TMI Blog2005 (11) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... cer for adjudication afresh? I have received the following proposed question under section 255(4) of the Income-tax Act, 1961 in ITA No. 206/Del./2002: Whether on the facts and findings, issue being identical and covered by various Tribunal Orders arising from the same search and in the light of material on record, the learned Accountant Member is justified in deleting the addition on account of investment in share capital of Rs. 21,63,070 made as undisclosed income of the block period of the appellant or that the learned Judicial Member is justified in restoring the issue back to the file of Assessing Officer for adjudication afresh? After a perusal of the same I would like to suggest that the following questions would better bring out the points of difference to be referred to the Hon'ble President which may be referred to the Third Member: Q.1. Whether in view of the facts and material on record referred to by the D.R. in his arguments, which was not rebutted by the A.R. and admittedly has not been considered in the other orders of the Tribunal, on which reliance has been placed by the assessee, is the action of J.M. justified in restoring the issue for necessary verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue which has not been considered by other orders should be ignored especially since this aspect was not challenged on behalf of the assessee or should the Tribunal consider arguments of both the sides with even hand? B.R. Jain, Accountant Member 1. Briefly the facts are that the appellant is a private limited company having allotted share capital of Rs. 49,93,070. Regular books of account have been maintained. Statutory records as required under the Companies Act have also been maintained. Shares were allotted in different years for which share certificates were issued and return of allotment has also been filed with the Registrar of Companies, Delhi and Haryana. Return of income has also been filed from year to year and regular assessments have been framed and disclosed results stood accepted. 2. On 19-4-1996 an action under section 132 was taken at the business premises of Shri Alok Agarwal, a Chartered Accountant in practise. Certain documents relating to the appellant-company were found and seized. These documents are in respect of sale of shares by the shareholders e.g., blank signed share transfer forms, sale bills, receipts, affidavits and share certificates in ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought on record has been perused. As a consequence of the same search similar facts and documents were taken into possession of the revenue authorities in the cases of certain other companies namely Real Overseas Pvt. Ltd., M/s. Makhani Tyagi Pvt. Ltd., Indradhan Agro Products Ltd., Akriti Media Pvt. Ltd. and Garg Polymers Pvt. Ltd. Proceedings under section 158BD were initiated and share capital under the identical facts and circumstances was treated as non-genuine by invoking provision of section 68 of the Act and the same was also assessed as undisclosed income of the block period. These assessees preferred appeal before various benches of the Tribunal and after examining the judicial pronouncements vis- -vis the material on record, the Tribunal came to the conclusion that the share capital is genuine and the same cannot be treated as undisclosed income in block period. Copies of all these orders are placed on record as Annexures A to E to the written synopsis filed before us. The ld. Departmental Representative present in the proceedings admits that facts, circumstances and issue are identical and has not shown any new or distinguishing findings of the Assessing Officer. 6. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs to logical conclusion. If he wanted the presence of shareholders, the same should have been enforced by virtue of powers vested in him and not merely by closing his own enquiry and asking the assessee to produce these persons which was not under the control of the appellant. Since nothing adverse regarding investment in shares had come in possession of the Assessing Officer nor did he find any contradiction or infirmity in the sworn statements in the shape of affidavits procured by the Assessing Officer himself the assessee cannot be expected to perform what factually was not in the scope of his duty. Once the initial onus that lay upon the appellant had been discharged by the appellant the burden lay upon the revenue to verify and examine the correctness of material before making any addition. Without doing so or without bringing any positive material to controvert the correctness of such material, the addition could not be made as unexplained credit. Such a view stands fortified by the decision of Apex Courtin CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 782. 7. That apart the presumption as given in section 132(4A) of the Act is in favour of the appellant. The documents of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation to the facts of the case. This view stands fortified by the decision of the jurisdictional High Court in CIT v. Ravi Kant Jain [2001] 250 ITR 141 (Delhi). 8. The perusal of the order also reveals that the income has been treated as undisclosed of the block period without finding as to when the investment in shares had factually taken place. It is admitted position of law that a cash credit which remains unexplained can be assessed in the year in which amount is originated. Authority on this can be read in CIT v. Om Prakash Mahajan Sons [1985] 152 ITR 583 (Delhi). The scheme of block assessment which in itself is a separate code requires separate computation of total income of each previous year comprised in the block period. This has also not been done by the Assessing Officer, who appears to have been casual in his approach and making the addition without any basis or relevant material on record. When the company is incorporated with share capital which was raised in different previous years for Rs. 49,93,070 for which shares were also allotted and issued to the shareholders and accepted by each of the shareholders, who are in existence and whose identity and capacity also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal position to the facts of the instant case, we find that the impugned addition made by the Assessing Officer is in any case liable to be deleted in the facts of the instant case. It is not disputed by the revenue that the identity of the shareholders is established and they have filed confirmation letters which have in fact, been found at the premises of Shri Alok Agarwal, as mentioned by the Assessing Officer in the assessment order itself. On this short ground alone, the ratio of Delhi High Court decisions clinches the issue against the revenue. The addition of the share capital made by the Assessing Officer in the block assessment is, therefore, liable to be deleted. 10. The identical issue also came up for our consideration is in the case of Real Overseas (P.) Ltd. v. Dy. CIT [IT (SS) Appeal No. 266 (Delhi) of 2001, dated 29-8-2003] where one of us the ld. J.M. who has authored the judgment deleted the addition by observing in paragraphs 20 and 21 of our order as under: Having heard the rival submissions and perused the material placed on our files, we are of the view that in the peculiar facts and circumstances, the identical issue has been considered by the Tribunal in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did not argue specifically ground Nos. 1 and 2, the same are, therefore, dismissed. 14. In the result, assessee's appeal stands partly allowed. Per Diva Singh, Judicial Member . 1. I have gone through the proposed order and after a careful perusal of the same, I regret that I am unable to concur with the reasoning and conclusion of my esteemed colleague. Accordingly, after due discussion with my learned Brother, I propose to write my separate order for the reasons given hereinafter. 2. I would propose at the outset to refer to the specific reason discussed with my esteemed colleague for writing my separate order. The learned DR in the course of the hearings before us confronted with the orders of the Tribunal wherein in the case of different companies additions had been made as a result of the action under section 132 of the Income-tax Act on 19-4-1996 on the business premises of Shri Alok Aggarwal, CA hereinafter referred to as the searched person had in sheer helplessness and misery submitted that documents have been found in the course of the search from the premises of the searched person and admittedly amongst them are blank transfer forms where the part to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e picture. 5. It is on account of the aforesaid background that after serious deliberation and consideration and due discussion with my esteemed colleague, my separate order has been written. 6. At the outset, it may be pertinent to refer to the order in the case of Real Overseas (P.) Ltd. v. Dy. CIT [IT (SS) Appeal No. 266 (Delhi) of 2001, dated 29-8-2003], this very Bench of which I was the author, therein allowed the appeal of the assessee. It may be necessary to refer to the facts as appreciated by us by reproducing paragraphs 3 to 5 of the said order. They read as under:- 3. The relevant facts of the case are that a search and seizure operation under section 132(1) was carried on the official and residential premises of Shri Alok Aggarwal. From the said premises bearing Nos. 245, 234 and 224, Anarkali Bazar, Jhandewalan, New Delhi, incriminating documents pertaining to the present assessee were seized. The Assessing Officer of Shri Alok Aggarwal completed the assessment under section 158BC in his case. He found that undisclosed income arising out of those incriminating documents related to the assessee. As such, the seized documents/books of account were handed over to the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour. It was pointed out that the addition in the case of Makhni Tyagi (P.) Ltd had been based on the same search which took place on Shri Alok Aggarwal, the CA of the assessee. Referring to the said order, it was contended that even there, the entire share capital worth Rs. 30 lakhs odd has been treated as 'income from undisclosed sources' of the assessee. Special attention was invited to paragraph 2.1 of the same so as to point out that there was a search on the business and residential premises of Shri Alok Aggarwal, practicing CA on19-4-1996during which certain documents/incomplete statutory records of various companies including the assessee-company were seized from his custody. The said paragraph was pointed out so as to contend that the issue in the present appeal is fully covered by the said order. Referring to the same, it was submitted that the block assessment order in the case of the Chartered Accountant, Shri Alok Aggarwal was set aside by the Tribunal. As a result of it additions on identical lines were made in the case of Makhni Tyagi (P.) Ltd It was further argued that the income added in the block assessment already stands disclosed in the regular assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manner made. Referring to the synopsis filed at page 127, it was contended that the assessee-company was incorporated on 2-5-1988 and has been maintaining its account books in the normal course of its business of financing and dealing in shares. It was argued that the position of the filing of the returns from the assessment years 1989-90 till 1996-97 had already been referred to. Thus, it was contended that once the entire share capital has been disclosed to the department by the assessee in its recorded books of account maintained by the assessee prior to the date of search on 19-4-1996 under section 132 against Shri Alok Aggarwal, the provisions of Chapter XIV-B could not be invoked against the assessee since the fact is not in dispute that the share capital was recorded in the account books maintained by the assessee on the basis of which it stood assessed in regular assessment proceedings year after year right up to 1996-97 assessment year. 9. The submissions in response to the arguments which have been reproduced above as well as various other arguments on facts were responded to by the learned DR Shri Ujagar Singh in the following manner:- 18. Learned DR, in reply, with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , then he could have reopened the same in 147/148 proceedings. It may be pertinent to reproduce the view taken by the jurisdictional High Court on the scope of the assessments made under Chapter XIV-B. Their Lordships have held that the block assessment under Chapter XIV-B is not intended to be a substitute for regular assessment. Accordingly, in the face of the evidence that the evidence relied upon by the assessee and the case law considered by the Tribunal and taking note of the fact that no distinguishing fact, circumstance or contrary view was brought to our notice, we are of the view that the grounds challenging the addition on merit deserve to be allowed. 11. At this juncture, it may also be relevant to consider the order of the Tribunal in the case of Makhni Tyagi v. Dy. CIT [IT(SS) No. 204 (Delhi) of 2002, dated 21-7-2003] wherein the arguments advanced on behalf of the revenue were as under:- 3. The ld. DRs relied on the assessment order and submitted that the share capital appeared to be bogus because none of the shareholders having appeared before the Assessing Officer under section 131 of the Income-tax Act, the same had not been proved to be genuine. He, therefore, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir PAN/GIR No. and other relevant particulars under which they were assessed to tax. No adverse inference could be drawn against the assessee if in response to summons under section 131 of the Income-tax Act, none of the shareholders had appeared before the Assessing Officer though each one of them sent their confirmations to him. If the Assessing Officer felt that their examination was necessary, he could have enforced their attendance as held by Allahabad High Court in 49 ITR 561 and 651. The onus that the share capital of the assessee-company represented its undisclosed income under Chapter XIV-B of the I.T. Act was certainly on the Assessing Officer which had not at all been discharged. On other hand, necessary documentary evidence was placed on record to prove the identity of all the shareholders including furnishing of their GIR/PAN numbers and filing of other documentary evidence in the form of ration cards etc. which had neither been controverted nor disproved by the Assessing Officer. All the shareholders had subscribed share capital by account payee cheques/drafts - a fact also controverted or disproved by the Assessing Officer. There was no justification on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason. When each and every individual case has been considered by different benches, then, necessarily, they have confined themselves to the facts of that case and had not the ld. DR made his impassioned submissions then probably the present appeal would have followed the same course. However, once in an attempt to shake the judicial consciousness, the facts vis-a-vis the impugned orders are addressed, then we are faced with a scenario entirely different from the one appreciated by this very Bench in the case of Real Overseas (P.) Ltd. In the circumstances, the facts as argued need due consideration and the alarm sounded by the learned DR cannot be wished away. 14. Being of the view that the issue cannot be decided by wearing blinkers, the full scape of the picture which emerges has to be taken cognizance of and dealt with and merely blindly disposing the issue holding it as covered in the peculiar facts as are emerging from the impugned order will to my mind in the circumstances be not appropriate as once a judicial consciousness has been stirred, then it must be taken to its logical conclusion. Accordingly, in the circumstances, reference may be made to page 2 of the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling shares in the assessee-company, advance receipts and blank transfer forms were given by them to Shri Alok Aggarwal, C.A. for using them as and when he could find any prospective buyer for shares. As and when the transaction materialized, the payment had to be received only through crossed cheques/drafts and the relevant number of cheque and other particulars would have been filled in the blank receipts. There was no question of any cash having been received or paid at any time. It may further be stated that the documents were lying with Shri Alok Aggarwal, C.A. as he is professional consultant to the company and his opinion is normally taken in all such matters so as to maintain strict compliance with the provisions of the Companies Act. It may also be brought to your kind notice that this mode of signing of advance receipts and return of original documents is a prevalent practice followed for claiming refund of deposit or receipts of any payment from Central or State Governments, DDA and other Housing Corporations etc. The advance receipts are not valid till cheques/drafts Nos. are entered in them at the time of actual payment. 19. As though this was not enough, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted through shareholders. This raises the question whether the apparent can be considered as the real. As laid down by the Hon'ble Supreme Court, the apparent must be considered the real until it is shown that there are reasons to believe that the apparent is not the real and the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and matter has to be considered by applying the test of Human Probabilities 214 ITR 801, Sumati Dayal v. CIT (SC) and 82 ITR 540, CIT v. Durga Prasad More (SC). In the case of the assessee, the surrounding circumstances discussed above leads one to the conclusion that the share application money in respect of the persons mentioned above is not genuine investment. 21. On account of these facts, an amount of Rs. 21,63,000 was added as bogus share capital in the hands of the assessee-company. 22. It may be pertinent to briefly observe that their Lordships in the cases of CIT v. Steller Investment Ltd. [1991] 192 ITR 287 (Delhi) and CIT v. Sophia Finance Ltd. [1994] 205 ITR 982 (Delhi) (FB) have considered the aspect of genuineness in the context of the identity of the shareholder. The Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack to the file of the Assessing officer with the direction to decide the same in accordance with law by way of a speaking order after giving the assessee an opportunity of being heard. 25. In the result, the appeal filed by the assessee is allowed for statistical purposes. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Per B.R. Jain, Accountant Member . - THIRD MEMBER ORDER 1. In this case the appeal filed by the assessee on 19-6-2002 against the order under section 158BD dated 31-5-2002 for the block period 1-4-1986 to 19-4-1996 made by Dy. CIT, Circle 4(1), New Delhi was heard by Income-tax Appellate Tribunal, Delhi Bench 'B' on 7-1-2004. As there has been a difference in opinion between the Members of the aforesaid Bench, Hon'ble President, ITAT has nominated me as a Third Member for hearing points of difference between the Hon'ble Accountant Member and the Hon'ble Judicial Member of the earlier Bench. Thereafter I have heard both the assessee and respondent department from time to time. 2. Facts of the case may be stated first. A search under section 132(1) of the Act was conducted at the premises of one Shri Alok Aggarwal, Chartered Accountant on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts is a prevalent practice followed for claiming refund of deposits or receipts of any payment from Central or State Government, DDA and other Housing Corporations etc. The advance receipts are not valid till cheques/drafts Nos. are entered in them at the time of actual payment. The Assessing Officer considered the submissions made by the assessee and the confirmations submitted by the shareholders. Examination of the bank pass books of shareholders revealed that in every case there was a deposit of an equivalent amount just before the date of withdrawal of share money from the bank account for application of shares of the assessee-company. The learned Assessing Officer, therefore, held that though the identity and capacity of the shareholders indicating their income-tax particulars and bank account details had been furnished, the genuineness of the transaction was not proved. In the normal circumstances the share certificates should have been with the respective shareholders. Moreover the fact that signed but blank sale bills, share transfer deeds, cash receipts and affidavits were found and seized from the premises of Shri Alok Aggarwal showed that investments by such persons in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under section 158BD, the assessee filed appeal before the Tribunal that was heard in Bench B on 7-1-2004. Thereafter Hon'ble Accountant Member made an order of the Bench in writing and forwarded the same to Hon'ble Judicial Member for counter signature. He noted that as a consequence of the same search similar facts and documents were taken into possession of the revenue authorities in the cases of certain other companies, viz., Real Overseas Pvt. Ltd., M/s. Makhni Tyagi Pvt. Ltd., Indradhan Agro Products Ltd., Akriti Media Pvt. Ltd. and Garg Polymers Pvt. Ltd. Proceedings under section 158BD were similarly initiated in their cases and under the identical facts and circumstances share capital was treated as non-genuine by invoking provisions of section 68 of the Act and the same was also assessed as undisclosed income of the block period in the cases of those companies. Those assessees preferred appeals before various Benches of the Tribunal and after examining the judicial pronouncements, vis-a-vis material on record, the Tribunal came to the conclusion that the share capital was genuine and the same could not be treated as undisclosed income in block assessments. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble Supreme Court in CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 782. 6. The learned Accountant Member found that presumption under section 132(4A) of the Act was in favour of the assessee. The circumstances under which the share certificates were lying with Shri Alok Aggarwal also stood explained and no infirmity was found in the explanation of the assessee. Apparently, the investment in shares was of all such persons who had become shareholders and the Assessing Officer without bringing any material erred in saying that the apparent was not real. That burden was on revenue as held by the Apex Courtin CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349. The assessment was made by the learned Assessing Officer on the basis of suspicion. A suspicion howsoever strong could not take the place of evidence, as laid down by the Apex Court in Umacharan Shaw Bros. v. CIT [1959] 37 ITR 271. 7. The Hon'ble Accountant Member also held the view that the presumption of undisclosed income was outside the scope of block assessment in Chapter XIV-B. The Assessing Officer was required to determine undisclosed income on the basis of any material found during the course of the search. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere similar additions made had been deleted. The learned D.R. in sheer helplessness with misery writ large on his face, attempted to point out how in the case of all the companies floated or served as a professional consultant by the searched person, all the shareholders at the same point of time came to be under circumstances where they were in dire need of money. The valiant attempt was made by him to point out as to how all the shareholders who were in dire need of money could sign blank share transfer forms, sale bills, cash receipts, affidavits etc. at the same time in identical manner. The learned DR pointed out that the surrounding circumstances and the probabilities had-not been considered by the Tribunal in the earlier orders. A prayer was made that all the parts should be seen together in the complete picture. 10. The Hon'ble Judicial Member referred to the order in the case of Real Overseas (P.) Ltd. decided by the same Members, of which she was the author, allowing the appeal of the assessee. She pointed out that apart from other submissions made before the Bench at that point of time, it was also stated that the issue stood covered in favour of the assessee by virt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member pointed out that on the basis of these submissions and material placed on record, the Tribunal found that identical issue had been considered by Makhni Tyagi (P.) Ltd., wherein reliance had been placed on the judgment of jurisdictional High Court in the case of Ravi Kant Jain; CIT v. Steller Investment Ltd. and Sophia Finance Ltd. On that basis it was held that the Assessing Officer could not have made addition in the block assessment order and if he was of the view that the documents had not been considered in the regular assessments, he could have reopened the same under section 147/148 proceedings. 11. Hon'ble Judicial Member pointed out that in the case of Makhni Tyagi (P.) Ltd. also the revenue had raised only the following arguments:- The learned DRs relied on the assessment order and submitted that the share capital appear to be bogus because none of the shareholders having appeared before the Assessing Officer under section 131 of the Income-tax Act, the same had not been proved to be genuine. He, therefore, submitted that no interference was called for in the block assessment order as passed by the Assessing Officer. In the case of Makhni Tyagi Ltd. emphasis was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue cannot be decided by wearing blinkers, the full scape of the picture which emerges has to be taken cognizance of and dealt with and merely blindly disposing the issue holding it as covered in the peculiar facts as are emerging from the impugned order will to my mind in the circumstances be not appropriate as once a judicial consciousness has been stirred, then it must be taken to its logical conclusion. 12. The learned Judicial Member also took note of the observations of the Assessing Officer that in the shareholders' bank pass books, it was found that funds had been deposited of an equivalent amount just before the date of withdrawal of the share money from the respective bank accounts, in a majority of the shareholders. For that reason and that signed blank documents and share certificates found and seized from premises of Shri Alok Aggarwal and the fact that none of the shares had been sold at all, the learned Assessing Officer found that it was in dispute as to whether share application money purportedly received by the assessee from different shareholders was real genuine investment of shareholders or just entries, which in fact, represented the income of the assessee- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stified in restoring the issue back to the file of Assessing Officer for adjudication afresh? On receipt of the aforesaid proposed question from the Hon'ble Accountant Member, the Hon'ble Judicial Member suggested the following questions to bring out the point of difference to be referred to the Hon'ble President for further action:- Q.1. Whether in view of the facts and material on record referred to by the DR in his arguments, which was not rebutted by the A.R. and admittedly has not been considered in the other orders of the Tribunal, on which reliance has been placed by the assessee, is the action of J.M. justified in restoring the issue for necessary verification to the Assessing Officer or is the ld. Accountant Member justified in not considering those facts, material on record and the arguments of the DR and deleting the addition. Q.2. Whether the purpose of an appeal filed before the Tribunal is to dispose the issue as covered once it is so argued by the assessee or is the Tribunal required to give due deliberation and consideration to the arguments of the other side, i.e., the revenue also? Accordingly, is the Judicial Member justified in dealing with those arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the assessee argued that the dispute in this appeal stands concluded by the judgment of Hon'ble Delhi High Court in the case of CIT v. Makhni Tyagi (P.) Ltd [2004] 267 ITR 433. He pointed out that that judgment relates to the very search in relation to which the order under section 158BD was made in the case of the assessee before me. The learned counsel pointed out that earlier there was judgment of Hon'ble Delhi High Court in the case of CIT v. Steller Investment Ltd. [1991] 192 ITR 287. According to that judgment under no circumstances the amount of share capital may be regarded as undisclosed income of the company. That judgment of Hon'ble Delhi High Court has also been affirmed by Hon'ble Supreme Court by their judgment in CIT v. Steller Investment Ltd. [2001] 251 ITR 263. Besides, the Full Bench of the Hon'ble Delhi High Court had held in the case of CIT v. Sophia Finance Ltd. [1994] 205 ITR 984 that in any case where the shareholders are identified then possibly no further enquiry is required. Hence looked from any angle, the addition in the present case was not sustainable and, therefore, there was no force in various arguments raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precluded from assessment of undisclosed income in the block assessment proceedings under section 158BC/158BD. On that aspect also there was no difference of opinion and, therefore, the matter stood concluded by the findings recorded by the Hon'ble Accountant Member. 18. The learned counsel argued that there was lot of overlapping in the questions framed by the Hon'ble Judicial Member. Those questions were more of academic interest than any real controversy arising on the facts and in the circumstances of the case. The allegations contained in those questions that the arguments of the learned DR had not been considered in the order made by the Hon'ble Accountant Member were not correct. In the order written by Hon'ble Accountant Member there were references to the arguments of the learned DR at various places. The Accountant Member had recorded, The learned DR present in the proceedings admits that facts, circumstances and issues are identical and has not shown any new or distinguishing findings of the Assessing Officer. In other words the learned DR himself accepted that the facts of the case in the present appeal were identical to appeals in various other cases a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces drawn by the learned Assessing Officer were self-evident on the basis of discovery of material as a result of the search. The burden cast upon the assessee was very heavy as to why all the shareholders should en masse sign these blank documents and deposit them with the Chartered Accountant? The learned DR referred to the letter of the assessee dated 28-5-2002 addressed to the Assessing Officer and placed at pages 6 to 12 of the assessee's paper book. According to the assessee, the papers found were advance receipts for sale of shares. This explanation was not substantiated by pointing at even a single prospective buyer of those shares. How could every shareholder of several companies comprehensively sign all the blank documents even when there was no prospective buyer in sight. Those facts pointed out that there was no genuine shareholders and mere name lender who had already signed blank documents for the safety of the assessee to whom the money actually belonged. The learned DR. argued that the distinguishing feature noticed by the Hon'ble Judicial Member in the instant case was that while in the case of each of the assessee-company the Tribunal viewed facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed, PAN numbers applied and all those things were mere-exercise of make believe than any thing in substance. In many cases the balance-sheet of the shareholders did not reflect the shares of the assessee-company. The learned DR referred to assessee's paper book page 31 as an illustration of that point. 22. The learned DR argued that the abundant facts found during the course of search constituted the focal point of the order of the Hon'ble Judicial Member and, therefore, it cannot be said that she had disregarded the judgment of Hon'ble Jurisdictional High Court in the case of Ravi Kant Jain or the findings of the Tribunal in the case of Sunder Agencies. As to the presumption raised in section 132(4A), the correct legal position was that such presumption was for the purpose of conducting search proceedings only and could not be raised by either side during the course of assessment proceedings. The learned DR argued that orders of the Tribunal in the cases of other assessee-companies relating to the same search, as also the judgment of Hon'ble Delhi High Court in the case of Makhni Tyagi (P.) Ltd. were distinguishable because in each of those cases facts of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e whether the Tribunal is required to decide the matter afresh if facts and material on record and arguments based on such material not considered by the earlier orders of the Tribunal are raised before the subsequent Bench. Further, Hon'ble Judicial Member has raised the question of the significance of surrounding circumstances and human probabilities. Hon'ble Judicial Member has stated also that the arguments of revenue, not being arguments of the assessee, have not been given due consideration in the order of the Hon'ble Accountant Member. 25. On analyzing the points of reference by both Hon'ble Accountant Member and Hon'ble Judicial Member, I find that the first and foremost issue before me is the force and impact of the earlier orders of the Tribunal in the appeal before me. 26. While considering the question of the binding nature of the order of one Bench of the ITAT on another Bench, it is very important to bear in mind the difference between High Courts and ITAT. ITAT is not a formal source of law in the sense Hon'ble High Courts are in accordance with Article 141 of the Constitution of India. Secondly, ITAT is not a court of record. The orders passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that it did. 29. In the case of Dwarkadas Kesardeo Morarka v. CIT [1962] 44 ITR 529, the Hon'ble' Supreme Court have observed as under:- In the matter of assessment of income-tax, each year's assessment is complete and the decision arrived at in a previous year on materials before the taxing authorities cannot be regarded as binding in the assessment for the subsequent years. The Tribunal is not shown to have omitted to consider the material facts. The decision of the Tribunal was on a question of fact and no question of law arose which could be directed to be referred under section 66(2) of the Income-tax Act. 30. In the case of M.M. Ipoh v. CIT [1968] 67 ITR 106, the Hon'ble Supreme Court once again reiterated:- The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are conclusive only in the year of assessment: the findings on questions of fact may be good and cogent evidence in subsequent years, when the same question falls to be determined in another year. 31. In the case of CIT v. Brij Lal Lohia Mahabir Prasad Kh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple of law is so well-settled that I do not see any necessity for it. I have thus no hesitation in answering the first question as reframed in the negative as it must be held that the Tribunal was not correct in coming to the conclusion that the gifts were inchoate and incomplete only on the ground that this question was concluded by the Tribunal's previous order in relation to the assessment year 1954-55. 33. In the case of Surjidevi Kunjilal Jaipuria Charitable Trust v. CIT [1978] 114 ITR 685 (All.), the Tribunal decided the appeal simply following the earlier decision. Hon'ble Allahabad High Court, therefore, considered it necessary to direct the Tribunal to re-hear the appeal in the following words:- The position is that there is no finding by the Tribunal on the merits of the matter, specially on the two objects which were the subject-matter of concession on the previous occasion. Learned counsel for the trust argues that each of the objects is an object of public charity which is covered by the relevant clause in the Income-tax Act of 1961, entitling the trust to exemption. Since the Tribunal has not recorded any finding on the merits of the matter, we are unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by another Judge on a question of law, he does not finally pronounce his view and the matter is referred to a Division Bench. Similarly, if a Division Bench differs from the view taken by another Division Bench, it does not express disagreement and pronounce its different views, but has the matter posted before a Full Bench for considering the question. If that is the position even with regard to a question of law, the position will be a fortiori with regard to a question of fact. If the Tribunal in the present case wanted to take an opinion different from the one taken by the earlier Bench, it should have placed the matter before the President of the Tribunal so that he could have referred the case to a Full Bench of the Tribunal, consisting of three or more members for which there is provision in the Act itself. 36. In the case of Namdang Tea Co. Ltd. v. CIT [1982] 138 ITR 326 Hon'ble Calcutta High Court distinguished the aforesaid judgments of Hon'ble Madras High Court in the case of L.G. Ramamurthi anti pronounced the legal position in the following words:- Much reliance has been placed on behalf of the appellant on the assessment for the subsequent year, that is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act, 1922? 38. It was strongly contended on behalf of the revenue that it was not open to the subsequent Bench to take a different view of the matter and if different views were taken that would create chaos and uncertainty. Strong reliance was placed on Madras High Court judgment. Reliance on behalf of the assessee was placed on the judgment in M.M. Ipoh v. CIT [1968] 67 ITR 106 (SC). Hon'ble High Court referred to the Supreme Court judgments in New Jehangir Vakil Mills Co. Ltd. v. CIT [1963] 49 ITR 137 and CIT v. Brij Lal Lohia Mahabir Prasad Khemka [1972] 84 ITR 273 and some other judgments and thereafter held:- It is not useful to multiply the authorities. It may be taken as an established rule of law that the decisions rendered in earlier proceedings under the Income-tax Act do not operate as res judicata in connection with the subsequent assessment years nor the question of estoppel arises. The decision rendered is a decision for that particular year. So far as the present case is concerned, we need not be guided by the broader proposition propounded, for, it may be staled that the Income-tax Appellate Tribunal, Bombay Bench 'B', has not proceeded to det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osal of the appeal on merits by the Tribunal. 42. In the case of CIT v. Mohanlal Ranchhodas [1993] 203 ITR 304 (Guj.), the Hon'ble High Court laid down that a subsequent Bench should consider in a subsequent appeal any new issue that was not considered while arriving at the earlier decision. The Hon'ble High Court observed:- The Tribunal has, however, recorded in paragraph 7 of its judgment a finding that the surplus arising out of Arvind Mills and Atul Products shares should be treated as capital gains as has been rightly held by the Income-tax Officer. Based on this finding of the Tribunal in the earlier appeal, it was contended before the Tribunal by the revenue that the subsequent appeals against the order of the Appellate Assistant Commissioner were not maintainable because this ground was already concluded by the Tribunal in its earlier order in Income-tax Appeal Nos. 225 and 226 (Ahd.) of 1970-71. The Tribunal, while dealing with the said preliminary objection, rightly found that, while deciding the earlier appeals, the Tribunal has not actually gone into the question of conversion of investment shares into stock-in-trade for ready share business. 43. In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirmative in favour of the assessee and in respect of question No. 2 it is held that as a matter of prudence the Income-tax Appellate Tribunal is to take into notice and consider the decision given by another Bench of the Income-tax Appellate Tribunal though that may not be entirely binding upon the Income-tax Appellate Tribunal. 45. There is unanimity in the judgments of High Courts and theApex CourtinIndiathat the decision of one Bench of the Income-tax Appellate Tribunal carries no binding force on another Bench of equal strength in another appeal on similar issues or facts. Hon'ble Madras High Court too, have not said so in their judgment in the case of L.G. Ramamurthi and held only that if a Bench wanted to take an opinion different from the one taken by the earlier Bench, it should place the matter before the President of the Tribunal for reference to a Full Bench of the Tribunal. This view of Hon'ble Madras High Court has been reiterated by some other High Courts as well. 46. In the case of CIT v. Goodlas Nerolac Paints Ltd. [1991] 188 ITR 1, the Hon'ble Bombay High Court have given the same advice in the following words:- Before parting with this question, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of the Tribunal deciding the similar issue. There is unanimity and direct authority of Hon'ble Supreme Court in more than one judgments that in Income-tax matters the decision of one Bench of the Tribunal does not constitute a binding precedent on subsequent Bench of the Tribunal deciding upon the same or similar issues or facts. There is, however, a strong under current in judicial thinking that where there is only difference of opinion on the same facts and the same aspects, the subsequent Bench ought not to proceed to decide the matter on its own contrary to the earlier decision and should refer the matter to the President of the Tribunal for constitution of a larger Bench. At the same time there is plethora of authority that a subsequent Bench can draw different conclusion if there is adequate justification to depart from the earlier view, e.g., where subsequently new or more facts come to light. [Raja Bahadur Visheshwara Singh v. CIT [1961] 41 ITR 685 (SC); CIT v. Brij Lal Lohia Mahabir Prasad Khemka [1972] 84 ITR 273 (SC); Namdang Tea Co. Ltd. v. CIT [1982] 138 ITR 326 (Cal); CIT v. Manaklal Porwal [1986] 160 ITR 243 (Raj.) etc.] or if the earlier Bench omitted to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that Hira Lal was a partner in his own right. Thereafter at the instance of the assessee, the following question was referred to Hon'ble Bombay High Court for their opinion:- Whether in the circumstances of the case the Tribunal was justified in law in departing from its previous finding that Hiralal was trustee of the minor Vasantlal. A large number of authorities were cited before the Hon'ble Bombay High Court. The Hon'ble Bombay High Court referred to the judgment in the case of IRC v. Sleath 17 Tax Cases 149 at 163, The assessment is final and conclusive between the parties only in relation to the assessment for the particular year for which it is made. No doubt, a decision reached in one year would be a cogent factor in the determination of a similar point in a following year, but I cannot think that it is to be treated as an estoppel binding upon the same party for all years. Hon'ble High Court found that the principle that each assessment is a different assessment year is not merely helpful to the income-tax authorities but it is equally helpful to the assessee. Shri N.A. Palkhiwala, the eminent counsel for the assessee argued that the Tribunal stood on a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if these material facts had been taken into consideration the decision would have been different, then the second Tribunal would be in the same position to revise the earlier decision as if fresh facts had been placed before it. On principle there is not much difference between fresh facts being placed before the second and the second Tribunal taking into consideration certain material facts which the first Tribunal failed to take into consideration. It may be said that even though the first Tribunal may take into consideration all the facts, still its decision may be so erroneous as to justify the subsequent Tribunal in not adhering to that decision. In a case like this, which indeed must be an extreme case, it could be said that the decision of the first Tribunal was a perverse decision, and if the decision of the first Tribunal was either arbitrary or perverse it would justify the second Tribunal in departing from the decision arrived at by the first Tribunal. Therefore, in our opinion, an earlier decision on the same question cannot be reopened if that decision is not arbitrary or perverse, if it had been arrived at after due inquiry, if no fresh facts are placed before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber once it was realized that in the peculiar facts and circumstances of the case the assessee was not alone but was one of many, the whole complexion of the facts and circumstances of the case became altogether different. I see considerable force in this reasoning. The Tribunal has decided the appeals on identical facts in the cases of Real Overseas (P.) Ltd.; Makhni Tyagi (P.) Ltd.; Indradhan Agro Products Ltd., Akriti Media (P.) Ltd. and Garg Polymers (P.) Ltd., each in isolation without examining the totality of the picture that emerges once all these cases are considered as pieces of a large mosaic. In other words what the learned Accountant Member considered to be the strength of the case of the assessee, precisely the same has been considered by the learned Judicial Member to be the weakness in the case of the assessee. According to the learned Judicial Member by valiant efforts made the learned DR could change the entire complexion of the case as compared to the cases earlier decided by the Tribunal including herself. It is needless to say that in such circumstances the case before her fell in the category of exceptions carved out by the series of judgments of Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are alleged to have really advanced the money is sought to be reopened, that would have made some sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself. In our opinion, no question of law arises and the petition is, therefore, dismissed. 54. The matter thereafter came before Full Bench of the Hon'ble Delhi High Court in the case of CIT v. Sophia Finance Ltd. [1994] 205 ITR 98. The assessee in that case was incorporated on27-4-1983. The assessee disclosed paid up capital of Rs. 20 lakhs. During the course of assessment proceedings the assessee furnished necessary details and confirmation. The Assessing Officer made an assessment order accepting the return filed by the assessee. Thereafter the CIT issued a notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholders exist then, possibly, no further enquiry need be made. But if the Income-tax Officer finds that the alleged shareholders do not exist then, in effect, it would mean that there is no valid issuance of share capital. Shares cannot be issued in the name of non-existing persons. The use of the words may be charged in section 68 clearly indicates that the Income-tax Officer would then have the jurisdiction, if the facts so warrant, to treat such credit to be the income of the assessee. It is neither necessary nor desirable to give examples to indicate under what circumstance section 68 of the Act can or cannot be invoked. What is clear, however, is that section 68 clearly permits an Income-tax Officer to make enquiries with regard to the nature and source of any or all the sums credited in the books of account of the company irrespective of the nomenclature or the source indicated by the assessee. In other words, the truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of account can be gone into by the Income-tax Officer. In the case of Steller Investment Ltd [1991] 192 ITR 287 (Delhi), the Income-tax Officer had accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirmed by theApex Court. Hon'ble Calcutta High Court came to the conclusion that while doing soHon'ble Apex Courthad not laid down any proposition of law. According to the Hon'ble High Court:- In Steller Investment Ltd.'s case [2001] 251 ITR 263, theApex Courthad passed the following order: 'We have read the question which the High Court answered against the revenue. We are in agreement with the High Court. Plainly, the Tribunal came to a conclusion on facts and no interference is called for. The appeal is dismissed. No order as to costs'. From the above observation, it appears that the Supreme Court has not entered into the question involved or has not decided the ratio laid down. It had plainly held that it was a question of fact. The Supreme Court has not laid down any proposition with regard to the question. It was purely a question of fact with which theApex Courthad dealt with and was in agreement with the High Court on conclusion of facts. Therefore, it cannot be said that the Supreme Court answered the ratio laid down as sought to be propounded by the Delhi High Court in Steller Investment Ltd's case [1991] 192 ITR 287. A decision becomes bindi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly question for consideration is whether the finding of the Tribunal accepting share capital as genuine is without any evidence or material or is it contrary to the evidence on record or there is no direct nexus between the conclusion of fact and the primary fact upon which that conclusion is based. 59. In the case of CIT v. Gujarat Heavy Chemicals Ltd. [2002] 256 ITR 795, Hon'ble Supreme Court passed the following order:- We have read the order of the High Court and heard learned counsel for the appellant. We are satisfied that upon the facts, no interference with the order of the High Court is called for. The civil appeals are dismissed. No order as to costs. In that case the assessee M/s. Gujarat Heavy Chemicals Ltd. was a Joint Sector company. 40 per cent of shareholding was by public sector undertaking, public shareholding was 31 per cent and 29 per cent shareholding was by the Dalmia Group of companies. There was allegation against one of the shareholder-company, viz., Golden Investment (Sikkim) (P.) Ltd. that it was a bogus company and being used as by big industrialists for laundering of their black money. On these facts the learned CIT (Appeals) held that there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholders, the money invested on shares should be treated as income of the assessee. If the ostensible shareholders failed to explain the means of investment, that should have been treated as unexplained income in their hands. In order to add it to the income of the assessee there must be a further finding that in fact the shareholders were mere name-lenders and the money allegedly invested by them really belonged to the directors of the assessee-company. In the absence of a finding that the persons to whom the share certificates were issued on receipt of consideration as per the book entries were in fact dummies or stooges of the directors of the assessee-company, the same cannot be treated as unaccounted income of the assessee. There was no such finding by the assessing authority. In this view of the matter, the ultimate conclusion of the Tribunal cannot be faulted in any case. We, therefore, see no ground to admit this appeal as no substantial question of law arises for consideration. The Income-tax Tribunal appeal is dismissed. 62. There are two recent judgments of Hon'ble Delhi High Court viz., CIT v. Makhni Tyagi (P.) Ltd. [2004] 267 ITR 433 and CIT v. Achal Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was not traceable or there was no such file and accordingly the first ingredient as to the identity of the creditors had not been established. In the instant case, when necessary material has been produced before the Assessing Officer to establish the identity of the persons with their PAN/GIR numbers and other details, it was for the Assessing Officer to enquire further if he felt that it was necessary. Instead of doing so, after issuance of summons when these materials were produced before him, he thought that he is helpless and he passed the burden on the assessee to bring the shareholders before him. The Tribunal, considering the facts of the case, arrived at the following conclusion: 'We find that the identity of the shareholders who had also confirmed their investment in the share capital in response to summons under section 131 of the Income-tax Act also stood proved. Consequently, the addition of Rs. 30 lakhs is deleted.' In the backdrop of this finding on facts, we find that no substantial question of law arises in this matter and hence the appeal is dismissed. 63. In the case of CIT v. Achal Investment Ltd. [2004] 268 ITR 211 (Delhi), the Assessing Officer compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 192 ITR 287 (Delhi) was challenged by the revenue before the Supreme Court which, by its decision reported in the case of CIT v. Steller Investment Ltd. [2001] 251 ITR 263 disposed of the appeal by passing the following order: 'We have read the question which the High Court answered against the revenue. We are in agreement with the High Court. Plainly, the Tribunal came to a conclusion on facts and no interference is called for. The appeal is dismissed. No order as to costs.' It is in view of this, the question framed need not be answered. The reference is, accordingly, disposed of. 64. On consideration of the matter I find that Hon'ble High Court have neither in the case of Makhni Tyagi (P.) Ltd. nor in the case of Achal Investment Ltd. laid down any proposition of law, much less the proposition that in the case of a company under no circumstances any addition can be made in relation to its share capital. In the case of Makhni Tyagi (P.) Ltd., the Hon'ble High Court considered the Full Bench judgment in the case of Sophia Finance Ltd. and found that no substantial question of law had arisen and, therefore, the revenue's appeal was dismissed. In the case of Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it cannot, in our opinion, be said that it was a decision of the High Court on merits. What the High Court can be said to have observed is that they declined to entertain/admit the appeal in the absence of any substantial question of law, which is pre-requisite for assuming the jurisdiction of the High Court. If there is no substantial question of law, in the opinion of the High Court, then by virtue of provision of sub-section (1) of section 260A, there lies no appeal. Therefore, when the High Court dismisses an appeal stating that no substantial question of law arises it only mean that the High Court has declined to entertain/admit the appeal in the absence of any substantial question of law. There is no decision on merits by the Jurisdictional High Court on the issues raised by the parties. 66. On perusal of the above enumerated judgments in relation to the assessment of unexplained share capital of a company it is seen that the courts have held that the question is predominantly a question of fact. It should be borne in mind that in the case of CIT v. Steller Investment Ltd. [1991] 192 ITR 287 (Delhi), the revenue's petition has been dismissed with the remark, 'No que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of law arises. It, therefore, appears to me that in every case where a dispute arises about the genuineness of share capital, it would be necessary to examine the facts and circumstances of each case-whether the dispute is confined to the financial capacity of the share applicant or there is material/evidence to call in question the genuineness of the issuance of share capital itself. In a case where the public issue of shares is not in doubt, it cannot be conceived as to how any share capital contribution can be assessed as income of the company for reason only of some share applicants not being able to explain the source of funds invested by them. At the same time in a case where the facts and circumstances justify the finding that what has been credited as share capital of the company is actually not so, the provisions of section 68 clearly permit an I.T. authority to make enquiries and if necessary to assess the same as representing the income of the company. In this context a question as to whether or not the shareholder really exists becomes the most relevant question. I may mention here that similar view has been held by the Hon'ble Third Member in the case of Asstt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those documents were true. The issue of such shares was already recorded in the books of account maintained by the assessee and disclosed during the course of returns of income filed by the assessee/assessment proceedings. The documents found or seized during the course of the search did not reveal any investment outside the books of account by the assessee. According to the learned counsel for the assessee while the learned Accountant Member has applied the judgment of Hon'ble Delhi High Court in the case of CIT v. Ravi Kant Jain [2001] 250 ITR 141 there is no discussion in the order of the learned Judicial Member in this respect. As she did not differ with the Hon'ble Accountant Member in this vital respect, the appeal was required to be decided in favour of the assessee following the judgment of Hon'ble Delhi High Court in the case of Ravi Kant Jain. On consideration of the matter I find that the Hon'ble Judicial Member has based her order on the discovery of the very same documents, which according to the assessee establishes its case of genuineness of the share capital. It cannot, therefore, be said that in the order of the Hon'ble Judicial Member no bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of section 158BB(1) of the Act. It is important to bear in mind that computation of income under section 158BC is to be made not exclusively on the basis of evidence found as a result of search but such other materials or information also available with the Assessing Officer relatable to that evidence. On perusal of the order of the Hon'ble Judicial Member in entirety there is no manner of doubt that the same is pre-dominantly based on evidence/material found as a result of the search and it cannot be said that the findings given by her have no nexus with the search under section 132. As to the legal presumption of facts under section 132(4A) that does not in its very nature appear to be available to an assessee for where is the question of a presumption of fact being drawn by the person in the knowledge and possession of true facts? Moreover Hon'ble Delhi High Court have held in the case of Daya Chand v. CIT [2001] 250 ITR 327 that the presumption under section 132 (4A) is linked with search and seizure and is applicable only in relation to provisional adjudication contemplated under section 132(5) of the Act. Hon'ble Delhi High Court have further held that ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee relied upon confirmations submitted by the shareholders of having paid share application money for subscription to the assessee's share capital. Examination of the bank pass books of shareholders revealed that in most cases there was a deposit of an equivalent amount just before the date of withdrawal of share money from the bank account for application of shares of the assessee-company. The learned Assessing Officer, therefore, disputed the genuineness of the transactions. With a view to enquire further into the matter the Assessing Officer asked the assessee to produce the shareholders but the assessee did not produce any of them. On the basis of these facts and circumstances the learned Assessing Officer held that share application money credited in the books of account of the assessee did not represent genuine investments made by the alleged shareholders. The Hon'ble Accountant Member noted that share capital was raised through account payee cheques and relevant entries had been made in the regular books of account. The Income-tax returns filed by the assessee had been accepted in the regular assessments. Details of shareholding and confirmations/affidavits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judicial consciousness, the overwhelming impact of serious allegations made, documents found and identical ingenuous explanation that everyone needed money direly calls for a moment to pause and seriously reconsider since it is a little surprising that in the case of almost 5-6 companies allegedly floated by the searched person or taken care of professionally as per the assessee's version by the searched person, blank but signed share transfer forms, bills, receipts etc. had been found from the premises of the searched person and the shareholders no doubt identifiable give the same reason. When each and every individual case has been considered by different benches, then, necessarily, they have confined themselves to the facts of that case and had not the ld. DR made his impassioned submissions then probably the present appeal would have followed the same course. However, once in an attempt to shake the judicial consciousness, the facts vis-a-vis the impugned order are addressed, then we are faced with a scenario entirely different from the one appreciated by this very Bench in the case of Real Estates. In the circumstances, the facts as argued need due consideration and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an assessee. Under section 143(3) of the Act, the Income-tax Officer does not only hear such evidence as the assessee may produce or as he may require to be produced, but also takes into consideration 'all relevant material which he has gathered' for the purpose of making an assessment. While the word 'evidence' may recall the oral and documentary evidence as may be admissible under the Indian Evidence Act, the use of the word 'material' shows that the Income-tax Officer not being a court can rely upon material which may not be strictly evidence admissible under the Indian Evidence Act for the purpose of making an order of assessment. Courts often take judicial notice of certain facts which need not be proved, while administrative and quasi-judicial authorities can take 'official notice' of wider varieties of facts which need not be proved before them. Thus, hot only in respect of the relevancy but also in respect of proof the material which can be taken into consideration by the Income-tax Officer and other authorities under the Act is far wider than the evidence which is strictly relevant and admissible under the Evidence Act. 71. It is well-set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s who were not under the control of the assessee-company. When the share certificates physically, blank signed forms of transfer, blank cash receipts, sale bills and affidavits etc. duly signed by these persons were found in the possession of the assessee, it was a far cry on the part of the assessee to state that he could exercise no control over the shareholders. It is also not correct to say that the Assessing Officer was under an obligation to treat the apparent as real. The moot question is what is apparent on the peculiar facts and circumstances of the case when practically everything relating to these shares is found in the possession of the Chartered Accountant at the behest of the assessee? 72. In the case of Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28, the Hon'ble Supreme Court held as under:- When a conclusion has been reached on an appreciation of a number of facts established by the evidence, whether that is sound or not must be determined not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting in the picture as a whole. In Edwards (Inspector of Taxes) v. Bairstow, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of race winning in Jackpots and treble events in races at Bangalore, Madras and Hyderabad. For assessment year 1972-73 again the assessee showed receipts of Rs. 93,500 in like manner. Before the Assessing Officer the assessee admitted that these amounts did not represent winning in races. It was shown that the assessee lacked any knowledge of race techniques and the theory of probabilities precluded any systematic and continuous winning at races on as many as 16 occasions during a period of less than two years. The majority opinion of Settlement Commission was that the winning of races shown by the assessee in fact represented her income from undisclosed sources. The Chairman of the Settlement Commission, however, had dissenting opinion on the ground that the assessee had produced evidence in support of the credits in the form of certificates from the racing clubs and given particulars of the crossed cheques for payment of amounts of winning to the assessee. After consideration of the matter, the Hon'ble Supreme Court observed:- This, in our opinion, is a superficial, approach to the problem. The matter has to be considered in the light of human probabilities. The Chairman of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills, cash receipts and affidavits in the name of the ostensible shareholders. The Assessing Officer has recorded the finding that on examination of the bank pass books of these shareholders, it was found that in majority of the cases there was cash deposit of equivalent amount just before the withdrawal of the same for the purpose of purchase of shares in question. The cumulative weight of all these circumstances weighed very heavily against the assessee. There is no mention of a single prospective purchaser nor is there any instance of any actual sale. How could so many persons be at the same time in such dire need of money as to hand over all these documentation to the assessee's Chartered Accountant without receipt of single rupee by way of advance or actual sale consideration. The learned Judicial Member has found that such facts are not peculiar to the assessee alone. The same Chartered Accountant Shri Alok Aggarwal was found in possession of shares and accompanying documents in the same manner in respect of half a dozen other companies. When a twin or a triplet is born, people are surprised. The surprise turns into wonder if the birth of a quadruplet is announced, and no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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