THE COMPANIES ARE NOT IN EXISTENCE. THE COMPANIES ARE HAVING THEIR RESPECTIVE PAN NOS. FILING THEIR INCOME TAX RETURNS HOLDING BANK ACCOUNT ISSUING CHEQUES IN FAVOUR OF THE ASSESSEE AS CONTRIBUTION TOWARDS SHARE CAPIT AL. THE IDENTITY OF THE COMPANIES WHO HAVE CONTRIBUTED TOWARDS SHARE CAPITAL ARE DULY PROVED. THE TRANSACTION THAT THEY HAVE CONTRIBUTED TOWARDS SHARE CAPITAL IS ALSO PROVED AS THEY HAVE ISSUED CHEQUES BY SUBMITTING THE SHARE APPLICATION TO THE COMPANY A ND THE COMPANY HAS ALLOWED THE SHARES IN THE NAME OF THOSE COMPANIES. THIS FACT HAS NOT BEEN DENIED. MERELY BECAUSE THESE COMPANIES ARE NOT ABLE TO PROVE THE SOURCE FROM WHERE THEY HAVE INVESTED AND DEPOSITED THE AMOUNT IN THEIR BANK ACCOUNTS THE ASSESS EE CANNOT BE MADE LIABLE AS IN OUR OPINION THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE. 41 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 41 THE PROVISO IN SECTION 68 HAS BEEN INSERTED W.E.F.1.4.2013 AND THEREFORE THE ONUS TO PROVE THE NATURE AND SOURCE OF SUCH SUM SO CREDITED SHALL BE ON THE ASSESSEE ONLY FROM ASSESSMENT YEAR 2013 - 14 NOT PRIOR TO THAT. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. METACHEM INDUSTRIES 245 ITR 160(MP) HAS ALSO TAKEN THE SIMILAR VIEW. EVEN THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DEPUTY COMM ISSIONER OF INCOME TAX VS ROHINI BUILDER 256 ITR 360 (GUJ) HAS ALSO TAKEN THE VIEW THAT THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE. ON THIS BASIS ALSO FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) THE ADDITIONS MADE ARE TO BE DELETED. THE AO IS DIRECTED TO TAKE ACTION IN THE HANDS OF THE COMPAN IES/PERSONS WHO HAS CONTRIBUTED TOWARDS SHARE CAPITAL IN THE CASE OF THE ASSESSEE IN ACCORDANCE WITH LAW IN RESPECT OF WHICH THE ADDITION HAS BEEN MADE . 59. WE MAY ALSO OBSERVE THAT FROM THE ASSESSMENT ORDER WE NOTED THAT THE AO OBSERVED THAT MR VINAY GANDHI WHO WAS A CHARTERED ACCOUNTANT IN HIS STATEMENT DATED 14.2.2009 STATED THAT HIS SOURCE OF INCOME IS C.A. PRACTICE AND HE HAS ARRANGED ENTRIES FOR THE ASSESSEE COMPANY BY INTRODUCING HIM TO SUNIL AGARWAL. EVEN IN THE STATEMENT OF SHRI GUNJAN KARUN S/O. SHRI J.K.RAY RECORDED ON 21.12.2009 IT HAS BEEN STATED THAT THEY HAVE SIGNED THE CHEQUE AND GIVEN IT TO C.A. MR VINAY GANDHI FOR SHARE CAPITAL ENTRY . THE C.A. WHO IS IN PRACTICE IS BARRED TO CARRY ON ANY OTHER BUSINESS AS PER THE CODE OF CONDUCT FORMULATED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS . EVEN IN CASE THE C.A. HAS ACCEPTED THAT HE WAS ENGAGED IN SUCH ILLEGAL ACTION THE AO IS DIRECTED TO T AKE ACTION AGAINST THE C.A. BEFORE THE INSTITUTE OF CHARTERED ACCOUNTANTS SO THAT DISCIPLINARY ACTION BE TAKEN AS THE C.A. WHO IS HOLDING CERTIFICATE OF PRACTICE CANNOT BE ENGAGED IN THE BUSINESS OF PROVIDING THE ENTRIES. THUS WE ACCORDINGLY ALLOW THE G ROUND NOS.3 4 5 IN EACH OF THE ASSESSMENT YEARS . 60. GROUND NO.6 IN EACH OF THE ASSESSMENT YEAR S IS CONSEQUENTIAL FOR CHARGING OF INTEREST UNDER SECTION 234A 234B & 234C OF THE ACT. WE ACCORDINGLY DIRECT THE AO TO RE - COMPUTE THE INTEREST UNDER SECTION 234A 234B AND 234C AFTER GIVING EFFECT TO THIS ORDER. 61. IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 42 IT(SS)A NOS.206 TO 211/IND/2013 & C.O.NOS. 96 TO 101/IND/2013 (A.YRS: 2003 - 04 TO 2008 - 09) & IT(SS)A NOS. 164 TO 167/IND/2003 (A.YRS :2003 - 04 TO 2006 - 07) 42 ORDER PRONOUNCED IN PURSUANCE WITH RULE 34(4) BY PUTTING ON THE NOTICE BOARD AT INDORE. . SD/ - SD/ - ( MUKUL SRAWAT ) (P.K.BANSA L) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATED 17 / 1 1 /2014 B.K.PARIDA SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. . 6. / GUARD FILE. / BY ORDER ASST. REGISTRAR ITAT //TRUE COPY//