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 All India Federation of Tax Practitioners vs. ITO (ITAT Mumbai)
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January, 02nd 2014

+                          ITA 409/2012

                                    Reserved on: 2nd December,2013
%                              Date of Decision: 10th December,2013

                   Through  Mr. Sanjeev Sabharwal,
                            Sr. Standing Counsel


                                          ..... Respondent
                  Through     Mr. Salil Kapoor with
                  Mr. Sanat Kapoor, Mr. Vikas Jain and
                  Ms. Sugandha Anand, Advs.


       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

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
                   "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

               ..........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

               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

               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
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] 30 328 (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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