TMI Blog2019 (2) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has been specifically mentioned to this also, the ld. DR fairly agreed that the name of the assessee has not been specifically mentioned. Thus, considering all the grounds decided in favour of the assessee. Addition made u/s 69C on account of commission expenses - Held that:- We note that while deliberating upon the issue in the appeal of the assessee, we have deleted the addition by an elaborate discussion, therefore, this ground of the Revenue also fails as the part addition sustained by the Ld. Commissioner of Income Tax (Appeal) has been deleted by the Tribunal. Thus, there is no merit in the impugned ground raised by the Revenue. Disallowance u/s 14A - Held that:- Commissioner of Income Tax (Appeal) fairly noted that the ld. Assessing Officer wrongly disallowed the expenditure without pointing out as to which expenditure relates to any exempt income. The interest expenditure of ₹ 3,14,431/- is the interest expenditure of the bank which was not utilized for any investment nor relates to exempt income. In view of this factual matrix, we find no infirmity in the conclusion of the CIT(Appeal) decided in favour of the assessee. - ITA NO.4137/Mum/2015 And ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee company, during the relevant time, was engaged in the business of general merchants, trader in goods and commodities on ready or forward basis, commission agents, brokers, importers besides sale and dealing in shares and stocks etc, declared income of ₹ 9,290/- in its return filed on 18/09/2008, which was processed under section 143(1) of the Act on 19/08/2009. Subsequently, the Ld. Assessing Officer recorded the reasons and reopened the assessment under section 147/148 of the Act. The assessee asked for the reasons which were provided to the assessee. The reasons of reopening are as under:- It was alleged that appellant company has taken accommodation entries to the tune of ₹ 2,76,70,000/- from one Shri Surendra Kumar Jain group in lieu of cash in the form of share capital/share premium/loan. The Assessing Officer also stated in the reasons recorded that analysis of ITR of the appellant showed that there was increase in the issued capital from ₹ 9,70,000/- to ₹ 97,55,000/- and also that securities premium of ₹ 11,78,10,000/- was received during the year. Pursuant to notice under section 148 of the Act, issued to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- ( a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax ; ( b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; ( ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E; ( c) where an assessment has been made, but- ( i) income ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011) 196 taxman 78 (Mad.). The provision of the Act is very much clear as with effect from 01/04/1989, the Assessing Officer has wide powers to initiate proceedings of reopening. The Hon ble Kerala High Court in CIT vs Abdul Khadar Ahmad (2006) 156 taxman 206 (Kerala) even went to the extent so long as the AO has independently applied his mind to all the relevant aspect and has arrived to a belief the reopening cannot be said to be invalid. 2.4. We are aware that mere change of opinion cannot form the basis of reopening when the necessary facts were fully and truly disclosed by the assessee in that situation, the ITO is not entitled to reopen the assessment merely on the basis of change of opinion. However, powers under amended provision are wide enough where there is a reasonable belief with the Assessing Officer, that income has escaped assessment, because the powers with effect from 01/04/1989 are contextually different and the cumulative conditions spelt out in clauses (a) and (b) of section 147, prior to its amendment are not present in the amended provision. The only condition for action is that the Assessing Officer should have reason to believe that income chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in Prafull Chunnilal Patel vs ACIT (supra) even went to the extent that at the initiation stage formation of reasonable belief is needed and not a conclusive finding of facts. Identical ratio was laid down in Brijmohan Agrawal vs ACIT (2004) 268 ITR 400, 405 (All.) and Ratnachudamani S. Utnal vs ITO (2004) 269 ITR 272, 277 (Karnataka) applying Sowdagar Ahmed Khan vs ITO (1968) 70 ITR 79(SC). 2.6. So far as, the meaning of expression, reason to believe is concerned, it refers to belief which prompts the Assessing Officer to apply section 147 to a particular case. It depend upon the facts of each case. The belief must be of an honest and reasonable person based on reasonable grounds. The Assessing Officer is required to act, not on mere suspicion, but on direct or circumstantial evidence. Our view find support from the ratio laid down in following cases:- i. Epica Laboratories Ltd. vs DCIT 251 ITR 420, 425-426 (Bom.), ii. Vishnu Borewell vs ITO (2002) 257 ITR 512 (Orissa), iii. Central India Electric Supply Company Ltd. vs ITO (2011) 333 ITR 237 (Del.), iv. V.J. Services Company Middle East ltd. vs DCIT (2011) 339 ITR 169 (Uttrakhand), v. CIT vs Abhyudaya Bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out a case that no part of the relevant material had been kept out from the Assessing Officer). The information was in the annexures and consequently Explanation 2(c)(iv) of section 147 would apply. The reassessment proceedings after four years were valid. 2.11. In the case of Deputy CIT v. Gopal Ramnarayan Kasat, (2010) 328 ITR 556 (Bom), it was not the case of the assessee that the notice issued was after the expiry of the time limit provided in section 153(2). The reassessment proceedings were held to be valid. In Indian Hume Pipe Co. Ltd. v. Asst. CIT, (2012) 348 ITR 439 (Bom), both in the computation of taxable long-term capital gains in the original return of income and in the computation that was submitted in response to the query of the Assessing Officer there was a complete silence in regard to the dates on which the amounts were invested, as such there being a failure to disclose fully and truly material facts necessary for assessment. The reassessment proceedings were held to be valid. This view was also confirmed in following cases:- a. Dalmia P. Ltd. v. CIT, (2012) 348 ITR 469 (Del); b. CIT v. K. Mohan Co. (Exports), (2012) 349 ITR 653 (Bom); c. Remfry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. Asst. CIT, (2004) 267 ITR 779, 781-82 (P H), where depreciation was allowed to the assessee, who was engaged in the business of financing of vehicles and consumer durables on 'hire-purchase basis' as well as on 'lease/rent basis', a reassessment notice issued after four years has been held not to suffer from any illegality as the same was based on the bona fide action of the competent authority to determine whether or not the vehicles in respect of which the petitioner had been claiming depreciation, were actually owned by it. 2.14. In Jawand Sons v. CIT(A), (2010) 326 ITR 39 (P H), in the initial assessment, the benefit of deduction of the duty drawback and DEPB under section 80-IB was wrongly granted to the assessee, for which it was not entitled. Therefore, reassessment proceedings to withdraw the deduction were held to be valid. Likewise, in CIT v. Hindustan Tools Forgings P. Ltd., (2008) 306 ITR 209 (P H), where, the assessee in the regular assessment had been allowed deduction more than actually allowable under section 80HHC. Therefore, the action initiated by the AO for reassessment under section 147(b) could not be held to be invalid. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 332-33 (Pat), where the material evidence for the purpose of reopening of the assessment already completed has been brought to the notice of the authority during the course of enquiry. The notice was held to be valid by the Hon ble High Court. In the case of Vippy Processors Pvt. Ltd. v. CIT, (2001) 249 ITR 7, 8 (MP), where the need to issue notice arose due to noticing of vast difference in value of properties disclosed by the assessee and that of the report of the Valuation Officer and the reasons that led to the issue of the notice were duly recorded and the same were also adequate and based on relevant facts and material, initiation was upheld. In Triple A Trading Investment Pvt. Ltd. v. Asst. CIT, (2001) 249 ITR 109, 110-11 (MP), where the notice was issued after recording reasons in that regard, initiation was upheld. 2.18. Likewise, Hon ble Gujarat High Court in Garden Finance Ltd. v. Add/. CIT, (2002) 257 ITR 481, 489, 494- 95, special leave petition dismissed by the Supreme Court: (2002) 255 ITR (St.) 7-8 (SC), where the assessee was holding shares in an amalgamating company and he was allotted shares in the amalgamated company and such shares were sold by him and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een assessed to tax in the hands of P, he had taken a stand that the amount did not belong to him and instead belonged to S. Thus, it was not clear as to in whose hands the amount in question had to be assessed. The ITO was justified in taking proceedings under section 147 for assessing the amounts in the hands of the petitioners according to the claim made by the petitioners. Likewise, Hon ble Kerala High Court in CIT v. Dr. Sadique Ummer, (2010) 322 ITR 602 (Ker), where, the Assessing Officer collected further information to complete the reassessments which was also permissible under the Act. The finding of the first appellate authority as well as the Tribunal, that the Assessing Officer had no material to believe that the income had escaped assessment was wrong and contrary to facts. The assessee had not maintained any books of account. Therefore, the reopening of assessments was held to be valid and within time. In the case of CIT v. Uttam Chand Nahar, (2007) 295 ITR 403 (Raj), the notice requiring the assessee to file the return within 30 days was in accordance with section 148 as it must be deemed to be in force with effect from 1-4-1989, and in force as on the date notice wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make such an assessment recorded in the order sheet illegal and that would not bar further proceedings under section 147 of the Act. Thus, the assessment was held to be validly reopened under Explanation 2(c) to section 147. Likewise, in CIT v. N. Jayaprakash, (2006) 285 ITR 369 (Ker), where, the assessee could not, after having persuaded the assessing authority to withdraw the notice dated 1-10-1993, pointing out that it was not in conformity with law, be allowed to contend that the notice was valid due to the omission of the time-limit by the Finance (No.2) Act, 1996, with effect from 1-4-1989. In the absence of specific provision in the Finance (No. 2) Act, 1996, invalidating proceedings initiated by the Income-tax Officer, the action taken by him applying the then existing law could not be said to be invalid. 2.23. Likewise, in CIT v. S.R. Talwar, (2008) 305 ITR 286 (All), the factum of taking advances or loan from T and K, in which the assessee was one of the directors had not been disclosed nor a copy of the ledger account of the assessee maintained by the company filed. In view of the absence of these details, the Assessing Officer could not examine the taxability of adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference between the figures of liabilities towards sundry creditors in the party ledgers of the assessee-firm and the figures of liabilities towards sundry creditors in the balance-sheet of the assessee-firm for the previous year relevant to the assessment year 1989-90. These materials had a direct link and nexus for formation of a belief by the Assessing Officer that income of the assessee-firm had escaped assessment because of failure of the assessee to disclose fully and truly all material facts necessary for the assessment. In the case of CIT v. Best Wood Industries Saw Mills, (2011) 331 ITR 63 (Ker), the assessee challenged the validity of the reassessment on the ground that the AO had exceeded his jurisdiction under section 147 and both the first appellate authority as well as the Tribunal accepted the contention of the assessee holding that so far as the reassessments related to assessment of unexplained trade credits, they were invalid. On appeal, it has been held that the reassessments were to be valid. In Honda Siel Power Products Ltd. v. Deputy CIT, (2012) 340 ITR 53 (Del), there being omission and failure on the part of the assessee to disclose fully and truly mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. v. Joint CIT [(2013) 353 ITR 73 (Del)]; xiv. A G Group Corporation v. Harsh Prakash [(2013) 353 ITR 158 (Guj)]; xv. Inductotherm (India) P. Ltd. v. M. GopaLan, Deputy CIT [(2013) 356 ITR 481 (Guj)]; CIT v. Dhanalekshmi Bank Ltd. [(2013) 357 ITR 448 (Ker)]; xvi. Sitara Diamond Pvt. Ltd. v. ITO [(2013) 358 ITR 424 (Bom)]; xvii. Rayala Corporation P. Ltd. v. Asst. CIT [(2014) 363 ITR 630 (Mad)]. 2.29. So far as, the decision in the case of CIT vs Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) is concerned, the Hon ble Apex Court, while coming to a particular conclusion, only in a situation, when not a single piece of paper or document was recovered, therefore, the Hon ble Court held that since there was no tangible material found and the addition was merely on the basis of statement only then reopening of assessment u/s 147 of the Act was not permissible. Likewise, in the case of CIT vs S. Khader Khan Son (2012) 254 CTR 228 (SC), affirming the decision of Madras High Court in (2008) 300 ITR 157 (Mad.), the whole addition was made solely on the basis of statement u/s 133A and no other material was found, in that situation, it was held that the such statement has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso to section 147 of course requires that where the assessment under sub-section (3) of section 143 has been made for the relevant assessment year, no action shall be taken under this section after the expiry of the four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment by reason of the failure on part of the assessee to make return under section 139 or in response to a notice issued under sub-section (1) of section 142 or 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. In this context, it is well settled that the requirement of full and true disclosure on part of the assessee is not confined to filing of return alone but would continue all throughout during the assessment proceedings also. In this context, the materials on record would suggest that the Assessing Officer had received fresh information after the assessment was over prima facie suggesting that sizeable amount of income chargeable to tax in case of the assessee had escaped assessment and that such escapement was on account of failure on part of the assessee to disclose truly and fully all mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference in facts. [Para 11] The next contention that the Assessing Officer did not demonstrate any material enabling him to form a belief that income chargeable to tax has escaped assessment is fallacious. The Assessing Officer recorded detailed reasons pointing out the material available which had a live link with formation of belief that the income chargeable to tax had escaped assessment. At this stage, as is often repeated, one would not go into sufficiency of such reasons. [Para 13] Section 68 as is well known, provides that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. That the share application money received by the assessee from above-noted companies was only by nature of accommodation entries and in reality, it was the funds of the assessee which was being re-routed. Undoubtedly. Section 68 would have applicability. Proviso added by the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 384 ITR 424/69 taxmann.com 444 (Delhi) (para 11) and ii. Yogendrakumar Gupta v. ITO [2014] 366 ITR 186/46 taxmann.com 56 (Guj.) (para 11) The Hon'ble High Court while upholding the validity of reopening also considered following decision, which were referred by both sides- I. Allied Strips Ltd. v. Asstt. CIT [2016] 384 ITR 424/69 taxmann.com 444 (Delhi) (para 5), II. Harikrishan Sunderlal Virmani v. Dy. CIT [2017] 394 ITR 146 (Guj.) (para 5), III. Raymond Woolen Mills Ltd.v. ITO [1999] 236 ITR 34 (SC) (para 6), IV. Yogendrakumar Gupta v. ITO [2014] 366 ITR 186/46 taxmann.com 56 (Guj.) (para 6), V. Aaspas Multimedia Ltd. v. Dy. CIT [2017] 83 taxmann.com 82/249 Taxman 568 (Guj.) (para 6), VI. Jayant Security Finance Ltd. v. Asstt. CIT [Sp. Civil Application No. 18921 of 2017, dated 12-2-2018] (para 12), VII. Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 (SC) (para 13) and VIII. Pr. CIT v. Gokul Ceramics [2016] 241 Taxman 1/71 taxmann.com 341 (Guj.) (para 16). 2.32. The sum and substance of the aforesaid decision was that since the Assessing Officer was having sufficient material at his command to form a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al evidence would not necessarily amount to disclosure within the meaning of the proviso that stipulates an extended period of limitation for action in cases where the escapement arises out of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The formation of opinion by the Assessing Officer has to be considered on the touch stone whether there was reasonable belief that income chargeable to tax had escaped assessment and for that purpose, the Hon'ble Apex Court in Raymond Woolen Mills Ltd. vs Income Tax Officer throws light on the issue and further by Hon'ble jurisdictional High Court in M/s Girilal Company vs Income Tax Officer 300 ITR 432 (Bom.). Thus, we found that there was fresh information with the Assessing Officer, which in our view, entitle the Assessing Officer to have prima facie reason to believe that income chargeable to tax had escaped assessment. The ratio laid down by Hon'ble Apex Court in Claggett Brachi Company Ltd. vs CIT 177 ITR 409 (Supreme Court), Hon'ble Bombay High Court in Anusandhan Investment Ltd. vs DCIT 287 ITR 482 and Piaggio Vhicles Pvt. Ltd. vs DCIT 290 ITR 377 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital Services Pvt. Ltd. 22,10,000 10 Zenith Automotive Pvt. Ltd. 22,10,000 11 Microland Developers Pvt. Ltd. 22,10,000 12 Brite Industires Resources Ltd. 20,10,000 Total 2,76,70,000 So far as, the above share capital/premium from twelve parties is concerned, the same was deleted by the First Appellate Authority by observing as under:- 5.7 I have circumspected the spectrum of facts and circumstances of the case and have also carefully considered the finding of the Assessing Officer and counter representation of the appellant. I have also perused the paper book containing 258 pages and various case laws relied upon by the Assessing Officer as well as Ld AR of the appellant. I find that Ld. Assessing Officer has made addition of share capital and premium of ₹ 2,76,70,000/- mainly on the basis of report of Investigation Wing, without corroborating the finding with any reliable evidence. It is very evident from the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore addition is called for u/s. 68, is highly unjustified. Nobody under Law is burdened to prove a negative fact. Rather, AO was under obligation to establish the fact that these amounts are actually received by the appellant, if he alleges the same. The question of onus probandi is certainly important in the early stage of a case. It may also assume importance where no evidence at all is led on the question in dispute by either side; in such a contingency the party on whom the onus lies to prove a certain fact must fail. Where, however, evidence has been led by the contesting parties on the question in issue, abstract considerations of onus are out of place; the truth or otherwise of the case must always be adjudged on the evidence led by the parties (Kalwa Devadattam v. Union of India, (1963) 49 ITR (SC) 165, 175), Such stand and approach of the Assessing Officers has been disapproved by the Hon'ble ITAT in the case of ITO vs. Balaram Jakhar (2005) 98 TTJ 924 (Amritsar ITAT) 5.9 As regards rest of the addition of ₹ 2,44,60,000/-, being share capital and premium appearing in the name of 10 companies in the table given by the Assessing Officer, I further find that A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the appellant during the course of assessment proceedings has been ignored by the Assessing Officer without any contrary evidence in possession. It is relevant to mention that by letter dated 14.3.2014, the Ld. A.R. of the appellant had submitted the copies of the assessment order u/s.153C of the I.T. Act of these companies who had made investments in shares, hence unless otherwise is established , such conclusive evidence has to be accepted. 5.12 Further, an important evidence is also worth highlighting that during the course of assessment proceedings itself, Assessing Officer has issued summons to the following parties who had duly replied to the Assessing Officer and had communicated the fact of investment in equity shares of the appellant company - i. Zenith Automotive Pvt. Ltd. ii, VT Leasing Finance Pvt, Ltd. iii. Virgin Capital Services Pvt. Ltd. iv, Shalini Holdings Pvt. Ltd. v. Singhal Securities Pvt. Ltd. vi, Manimala Delhi PRO Pvt. Ltd. Vii Eagle Infratech Pvt. Ltd. viii. Mega Top Promoters Pvt. Ltd ix. Finance Finage Lease and Finance India Pvt, Ltd. x. Lotus Realcon Pvt. Ltd. When after search on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that by letter dated 10.03.2014, appellant has very categorically challenged the show cause notice dated 04.02.2014 that because of above evidences and replies of the companies, no addition could be made and there was not accommodation entries, and addition could not be made uJs.68, then Assessing Officer had to meet out the various objections with fresh evidences, subsequently, but Ld. Assessing Officer had failed to do so, hence the explanation and evidences relied upon by the appellant has to be accepted. Thus it is very evident that appellant has successfully established the genuineness of transactions, identity of shareholders and creditworthiness of such companies, though all these three criteria are not applicable in the case of share capital. Obviously, initial burden on the appellant was discharged, hence if any addition was to be made, the burden shifted upon the Assessing Officer to prove that investment made by them actually emanated from the assessee. Obviously, in absence of contrary evidence, Assessing Officer can make any such addition. 5.16 Here, it is pertinent to mention that Hon ble Delhi High Court in the case of Divine Leasing Finance Ltd. 299 ITR 299 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100] 4. CIT vs. Lovely Exports Pvt.Ltd. [2009] 319 ITR (st.)5. (SC) 5. Shree Barkha Synthetics Ltd. Vs. Asst. CIT(283 ITR 377) 6. M/s. Uma Polymers Pvt.Ltd vs. DCIT [100 ITD1, 7. CIT vs Dwrkadhish Investment (P) Ltd. (330 ITR 298 9. CIT vs. Value Capital Services Ltd. (307 ITR 334, Delhi) 10.CIT vs. Arunananda Textiles Pvt.Ltd. (333 ITR 116 Kar) 11. Aim properties vs Income-tax Officer, I.T. Appellate No. 7426/Mum/2012 Recently the Delhi High Court in the case of Kamdhenu Steel (surpa) summarized all the earlier judgment of all the courts including the judgment of Hon ble Bombay High Court in the case of Creative world (supra) and held that when the assessee has submitted the details of Identity, genuineness and creditworthiness of the transaction he has discharged its burden and now it is for the revenue to prove that the amount came from the coffers of the assessee. 5.18 The case of the appellant is on better footing as not only the details of the parties were submitted but the parties have also confirmed the transactions, therefore, in the background of these legal propositions, the approach and finding of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the payment of share application money along with their return of Income, Balance Sheet, Copy of Bank Statement from where cheques for payment of shares application money were appearing before the AO in response to the notices issued u/s 133(6) of the IT Act, 1961 during the re-assessment proceedings. Further, the appellant company has also filed copy of the board resolution, MOA, copy of return of Allotment filed with the ROC. Thus, I find that the appellant company has discharged its onus under section 68 of the Act by proving the Identity of the parties, genuineness of the transactions and creditworthiness of the parties and the AO had not found any foul play in that. He has simply made the addition relying on the report of the Investigation wing without rebutting properly the evidence came in his way through these confirmations and documents. 5.21 The Learned AO has disputed on the creditworthiness of the parties on the ground that during the year under consideration the profit and loss account of these parties does not show significant business activities and their total income for the year is also less, This is not a correct view to judge creditworthiness for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the instant case. In holding this, I am fortified by the law propounded by Hon ble Apex Court in CIT vs. Divine Leasing Finance Ltd. (CC 375/2008) dated 21.01.2008; Apex Court in the case of Lovely exports Pvt Ltd 216 CTR 195, Hon ble Bombay High Court in the cases of Creative World Telefilms Ltd, 333 ITR 100 (Bom), Decision of Delhi High Court in the case of Kamdhenu Steels and alloys Ltd 361 ITR 220, Mumbai Tribunal in the case of Provid Trade Impex Pvt Ltd 2219/Mum 2009, AIM Proprieties and Investment Pvt Ltd 2219/Mum 2009, AIM Proprieties and Investment Pvt Ltd ITA 7426/Mum/2012, Saimangal Investment Ltd 3924/Mum/2009, Uttam Chand Jain that upheld the decision of Spl, Bench of ITAT, Mumbai apart from latest clinching decision of Hon ble ITAT (DELHI-E Bench) dt. 1.4. 2015 in ITA No. 2821/ Del/2009 in the case of ITO, Ward 13(2), New Delhi vs. Neelkanth, Finbuild Ltd., New Delhi. As discussed above, undoubtedly the issue has been settled by the Hon ble ITAT, J Bench, Mumbai vide: Saimangal Investment Ltd 3924/Mum/2009 dt. 20.12.2013. Following the decision of Hon ble Supreme Court in the case Union of India v. Kamlakshi Finance Corporation Ltd., AIR 1992 SC 711; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the basis of addition made by the Ld. Assessing Officer, wherein, the creditworthiness of the parties were suspected. The Ld. First Appellate Authority relied upon the decision from the Hon'ble Delhi High Court in the case of Kamdhenu Steels and Alloy Ltd. 361 ITR 220 ((Supra)) and duly found from the bank statement of these parties that they were having sufficient bank balances and concluded that the creditworthiness of the parties stands proved. The share application money received by the assessee from these parties were found to be genuine and the capacity of the investing parties was also proved. The parties also confirmed the transactions and if the Ld. Assessing Officer was still apprehensive of their creditworthiness, nothing prevented him to issue summons under section 131 of the Act. It is also noted that these parties/investing parties were assessed by the Department under section 143(3) r.w.s 153A of the Act and this fact has been mentioned in the assessment order itself. Nothing adverse has been brought on record by the Ld. Assessing Officer. Thus, following the decision from Hon'ble Apex Court in the case of CIT vs Devine Leasing and Finance Ltd., order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the CIT(A)-16, Mumbai dated 10-06-2015 and it pertains to AY 2018-19. The revenue has raised the following grounds of appeal:- i) Whether on the facts and in the circumstances of the case,the Ld. CIT(A) erred in deleting the addition of ₹ 1,10,00,000 made u/s 68 of the I.T.Act despite of the facts that the appellant failed to prove creditworthiness of the creditors and their identity genuineness of transaction as the creditors were accommodation entry providers? ii) Whether on the facts and in the circumstances of the case the Ld. CIT(A) erred in not relying on investigation carried out by DIT Delhi and without calling remand report from the AO the additions has been deleted it has co terminus power of the Assessing Officer. iii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 5,25,000/- on account of commission paid @2.75% to obtain alleged entry to the tune of ₹ 1,10,000 iv) 2. The brief facts of the case are that the assessee company is engaged in the business of trading in shares and securities and textiles, filed its return of income on 12-09-2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trolled by Shri SK Jain, 3. Aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee has challenged reopening of assessment Q:1 the ground that the AO has formed reasonable belief of escapement of income on the basis of information received from Investigation Wing without independently applying his mind to ascertain whether there being any escapement of income. The assessee has filed elaborate written submissions on the issue which has been reproduced by the Ld.CIT(A) at para 3.3 on pages 4 to 9 of his order. The assessee also challenged addition made by the AO towards unexplained credit u/s 68 of the LT. Act, 1961 and filed elaborate written submissions along with certain judicial precedents to argue that when enormous details are filed to prove identity, genuineness of transactions and creditworthin5 of the parties, the AO was erred in making addition towards share application money received from companies controlled by Shri S.K. Jain only on the basis of his statement without providing an opportunity to cross examine the witness and also to verify the statement given by the parties. The assessee has filed wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t escapement at the stage of-re-opening, irrespective of the fact whether, the AO confirms the suggested ,escapement or not at the end of the scrutiny finalization of assessment proceedings. Hence, I don't concur with views of Ld. AR that it was a 'reason to suspect only not a reason to believe within the meaning of' Sec. 147 of the I.T. Act, 1961 5. Insofar as addition made u/s 68 towards share application money received from five companies, the Ld.CIT(A) held that there is no dispute that the parties have confirmed the payment of share application money along with their return of income balance-sheet and copy of bank statement. The Ld. CIT(A) further observed that the assessee also proved the creditworthiness of the parties by filing their financial statements, as per which, the share application money received by the assessee is sufficiently explained as out of share capital and reserves and surplus. Therefore, there is no reason for the AO to make addition when assessee has filed complete details in respect of five companies to prove identity, creditworthiness of the parties and genuineness of transactions. The Ld.C1T(A) also deleted addition made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of vague information received. 4.8 The AO has doubted creditworthiness of the parties M/s Finange Leasing and Finance Pvt Ltd. on the ground that the turnover of the company was meagre and Net current assets of the company as on 31.3.2007 to a negative figure of 17.78 crores. He has not observed that actually the Net Current Assets is a positive figure of ₹ 1,72,950/- as on 31.3.2008 and the net worth of the company also was for 14,57 Comes. Similar is the case of Singhal Securities Pvt Ltd, M/s ShaliniHolidngs Ltd and Brite Industrial Resource Limited where the AO has not given thought to the net worth ef Ks.20,00,000/- each. The reason given for rejecting their creditworthinessfor Vogue Leasing and Finance Ltd are very vague and the AO has not given thought to the huge net worth of 17.61 crores as on 31.3.2008. Whereas this party also has paid the share application money for ₹ 20,00,000/- only. Thereforeon one of the parties can be held lacking in their creditworthiness as wrongly presumed by the AO. The Identify of these parties was never in doubt as the details of their PAN was provided to the AO by the appellant during the assessment proceedings b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord by the AO to establish that the Share Application Money received by the appellant represented its own undisclosed income. Hence, this addition too, is not justified in the facts circumstances of the instant case. In holding this these additions, I am fortified by the law propounded by Hon'ble Apex Court in C1T vs Divine Leasing Finance ,Ltd (CC 375/2008) dated 21.04.2008; Apex Court in the case of Lovely Exports Pvt Ltd 216 CTR [95,Hon'ble Bombay High Court in the cases of Creative World Telefilms Ltd, 333 ITR 100 (Bom), Decision of Delhi High Court in the case of Kamdhenu Steels and alloys Ltd 361 ITR 220, Mumbai Tribunal in the case of' Provid Trade Impex Pvt Ltd 2219/Mum 2009, AIM Proprieties and InvestmentPv Ltd ITA 7426/Mum/2012, Saimangal Investment Ltd 3924/Mum/2009, Uttam Chand Jain that upheld that decision of Sp. Bench of ITAT, Mumbai apart from latest clinching decision of Hon ble ITAT (DELHI-E) Bench) dt. 1.4.2015 in ITA No. 2821/Del/2009 in the case of ITO, Ward 13(2), New Delhi vs. Neelkanth, Finbuild Ltd., New Delhi. As discussed above, undoubtedly the issue has been settled by the Hon ble ITAT, J Bench, Mumbai, (Saimangal Investment Ltd 3924 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of tax laws. 4.11 Obviously, the Commissioner of Income-tax (Appeals) not only committed judicial impropriety but also erred in law in refusing to follow the order of the Appellate Tribunal. Even where he may have some reservations about the correctness of the decision of the Tribunal, he had to follow the order. He Could and should have left it to the Department to take the matter in further appeal to the Tribunal and get the mistake, if any rectified. Therefore the total addition of ₹ 1,10,000/- is deleted in view of above discussion. (Relief: ₹ 1,10,00,0007-) 4.12 Ground 11 4. 12.1 1 have gone through the contents of the impugned assessment order and the submission of the appellant on this issue. I Find that this is a notional addition made by the AO consequent to the presumption that appellant has taken entries only and as a matter of general perception he might have paid 1.75% commission for obtaining the alleged entry to the tune of 1,10,00,000/- 4.12.2 Since I have already held that ₹ 10,00,000/- was never received by the appellant and ₹ 1,00,00,000/- was received on account of share application money and not by the way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee also sought cross examination of the witness, but the AO has turned down the request of the assessee and made addition only on the basis of information received from Investigation Wing in respect of share application money received from five companies, even through the assessee has filed completed details of companies, which subscribed to share application money. In this regard, he relied upon the decision of Hon'ble Supreme Court in the case of CIT vs SunitaDhadda in SLP (C) No.9002 of 2018 reported in 403 ITR 309 (SC). The assessee also relied upon the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries vs Commissioner of Central Excise 52 GST 355 (SC). 8. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. There is no dispute with regard to the fact that the assessee has filed enormous details in respectof five companies from which share application money has been received. Theassessee has filed complete names and addresses of the subscribers, PAN, bank statements and also financial statements for the relevant financial year in order to prove identity, genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings. The AO, neither allowed the assessee to cross examine witnesses nor furnished statement which was used against the assessee to make addition towards share application money. Therefore, we are of the considered view that the AO has violated principles of natural justice during the course of assessment proceedings while making addition towards share application money u/s 68 of the Income-tax Act, 1961. 9. Coming to the issue on merit, the Ld.CIT(A) categorically stated in his order that the assessee has filed enormous details to prove identity and also filed financial statements of subscribers and bank statement to prove creditworthiness of the parties and genuineness of transactions. The Ld.CIT(A) further observed that the subscribers to the share capital are having capacityto explain share application money given to the assessee which is evident from the fact that they are having huge net worth in the form of share capital and reserves. The AO neither pointed out any cash deposits or any other credits in the bank statements of the subscribers immediately preceding the day on which the amount has been transferred to the assessee. It is also not a case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that assessee is engaged in the business as general merchants and trader in goods and commodities on ready or forward basis, commission agents, buying and selling agents, etc. During the year, the assessee has shown income from house property and income from business and the return of income for the year under consideration was filed on 28.09.12 declaring total income of ₹ 4,00,323/-. Subsequently the case was selected for scrutiny and after serving statutory notices and providing opportunity of hearing, assessment order u/s 143(3) of the I.T. Act was passed assessing income of ₹ 5,76,48,940/- thereby making additions on account of unaccounted cash credit and disallowance made u/s 14A of the I.T Act. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties, partly allowed the appeal of the assessee. Now before us, the revenue has preferred the present appeal by raising the above grounds. Ground No. 1 to 3 3. These grounds raised by the revenue are inter connected and inter related and relates to challenging the order of Ld. CIT(A) in deleting the addition made by AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court upheld the addition u/s 68 in the case of credits as share capital in the case of N. Tarika Property Invest. (P.) Ltd. v. Commissioner of Income-tax*[2014] 51 taxmann.com 387 (SC) by dismissing the SLP filed by the appellant. 4.11. In the remand report called the assessing officer was clearly given a free hand to bring in any evidence that specifically linked the appellant company receiving share capital money in lieu of cash. No specific person was specified and it was stated as a general proposition that for any statement to be used against the appellant, an opportunity of cross examination must be provided. The assessing officer has made efforts to bring in Shri Praveen Jam, but has not obtained any statement incriminating the appellant. The statement recorded of Shri Praveen Jain on 9.1.2017 does appear to be meandering and too short for the three hours for which Shri Jain attended. Not a single question relating to the investors in this case was asked. It is also noted that there is nothing asked nor confirmed to link the investor companies in this case to Shri Praveen Jam, much, less link it to the appellant company. 4.12. A perusal of the assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dev Shares Securities Pvt. Ltd. Now known as Koina Trading P. Ltd 1,00,00,000 2,97,72,514 21,69,240 7 M/s. Jasol Maa Share Trading 1,00,00,000 4,11,30,413 5,32,200 8 Yashita Trading Pvt. Ltd. 95,00,000 41,58,066 Plus share application money 40,00,000 (-) 42177 9 Ashrita Trading Co. Pvt. Ltd. 85,00,000 50,83,061 Plus share application money (-) 40,851 50,00,000 10 Accurate Multitrade Pvt. Ltd. 25,00,000 42,28,354 Plus share application money 40,00,000 (-) 2,460/- TOTAL 5,75,00,000 In the case of Koina Trading Pvt. Ltd., copy of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of assessee company . (ii) The Hon'ble Bombay High Court in the case of CIT v/s Creative World Teleflims Ltd 333 ITR 100 has held as under: If the share application money is- received by the assessee company from alleged bogus share holders who's name are given to the Assessing Officer then the department can always proceed against them and if necessary reopen their individual assessments. Held, dismissing the appeal, that there was no dispute that the assessee had given the details of names and addresses of the shareholders, their PAN/ GIR numbers and had also given the cheque numbers, name of the bankers. The Assessing Officer ought to have found out their details through PAN cards, bank reholders. Thus, the view taken by the Tribunal could not be faulted. (iii) The Hon'ble Supreme Court of India in the case of CIT vs. Orissa Corporation reported in 159 ITR 78 (SC) has held as under: That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessee's. Their index numbers were in the file of the Revenue. The Revenue, apart from iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar addition made u/s 68 of the I.T. Act. The Hon'ble ITAT (Jaipur Bench)In the case of Bharti Syntex Ltd. vs. DCIT ITA Nos. 172 173/Jp/2010 has held in para 24.4 as under:- 24.4 In this case also no cross examination was allowed to the assessee. Therefore, adverse inference cannot be drawn only on the statement of Shri MukeshChoksi. We further noted that all other necessary details have been filed before AG. Amounts were received through account payee cheque. Both the companies are assessed to tax in Mumbai. Confirmation along with copies of share certificate, bank statement, memorandum of articles, copy of share application money, audited balance sheet and P L a/c of these parties were filed. These are similar details as were filed in case of three other companies for asst. yr. 2005-06. We have already disposed of the appeal for asst. yr. 2005-06 whereby we have held that the assessee has discharged its onus by filing necessary details and further have relied on the decisions of Hon'ble Supreme Court and Hon'ble Delhi High Court alongwith various other decisions of Tribunal and have held that addition cannot be made under S. 68 in the hands of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that shares were allotted to sister concerns, though at a premium, but at lower premium than that at which it was allotted to other third party companies. After seeking explanation from the assessee, made the additions u/s 68 of the Act. The Ld. CIT(A) during the appellate proceedings after appreciating the facts had sought remand report from the AO with a view to give free hand to the AO for bringing in any evidence that specifically linked the assessee company receiving share capital money in lieu of cash. Although, the AO had relied upon the statement of Shri Praveen Jain, but could not point out any portion of the statement of the said Praveen Jain to link the investor companies. Apart from this, even no evidence has been brought on record to link the assessee company with the said Praveen Jain. More so, there was no evidences to show that there was any cash trail in respect of the amounts received by the assessee company from the investors. We noticed that though the AO was specifically asked to furnish specific incriminating evidences, but the AO was unable to pin point the specific evidences which could clearly show that the share application money was received in lieu of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,00,000 42,28,354 Plus share application money 40,00,000 (-) 2,460/- TOTAL 5,75,00,000 6. We also noticed that the AO recorded his findings by only referring to the information related to the outcome of search in the case of Shri Pravin Kumar Jain Group who were providing accommodation entries. However, the AO failed to link the assessee in obtaining any accommodation entries. We have seen no evidence on record from which it can be shown that any cash was deposited by the assessee in the accounts of the investors. Apart from above, no incriminating evidence linking the investor to the assessee. 7. The Ld. CIT(A) had also appreciated the fact that though opportunity of cross examination was provided to the assessee in the remand proceedings but Shri Praveen Jain did not confirm that any accommodation entries were provided. Even the basic premise that the investor companies belong to Praveen Jain was also not proved. It is also an admitted fact that the transactions in the present case were through banking channel and thus, in such circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no evidence . 10. Reliance was also placed on the following decisions: i. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Value Capital Services P.Ltd. (2008) 307 ITR 334 (Delhi). ii. Hon'ble Punjab and Haryana High Court in the case of Commissioner of Income Tax v/s. GP International Ltd. (2010) 325 ITR 25 (P H). iii. Hon'ble Madras High Court in the case of Commissioner of Income Tax v/s. Electro Polychem Ltd (2007)294 ITR 661 (Mad). iv. Hon'ble Rajasthan High Court in case of Commissioner of Income Tax v/s. AKJ Granites P.Lt4. (2008)301 ITR 298 (Raj.) V. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Oasis Hospitalities Pvt.) Ltd. (2011) 51 DTR 74 (Delhi). Sec. 69 places the burden of proof on the tax payer to explain the nature and source of any credit found in the books. But, when assessee proves or submit the basic information like identification, genuineness of transactions and creditworthiness of the creditors, onus is discharged by him and if Assessing Officer disbelieve the genuineness of the same, he has to prove otherwise, merely, doubting or pointing out so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing details:- Issue raised in this appeal relates to first five companies, who had invested ₹ 1,51,50,000/- as share application money with premium as per details given in above table. 4. The Assessing Officer vide assessment order dated 30th December, 2010, made an addition of ₹ 1,51,50,000/- recording that the aforesaid companies were creation ‟ of and de facto operated by one Tarun Goyal, Chartered Accountant, who had set up about 90 companies/firms including the aforesaid 5 companies for providing accommodation entries. Paper work was perfect but there were chinks, which had revealed that the true nature of the transactions was to convert illegitimate money by providing bogus or accommodation entries. These evidences and details collected and ascertained during the course of search under Section 132 of the Act conducted by the Investigation Wing in the case of Tarun Goyal, had revealed that the registered office of 90 companies was located at 13/34, Main Arya Samaj Road, Karol Bagh and their former office was at 203, Dhaka Chambers, 2069/39, Naiwala, Karol Bagh, New Delhi. These companies were not carrying on any genuine business ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificates. If share certificates were issued by post, state whether they were received back; indicate whether annual reports, balance sheet or notices of AGM/EGM of the respondent-assessee company were sent to the shareholders. 7. The respondents-assessee did not produce the Directors for examination. Other details and particulars were also not filed as required by the Assessing Officer. However, the respondent-assessee had filed:- ( i) Copy of the ledger account of share application. ( ii) Copy of the bank statement of the account in which money was received. ( iii) Copy of the ledger account of share capital. ( iv) Copy of balance sheet and profit loss account reflecting receipt of share application money. ( v) Share application form with complete list of shareholders, old and new. ( vi) Annual return filed before the Registrar of Companies. ( vii) Copy of Form No.2 i.e., return of allotment filed before the Registrar of Companies. ( viii) Affidavits of Directors of the shareholder companies along with PAN details, copy of PAN cards, Board Resolutions, confirmations from the parties, share application forms, bank ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, PAN details, copies of Income Tax Returns as well as share application forms and complete name and address of share applicants. These documents were sufficient to establish the identity of share applicants. It is also not in dispute that all the transactions have been routed through banking channels and share application money has been received through account payee cheques, details of which were furnished. The assessees had also furnished returns of income of the creditors accepted by the Department and thus, we are of the view that in absence of rebuttal of these facts there was no reason to doubt the genuineness of the transactions. The creditworthiness of the share applicants was also established by the assessee by filing the audited balance sheet of each of the share-holder company. On the contrary, no evidence has been brought on record by the Assessing Officer to prove that share application money emanated from the coffers of the assessees. It is also pertinent to note here that in response to the notices issued under section 133(6) of the Act by the Assessing Officer were responded by the share applicants. Merely because the assessee, as directed by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. Therefore, failure of assessee to produce then could not by itself have justified the additions made by A. 0. 4.1 As discussed above, we find that the assessees have been able to discharge its initial onus to establish the genuineness of the claimed transactions of share application moneys by furnishing all the necessary possible evidences and thus, the onus to disprove those evidences were shifted upon the Assessing Officer the Assessing Officer has failed to discharge by not disproving those evidences. The assessees were thus, able to establish the identification as well as creditworthiness of the share applicants and the genuineness of the claimed receipt of share application moneys from those parties. The ld. CIT (Appeals) was thus justified in deleting the additions made under section 68 of the Act on account of the alleged unexplained share application money. The same is upheld. The grounds questioning the action of the Id. CIT (Appeals) in this regard are thus rejected. 11. Issue of bogus share capital in the form of accommodation entries has been subject matter of several decisions of this Court and we would like to refer to decision in Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement, financial position of the recipient and beneficiary assessee and surrounding circumstances. The primary requirements, which should be satisfied in such cases is, identification of the creditors/shareholder, creditworthiness of creditors/shareholder and genuineness of the transaction. These three requirements have to be tested not superficially but in depth having regard to the human probabilities and normal course of human conduct. 14. Certificate of incorporation, PAN number 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 Vs. 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 learned judges. It is true that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing a gift of ₹ 80,000 and the other being receipt of ₹ 42,000 from business of which he claimed to be the real owner. When both these explanations were rejected, as they have been it was clearly upon to the Income-tax Officer to hold that the income must be concealed income. There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature. The conclusion to which the Appellate Tribunal came appears to us to be amply warranted by the facts of the case. There is no ground for interfering with that finding, and these appeals are accordingly dismissed with costs. ( emphasis supplied) Section 68 recognizes the aforesaid legal position. The view taken by the Tribunal on the duty cast on the Assessing Officer by section 68 is contrary to the law laid down by the Supreme Court in the judgment cited above. Even if one were to hold, albeit erroneously and without being aware of the legal position adumbrated above, that the Assessing Officer is bound t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholders companies belong to Sh. Tarun Goyal. This is enforced even more from the following:- i. All the companies are operated from the-office premises of Sh. Tarun Goyal. ii. All the directors are either his employees or close relatives. Sh. Tarun Goyal could never produce the directors nor furnish their residential address. iii. The statement of employees of Sh. Tarun Goyal is ,on record, whereby they have clearly stated that they signed on the papers produced before them by Sh Tarun GoyaL They do not know about the basic details of the companies like shareholding patterns, nature of business of these companies etc. iv. The statement of auditors of Sh. Tarun Goyal is on record. They have stated to have never meet (sic) the directors of the companies and audited the accounts only on the directions of Sh Tarun Goyal. As per the statement of auditors, the employees of Sh Tarun Goyal were directors of the companies run by them, also they could not ascertain the so called share capital subscribed by Sh Tarun Goyal as documentary proof of the same was lacking. v. During the course of search, all the passbooks, cheque books, PAN Cards etc. were alwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and material referred to in the assessment order. The reasoning given is contrary to human probabilities, for in the normal course of conduct, no one will make investment of such huge amounts without being concerned about the return and safety of such investment. 14. Accordingly, the appeal is allowed. The substantial question of law framed above is accordingly answered in favour of the appellant-revenue and against the respondent assessee. There would be no order as to costs . 4.4. If the aforesaid decisions are analyzed, we note that in the case of M/s Chand Merchant Pvt. Ltd., the issue relates to share application money and consequent addition made under section 68 of the Act. It is noted that this addition was made on the basis of statement of Shri SK Jain, recorded under section 132(4) of the Act and during search proceedings he tendered that he was involved in providing accommodation entries in the form of share application/unsecured loans. The First Appellate Authority decided the issue in favour of the assessee, which was affirmed by the Tribunal, dismissing the appeal of the Revenue. Identically, in the case of Income Tax Officer vs M/s Trishul Pvt. Ltd. ((s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and ( b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB)of section 10. 4.5. As per section 68 of the Act, onus is upon the assessee to discharge the burden so cast upon. First burden is upon the assessee to satisfactorily explain the credit entry contained in his books of accounts. The burden has to be discharged with positive material (Oceanic Products Exporting Company vs CIT 241 ITR 497 (Kerala.). The legislature had laid down that in the absence of satisfactory explanation, the unexplained cash credit may be charged u/s 68 of the Act. Our view is fortified by the ratio laid down in Hon ble Apex Court in P. Mohankala (2007)(291 ITR 278)(SC). A close reading of section 68 and 69 of the Act makes it clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at even the persons (Jain Brothers) who tendered their statements before the Department, nowhere specifically named the assessee and the statement is general in nature, such type of general statement cannot be the basis for making the addition unless and until it is corroborated with tangible material. Even otherwise, the case of the assessee is covered by the decision of the Tribunal in the case of M/s Trishul Trader Pvt. Ltd. ((supra)) and M/s Chand Merchant Pvt. Ltd. ((supra)) where the facts are identical and the issue was based upon the statement of S. K. Jain/Pravin Kumar Jain. The Tribunal reached to a particular conclusion by placing reliance upon the decision in CIT vs Value Capital Service Pvt. Ltd. (2008) 307 ITR 334 (Del.), CIT vs G.P. International Ltd. (2010) 325 ITR 25 (P H), CIT vs Electro Polychem Ltd. (2007) 294 ITR 661 (Madras), CIT vs AKJ Granites Pvt. Ltd. (2008) 301 ITR 298 (Raj.), CIT vs Oasis Hospitalities Pvt. Ltd. (2011) 51 DTR 74 (Del.), CIT vs Gujarat Heavy Chemical Ltd. (2002) 256 ITR 795, CIT vs Sunita Dhadda 403 ITR 309 (Supreme Court), Andaman Timbers Industries vs Commissioner of Central Excise 52 GST 355 (Supreme Court) and various other decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, this ground of the Revenue also fails as the part addition sustained by the Ld. Commissioner of Income Tax (Appeal) has been deleted by the Tribunal. Thus, there is no merit in the impugned ground raised by the Revenue. 8. The next ground pertains to deleting the disallowance of ₹ 2,57,349/- made under section 14A of the Act r.w.s. 8D of the Rules. The crux of the argument on behalf of the Revenue is in support of the addition made by the ld. Assessing Officer, whereas, the ld. counsel for the assessee, defended the impugned order. 8.1. We have considered the rival submissions and perused the material available on record. The stand of the Revenue is that the assessee has paid interest of ₹ 3,14,431/-, therefore, it comes under section 14A of the Act and further such expenditure has been incurred and disallowance has been made as per Rule-8D. The stand of the assessee is that such disallowance has been made on notional basis without pointing out as to whether the assessee has incurred any expenditure or not. The Ld. Commissioner of Income Tax (Appeal) noted that the ld. Assessing Officer wrongly disallowed the expenditure without pointing out as to which expend ..... 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