ITO, New Delhi v. M/s Optibelt Private Ltd,, New Delhi

ITA 1964/DEL/2009 | 2005-2006
Pronouncement Date: 29-01-2010 | Result: Allowed

Appeal Details

RSA Number 196420114 RSA 2009
Bench Delhi
Appeal Number ITA 1964/DEL/2009
Duration Of Justice 8 month(s) 18 day(s)
Appellant ITO, New Delhi
Respondent M/s Optibelt Private Ltd,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted F
Tribunal Order Date 29-01-2010
Date Of Final Hearing 25-01-2010
Next Hearing Date 25-01-2010
Assessment Year 2005-2006
Appeal Filed On 11-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER I.T.A.NO.1964/DEL/2009 ASSESSMENT YEAR : 2005-06 INCOME-TAX OFFICER M/S. OPTIBELT PRIVATE LTD. WARD 13(4) NEW DELHI. VS. S-23 GREEN PARK EX TENSION NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K. LAL SR. DR. RESPONDENT BY : SHRI SANJEEV JAIN CA. O R D E R PER B.P. JAIN ACCOUNTANT MEMBER. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XVI NEW DELHI DATED 09.02.2009 IN AN APPEAL AGAINST THE ASSESSMENT FRAMED UNDER SE CTION 143(3) OF THE INCOME-TAX ACT (THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING SOLITARY GR OUND BEFORE US:- THE LD. CIT(A) ERRED IN LAW IN DELETING THE ADDITI ON OF RS.18 00 000/- MADE U/S 68 WITH RESPECT TO THE MONE Y CLAIMED TO HAVE BEEN RECEIVED AS SHARE APPLICATION MONEY WI THOUT APPRECIATING THE FACTS AND THE CIRCUMSTANCES IN THE RIGHT PERSPECTIVE. 2 3. BRIEF FACTS OF THE CASE AS NOTED IN THE ORDER OF THE ASSESSING OFFICER AT PAGES 1 TO 6 ARE REPRODUCED HEREUNDER FOR THE SAKE OF CLARITY:- DURING THE YEAR THE ASSESSEE COMPANY HAS SHOWN INCOME FROM HOUSE PROPERTY. IT WAS NOTICED FROM TH E BALANCE- SHEET THAT DURING THE YEAR THE ASSESSEE COMPANY HAS ISSUED 18000 SHARES OF RS.10/- EACH AT A PREMIUM OF RS.90. DURING THE COURSE OF ASSTT. PROCEEDINGS THE AR OF THE ASSESSEE WAS ASKED TO FILE THE DETAILS IN RESPECT OF THIS. FROM THE DETAILS FILED IT WAS SEEN THAT THE ASSESSE E HAS ALLEGEDLY RECEIVED RS.9 00 000/- EACH FROM M/S. G.C . TECHNOLOGY INDIA PVT. LTD. AND M/S. FAIR `N/ SQUARE EXPORTS PVT. LTD. AND SHARES HAVING FACE VALUE OF RS.10/- W ERE ALLEGEDLY ALLOTTED TO THEM AT A PREMIUM OF RS.90/-. THE AR OF THE ASSESSEE FILED COPY OF ACK. OF IT RETURN FILED BY THESE COMPANIES AND THEIR BALANCE-SHEET AND CONFIRMATION ON AFFIDAVIT DATED 4.3.2005. THE AR OF THE ASSESSEE WAS ASKED VIDE ORDERSHEET EN TRY DATED 7.8.2007 TO PRODUCE THE PRINCIPAL OFFICER OF THESE PARTIES ALONGWITH THEIR COPY OF BANK STATEMENT AND BOOKS OF ACCOUNT FOR VERIFICATION. THE ASSESSEE AFTER TAKING SUCH A LONG TIME SUBMITTED VIDE ITS LETTER DATED 10.9.2007 THAT: IT IS SUBMITTED THAT WE HAVE ALREADY FILED THE CONFIRMATION OF THE ABOVE REFERRED TWO SHAREHOLDERS ALONGWITH COPIES OF THEIR BALANCE SHEETS INCOME TAX RETURNS ACKNOWLEDGMENT RECEIPTS IN EVIDENCE OF FILING THE RETURNS. THE SHAREHOLDERS HAVE ALSO CONFIRMED THEIR INVESTMENT IN OUR COMPANYS SHARES AND HAVE IDENTIFIED THEMSELVES BY GIVING THEIR PAN. WITH REGARD TO THEIR BANK ACCOUNTS AND PRODUCTION OF PRINCIPAL OFFICER IS CONCERNED IT IS STATED THA T THE SHAREHOLDERS ARE NOT IN OUR CONTROL AS THEY ARE NOT RELATED TO DIRECTORS OF THE COMPANY. WE REQUESTED THEM TO PROVIDE THE DESIRED INFORMATION 3 WHICH THEY REFUSED TO SUBMIT ON THE GROUND THAT THEY WOULD SUBMIT THE SAME TO THE ASSESSING OFFICER AS & WHEN THEY WILL BE CALLED FOR. SO FAR OUR ONUS OF PROVING THEIR INVESTMENT IN SHARES OF OUR COMPANY IS CONCERNED THE SAME HAVE BEEN DISCHARGED BY FILING THE RELEVANT DOCUMENTS AS STATED ABOVE. IT WOULD NOT BE INCONGRUOUS TO MENTION HERE THAT T HE INVESTIGATION WING HAD MADE VARIOUS ENQUIRIES/INVES TIGATIONS ON THE BASIS OF WHICH IT WAS FOUND THAT M/S. G.C. T ECHNOLOGY INDIA PVT. LTD. AND M/S. FAIR `N/ SQUARE EXPORTS PV T. LTD. WERE NOT CARRYING ON ANY ACTUAL BUSINESS AND WERE ENGAGE D IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. THE PERSON/PARTY WHO PROVIDES SUCH ENTRY IS KNOWN AS EN TRY OPERATOR AND THE PERSON/PARTY TAKING SUCH ENTRY IS CALLED BENEFICIARY. AN ENTRY OPERATOR OPERATES A NUMBER OF ACCOUNTS IN THE SAME BANK/BRANCH OR IN DIFFERENT BRANCHES IN THE NA MES OF COMPANIES FIRMS PROPRIETARY CONCERNS AND INDIVIDU ALS. FOR THE OPERATION OF THESE BANK ACCOUNTS FILING INCOME TAX RETURNS ETC. PERSONS ARE HIRED. EXCEPT FOR TWO OR THREE PERSONS WHO ARE REQUIRED REGULARLY TO VISIT BANK AND TO DO OTHER SP ADE WORK LIKE COLLECTION OF CASH ETC. MOST OF THE OTHER PERSON I NVOLVED ARE ON PART TIME BASIS. THE PART TIME EMPLOYEES ARE CALLE D AS AND WHEN REQUIRED TO SIGN DOCUMENTS CHEQUE BOOKS ETC. WHENEVER ANY BENEFICIARY IS INTERESTED IN TAKING A N ENTRY HE/SHE/IT APPROACHES THE ENTRY OPERATORS AND HANDOV ER THE CASH ALONG WITH COMMISSION AND TAKE CHEQUES/DD/PO. THE CASH IS DEPOSITED BY THE ENTRY OPERATOR IN A BANK ACCOUNT E ITHER IN HIS OWN NAME OR IN THE NAME OF RELATIVE/FRIENDS OR OTHE R PERSON HIRED BY HIM FOR THE PURPOSES OF OPENING BANK ACCOU NT. THE OTHER PERSON IN WHOSE NAME THE ACCOUNT IS OPENED ONLY SIGNS THE BLANK CHEQUE BOOK AND HANDOVER THE SAME TO THE MAIN ENTRY OPERATOR. THE ENTRY OPERATOR THAN ISSUE CHEQUES/DD /POS IN THE NAME OF THE BENEFICIARY FROM THE SAME ACCOUNT IN W HICH THE CASH IS DEPOSITED OR ANOTHER ACCOUNT IN WHICH THE FUNDS ARE TRANSFERRED THOUGH CLEARING IN TWO OR MORE STAGES. 4 THUS THE BENEFICIARYS MONEY SAILS THROUGH SEVERA L ACCOUNTS BEFORE REACHING HIM/IT IN THE END. INTERE STINGLY MOST OF THE CONCERNS/INDIVIDUAL WHO ARE OPERATING AS EN TRY OPERATOR HAVE OBTAINED PAN FROM THE DEPARTMENT AND ARE FILING RETURNS AS WELL. BUT WHAT IS SHOWN IN THE R ETURN ARE NOT ACTUAL STATE OF AFFAIRS. THEY CREATE SUCH A FAADE THAT ON THE FACE OF IT ALL THINGS APPEAR TO BE IN ORDER SUCH AS THEY HAVE PAN AND ARE FILING INCOME-TAX RETURNS ETC. SHRI RAJAN JASSAL DIRECTOR OF M/S. FAIR `N SQUAR E EXPORTS PVT. LTD. AND SHRI MUKESH GUPTA DIRECTOR O F M/S. G.C. TECHNOLOGY INDIA PVT. LTD. HAD IN THEIR STATEM ENT RECORDED ON OATH BY SHRI P.S. TOMAR THE THEN ADDL. DIT (INVESTIGATION) CATEGORICALLY STATED THAT THESE COM PANIES UNDER THEIR CONTROL WERE NOT DOING ANY GENUINE BUSINESS A ND WERE MERELY PROVIDING ACCOMMODATION ENTRIES. IN VIEW OF THIS THE PHOTOCOPIES OF THE SO CALLED CONFIRMATION ON AFFIDA VIT DT. 04.03.2005 FROM THESE PARTIES I.E. THE DATE EVEN PR IOR TO THE CLEARANCE OF ALLEGED CHEQUES FROM THE BANK HAVE NO EVIDENTIARY VALUE. IT IS IMPORTANT TO MENTION HERE THAT IN THE CASE OF CIT VS DURGA PRASAD MORE (1971) 82 ITR 540 (SC) IT WAS HEL D BY THE HONBLE SUPREME COURT THAT IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REA L. BUT A PARTY WHO RELIES ON A RECITAL IN A DEED HAS T O ESTABLISH THE TRUTH OF THOSE RECITALS OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. THE TAXING AUTHORITIES ARE NOT REQUIRED TO PUT NO BLINKERS WHILE LOOKING AT TH E DOCUMENTS PRODUCED BEFORE THEM. THEY ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES 5 TO FIND OUT THE REALITY OF THE RECITALS MADE IN THO SE DOCUMENTS--- FURTHER IT WAS HELD IN THE CASE OF ITO VS K. JAYARA MAN (1987) 168 ITR 757 (MAD) THAT IF A DOUBT ARISES AS TO THE VALIDITY OR THE GENUINENESS OF A DOCUMENT FILED FO R THE LIMITED PURPOSE OF A PROCEEDING BEFORE THE AUTHORITY UNDER THE ACT SUCH AUTHORITIES ARE BOUND TO GO INTO THE QUESTION OF GENUINENESS AND VALIDITY. IT WILL NOT BE INCONGRUOUS TO MENTION HERE THAT BA NK STATEMENT OF M/S. G.C. TECHNOLOGY INDIA PVT. LTD. A ND M/S. FAIR `N SQUARE EXPORTS PVT. LTD. WERE CANCELLED FO R U/S 133(6) OF THE IT ACT FROM THE BANS. A PERUSAL OF THE BANK STATEMENT OF THESE PARTIES LE AVES NO ROOM FOR ANY DOUBT. IT CLEARLY SHOWS WHAT WAS OBSERVED IN THE CASE OF BANK ACCOUNT OF ENTRY OPERATORS I.E. FO R MOST OF THE PERIOD THE BALANCE IN THE ACCOUNT WAS QUITE MEAGER AS COMPARED TO THE VOLUME AND VALUE OF TRANSACTIONS. THE DEPOS ITS WERE MADE IN THE ACCOUNT MOSTLY THROUGH DEPOSITS OF THE HUGE CASH AND OCCASIONALLY THROUGH TRANSFER ENTRIES AND THE S AME ARE IMMEDIATELY FOLLOWED BY TRANSFER OUT OF FUNDS THROU GH TRANSFER ENTRIES CHEQUES AND AT TIMES THROUGH WITHDRAWAL OF CASH. IN RESPECT OF BANK STATEMENT OF M/S. FAIR `N SQUAR E EXPORTS PVT. LTD. FROM WHOM THE ASSESSEE HAS ALLEGE DLY SHOWN RECEIPT OF RS.9 00 000/- AS SHARE CAPITAL ON 07.03. 2005 IT IS NOTICED THAT A SUM OF RS.8 00 000/- (4 00 000 + 4 0 0 000) WAS DEPOSITED IN CASH ON 07.03.2005 ITSELF. IT IS WORT HWHILE TO MENTION HERE THAT IN THIS PARTICULAR ACCOUNT OF M/ S. FAIR `N SQUARE EXPORTS PVT. LTD. DURING F.Y. 2004-05 ABOUT RUPEES TEN CRORE WERE DEPOSITED IN CASH. EVEN A CURSORY L OOK AT P & L A/C & BALANCE-SHEET OF THIS COMPANY FILED BY THE SH OWS THAT THIS COMPANY IS NOT CAPABLE OF DEPOSITING SUCH A HU GE AMOUNT OF CASH IN ITS ACCOUNTS AS THE TOTAL REVENUE AS PER ITS P & L A/C IS RS.3 52 142/- ONLY. IN VIEW OF THESE FACTS AND THE ASSESSEES INABILITY/UNWILLINGNESS TO PRODUCE THESE PARTIES SU MMONS U/S 6 131 DATED 10.10.2007 WERE ISSUED IN THE NAME OF M/S . G.C. TECHNOLOGY INDIA PVT. LTD. AND M/S. FAIR `N SQUARE EXPORTS PVT. LTD. REQUIRING THEM TO APPEAR ON 17.10.2007 AN D TO PRODUCE THE FOLLOWINGS:- BANK STATEMENT FOR F.Y. 2004-05 I.E. RELEVANT TO A. Y. 2005-06. COPY OF ACKNOWLEDGEMENT OF FILING OF INCOME-TAX RETURN FOR A.Y. 2005-06 AND FOR THE CURRENT ASSESSMENT YEAR I.E. A.Y. 2006-07 ALONG WITH COPY OF AUDITED BALANCE SHEET FOR A.Y. 2005-06. SUPPORTING DOCUMENTS IN RESPECT SOURCE OF INVESTMEN T IN SHARES OF M/S. OPTIBELT PVT. LTD. DURING A.Y. 20 05- 06 ALONG WITH COMPLETE LEDGER AND CASH BOOK. PHOTOCOPY OF SHARE CERTIFICATE IF ANY ALLOTTED BY M/S. OPTIBELT PVT. LTD. THE SUMMONS WERE SENT THROUGH SPEED POST AT THE ADD RESS GIVEN BY THE ASSESSEE BUT NEITHER THESE WERE RECEIV ED BACK UNSERVED NOR ANYBODY ATTENDED IN RESPONSE TO THIS N OTICE. IN VIEW OF THIS SUMMONS U/S 131 WERE AGAIN ISSUED ON 2 5.10.2007 IN THE NAME OF BOTH THESE COMPANIES REQUIRING THEM TO PRODUCE THE DETAILS MENTIONED ABOVE ON 1.11.2007. THE INS PECTOR OF THIS WARD MRS. RENU KAMRA WAS DEPUTED TO SERVE THE SUMMON PERSONALLY ON BOTH THESE COMPANIES. THE INSPECTOR AFTER VISITING THE GIVEN ADDRESSES FILED HER REPORT WHERE BY SHE INFORMED AS UNDER:- INSPECTOR REPORT M/S. FAIR `N SQUARE EXPORTS PVT. LTD. WZ-134 PLOT NO.170 VISHNU GARDEN NEW DELHI. I WAS DEPUTED BY THE ITO WARD 13(4) NEW DELHI TO SERVE THE SUMMONS U/S 131 OF THE I.T. ACT 1961 IN CONNECTION 7 WITH THE INCOME TAX PROCEEDINGS IN THE CASE OF M/S. OPTIBELT PVT. LTD. FOR THE ASSTT. YEAR 2005-06. I VISITED T HE ABOVE MENTIONED PLACE IT IS FIND THAT THIS ADDRESS DOES N OT EXIST IN VISHNU GARDEN BUT THIS ADDRESS IS LOCATED IN KHYALA & CHAND NAGAR ALSO. BUT THE ABOVE NAMED COMPANY DOES NOT E XIST AT ABOVE MENTIONED PLACES. INSPECTOR REPORT M/S. G.C. TECHNOLOGY (I) PVT. LTD. B-348 3 RD FLOOR HARI NAGAR NEW DELHI. I WAS DEPUTED BY THE ITO WARD 13(4) NEW DELHI TO SERVE THE SUMMONS U/S 131 OF THE I.T. ACT 1961 IN CONNECTION WITH THE INCOME TAX PROCEEDINGS IN THE CASE OF M/S. OPTIBELT PVT. LTD. FOR THE ASSTT. YEAR 2005-06. I VISITED T HE ABOVE MENTIONED PLACE. THIS PLOT IS DIVIDED IN FOUR EQUA L RESIDENTIAL HOUSES. NONE OF THESE IS CONSTRUCTED UPTO THE THIR D FLOOR. OUT OF THE ABOVE ONE HOUSE IS VACATED AND LOCKED FOR T HE LAST FOUR YEARS. ALL THE PERSONS LIVING IN THE ABOVE PREMISE S REFUSED TO KNOW ABOUT THE ABOVE SAID COMPANY. I ALSO ENQUIRED FROM SH. MANOHAR LAL RESIDENT OF HOUSE NO.336 ALSO STATED THAT HE HAS BEEN LIVING THERE FOR THE LAST EIGHT YEARS AND HE I S NOT AWARE OF THE ABOVE NAMED COMPANY. IN VIEW OF THIS AND THE REPORT OF THE INSPECTOR T HE ASSESSEE WAS INFORMED ACCORDINGLY VIDE LETTER DATED 15.11.2007 OF THIS OFFICE AND IT WAS ASKED TO DEPUTE SOMEONE T O ACCOMPANY THE INSPECTOR AND GET THE SUMMONS SERVED OR PRODUCE THESE PARTIES ON ITS OWN FOR VERIFICATION. THE CASE WAS FIXED FOR 19.11.2007. ON THIS DATE THE AR OF THE ASSESSEE RA THER THAN PRODUCING THESE PARTIES FILED ITS REPLY VIDE LETTER DATED 17.11.2007 WHICH IS SIMILAR TO WHAT IT SUBMITTED VI DE ITS LETTER DT. 10.09.2007 AS DISCUSSED ABOVE. THE ASSESSEE COMPANY IS A PRIVATE LTD. COMPANY. IN THE CASE OF SUCH COMPANIES THERE IS CLOSE AND PROXIMATE RELATIONSHIP BETWEEN THE PROMOTERS/DIRECTORS AND TH E SHAREHOLDERS. THE CLOSELY HELD COMPANIES ARE PERMI TTED TO 8 ACCEPT THE SUBSCRIPTION OF SHARE CAPITAL OR DEPOSIT S FROM THE FRIENDS OR RELATIVES OF THE PROMOTERS. AS SUCH THE RE SHOULD HAVE BEEN NO DIFFICULTY ON THE PART OF THE ASSESSEE TO P RODUCE SOMEBODY FROM THE SAID ENTITY HAD THE WHOLE APPARA TUS NOT BEEN MERELY A CONDUIT TO PLOUGH BACK THE MONEY OF T HE ASSESSEE COMPANY IN THE GARB OF SHARE CAPITAL. MERE PAYMENT BY A/C PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE A NO N GENUINE TRANSACTION GENUINE. THE ASSESSEE WAS FAILED TO DISCHARGE ITS ONUS AND TO PRODUCE THESE PARTIES TO PROVE BEYOND DOUBT THE GE NUINENESS OF THE TRANSACTION AND THE EXISTENCE AND CREDITWORTHIN ESS OF THESE PARTIES. IN VIEW OF THE ABOVE FACTS I AM SATISFIED THAT TH E AMOUNT OF RS.18 00 000/- ALLEGEDLY RECEIVED FROM M/S. G.C. TECHNOLOGY INDIA PVT. LTD. AND M/S. FAIR `N SQUARE EXPORTS PVT. LTD. WAS NEVER RECEIVED AS SHARE CAPITAL & PRE MIUM. IT WAS A CAMOUFLAGED TRANSACTION TO AVAIL THE BENEFIT OF FAVORABLE JUDICIAL PRONOUNCEMENT ON SHARE CAPITAL. THUS KEE PING IN VIEW THE TOTALITY OF THE FACTS THE AMOUNT OF RS.18 00 0 00/- IS ADDED BACK TO THE INCOME OF THE U/S 68 OF THE IT ACT. 4. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS MADE BY THE LEARNED AR HELD THAT THE ADDITIONS HAVE BEEN MADE B Y THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM THE INVES TIGATION WING OF THE DEPARTMENT. WHEN THE ASSESSEE WAS ASKED TO PRODUCE THE DIRECTORS OF THE COMPANIES FROM WHOM SHARE APPLICATION MONEY WAS REC EIVED THE ASSESSEE SUBMITTED CONFIRMATIONS AND OTHER EVIDENCES BUT DID NOT PRODUCE THE DIRECTORS OF THE SAID COMPANIES. IT WAS OBSERVED B Y THE LEARNED CIT(A) THAT THE AO DISREGARDED THESE EVIDENCES AND EMPHASIZED T HAT IDENTITY AND CREDITWORTHINESS OF THE INVESTORS WAS NOT PROVED. THE LEARNED CIT(A) 9 FURTHER OBSERVED THAT THE AO HAS NOT GIVEN ANY DETA ILS ABOUT THE ENQUIRY CONDUCTED BY HIM ON THE BASIS OF WHICH IT WAS HELD THAT THE SAID PARTIES WERE INVOLVED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD WHICH CAN PROVE THAT THIS MONEY WAS ASSESSEES OWN MONEY BUT THE FINDINGS ARE ON THE BA SIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT WITHOUT MAKING ANY EFFORT TO VERIFY THE FACTS STATED THEREIN. NOTHING HAS BEEN BROUGHT ON RECORD IN THE FORM OF POSITIVE MATERIAL OR EVIDENCE TO IND ICATE THAT THE SHAREHOLDERS WERE BENAMIDARS. THE LEARNED CIT(A) RELIED UPON TH E DECISION OF VARIOUS COURTS OF LAW AS STATED BY THE ASSESSEE INCLUDING T HE DECISION OF HONBLE SUPREME COURT WHERE IT HAS BEEN HELD THAT WHEREAS T HE IDENTITY OF THE SHAREHOLDERS HAS BEEN ESTABLISHED EVEN IF THERE IS A CASE OF BOGUS SHARE CAPITAL IT CANNOT BE ADDED IN THE HANDS OF THE COM PANY UNLESS ANY ADVERSE EVIDENCE IS NOT ON RECORD. THE LEARNED CIT(A) FURT HER OBSERVED THAT THE ASSESSEE HAS DULY EXPLAINED THE CREDIT ENTRIES IN T HE FORM OF DOCUMENTARY EVIDENCES WHICH PROVE THE IDENTITY OF THE SHAREHOLD ERS. THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS OF ESTABLISHING THE BON A FIDE OF TRANSACTIONS AND THE AO WAS NOT JUSTIFIED IN IGNORING THE VARIOUS EV IDENCES PROVIDED TO HIM BY THE ASSESSEE. THE AO HAS NOT DONE ANY INVESTIGA TION/ENQUIRY DURING THE 10 COURSE OF ASSESSMENT PROCEEDINGS. ACCORDINGLY THE LEARNED CIT(A) DELETED THE ADDITION OF RS18 00 000/- MADE U/S 68 OF THE AC T BY THE AO. 5. THE LEARNED DR SHRI H.K. LAL RELIED UPON THE ORD ER OF THE AO AND THE LEARNED COUNSEL FOR THE ASSESSEE SHRI SANJEEV JAIN RELIED UPON THE FINDINGS OF THE LEARNED CIT(A) AND SUBMITTED THAT IN THE ABSENC E OF ANY CONTRARY EVIDENCE THE ADDITION HAS RIGHTLY BEEN DELETED BY THE LEARNED CIT(A). 6. WE HAVE CONSIDERED THE FACTS OF THE CASE AND THE ARGUMENTS MADE BY THE PARTIES AND THE DECISIONS CITED. THE LEARNED D R AT THE OUTSET RELIED UPON THE ORDER OF ITAT DELHI BENCH `B IN THE CASE OF IT O VS. M/S. OMEGA BIOTECH LTD. IN ITA NO.2860/DEL/09 DATED 31.12.200 9 ON IDENTICAL ISSUE. WE HAVE GONE THROUGH THE SAID DECISION WHICH IS ON THE IDENTICAL FACTS AS IN THE PRESENT CASE. THE DECISION OF THE SAID BENCH O F ITAT IN THE CASE OF M/S. OMEGA BIOTECH LTD. (SUPRA) FOR THE SAKE OF CLARITY IN PARA 7 TO 10 IS REPRODUCED IN ENTIRETY HEREUNDER:- 7. WE HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS ARGUMENTS ADVANCED AND THE DECISIONS CITED. AFTER T HE ASSESSEE FILED VARIOUS DOCUMENTS IN RESPECT OF SHARE APPLICA NTS THE AO TRIED TO EXAMINE WHETHER THIS PERSON EXIST. THE INQ UIRY REVEALED THAT ALL THESE COMPANIES DO NOT EXIST AT THE PLACES MENTIONED. THIS FACT WAS BROUGHT TO THE NOTICE OF ASSESSEE ALS O. THEREAFTER THE ASSESSEE HAS NOT TRIED TO PROVE THE EXISTENCE O F SUCH SHARE APPLICANTS. ON THE CONTRARY IT HAS BEEN STATED THAT THE SO CALLED SHARES ALLOTTED TO THE SHARE APPLICANTS HAVE BEEN A CQUIRED BY THE DIRECTORS AND THE RELATIVES OF THE DIRECTORS OF RES PONDENT COMPANY HEREIN. IN SUCH CIRCUMSTANCES LD. CIT(A) ER RED IN HOLDING THAT THE ADDITION IS TO BE DELETED. THE COM MISSIONER 11 (A) HAS FAILED TO TAKE NOTE OF THE FACT THAT WHEN T HE SHARE APPLICANTS DO NOT EXIST AND WERE NOT AVAILABLE FOR THEIR EXAMINATION HOW MERELY ON PAPER THE EXISTENCE OF S HARE APPLICANTS CAN BE PROVED. THE AO HAS NOT MERELY REL IED UPON THE INFORMATION RECEIVED FROM INVESTIGATION WING BU T HAS ALSO TRIED TO FIND OUT WHETHER THE SHARE APPLICANTS EXIS T OR NOT. WHEN THE PARTIES WERE NOT FOUND AT THE GIVEN ADDRESS TH IS FACT WAS BROUGHT TO THE NOTICE OF ASSESSEE AND THE ASSESSEE HAS THEREAFTER NOT PROVIDED ANY FURTHER PROOF OF THE EXISTENCE OF SHARE APPLICANTS. THOUGH HONBLE SUPREME COURT OBSERVED A S EXTRACTED HEREIN ABOVE BEFORE ARRIVING AT A FINDIN G THAT THE SHARES WERE ALLOTTED THE EXISTENCE OF SHARE APPLIC ANTS IS REQUIRED TO BE ESTABLISHED. THE OBSERVATION WILL BE RELEVANT ONLY WHEN THE SHARES APPLICANTS ARE EXISTING AND SH ARES ARE ALLOTTED TO THEM. IN THIS CASE EXISTENCE OF SHARE A PPLICANTS HAS BEEN SHOWN BY THE ASSESSEE ON PAPERS WHICH EVEN COU LD NOT BE SUBSTANTIATED BY PROOF THAT THE EXISTENCE IS ON THE ADDRESS PROVIDED TO THE ASSESSEE BY THE SHARE APPLICANTS. T HEREFORE THE PAPERS SUBMITTED ITSELF BY THE ASSESSEE DO NOT PROV E THE EXISTENCE OF SHARE APPLICANT FACTUALLY. THEREFORE I N THE PRESENT CASE WE FIND THAT THE EXISTENCE OF SHARE APPLICANTS WERE NOT PROVED. THEREFORE MERELY ON CERTAIN PAPERS PRODUCED BY ASSESSEE IT CANNOT BE SAID THAT THESE SHARE APPLICA NTS WERE IN EXISTENCE WHO HAVE ACTUALLY APPLIED FOR SHARES AND WERE ALLOTTED THE SHARES. THE FACT ALSO REMAINS THAT NOW THE SHARES ARE ACQUIRED BY THE FAMILY MEMBERS OF THE DIRECTORS AT MUCH LESSER PRICE. THIS FACT ALSO SHOULD HAVE BEEN EXAMINED . 8. THE COMMISSIONER (APPEALS) HAS DELETED THE ADDIT ION FOR THE REASON THAT SINCE THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY AFTER THE APPELLANT FURNISHED ALL THESE PAR TICULARS IT HAS DISCHARGED ITS ONUS AND NO ADDITION IS CALLED FOR U NDER SECTION 68 OF THE ACT. THE COMMISSIONER (APPEALS) HAS ALSO NOT EXAMINED WHETHER THE SHARE APPLICANT HAD ANY CREDIT WORTHINESS AND THE TRANSACTION WAS GENUINE. IN SUCH A SITUATIO N THE COMMISSIONER (APPEALS) ERRED IN DELETING THE ADDITI ON AS THE ASSESSING OFFICER FAILED TO MAKE ANY ENQUIRY. RATHE R IT WAS INCUMBENT UPON THE COMMISSION (APPEALS) TO CARRY TH E ENQUIRY FURTHER AND SHOULD HAVE DONE WHAT THE ASSESSING OFF ICER FAILED 12 TO DO. HONBLE SUPREME COURT IN THE CASE OF KAPURCH AND SHRIMAL VS. CIT 131 ITR 451 HELD IT IS WELL KNOWN THAT AN APPELLATE AUTHORITY HAS THE JURISDICTION AS WELL AS THE DUTY TO CORRECT ALL ERRORS IN THE PROCEEDINGS UNDER APPEAL AND TO ISSUE IF NECESSARY APPROPRIATE DIRECTIONS TO THE AUTHORI TY AGAINST WHOSE DECISION THE APPEAL IS PREFERRED TO DISPOSE OF THE WHOLE OR ANY PART OF THE MATTER AFRESH UNLESS FORBIDDEN FROM DOING SO BY STATUTE. 9. SINCE NO FURTHER EVIDENCE IS AVAILABLE BEFORE US TO GIVE A FINDING THAT THE CASH CREDIT DURING THE YEAR HAS BE EN PROVED AND SINCE THE AUTHORITIES BELOW ALSO FAILED TO CONDUCT NECESSARY ENQUIRIES IN THIS REGARD WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE NATURE OF CRED IT AND THEN TO SATISFY WHETHER THE CREDIT IS PROPERLY EXPLAINED OR NOT. THE ASSESSEE IS DIRECTED TO PLACE NECESSARY EVIDENCE SO AS TO JUSTIFY THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR A ND GENUINENESS OF THE TRANSACTION. 10. FOR STATISTICAL PURPOSES THE APPEAL IS TREATED AS ALLOWED. 7. IN THE PRESENT CASE ON ENQUIRY BY THE INSPECTOR ALL THESE COMPANIES CLAIMED AS SHAREHOLDERS DO NOT EXIST AT THE PLACES/ ADDRESSES GIVEN BY THE ASSESSEE. THE RESULT OF THE ENQUIRY WAS BROUGHT TO THE NOTICE OF THE ASSESSEE COMPANY AND THE ASSESSEE COMPANY DID NOT EVEN TRY T O PROVE THE EXISTENCE OF SUCH SHARE APPLICANTS. MOREOVER IN THE PRESENT CASE THE DIRECTORS OF SHAREHOLDER COMPANIES WERE EXAMINED BY THE INVESTIG ATION WING OF THE DEPARTMENT WHO HAD CATEGORICALLY STATED THAT THESE COMPANIES UNDER THEIR CONTROL WERE NOT DOING ANY GENUINE BUSINESS AND THE Y WERE MERELY PROVIDING ACCOMMODATION ENTRIES. THE PHOTOCOPIES OF THE SO C ALLED 13 CONFIRMATIONS/AFFIDAVIT DATED 4.3.2005 FROM THESE P ARTIES ARE DATED EVEN PRIOR TO THE CLEARANCE OF ALLEGED CHEQUES FROM THE BANK. THE FINDINGS OF THE LEARNED CIT(A) THAT THE AO HAS MERELY RELIED UPON T HE INFORMATION RECEIVED FROM THE INVESTIGATION WING CANNOT BE SAID TO BE TR UE SINCE THE AO HAS TRIED TO FIND OUT THE SHARE APPLICANTS EXIST OR NOT AND T HE INSPECTORS REPORT HAS BEEN REPRODUCED IN THE ORDER OF THE AO AND THE SAME HAS BEEN BROUGHT TO THE NOTICE OF THE ASSESSEE AS WELL. AS PER THE JUDGMEN T OF HONBLE SUPREME COURT THE EXISTENCE OF SHARE APPLICANTS IS REQUIRED TO BE ESTABLISHED. IN THE PRESENT CASE THE EXISTENCE OF THE SHAREHOLDERS HAS NOT BEEN ESTABLISHED IN SPITE OF OPPORTUNITY GIVEN TO THE ASSESSEE. NO FUR THER EVIDENCE SINCE THE START OF ASSESSMENT PROCEEDINGS HAS BEEN GIVEN EXCE PT THE DOCUMENTS PROCURED BEFORE THE START OF THE ASSESSMENT PROCEED INGS. MOREOVER IN THE PRESENT CASE THE ASSESSEE HAS CHARGED A PREMIUM OF RS.90/- PER SHARE OVER AND ABOVE THE FACE VALUE OF RS.10/- PER SHARE AND T HIS ASPECT HAS NOT BEEN EXAMINED BY ANY OF THE AUTHORITIES BELOW. THOUGH THE FACT OF CHARGING PREMIUM OF RS.90/- PER SHARE NO MATERIAL HAS BEEN BROUGHT ON RECORD VIS-- VIS THE FINANCIAL POSITION OF THE ASSESSEE TO THE J USTIFICATION OF CHARGING THE PREMIUM. NO BALANCE SHEET OF THE ASSESSEE COMPANY HAS BEEN FILED BEFORE US. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE EXISTENCE OF THE SHARE APPLICANTS IS NOT PROVED. THE LEARNED CIT(A) HAS D ELETED THE ADDITION SINCE 14 THE AO HAS NOT MADE ANY ENQUIRY OF THE DOCUMENTS SU BMITTED. AT THE SAME TIME THE LEARNED CIT(A) HAS ALSO NOT CONDUCTED ANY ENQUIRY. AS PER DECISION OF HONBLE SUPREME COURT IN THE CASE OF KA PUR CHAND SHRIMAL (SUPRA) CIT(A) COULD ALSO MAKE APPROPRIATE ENQUIRY IF ANYTHING WAS FOUND LACKING IN THE ASSESSMENT ORDER. 8. FROM THE FACTS AS DISCUSSED ABOVE IT CAN BE SEE N THAT THE ASSESSEE HAS NOT BEEN EVEN ABLE TO ESTABLISH THE IDENTITY OF THE SHAREHOLDERS AS AFTER THE COMMENCEMENT OF ASSESSMENT PROCEEDINGS NO FRESH CO NFIRMATION HAS BEEN FILED FROM THE SHAREHOLDER AND NO FRESH ADDRESS HAS BEEN GIVEN. THE ADDRESS WHICH WAS GIVEN WAS NOT FOUND CORRECT. HOWEVER I N THE INTEREST OF JUSTICE WE ARE OF THE OPINION THAT THIS MATTER SHOULD BE RE STORED BACK TO THE FILE OF THE AO WITH A DIRECTION TO PROVIDE THE ASSESSEE A R EASONABLE OPPORTUNITY OF HEARING TO ESTABLISH THE IDENTITY OF THE SHAREHOLDE RS. WITH THESE DIRECTIONS THE MATTER IS RESTORED BACK TO THE FILE OF THE AO. 9. IN THE RESULT THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY 2010. SD/- SD/- (I.P. BANSAL) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29 TH JANUARY 2010. 15 ITA NO.1964/DEL/2009 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.