* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 409/2012
Reserved on: 2nd December,2013
% Date of Decision: 10th December,2013
COMMISSIONER OF INCOME TAX DELHI ..... Appellant
Through Mr. Sanjeev Sabharwal,
Sr. Standing Counsel
versus
GLOBUS SECURITIES & FINANCE PVT. LTD
..... Respondent
Through Mr. Salil Kapoor with
Mr. Sanat Kapoor, Mr. Vikas Jain and
Ms. Sugandha Anand, Advs.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
SANJIV KHANNA, J.
This appeal by the Revenue which relates to assessment year
2006-07 stands for adjudication on the following question:
"Whether the impugned order of the Income
Tax Tribunal (ITAT) is an error of law in
approving the deletion of the amount included
by the assessing officer by applying Section 68
of the Income Tax Act, 1961, in the facts and
circumstances of the case?"
2. Commissioner of Income Tax (Appeals) and the tribunal have
held that the respondent assessee has been able to discharge onus
under Section 68 of the Act as the respondent assessee had filed
ITA 409/2012 Page 1 of 20
names and addresses of share applicants, PAN number details,
confirmation letters, their income tax returns, copies of bank
statements of share applicants from the account from which
investments were made, copy of share application form and copy of
audited balance sheet of the share applicants. It has been accordingly
held that the identity, creditworthiness of the shareholders and
genuineness of the transactions has been established. Reference and
reliance was placed on judgments of Delhi High Court in CIT vs.
Stellar Investment Ltd. [1991] 192 ITR 287, Monnet Ispat and
Energy Ltd. vs. DCIT (2008) 171 Taxman 27, CIT vs. Divine
Leasing and Finance Ltd. (2007) and CIT vs. Lovely Exports Pvt.
Ltd. both reported (2008) 299 ITR 268. Some other decisions have
also been referred to in the order of the Commissioner of Income Tax
(Appeals) (CIT (A) for short).
3. For the sake of convenience, we are reproducing below the
observations made by the Tribunal in their order dated 4th November,
2011 dismissing the appeal of the Revenue. The relevant paragraph
reads as under:
"4. We have considered the facts of the case and
submissions made before us. We find that the assessee
had filed sufficient evidence in the form of name,
address and PAN details of the contributors. Further,
copies of confirmation, income-tax return, bank
statement, share application form and balance-sheet
ITA 409/2012 Page 2 of 20
have also been filed. These details establish the identity
of the contributors. This, in fact, has not been doubted
by the AO also. He has relied on information received
from investigation wing, which listed four of the
contributors as persons who were indulging in
furnishing accommodation entries. This point has not
been examined in details by making any further
enquiry. He has also noted that there are matching
credits in the case of Inter Stellar Exports Pvt. Ltd.,
Sober Associates Pvt. Ltd. and Ritika Finance &
Investments Pvt. Ltd. However, further enquiry has not
been made in the case of the contributors to establish in
any manner that the source of the credits was the
assessee. It has also been found that shares were issued
in the immediately preceding year and no premium was
charged. This does not lead to the inference that the
amount of premium received in this year is bogus or
that such amount flowed from the coffers of the
assessee. Therefore, we are of the view that the
enquiries do not establish that source of the contribution
was the assessee. On the other hand, the identities of the
contributors have been established. In the light of the
decision in the case of Lovely Exports (P) Ltd. (supra),
the assessee was not required to bring anything further
than establishing the identity. Thereafter, if any doubt
persisted, the action lied in the case of the contributors.
Accordingly, it is held that the ld. CIT(Appeals) was
right in deleting the addition."
4. It is an undisputed position that during the assessment year in
question, the respondent assessee had received Rs.51,10,000/- from
six different companies as per details given below:
"1. M/s Inter Steller Exports Pvt. Ltd. Rs. 9,35,000
2. M/s Parivartan Capital & Financial
Services Pvt. Ltd. Rs. 9,75,000
3. M/s Sober Associates Pvt. Ltd. Rs. 7,00,000
4. M/s Ritika Finance &
Investment Pvt. Ltd. Rs.10,00,000
5. M/s Victoria Advertising Pvt.Ltd. Rs. 9,00,000
6. M/s Shri Niwas Leasing & Finance
Ltd. Rs. 6,00,000
Total Rs.51,10,000"
ITA 409/2012 Page 3 of 20
5. These six companies had paid Rs.9,22,000/- @ Rs.10/- per
share towards face value of the share and Rs.41,88,000/- @ Rs.40/-
per share as share premium to accordingly make a total sum of
Rs.51,10,000/-. This factual position is not disputed.
6. Before us relying upon the order of the Assessing Officer, it
was submitted by the respondent assessee that there was no
corresponding credit entry in the bank account of M/s Inter Steller
Exports Pvt. Ltd. as the assessment order mentions that there were
debit entries of Rs.4,23,000/- and Rs.5,15,000/- on 27th May, 2005
before a sum of Rs.9,35,000/- was transferred to the respondent
assessees account. The word ,,debit, it is apparent, is a
typographical error in the order of the Assessing Officer. Paragraph 3
of the impugned order passed by the tribunal which records the
submission made by the Departmental Representative, reads:-
"3. Before us, the ld. DR submitted that the shares of
the face value of Rs. 10/- have been issued at Rs. 50/-
per share and, thus, premium of Rs. 40/- per share has
been charged. There are matching deposits in the bank
account of the contributors. The relevant schedules of
the balancesheet of the contributors, containing the
details of investments, have not been filed. The assessee
had not charged premium in any earlier year. Thus, it is
argued that the creditworthiness of the contributors and
genuineness of the transactions have not been
established."
ITA 409/2012 Page 4 of 20
7. In paragraph 4 of the impugned order quoted above, it is
recorded by the Tribunal that there were matching credit entries in
Inter Steller Exports Pvt. Ltd, Sober Associates Pvt. Ltd. and Ritika
Finance & Investments Pvt. Ltd. Thus, it can be savely construed that
as per the bank statements of Inter Steller Exports Ltd., Sober
Associates Pvt. Ltd and Ritika Finance & Investments Pvt. Ltd., there
were corresponding or substantial deposits and credit entries before
the investments were made towards share capital. This is the factual
position, not commented upon by the tribunal.
8. It is also accepted as true and correct that the respondent
assessee had not charged premium in the immediately previous year
from the share subscribers. This factual position is recorded and
mentioned in the order of the Tribunal. Further, the shareholder
companies had not filed the relevant schedule of the balance sheet
relating to details of investments made by them. It is noticeable that
for the assessment year in question, the respondent assessee had filed
a return declaring income of Rs.71,910/-. The respondent assessee
was carrying on business of trading in shares and derivatives besides
which they had earned interest income of Rs.23,533/- and dividend
income of Rs.21,550/-. The assessment order records that M/s
Parivartan Capital and Financial Services Pvt. Ltd. was controlled by
ITA 409/2012 Page 5 of 20
Shri Hari Om Bansal and M/s Sober Associates Pvt. Ltd. and M/s
Shri Niwas Leasing & Finance Ltd. were controlled by Shri Mahesh
Garg, who in their statements before Director of Income Tax
(Investigations) had admitted that they were engaged in the business
of providing accommodation entry through various companies
controlled by them.
9. The short issue in question is raised whether the tribunal was
right in holding that the respondent assessee had discharged the onus
in establishing the identity of the shareholders, their creditworthiness
and genuineness of the transactions. We have quoted the reasoning
given by the tribunal which is recorded and elucidated in only one
paragraph i.e. paragraph 4 of the impugned order. Tribunal on the
basis of the judgment in the case of Lovely Exports Pvt. Ltd. (supra) has
held that the assessee was not required to produce any further material,
than establishing the name, identity by way of address, PAN details,
and copies of confirmation, income tax return, bank statements, share
application and balance sheet. Thereafter, if any doubt persisted, the
action lied in the case of the contributors i.e., the share applicants.
10. We had the occasion to deal with a similar controversy and
issue in our recent decision dated 22nd November, 2013 passed in ITA
No. 1018/2011 and 1019/2011 titled CIT vs. N.R. Portfolio Pvt. Ltd.
ITA 409/2012 Page 6 of 20
In the said decision we referred to the decisions of Delhi High Court
in Lovely Exports Pvt. Ltd. (supra) and Divine Leasing & Finance
Ltd. (supra) and observed as under:
"18. In the remand report, the Assessing Officer
referred to the provisions of Section 68 of the Act and
their applicability. The word "identity" as defined, it
was observed meant the condition or fact of a person or
thing being that specified unique person or thing. The
identification of the person would include the place of
work, the staff, the fact that it was actually carrying on
business and recognition of the said company in the eyes
of public. Merely producing PAN number or assessment
particulars did not establish the identity of the person.
The actual and true identity of the person or a company
was the business undertaken by them. This according to
us is the correct and true legal position, as identity,
creditworthiness and genuineness have to be established.
PAN numbers are allotted on the basis of applications
without actual de facto verification of the identity or
ascertaining active nature of business activity. PAN is a
number which is allotted and helps the Revenue keep
track of the transactions. PAN number is relevant but
cannot be blindly and without considering surrounding
circumstances treated as sufficient to discharge the onus,
even when payment is through bank account.
19. On the question of creditworthiness and
genuineness, it was highlighted that the money no doubt
was received through banking channels, but did not
reflect actual genuine business activity. The share
subscribers did not have their own profit making
apparatus and were not involved in business activity.
They merely rotated money, which was coming through
the bank accounts, which means deposits by way of cash
and issue of cheques. The bank accounts, therefore, did
not reflect their creditworthiness or even genuineness of
the transaction. The beneficiaries, including the
respondent-assessee, did not give any share-dividend or
interest to the said entry operators/subscribers. The
profit motive normal in case of investment, was entirely
absent. In the present case, no profit or dividend was
declared on the shares. Any person, who would invest
money or give loan would certainly seek return or
income as consideration. These facts are not adverted to
ITA 409/2012 Page 7 of 20
and as noticed below are true and correct. They are
undoubtedly relevant and material facts for ascertaining
creditworthiness and genuineness of the transactions."
On the question of ,,source of source and ,,origin of
origin, it was elucidated:
"24. We are conscious of the doctrine of ,,source of
source or ,,origin of origin and also possible difficulty
which an assessee may be faced with when asked to
establish unimpeachable creditworthiness of the share
subscribers. But this aspect has to be decided on factual
matrix of each case and strict or stringent test may not
be applied to arms length angel investors or normal
public issues. Doctrine of ,,source of source or ,,origin
of origin cannot be applied universally, without
reference to the factual matrix and facts of each case.
The said test in case of normal business transactions
may be light and not vigorous. The said doctrine is
applied when there is evidence to show that assessee
may not be aware, could not have knowledge or was
unconcerned as to the source of money paid or
belonging to the third party. This may be due to the
nature and character of the commercial/business
transaction relationship between the parties, statutory
postulates etc. However, when there is surrounding
evidence and material manifesting and revealing
involvement of the assessee in the "transaction" and that
it was not entirely an arms length transaction, resort or
reliance to the said doctrine may be counter-productive
and contrary to equity and justice. The doctrine is not
an eldritch or a camouflage to circulate ill gotten and
unrecorded money. Without being oblivious to the
constraints of the assessee, an objective and fair
approach/determination is required. Thus, no assessee
should be harassed and harried but any dishonest façade
and smokescreens which masquerade as pretence should
be exposed and not accepted."
With reference to two decisions, it was further held
"25. In Lovely Exports (supra), a Division Bench
examined two earlier decisions of this court in CIT vs.
Steller Investment Ltd. [1991] 192 ITR 287 (Delhi) and
CIT vs. Sophia finance Ltd. [1994] 205 ITR 98 (FB)
(Delhi). The decision in Steller Investment's case
ITA 409/2012 Page 8 of 20
(supra) was affirmed by the Supreme court but, by
observing that the conclusion was on the facts and no
interference was called for. Lovely Exports (supra)
was a case of public limited company where shares
were subscribed by public and it was accordingly
observed:-
"This reasoning must apply a fortiori to large
scale subscriptions to the shares of a public
Company where the latter may have no material
other than the application forms and bank
transaction details to give some indication of the
identity of these subscribers. It may not apply in
circumstances where the shares are allotted
directly by the Company/assessee or to creditors
of the assessee. This is why this court has
adopted a very strict approach to the burden
being laid almost entirely on an assessee which
receives a gift."
26. Thereafter reference was made to Full Bench
decision in the case of Sophia Finance Ltd.'s case
(supra) wherein it has been observed that if the
shareholders exists then, "possibly", no further enquiry
needs to be made and that the Full Bench had not
reflected upon the question of whether the burden of
proof rested entirely on the assessee and at which point
this burden justifiably shifted to the assessing officer.
The Full Bench has observed that they were not
deciding as to on whom and to what extent was the onus
to show that the amount credited in the books of
accounts was share capital and when the onus was
discharged, was not decided. The standard of proof
might be rigorous and stringent and was dependent
upon nature of the transaction and where there was
evidence that the source of investment cannot be
manipulated, it was material. Similarly, it was observed
that assessee could scarcely be heard to say that he did
not know the particulars of a donor in case of a gift. It
was held:-
"There cannot be two opinions on the aspect that
the pernicious practice of conversion of
unaccounted money through the masquerade or
channel of investment in the share capital of a
company must be firmly excoriated by the
Revenue. Equally, where the preponderance of
evidence indicates absence of culpability and
complexity of the assessee it should not be
ITA 409/2012 Page 9 of 20
harassed by the Revenuess insistence that it
should prove the negative. In the case of a public
issue, the Company concerned cannot be
expected to know every detail pertaining to the
identity as well as financial worth of each of its
subscribers. The Company must, however,
maintain and make available to the Assessing
Officer for his perusal, all the information
contained in the statutory share application
documents. In the case of private placement the
legal regime would not be the same. A delicate
balance must be maintained while walking the
tightrope of Section 68 and 69 of the Income
Tax Act. The burden of proof can seldom be
discharged to the hilt by the assessee; if the AO
harbours doubts of the legitimacy of any
subscription he is empowered, nay duty-bound,
to carry out thorough investigations. But if the
Assessing Officer fails to unearth any wrong or
illegal dealings, he cannot obdurately adhere to
his suspicions and treat the subscribed capital as
the undisclosed income of the
Company.....................
xxxx
..........Once material to prove these ingredients
are produced it is for the Assessing Officer to
find out as to whether, on these materials, the
assessed has succeeded in establishing the
ingredients mentioned above. The Assessing
Officer `lift the veil and enquire into the real
nature of the transaction. C.I.T. v. Ruby Traders
and Exporters Ltd. : [2003]263ITR300(Cal) ,
C.I.T. v. Nivedan Vanijya Niyojan Ltd.
[2003]263ITR623(Cal) and C.I.T. v. Kundan
Investment Ltd. [2003]263ITR626(Cal.) are the
other three.
In this analysis, a distillation of the
precedents yields the following propositions of
law in the context of Section 68 of the IT Act.
The assessee has to prima facie prove (1) the
identity of the creditor/subscriber; (2) the
genuineness of the transaction, namely, whether
it has been transmitted through banking or other
indisputable channels; (3) the creditworthiness
or financial strength of the creditor/subscriber.
(4) If relevant details of the address or PAN
identity of the creditor/subscriber are furnished
ITA 409/2012 Page 10 of 20
to the Department along with copies of the
Shareholders Register, Share Application Forms,
Share Transfer Register etc., it would constitute
acceptable proof or acceptable explanation by
the assessed. (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; and (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."
Decision in the case of Lovely Exports Pvt. Ltd. (supra)
was also considered in CIT vs. Nova Promoters & Finlease
(P) Ltd. [2012] 342 ITR 169 (Del.) and it was explained:
"38. The ratio of a decision is to be understood and
appreciated in the background of the facts of that case.
So understood, it will be seen that where the complete
particulars of the share applicants such as their names
and addresses, income tax file numbers, their
creditworthiness, share application forms and share
holders register, share transfer register etc. are
furnished to the Assessing Officer and the Assessing
Officer has not conducted any enquiry into the same or
has no material in his possession to show that those
particulars are false and cannot be acted upon, then no
addition can be made in the hands of the company under
sec.68 and the remedy open to the revenue is to go after
the share applicants in accordance with law. We are
afraid that we cannot apply the ratio to a case, such as
the present one, where the Assessing Officer is in
possession of material that discredits and impeaches the
particulars furnished by the assessee and also
establishes the link between self-confessed
"accommodation entry providers", whose business it is
to help assessees bring into their books of account their
unaccounted monies through the medium of share
subscription, and the assessee. The ratio is inapplicable
to a case, again such as the present one, where the
ITA 409/2012 Page 11 of 20
involvement of the assessee in such modus operandi is
clearly indicated by valid material made available to the
Assessing Officer as a result of investigations carried
out by the revenue authorities into the activities of such
"entry providers". The existence with the Assessing
Officer of material showing that the share subscriptions
were collected as part of a pre-meditated plan a
smokescreen conceived and executed with the
connivance or involvement of the assessee excludes the
applicability of the ratio. In our understanding, the ratio
is attracted to a case where it is a simple question of
whether the assessee has discharged the burden placed
upon him under sec.68 to prove and establish the
identity and creditworthiness of the share applicant and
the genuineness of the transaction. In such a case, the
Assessing Officer cannot sit back with folded hands till
the assessee exhausts all the evidence or material in his
possession and then come forward to merely reject the
same, without carrying out any verification or enquiry
into the material placed before him. The case before us
does not fall under this category and it would be a
travesty of truth and justice to express a view to the
contrary."
Reference in N.R. Portfolio Pvt. Ltd. (supra) was made
to CIT vs. Nipun Builders and Developers [2013] 350 ITR 470
(Del), and it was held as under:
"29. In CIT v. Nipun Builders and Developers
[2013] 350 ITR 407 (Del) , this principle has been
reiterated holding that the assessee and the Assessing
Officer have to adopt a reasonable approach and when
the initial onus on the assessee would stand discharged
depends upon facts and circumstances of each case. In
case of private limited companies, generally persons
known to directors or shareholders, directly or
indirectly, buy or subscribe to shares. Upon receipt of
money, the share subscribers do not lose touch and
become incommunicado. Call monies, dividends,
warrants etc. have to be sent and the relationship is/was
a continuing one. In such cases, therefore, the assessee
cannot simply furnish details and remain quiet even
when summons issued to shareholders under Section
131 return unserved and uncomplied. This approach
would be unreasonable as a general proposition as the
ITA 409/2012 Page 12 of 20
assessee cannot plead that they had received money, but
could do nothing more and it was for the assessing
officer to enforce share holders attendance. Some cases
might require or justify visit by the Inspector to
ascertain whether the shareholders/subscribers were
functioning or available at the addresses, but it would be
incorrect to state that the assessing officer should get
the addresses from Registrar of Companies website or
search for the addresses of shareholders and
communicate with them. Similarly, creditworthiness
was not proved by mere issue of a cheque or by
furnishing a copy of statement of bank account.
Circumstances might require that there should be some
evidence of positive nature to show that the said
subscribers had made a genuine investment, acted as
angel investors, after due diligence or for personal
reasons. Thus, finding or a conclusion must be
practicable, pragmatic and might in a given case take
into account that the assessee might find it difficult to
unimpeachably establish creditworthiness of the
shareholders.
30. What we perceive and regard as correct position
of law is that the court or tribunal should be convinced
about the identity, creditworthiness and genuineness of
the transaction. The onus to prove the three factum is on
the assessee as the facts are within the assessees
knowledge. Mere production of incorporation details,
PAN Nos. or the fact that third persons or company had
filed income tax details in case of a private limited
company may not be sufficient when surrounding and
attending facts predicate a cover up. These facts
indicate and reflect proper paper work or documentation
but genuineness, creditworthiness, identity are deeper
and obtrusive. Companies no doubt are artificial or
juristic persons but they are soulless and are dependent
upon the individuals behind them who run and manage
the said companies. It is the persons behind the
company who take the decisions, controls and manage
them."
11. The respondent assessee is a private limited company. It is not
the case of the respondent that their Directors or persons behind the
companies, who had purportedly made investment in the shares were
ITA 409/2012 Page 13 of 20
related or known to them. In the present case substantial investment
has been made in a private limited company which includes share
premium @ Rs.40/- per share amounting to Rs.41,88,000/-. It is not a
case of the respondent assessee that they had a proven good past track
record justifying a hefty premium, four times the face value. What
was placed on record were certain papers which showed that the
respondent assessee had taken care to ensure legal compliances. The
said evidence is primarily documentary evidence. But, what the
tribunal has noticed but not given due credence to are the surrounding
circumstances which include a huge premium i.e. four times of the
face value of the shares, credit entries in the bank accounts before
transfer of money to the assessee, failure of the companies to file
details of the inventories and the fact that the assessee company had
not charged any premium earlier. Identity, creditworthiness of the
shareholders and genuineness of the transaction in all cases is not
established by only showing that the transaction was through banking
channels or account payee instrument. It would be incorrect to state
that the onus to prove genuineness of the transaction and
creditworthiness of the creditor stands discharged in all cases if
payment is made through banking channels. Surrounding and
corroborative factual details are equally important and may justify
ITA 409/2012 Page 14 of 20
further proof or details before it is held that onus is discharged. As
held in N.R. Portfolio (supra) the question of discharge of onus
depends upon whether the two parties are related or known to each
other, the manner in which the parties approached each other, whether
the transaction was entered into through written documents to protect
the investment, whether the investor professes and was an angel
investor, the quantum of money, creditworthiness of the recipient, the
object and purpose for which payment was made etc. These facts are
primarily in knowledge of the assessee and it is difficult for revenue
to prove and establish the negative. Thus, mere reliance on neutral
documentary evidence cannot always be regarded as satisfactory
discharge of onus.
12. Investment decisions, that too of investing in share capital at a
premium in a private limited company, in the normal circumstances,
unless there are other peculiar or personal reasons, entails due
diligence by both the share applicant and the recipient company. This
implies inquiry and verification by the persons behind the artificial
entity. There have been a spate of cases where private limited
companies have purportedly received share application money from
unconcerned, unrelated parties without securing adequate protection
of their investment and with other surrounding circumstances clearly
ITA 409/2012 Page 15 of 20
indicative of racket or a scam. We reproduce a portion the ruling in
Onkar Nath v. Delhi Administration, AIR 1977 SC 1108, wherein it
was stated:
"6.....................The list of facts mentioned in
Section 57 of which the Court can take judicial notice
is not exhaustive and indeed the purpose of the
section is to provide that the Court shall take judicial
notice of certain facts rather than exhaust the
category of facts of which the Court may in
appropriate cases take judicial notice. Recognition of
facts without formal proof is a matter of expediency
and no one has ever questioned the need and wisdom
of accepting the existence of matters which are
unquestionably within public knowledge...........
.............No Court therefore insists on formal proof,
by evidence, of notorious facts of history, past or
present. The date of poll, passing away of a man of
eminence and events that have rocked the nation need
no proof and are judicially noticed. Judicial notice, in
such matters, takes the place of proof and is of equal
force. In fact, as a means of establishing notorious
and widely known facts it is superior to formal means
of proof..............."
13. It is important, to segregate cases of bonafide or genuine
investments by third persons in a private limited company, from cases
where receipt of share application money is only a facade for
conversion of unaccounted for money or money laundering. The said
question cannot be decided without taking notice of the surrounding
facts and circumstances, by merely relying upon paper work which at
best in some cases would be a neutral factor. The paper work though
important may not be always conclusive or determinative of the
final outcome or finding whether the transaction was genuine.
ITA 409/2012 Page 16 of 20
When and under what circumstances onus is discharged, as held in
N.R. Portfolio (supra), cannot be put in a strait jacket universal
formula. It will depend upon several relevant factors. Cumulative
effect has to be ascertained and understood before forming any
objective opinion whether or not onus has been discharged by the
assessee. Of course suspicion or doubts may not be sufficient and
care and caution has to be taken that the assessee has limitations but
this cannot be a ground to ignore contrary incriminating evidence or
material which when confronted, meets silence or no answer.
14. Learned counsel for the appellant has relied upon decision
dated 22nd November, 2012 in ITA No. 232/2012 titled
Commissioner of Income Tax IV vs. Fair Finvest Ltd. But the said
decision is distinguishable as the assessee had filed affidavits of the
present Directors of the share applicant companies affirming the
payment made and the fact that the shares were allotted.
15. Similarly reference to CIT vs. Gangeshwari Metal (P) Ltd.
[2013] 30 Taxmann.com 328 (Delhi) is inappropriate as in the said
case decision in Nova Finlease Pvt. Ltd (supra) was distinguished on
facts, observing that the Assessing Officer had failed to conduct any
enquiry and had proceeded with folded hands as if it was for the
assessee to produce all evidence and material.
ITA 409/2012 Page 17 of 20
16. In ITA No. 212/2012 titled CIT vs. Goel Sons Golden Estate
Pvt. Ltd., appeal of the Revenue was dismissed holding that the
Assessing Officer had failed to make necessary enquiry at the time of
the assessment proceedings. It was specifically observed that the
factual findings recorded by the Assessing Officer were incomplete
and sparse. In the present case, we find that the Assessing Officer
had conducted enquiries and made a reference to the surrounding
facts i.e. deposits/credit of the amounts in the bank account of the
share applicants; substantial amount of Rs.41,88,000/- paid as
premium and referred to the fact that only one Shri R.C. Verma, CA
and Power of Attorney holder of M/s Ritika Finance & Investment
Pvt. Ltd. had appeared alongwith Shri Dinesh Kumar, the AR of the
assessee company during the assessment proceedings and filed the
bank statement and copy of the balance sheet but, failed to file
schedule of investments made by the said company. Others had failed
to appear.
17. Learned counsel for the assessee during the course of hearing
had drawn our attention to the order of the CIT (Appeals), wherein he
had recorded that the assessing officer had neither conducted any
enquiries from the concerned parties nor did he examine the
assessment records of the share applicants and despite the request of
ITA 409/2012 Page 18 of 20
the assessee, he did not issue summons under Section 131. Our
attention was also drawn to the contentions recorded by the CIT
(Appeals) that the assessee in their reply dated 12th December, 2008
had made a specific request to the assessing officer to summon the
shareholders. This aspect has been dealt with in the case of N.R.
Portfolio (supra) as well as Nipun Builders and Developers (supra).
However, we refrain from stating or going into further details or
matrix, as we find that the tribunal has not adverted to the said fact in
affirmative or negative, in the impugned order dated 4th November,
2011. We find that the assessing officer in the assessment order has
not mentioned or recorded that the assessee had made any request for
summoning of the shareholders or their Directors or principal
officers. Whether any such request was made and if it was made
whether it amounts to lapse on the part of the Assessing Officer, why
and for what reasons the assessee was not able to produce principal
officer or Director of shareholder companies etc. are all aspects which
were required to be gone into by the Tribunal in detail. In the given
case, an order of remand/remand report or additional evidence may be
justified or proper. In these circumstances, we feel that it will be
appropriate and proper to pass an order of remit to the tribunal for
fresh decision wherein the entire issue will be dealt with afresh
ITA 409/2012 Page 19 of 20
without being influenced by the earlier order dated 4th November,
2011.
18. The tribunal will also take into account facts and circumstances
noted above but the observations made in this order will not be
treated as conclusive and final.
19. Accordingly, we have answered the question of law in favour
of the appellant Revenue and against the respondent assessee but with
order of remand to the tribunal for fresh decision. To cut delay,
parties will appear before the tribunal on 15 th January, 2014, when a
date of hearing will be fixed. The appeal is accordingly disposed of.
No Costs.
(SANJIV KHANNA)
JUDGE
(SANJEEV SACHDEVA)
JUDGE
December 10th, 2013
kkb
ITA 409/2012 Page 20 of 20
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