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TMI Blog2018 (10) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has issued share capital with premium of Rs. 1.94 crores to 8 companies. The share applicant companies are found to be operated by one of the accommodation entry provider Mr. Tarun Goyal, Shri Pramod Kumar and Harpreet Singh. The Investigation Wing on 15.09.20018 conducted search u/s 132 of the Act at the office premises of Shri Tarun Goyal, Chartered Accountant. The statement of Shri Tarun Goyal and Ms. Ritu Saxena was recorded on oath on 02.12.2008. The assessee has issued share capital of Rs. 38.80 lakhs at a share premium of Rs. 155.20 lakhs totaling to Rs. 1.94 crores to these companies. The ld AO issued notices to the assessee but it was not complied. Therefore, the ld AO issued show cause notice to the assessee to explain why the addition of Rs. 1.94 crores should not be made in the hands of the assessee, as the assessee has not produced any details of share capital with respect to identity, and creditworthiness of investors and Genuineness of the transaction. The ld AO also asked to produce individuals/ directors of these companies along with respective documents. The assessee did not comply firstly. However, the part details were furnished along with an affidavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices u/s 143(2) & 142(1) and show-cause dated 15/10/2010 to assessee was asked to show cause as to why the share capital and share premium raised amounting to Rs. 1,94,00,000/-, may not be added to the income. The assessee had shown addition to share capital at Rs. 38,80,000/- and share premium at Rs. 1,55,20,000/-, totaling to Rs. Rs. 1,94,00,000/-. As no details of share capital raised during the year with evidences in support of identity, genuineness of transaction and creditworthiness of the parties, had been submitted, the assessee was asked to produce ail the individuals and the directors / principal officers of the companies/ firms alongwith ail the documents and to prove their identity, creditworthiness and genuineness of the transactions. The assessee was also told that in case they are not able to substantiate their claim, the amount received as share application will be treated as undisclosed income, being unexplained .cash creeds u/s 68 of the Income-tax Act, 1961 and the share capital raised amounting to Rs. 1,94,00.000/- would be added to the income. Notices u/s 143(2) S. 142(1)' fixing the case for 21/10/2010 were also enclosed. There was no compliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion forms, share transfer register, etc., it would constitute acceptable proof or acceptable explanation by the assessee; (5) the Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, ''without more, against the assessee; (7) the Assessing Officer is duty bound to investigate the creditworthiness of the creditor/subscriber, the genuineness of the transaction and the veracity of the repudiation. The Hon'ble Delhi High Court in the case of CIT vs Dwarkadhish Investment (P) Ltd (2008) 2 DTR (Del) 7 (167 TAXMANN 321), has followed the ratio of the case of CIT v. Divine Leasing & Finance Ltd. [2007] 158 Taxman 440 (Delhi) The present case of the assessee cov. is differentiable from the case of CIT Vs. Lovely Exports Pvt. Ltd.. CIT vs Dwarkadhish Investment (P) Ltd (2008) 2 DTR (Dei) 7 (167 TAXMANN 321) and CIT v. Divine Leasing & Finance Ltd. [2007] 158 Taxman 440 (Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of M/s Gold Leaf Capital Corporation India Pvt. Ltd. Vs. JCIT, the Hon'ble ITAT, New Delhi vide order dated J. 1/01/2008 in ITAT No. 237(del)/2002 for Asstt. Year 1995- 96 observed as under with regard to-genuineness of transactions u/s 68. "On going through the decision in the case of Divine Leasing & Finance (Supra) and other relevant case law it is clear that the degree of onus would depend upon the facts of each case and no standard degree of proof can be applied generally to all cases, irrespective of the nature of receipts because in the case of share investment for public placements the degree of proof mav be light but in the case of private placement if may be stringent, the reason being a public issue cannot be made by a Private Limited Company. However with requisite permission the share capital can be received through private placement normally to known persons / companies. Similar would be the position when the shares are allotted by a Public Company on private placement basis". From the above facts it emerges that the person who had subscribed to the share capital are only name lenders. In the case of private placement of shares the onus on the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee company was again asked to show cause as to why the share capital & share premium raised amounting to Rs. 1,94,0,000/-, may not be added to the income. This show cause alongwith the notices u/s 143(2) & 142(1) dt. 16/11/2010 were sent by Speed Post and were also received by Sh. Amitoi Aneia. CA & AR of the assessee on 19/11/2010 by signing, on both the show cause and the notices. The following show cause dated 16/11/2010, was issued to the assessee company: "Vide the show cause dt. 15/10/2010 you were required to produce all the individuals and the directors / principal officers of the companies / firms, alongwith all the documents and to prove their identity, creditworthiness and genuineness of the transactions. The details filed by you on 10/11/2010 show that you have received the share capital and share premium amounting to Rs. 1,94,00,000/- from the following parties: S. No. Name Address Affidavit Signed by Share Capital Shares Premium Total (Rs.) 1 M/S Tejasvi Investment Pvt. Ltd. 13/34, W.E.A IVth Floor Karol Bagh New Delhi-110005 Tarun Goyal 4,80,000 19,20,000 24,00,000 2 M/s Campari Fiscal Services Pvt. Ltd. 13/34, W.E.A IVth Floor Karol Bagh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kar 28/06 Ap M/S Tejasvi InvestmentPvt. Ltd. DELHI 16AA 26/02/2008 - do - - do - - do - - dc - 2 M/s Campari Fiscal Services Pvt. Ltd. DELHI 16AA 23/02/2008 - do - - do - - do - - do - M/s Campari Fiscal es Pvt. Ltd. DELHI 09AA 22/03/2007 - do - - do - - do - - do - 3 M/s Thar steels Pvt. Ltd. DELHI 14AA 04/01/2008 - do - - do - - do - - do - iM/s Thar steels Pvt. Ltd. DELHI 10AA 566633 16/06/2007 - do - - do - - do - - do -. 4. !M/s Sai Baba Finvest ! Pvt. Ltd. DELHI 12 AA 04/10/2007 - do - - do - - do - - do - M/s Bhavani Portfolio Pvt. Ltd. DELHI 12AA 10/09/2007 - do - - do - - do - - do - 6. M/s Rishabh Shoes Private DELHI 09AA 08/05/2007 - do - - do - - do - - do - Ltd. 943132 7. M/s taurus Iron & Steel 7 Co. Pvt. Ltd. DELHI 12AA 750343 03/10/2007 - do - - do - - do - - do - DU Securities (P) R Ltd. DELHI18AA 117016 3/04/2008 - do - - do - - do - - do - 8. DU Securities (P) Ltd DELHI08AA 962277 13/03/ 2007 - do - - do - - do - - do - It is strange that though the stamp papers were purchased as long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the above, you are required to produce all the individuals and the directors / principal officers of the companies / firms, alonawith all the documents to prove then- identity, creditworthiness and genuineness of the transactions. In case the you are not, able to substantiate your claim, the amount received as share application will be treated as your undisclosed income, being unexplained cash credits u/s 68 of the Income-tax Act, 1951 and the share capital raised by you amounting to Rs. 19400,000/- would be added to your income as follows: Income as per the Income Tax Return e-filed Rs. 7,03,200/- Add: addition as discussed above Rs. 1,94,00,000/- Taxable income Rs. 2,01,03,200/- You are hereby granted an opportunity to represent-your case on 23/11 /2010. Please note that this is a final opportunity. In case no reply is received bv this date, the assessment would be decided or merits and ex-parte assessments u/s 144 would be completed in the case on the basis of the maters. available on record. In case you wish to appear in person or make a written submission or have anything else to state' you may do so on that date. Notices u/s 143(2) & 142(1) fixing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar 4,00,000 1,60,000 2,00,000 ~7 / M/s Taurus Iron & Steel Co. Pvt. Ltd. 13/34, W.E.A. IVth floor Main Arya Samaj Road Karol Bagj New Delhi-110005 Tarun Goyal 6,00,000 24,00,000 30,00,000 8 M/s DU Securities (P) Ltd. 203, Dhaka Chambers 2069/39, Naiwala Karol Bagh New Delhi-110005 Harpreet Singh 9,00,000 36,00,000 45,00,000 Vide this show cause dt 16/11/2010, you were told that: "The contents of the above show cause dt. 16/11/2010 were again reproduced in this show cause". However, till date, you have neither produced any of the above directors nor any written submission has been received till date. This office had issued summons u/s 131, by Speed Post to all the above companies at the addresses mentioned in the affidavits filed by you. The following summons u/s 131, issued to the companies at S.no. 3 & 8, have been received back Unserved with the Remarks "Left without address." S No. Name PAN: Address Affidavit signed by 3. M/s. Thar Steels Pvt. Ltd AABCT5923D 203, Dhaka Chambers 2069/ 39, Naiwala Karol Bagh, New Delhi Tarun Goyal 8. M/s. DU Securities (P) Ltd AACCD0002E 203, Dhaka Chambers 2069/ 39, Naiwala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not carrying out any genuine activity and are merely being used to provide accommodation entries. Hence all the companies of Sh. Tarun Goya! are 'bogus'. The network of companies run by Shri Tarun Goya! is only doing the business of providing accommodation entries to various beneficiaries and are not doing any real business, hence these companies are ' BOGUS'. All the companies are operating from the office of Shri Tarun Goyal, addresse at 13/34, WEA, Arya Samaj Road, Karol Bagh, New Delhi and at his former office viz. 203, Dhaka Chambers, 2069/33, Naiwala, Karol Bagh, New Delhi. The directors of the company are none but former and present employees of Shri Tarun Goyai. Sh. Tarun Goyal has been using them for merely signing al! the documents, bank cheques and also for transporting and exchanging cash and cheques in order to provide accommodation entries. At the time of search on 15/09/2Q08, the statement of Sh. Tarun Goyal was recorded on oath. As per his statement, he has accepted that he provides accommodation entries and his various companies are used for this purpose, Sh'. Tarun Goyal has also described the modus operand! for providing accommodat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. The signatures of Sh. Tarun Goyal, Sh. Parmod Kumar, Sh. Harpreet Singh and Ritu Saxena on these affidavits dated 28/10/2010 do not match with the signatures of the above persons on the statements recorded on oath, during and after the search operations by the Investigation Wing. It is strange that though the stamp papers were purchased as long as back as 13/03/2007, the same were signed on 28/10/2010 i.e. after a gap of almost three and a half years. AJl the affidavits were attested/notarized by Sudha Shankar Mishra on 28/10/2010 It has already been shown vide the discussion above that the ratio of the judgement in the cases of CIT Vs. Lovely Exports Pvt. Ltd.. CIT vs Dwarkadhish Investment (P) Ltd (2008) 2 DTR (Del) 7 (167 TAXMANN 321) and CIT v. Divine Leasing & Finance Ltd. [2007] 158 Taxman 440 (Delhi), is not applicable in the case of the assessee cov. Till date the assessee company has not produced any of the above individuals or any of the directors / principal officers of the above companies, alongwith all the documents requisitioned for cross examination. The assessee company has also not been able to prove the creditworthiness of the above share appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent legal entities. Their confirmation letters, copies of share application forms, the registration No. and date of incorporation of applicant companies, their PAN with assessing officer's detail, appellant company bank account ., detail of "share allotment in Form 2 submitted to the ROC have been furnished by him. Since the identity and existence of the share applicants are proved, the share application money/share capital have been routed through banking channel, and the shares have also been allotted to them, the said share applications money share capital have been routed through banking channel, and the shares have also been allotted to them, the said share application money amounting Rs. 1940000/- cannot be taxed in the hands of the company on the basis of law postulated by various courts below:- Hindustan Link & Resins Ltd. Vs Deputy Commissioner of Income Tax (HC) (Guj.) (2011) 60 DTR 18 it is held that:- "...Income - Cash credit - Share application money - None of the authorities have recorded any findings to the effect that the identity of the depositors had not been established by the assesee - Case of the Revenue is that the assessee has failed to explain the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries made through on Income Tax Inspector who found that none of the application were found to exist at the address given in the confirmations. However, the report of the Income Tax Inspector was furnished to the assessee on 22nd February 2000 and the assessment order was passed on the very next day, that is 23rd February 2000 giving the assesses no time to respond. 2. Before the C1T(A) the assesses furnished additional evidence, copies of which were sent by the CIT(A) to the Assessing Officer for comments. Despite reminders, no response was received from the Assessing Officer by the C1T(A) on the additional evidence. The C1T(A) then admitted the additional evidence. After examining the entire record, the CIT(A) deleted the addition on account of the unexplained share application money for 3. In the appeal by the Revenue, the Tribunal found that the facts of the case were no different from those in the case of the group company of the present assessee namely M/s Dwarikadhish Financial Services. In the said case the Tribunal had deleted the addition made by the Assessing Officer on account of unexplained share application money. The said decision was upheld by this Court in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals are dismissed." 10 We are also informed that a Special Leave Petition against the aforesaid Division Bench judgement in the case of the respondent assessee has been dismissed by the Supreme Court. Accordingly, we are of the opinion that no question of law arises in the present cases as the matter is fully covered by the judgement of the Supreme Court in Lovely Exports (P) Ltd. (supra) as well as Division Bench judgement of this Court in the case of the responded assessee itself. Commissioner of Income Tax Vs Lovely Exports (P) Ltd (2008) 216 CTR 195 : (2008) 6 DTR (SC) 303 Income cash credit-share application money if the share application money is received by the assessee company from alleged bogus shareholders, whose names are great the AO, then the Department is free to proceed to reopen their individual be regarded as undisclosed income of Commissioner of Income Tax Vs Value Capital Services (P) Ltd. (2009) 221 CTR (Del) 511 : (2008) 307 ITR 334 "Income-cash credit-share application money-CIT(A) accepted the existence of the application - it is very difficult for the assessee to show the creditworthiness of strangers-Revenue has not sjiown that the application di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in the facts of the present case and in view of the findings recorded by us hereinabove. 54. In view of the above, we are of the view that the Assessee has not discharged the onus satisfactorily and the additions made by the Assessing Officer were justified and sustainable" 2. CIT Vs Navodava Castle Pvt Ltd f20141 367 ITR 306 (Del) where Hon'ble Delhi High Court accepted that since the assessee was unable to produce the directors and the principal officers of the six shareholder companies and also that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer had observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions. "20. Now, when we go to the order of the Tribunal in the present case, we notice that the Tribunal has merely reproduced the order of the Commissioner of Income-tax (Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its co-ordinate Bench in the case of MAF Academy P. Ltd., a decision which has been overturned by the Delhi High Court, vide its judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the case. 13. We, therefore, answer the substantial question of law framed by us in the negative, in favour of the revenue and against the assessee. The appeal of the revenue is allowed with no order as to costs " 4 CIT Vs Nova Promoters & Finlease (P) Ltd (18 taxmann.com 217, 206 Taxman 207, 342 ITR 169, 252 CTR 187) where Hon'ble Delhi High Court held that amount received by assessee from accommodation entry providers in garb of share application money, was to be added to its taxable income under section 68. It Was held as follows: "41. In the case before us, not only did the material before the Assessing Officer show the link between the entry providers and the assesseecompany, but the Assessing Officer bad aiso provided the statements of Mukesh Gupta and Rajan Jassal to the assessee in compliance with the rules of natural justice. Out of the 22 companies whose names figured in the information given by them to the investigation wing, 15 companies had provided the so-called "share subscription monies" to the assessee. There was thus specific involvement of the assesseecompany in the modus operandi followed by Mukesh Gupta and Rajan Jassal. Thus, on cru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be logically and legitimately drawn by the Revenue in the natural course of assessment proceedings. The information that assessee furnishes would have to be credible and at the same time verifiable. In this case. 5 share applicants could not be served as the notices were returned unserved. In the backdrop of this circumstance, the assessee's ability to secure documents such as income tax returns of the share applicants as well as bank account particulars would itself give rise to a circumstance which the AO in this case proceeded to draw inferences from. Having regard to the totality of the facts, i.e., that the assessee commenced its business and immediately sought to infuse share capital at a premium ranging between Rs. 90-190 per share and was able to garner a colossal amount of Rs. 4.34 Crores. this Court is of the opinion that the CIT (Appeals) and the IT AT fell into error in holding that AO could not have added back the said amount under Section 68. The question of law consequently is answered in favour of the Revenue and against the assessee." 6. Konark Structural Engineering (P.) Ltd. Vs DCIT T20181 90 taxmann.com 56 (Bombay) where Hon'ble Bombay High Court held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case. 13. In view of the above reasons, the questions of law in these appeals are answered in favour of the revenue. The orders of the Assessing Officer are restored. The appeals are to succeed and are therefore allowed. 9 CIT Vs N R Portfolio Pvt Ltd r20131 29 taxmann.com 291 (DelhiVr2013l 214 Taxman 408 (Delhi)/r20131 263 CTR 456 (Delhi) where Hon'ble Delhi High Court held that if AO doubts the documents produced by assessee, the onus shifts on assessee to further substantiate the facts or produce the share applicant in proceeding. 10 CIT Vs Empire Builtech (P.) Ltd (366 ITR 110) where Hon'ble Delhi High Court held that u/s 68 it is not sufficient for ssessee to merely disclose address and identities of shareholders; it has to show genuineness of such individuals or entitles. 11 CIT Vs Focus Exports (P.) Ltd (51 taxmann.com 46 (Delhi)/r20151 228 Taxman 88) where Hon'ble Delhi High Court held that where in respect of share application money, assessee failed to provide complete address and PAN of certain share applicants whereas in case of some of share applicants, there were transactions of deposits and immediate withdrawals of money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has been made by the ld AO with respect to the share allotment made to eight companies to whom share capital of Rs. 38.80 lakhs has been issued at a premium of Rs. 155.20 lakhs. This shows that assessee company has issued the shares of its company at premium of four times its face value i.e. shares of face value of Rs. 10/- each are issued at a premium of Rs. 40/- each. Shares of Rs. 10/- are sold at Rs. 50/- . The assessee is a private limited company admittedly carrying on the business of investment and finance. The assessee being a private limited company cannot invite the public for subscription of its shares as prohibited by the provisions of the companies act. Therefore, it is apparent that Assessee Company has accepted the share application or allotted share of this company only to the known persons/ entities of the promoters of the company or to the existing shareholders. They cannot be wanderers. The appellant company has also not demonstrated before us the outstanding capabilities or the business of the assessee company, which can command the huge premium. Before the ld CIT (A) or before the ld AO the assessee could not show the business model to justify the premium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of incorporation is mentioned. This gives the basic details of the applicants of the shares. It is also between the issuer assessee company and share applicants. It does not prove creditworthiness or the genuineness of the transaction but merely gives some identification of the shareholder. Generally, in case of accommodation entries paper work is complete at the initial stage only. Even at the most the share application form shows the bank instrument stating cheque no , name of the bank, it does not show the bank account number of the assessee. It cannot be said that same is available in cheque because it has already been encashed and not in the posseeeisn of the assessee as well as the shareholders. It goes back to the bank. Even the branch details are also not available. Therefore share application forms are not showing any details which can lead for verification of the necessary ingredient u/s 68 of the act. b. Relevance of submission of Permanent Account Number Permanent Account number is allotted by Income Tax Department if any company assessee submits the details such as name, address, nature of business et. along with the certificate of incorporation issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely submitting the name and address of that shareholder along with the amount o hares allotted to the Registrar of companies. This form is also not submitted for scrutiny of the Income tax Department at the time of allotment. Merely filing a declaratory form in The companies Act 1956 , which is formed for all together different purposes and object, which is not at all having the similar purposes and object as of the Income tax Act, does not have any relevance while testing of the identity, creditworthiness and genuineness of the depositor u/s 68 of the act. d. Relevance of producing certificate of incorporation or website data of MCA Hon'ble Delhi High court in 367 ITR 306 with respect to the certificate of incorporation and Permanent Account number as under:- "14. Certificate of incorporation, PAN etc. are relevant for purchase of identification, but have their limitation when there is evidence and material to show that the subscriber was a paper company and not a genuine investor. It is in this context, the Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) had observed- "Now we shall proceed to examine the validity of those grounds that appealed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. Further, the bank statements of the shareholder applicants are not furnished. g. Non deposit of cash in the bank accounts of the shareholders Certain times it is said that there is no deposit of cash in the bank account of the depositor shareholders prior to issue of cheques of share capital to the assessee company and further transactions are through banking channel, addition cannot be made u/s 68 of the act. There is no law shown to us that transactions entered in to by the banking channel are genuine. No such provision was found by us in The Income Tax Act too. Equally, we also could not find any provision of the law either under the Income Tax Act or under any other law that when the cash is deposited in the bank account of depositors shareholders the transactions become non genuine. Both the propositions cannot be looked in to isolation but should be seen coupled with other circumstances of the whole transactions. It is also equally important that cash is routed through many bank accounts by the entry operators to build the bank balance in the parties and then brought in to the banking transactions in the books of the depositor companies. Therefore generally the cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity and are merely being used to provide accommodation entries. Hence, all the companies of Sh. Tarun Goyal are 'bogus'. f. Further no evidences could be placed that how the assessee company invited these shareholders to make an investments in assessee company without any substances. No evidences led before lower authorities about any business case/ justification for that. No subsequent returns or appreciation in the share value of the assessee company was shown to us. It is simply a façade to introduce unaccounted money in the garb of share capital. 14. Further apparently the shareholder/ share applicants in the assessee company are alleged to be bogus. This allegation of the ld AO was based on various statements of the directors of the company who provided share application. On this allegation, there is stoic and deafening silence by the assessee before the assessing officer. None of them was produced after repeated opportunities and summons by the ld AO. This proves that the evidences collected by the ld AO stares at the face of the assessee company that shareholders are shell companies. Therefore higher burden lies in the case of the assessee private limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment when called by issue of summons and also by the assessee company who is enjoying the money, it is apparent that to whom the money belongs to. The preponderance of probabilities shows that Share capital and Share premium are camouflaged to introduce the unaccounted money in the books of accounts without payments of taxes. These facts in its entirety show that assessee has not proved the genuineness of the shares allottees. This case before us falls in the second category of cases noted in para no. 13 by Hon Delhi high court in 367 ITR 306. 17. Further, the ld CIT (A) has held that assessee is not supposed to prove the source of the source of the funds. In the present case even the source of the original funds is also not shown from which bank account the funds have come and what is the nature of the funds available with the share applicants. Assessee neither furnished the bank account statement nor the Income tax Return of those shareholders. 18. Further with respect to the various affidavits rejected by the ld AO , the Hon Delhi High court in case of CIT v. Nova Promoters and Finlease P. Ltd. [2012] 342 ITR 169 (Delhi) has held as under :- "26. In the light of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted the affidavits of those persons. Assessee has never requested for cross-examination of those persons. Assessee is a private limited company, shareholders are necessarily known to the company, and there is no whisper about any dispute between them, assessee producing confirmation, and affidavits of those persons, no request for cross-examination ever made, and no request for statement of those persons ever made. In these circumstances, we are of the view that complete opportunity was granted to the assessee at all times, but assessee does not want to avail it for reason best known to it. 20. We also draw support from decision of Honourable Delhi High court in 342 ITR 169 where in it has been held that :- "32. The Tribunal also erred in law in holding that the Assessing Officer ought to have proved that the monies emanated from the coffers of the assessee-company and came back as share capital. Section 68 permits the Assessing Officer to add the credit appearing in the books of account of the assessee if the latter offers no explanation regarding the nature and source of the credit or the explanation offered is not satisfactory. It places no duty upon him to point to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inclined to think that in the facts of the present case such proof has been brought out by the Assessing Officer. The statements of Mukesh Gupta and Rajan Jassal, the entry providers, explaining their modus operandi to help the assessee's having unaccounted monies convert the same into accounted monies affords sufficient material on the basis of which the Assessing Officer can be said to have discharged the duty. The statements refer to the practice of taking cash and issuing cheques in the guise of subscription to share capital, for a consideration in the form of commission. As already pointed out, the names of several companies which figured in the statements given by the above persons to the Investigation Wing also figured as share applicants subscribing to the shares of the assessee-company. These constitute materials upon which one could reasonably come to the conclusion that the monies emanated from the coffers of the assessee-company. The Tribunal, apart from adopting an erroneous legal approach, also failed to keep in view the material that was relied upon by the Assessing Officer. The Commissioner of Income-tax (Appeals) also fell into the same error. If such materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any verification or enquiry into the material placed before him. The case before us does not fall under this category and it would be a travesty of truth and justice to express a view to the contrary." [Underline supplied by us} The facts of the case before us are more or less similar to the issue decided by Hon High court. 21. The ld CIT (A) has rest her decision solely based on the Decision of Lovely exports P Ltd (Supra). The hon. High court in 367 ITR 306 has considered the above h decision and held as under :- "16. In the said case, the Division Bench had also examined the decision of the Supreme Court in Lovely Exports (P.) Ltd. (supra) and other cases in which the assessee had succeeded. It was noticed that in the case of Lovely Exports (P.) Ltd. affidavits/confirmations of shareholders were filed and income tax record numbers of the shareholders were made available, but the Assessing Officer, who had sufficient time, failed to carry out inquiry and examination. reference was made to the observations in Divine Leasing (supra) to the effect that there cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Upon receipt of money, the share subscribers do not lose touch and become incommunicado. Call money, dividends, warrants, etc. have to be sent and the relationship remains a continuing one. Therefore, an assessee cannot simply furnish some details and remain quiet when summons issued to shareholders remain un-served and uncomplied. As a general proposition, it would be improper to universally hold that the assessee cannot plead that they had received money, but could do nothing more and it was for the Assessing Officer to enforce shareholders' attendance in spite of the fact that the shareholders were missing and not available. Their reluctance and hiding may reflect on the genuineness of the transaction and creditworthiness of the creditor. It would be also incorrect to universally state that an Inspector must be sent to verify the shareholders/subscribers at the available addresses, though this might be required in some cases. Similarly, it would be incorrect to state that the Assessing Officer should ascertain and get addresses from the Registrar of Companies' website or search for the addresses of shareholders themselves. Creditworthiness is not proved by showing issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... com 602 in case of Pee Aar Securities Ltd. v. Deputy Commissioner of Income-tax, Circle-14(1), New Delhi has held as under:- "28. We are unable to lay hands on any of the decisions of Hon'ble jurisdictional High Court which is contrary to the approach so adopted in this judicial precedent. Let us, in this light, revert to the facts of the case before us. The assessee before us is a private limited company, which is, by law, prohibited from offering its securities for subscription by general public. It cannot, therefore, be really open to the assessee to say that we have no clue about who the subscribers to the share capital are; these cannot be rank outsiders or walk in subscribers- as perhaps in the cases of public limited companies. Yet, all that the company has to offer, to establish genuineness of transactions of subscribing to the shares, are the bank statements. The assessee is not able to produce the brains behind these companies and the documents with respect to the their financials either. As for the other documents, these documents have to be there for issuance of share capital anyway- genuine subscription or not so genuine subscription. Genuineness of a transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h June, there are credits of Rs. 20,00,000 and on the same day a debit of Rs. 20,00,000 is given showing payment to the assessee. On 22nd June, there are credits of Rs. 19,97,995 and, on the same day, another debit of Rs. 20,00,000 is made showing payment to some other company. On 25th June and 28th June, it is the same story again though the amounts or debits and credits are Rs. 15,00,0000 and Rs. 10,00,000 respectively. As regards the other bank account of Geefcee in ABN Amro Bank is concerned, the situation is no better. On 3rd June, i.e. opening day of this bank statement, there is a credit balance of Rs. 5,742.32. On June 9, there are deposits of Rs. 20,10,000 and, on the same day, a payment of Rs. 20,15,000 is made leaving a balance of less than Rs. 1,000. On 11th June, there are deposits of Rs. 10,00,000 and on the same day, there is a payment of Rs. 10,00,000. On 16th June again, it is the same story but the amount is now Rs. 20,00,000. On other dates in the ABN Amro Bank statement, as given to us, is the same story. What do we conclude from these statements? The overnight balance in the bank accounts are of small amounts and the payments made from these accounts are almo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gar Sabha v. Abdulbahi Faizullabhai AIR 1976 SC 1455 "It is trite, going by Anglophonic principles that a ruling of a superior court is binding law. It is not of scriptural sanctity but of ratio-wise luminosity within the edifice of facts where the judicial lamp plays the legal flame. Beyond those walls and de hors the milieu we cannot impart eternal vernal value to the decisions, exalting the precedents into a prison house of bigotry, regardless of the varying circumstances and myriad developments. Realism dictates that a judgment has to be read, subject to the facts directly presented for consideration and not affecting the matters which may lurk in the dark". Genuineness of transactions thus cannot be decided on the basis of inferences drawn from the judicial precedents in the cases in which genuineness did come up for examination in a very limited perspective and in the times when shell entities were virtually non-existent. As the things stand now, genuineness of transactions is to be examined in the light of the prevailing ground realities, and that is precisely what we have done. We are of the considered view that there is nothing to establish genuineness of the share subscri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the law, particularly when it is disadvantageous to the taxpayers and is enacted ex abundanti cautela (as a measure of abundant caution) is generally, fraught with, what tax academicians and policymakers term as, the risk of its 'kill effect'. The risk is that when a specific provision, to make the things clear and beyond any doubt, is enacted with respect to a particular point of time and a particular consequence is envisaged by the provision, interpretation of the law or treaty will invariably be inclined to draw to the inference that no such consequence was envisaged by the legislature or the treaty prior to the amendment coming into force. That is a common and fairly well accepted approach. There is, however, a rider. The rider is that even on the first principles and in a situation in which a binding judicial precedent or judicial analysis of the preamendment legal has already come to the same conclusions, as indicated by the specific amendment as a measure of abundant caution, such a "kill effect" is ruled out. That precisely is the situation before us. In such cases, the impact of amendment remains confined to the areas on which either (i) on the areas on which, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winnings from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not based on evidence. " In the present case assessee before lower authorities could not rebut the relationship of the assessee, a private limited company with Shri Tarun Goyal and his accomplices in making investment at such a huge premium. The surrounding circumstances and test of Human probabilities also shows that there is no reason to invest those companies in the shares of the assessee company at such a huge premium. Therefore the ratio laid down by the Hon Supreme court squarely applies in the case of assessee. 27. Based on above, we are of the opinion that the ld CIT (A) has deleted the addition based on irrelevant documents, which does not prove the identity, creditworthiness, and genuineness of the shareholders/transactions. Therefore in view of above facts we reverse the order of the ld CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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