Acit, New Delhi vs M/S. Bnr Infotech Pvt. Ltd., New Delhi on 18 August, 2017

[Cites 16, Cited by 3]

Income Tax Appellate Tribunal - Delhi

Acit, New Delhi vs M/S. Bnr Infotech Pvt. Ltd., New Delhi on 18 August, 2017

1
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

IN THE INCOME TAX APPELLATE TRIBUNAL
[ DELHI BENCHES: "A" NEW DELHI ]

BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
AND SHRI L. P. SAHU, ACCOUNTANT MEMBER

I.T. Appeal No. 6171/Del/2013
Assessment Year : 2007-08.
Asstt. Commissioner M/s. BNR Infotech Pvt. Ltd.,
of Income Tax, Vs. 315, 3rd Floor, E - Block,
Central Circle : 13, International Trade Tower,
New Delhi. Nehru Place, New Delhi.
PAN : AADCB 0183 F
A N D
C. O. No. 256/Del/2015
[ in I.T. Appeal No. 6171/Del/2013 ]
Assessment Year : 2007-08.
M/s. BNR Infotech Pvt. Ltd., Asstt. Commissioner
211, Somdutt Chamber-II, Vs. of Income Tax,
Bhikaji Cama Place, Central Circle : 13,
N e w D e l h I - 110 066. New Delhi.
PAN : AADCB 0183 F
(Appellants) (Respondents)

Assessee by : Shri Ashwani Kumar, C. A.;
Department by : Shri S. K. Jain, Sr. D. R.;
Date of Hearing : 24.05.2017
Date of Pronouncement : 18.08.2017

O R D E R.
PER I. C. SUDHIR, J. M. :

This appeal and the cross objection against the first appellate

order for the assessment year 2007-08 were heard together and are
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

being disposed off, for the sake of convenience, by this common

order. Since in the cross objection the issue raised is legal in nature

going to the root of the matter, hence parties were directed to advance

their respective arguments on the issue raised in the cross objection.

C. O. No. 256/Del/2015 :

2. The assessee has taken the following ground of appeal in its

cross objection :-

" That the order dated 19.09.2013 passed under section 250 of the
Income Tax Act, 1961 by the ld. Commissioner of Income Tax
(Appeals)-I, New Delhi, is against law and facts on the file and bad
in law in as much as he was not justified to uphold the action of
the ld. Assessing Officer in resorting to the provisions of Section
148 of the Income Tax Act, 1961. "

3. Validity of initiation of reopening of assessment proceedings

under section 147 / 148 as well as validity of assessment framed

in furtherance thereto upheld by the ld. CIT (Appeals) has been

objected by the assessee.

4. In support of the above objection, the ld. AR has basically

reiterated submissions made in this regard before the ld. CIT (A). The

main thrust of his argument is that initiation of reopening proceedings
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

by the Assessing Officer was based on report filed by the Investigation

Wing of the Department, which was never confronted to the assessee

and there was no application of independent mind of the Assessing

Officer for forming his reasons to believe for initiation of reopening

proceedings.

5. The ld. AR submitted that a perusal of the assessment order and

history of the assessment proceedings would show that various

references have been made to the findings of various wings of the

Investigation Unit, a copy of which has not been provided to the

Appellant Company at any stage of the assessment proceedings even

after written requests. Consequentially, the basic principles of natural

justice which involve reasonable application of prescribed procedures

with a view to promote natural justice and prevent its miscarriage have

been derailed and sabotaged. As such a conclusion having a deep impact

on the Appellant and conflicting with his consistent stand has been

drawn without giving him at least a reasonable opportunity to examine

the said evidences and to cross examine the underlying witnesses and is

accordingly in violation of the principles of natural justice. As such the

entire exercise made in gross violation of the principles of natural justice
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

is void ab-initio and the corresponding conclusions drawn need to be

negated to prevent further miscarriage of justice. The North Wales Police

v. Evans [(1982) 1 WLR 1155] judicial review is concerned not with the

decision, but with the decision-making process. The assessment

proceeding is a part of judicial process. When a statutory process is

exercised by the assessing authority in exercise of its judicial functions

which is detrimental to the appellant, it is not and cannot be

administrative in nature. Principles of natural justice are based on two

principles: (i) nobody shall be condemned unheard (audi alteram

partem); (ii) nobody shall be judge of his own cause (nemo debet

esse judex in propria sua causa). Duty to assign reasons is, however,

judge-made law. The action of the Learned Assessing Officer in

resorting to provisions of section 148 which is also being challenged

in this appeal is bad in law as would be apparent from the submission

made hereinafter.

5.1 The above provisions make it clear that an Assessing Officer
if he has "reason to believe" that any income chargeable to tax has
escaped assessment for any assessment year, may, subject to the
provisions of sections 148 to 153, -

 assess or reassess
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

 such income; and
 also any other income chargeable to tax
 which has escaped assessment; and
 which comes to his notice subsequently in the course of the
proceedings under section 147, or
 re-compute

 the loss
 the depreciation allowance or
 any other allowance, as the case may be
 for the relevant assessment year.

(iii) Further the Explanation 2 to section 147(not reproduced
supra) clarifies that, for the purposes of section 147, the following
are also to be deemed to be cases where income chargeable to tax
has escaped assessment:-

 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.

 where a return of income has been furnished by the assessee
but no assessment has been done and it is noticed by the
Assessing Officer that the assessee -
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

has understand the income, or

 has claimed excessive loss, deduction, allowance or
relief in the return;

 where an assessment has been made, but

 income chargeable to tax has been under assessed; or

 income chargeable to tax has been assessed at too low
a rate; or

 income chargeable to tax has been made the subject of
excessive relief under the 1961 Act; or

 excessive loss or depreciation allowance or any other
allowance under the 1961 Act has been computed.

5.2 Thus Section 147 of the Income-tax Act, 1961 authorizes
and permits an Assessing Officer to assess or reassess income
chargeable to tax if he has reason to believe that the said income for
any assessment year has escaped assessment. The expression 'escaped
assessment' clearly connotes a very basic postulate that the income
for a particular assessment year went unnoticed by the Assessing
Officer and because of it not being noticed by him for any reason,
it escaped assessment. Accordingly there should be a complete and
direct conclusion as to income escaping assessment so as to resort to
the re-assessment provisions.
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

5.3 Section 148 to 151 set out the frame work, procedure and
the conditions governing the reassessment provisions incorporated a
section 147. The said sections successively deal with :-

(a) Form of notice and recording of reasons for issue (S. 148);

(b) Time limit for issue (S. 149);

(d) Sanction to be obtained for issue of notice (S. 151);

5.4 For resorting to reassessment the most noted requirement
is that the Assessing Officer should have reason to believe that
income chargeable for the relevant assessment year has escaped
assessment. The language of the section makes it clear that although
the powers of an Assessing Officer in initiating re-assessment
proceedings are very wide at the same time they are not plenary
in nature. These powers are vitally controlled by the words 'reason
to believe' employed by the section. The reasons for formation of belief
for reopening an assessment must have a rational connection or
relevant bearing on the formation of the belief. The existence or
otherwise of such a belief, on the part of the Assessing Officer, is
not a mere question of limitation but the very foundation of his
jurisdiction. These words import the presence of the following four
essential ingredients.
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

(i) some material or materials and not mere fancy, imagination,
speculation, suspicion;

(ii) a nexus between such material and the belief of escapement
of income from assessment;

(iii) an application of mind by the Assessing Officer to such
material; and

(iv) an inference based on reason drawn tentatively by the officer
that income has escaped assessment.

5.5 A review of the reasons recorded for resorting to reassessment
proceedings and consequent issue of notice u/s 148 would make it
clear that basis for the formation of an opinion is a statement recorded,
of an employee of Bhushan Steels Ltd., during the course of survey
u/s 133A at the Registered Office of the Company from which it was
sought to be concluded that the Assessee Company belonged to the
Bhushan Group of Companies and was allegedly a "Paper Company"
established for introducing money from unexplained sources. The fact
remains that the existence of the Company incorporated as a separate
legal entity following the rigorous and due process of law laid down in
the Companies Act, 1956 has not been denied. In fact, such a negation
of its corporate existence is neither suggestible nor inferable either
from the said statement or from the Office of the Registrar of Companies,
the statutory regulatory body, in this regard. The conclusion has
sought to be drawn on the basis of a statement of a person who had
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

no locus standi in the Assessee Company, and accordingly was not
authorized on its behalf. While again emphasizing the separate legal
existence of the Assessee Company, it needs also to be understood
that there is nothing in law to prohibit several companies having their
Registered Offices at the same address or for companies to share
common infrastructure and facilities so as to economize the costs.
In addition, the fact that the Directors of the Company being employees
of Bhushan Ltd, should also not lead to any adverse inference in as
much as such an arrangement is again a matter of administrative
and logistical convenience to ease operational matters. Such facts do
not merely themselves lead to any evidence or suggestion, what to talk
of conclusion, as to the Company being just a 'paper company'
established for introducing money from unexplained sources.

5.6 The above facts make it clear that the basis for formation of
the belief and recording of the reasons to escapement of income so as
to resort to reassessment proceedings is based on mere suspicion and
conjectural inferences not backed by any tangible evidence. The basis
for the issue of notice is an alleged statement of Shri B.S Bisht,
Assistant Secretarial Officer of M/s Bhushan Steel Ltd. While on a
deeper analysis the contents of the said statement by itself do not lead
to any damaging / adverse inference. Even otherwise, as discussed
supra, there is no tangible evidence of escapement of income to warrant
a revisit of the assessment and resorting to reassessment proceedings
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

and accordingly the basis of recording of "reason to believe" as to
escapement of income does not exist in the instant case.

6. The ld. AR contended that the reasons to believe recorded in the
present case are only suspicion and not belief. There is no tangible
material to substantiate the belief.

7. In support he placed reliance on the following
decisions :-

(i) M/s. Parashuram Pottery Works Co. Ltd. Vs. ITO (1977)

106 ITR 1 (SC);

(ii) Ganga Prasad Maheshwari & Others Vs. CIT (1983)

139 ITR 1043 (All.);

(iii) Sheo Nath Singh Vs. ACIT Central, Calcutta (1971)

82 ITR 147 (SC);

(iv) Ajit Jain Vs. Union of India & Others (2000)

242 ITR 302 (Del.);

(v) VXL India Vs. ACIT (1995)

215 ITR 295 (Guj.);

(vi) Surat City Gymkhana Vs. ACIT
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

76 ITD 327 (Ahd.);

(vii) Ram Bai Vs. CIT (1999)

236 ITR 696 (SC);

(viii) Bagsu Devi Bafna Vs. CIT (1966)
62 ITR 506 - 512 (Cal.);

(ix) Kishanchand Chellaram Vs. CIT, Bombay City-II (1980)
125 ITR 713 (SC);

(x) R.B. Shreeram Durga Prasad and Fatechand Nursing Das Vs.
Settlement Commission (IT and WT) and another (1989)
176 R 169 (SC);

(xi) Rajesh Kumar & Others Vs. DCIT & Others (2006)
287 R 91 (SC);

(xii) C. B. Gautam Vs. Union of India (1993)
199 R 530 (SC); & 1 SSC 78;

(xiii) Prakash Chand Nahta Vs. CIT (2008)
301 ITR 134 (MP).

8. The ld. Sr. DR, on the other hand, opposed the cross objection

with this submission that the assessee was given opportunity to raise

objection before the Assessing Officer against the initiation of reopening

proceedings. The assessee filed its objections and it was duly disposed
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

off by the Assessing Officer, hence there is no substance in the

contention of the ld. AR that assessee was not given opportunity to

cross examine on the basis of whose submissions reported by the

Investigation Wing of the Department reopening proceedings were

initiated.

9. Having gone through the orders of the authorities below in

view of the above submissions, we find that assessee was supplied

with the reasons recorded and opportunity to raise objections thereto

was given to him. It was availed as the assessee raised the objections

against the validity of initiation of reopening proceedings and the

Assessing Officer duly disposed off the said objections. The reason to

believe was based on search operation in Bhushan Steel Group and

survey at the assessee. We thus do not find substance in the contention

of the ld. AR that initiation of reopening proceedings against the

assessee was not valid. It is well established position of law that

for initiation of reopening proceedings formation of reasons to belief is

required to be based upon a prima facie view that taxable income has

escaped assessment. Sufficiency of such belief cannot be questioned

before the court of law. We thus do not find reason to interfere with

the first appellate order in this regard, as in our view, the ld. CIT
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

(Appeals) under the facts and circumstances of the case as discussed

above has rightly upheld the validity of initiation of reopening

proceedings and the assessment framed in furtherance thereto. The

first appellate order in this regard is thus upheld. The cross objection

is accordingly rejected.

I.T. Appeal No. 6171/Del/2013 :

10. The Revenue has questioned first appellate order on the

following grounds :-

" 1. The order of Ld. CIT (Appeals) is not correct in law and facts;

2. On the facts and circumstances of the case the ld. CIT
(Appeals) has erred in deleting the addition of Rs.5,50,00,000/-
made by Assessing Officer without appreciating the fact that the
identity and the creditworthiness of the investors were not
established as all the investors were showing a nominal income
and neither the investor company and nor the assessee
company had produced any proof to substantiate the
creditworthiness of the investors (for example balance sheet of
the investor company). "

11. The above ground is regarding the addition of Rs.5,50,00,000/-

made on account of unexplained share capital and share premium

received by the appellant company from various companies on the

ground that :-
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

(i) the creditworthiness of the investor companies was not
established as all the investors were showing a nominal income;

(ii) neither the investors companies nor the appellant company
had produced any proof to substantiate the creditworthiness of the
investors; &

(iii) the genuineness of the transactions was also in doubt.

The ld. CIT (Appeals) has, however, deleted the addition, now questioned

by the Revenue.

12. The relevant facts are that the appellant company had filed its

original return of income declaring a total income of Rs.573/- on

27.10.2007 vide receipt No.3945041271007. The return was processed

under section 143(1) of the Income Tax Act, 1961 at the returned

income. Subsequently, a search, seizure and survey operation under

section 132 and 133A respectively of the Income Tax Act, 1961 was

carried out in the Bhushan Group of cases on 3.03.2010. The appellant

company was also covered in the said survey operation and its

jurisdiction was subsequently transferred to the Office of the ACIT,

Central Circle - 13, New Delhi.
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

13. The case of the appellant company for the assessment year

2007-08 was reopened under section 147 of the Income Tax Act, 1961

and notice under section 148 was issued on 19.09.2011. In response

to the said notice the appellant company filed a reply dated

26.09.2011 stating that original return of income filed earlier by it on

27.10.2007 vide receipt No.3945041271007 may be treated as return

filed in response thereto.

14. The assessment was completed vide order dated 28.03.2013

at an income of Rs.5,50,00,573/- wherein the ld. Assessing Officer

has proceeded to add back a sum of Rs.5,50,00,000/- on account of

alleged unexplained share capital received by the appellant company

from various companies situated at Mumbai and Kolkata. The ld. CIT

(Appeals) has, however, deleted the addition being convinced with

the submissions of the assessee.

15. In support of the ground, the ld. Sr. DR has basically placed

reliance on the assessment order with this contention that assessee has

thoroughly failed to establish creditworthiness of the investor companies

as well as genuineness of the transaction. Some of the parties were not
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

found on the given address and some of them did not respond to the

notices issued by the Assessing Officer to them nor the assessee has

been able to produce them for verification before the Assessing Officer.

In absence of compliance of these requirements the Assessing Officer

was very much justified in making the addition of Rs.5,50,00,000/-

under section 68 of the Act on account of unexplained share capital

and share premium received by the assessee company from various

companies. Ignoring these material aspects the ld. CIT (Appeals) has

erred in deleting the addition.

16. The ld. AR, on the other hand, tried to justify the first appellate

order on the issue with following submissions :-

" (1) By way of brief introduction it is submitted that the appellant

company had raised money amounting to Rs.5,50,00,000/- through

share capital during the financial year 2006-07 from various parties

situated at Mumbai and Kolkata. The details of the parties from whom

share capital and share premium had been received, are as under :-

S Name of the Address Amount (Share
No. Investor Capital/ Premium)
Company (in Rs.)
1. BNR 111, Lotus Building, Bhushan Garden, 50,00,000/-
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

Consultancy P village-Nifan and Savroli, Taluka-
Ltd Khalapur, khopoli, Dist- Raigad,
Maharashtra-410202
2. Anikesh Trading 102, Atul Apartment, Vazir Naka L.T. 85,00,000/-
Co P Ltd Road, Borival( W), Mumbai-400091
3. Divya Infotech P 601, St Annes Apartment, 329, St. Annes 90,00,000/-
Ltd Road, Palimala Road, Bandra(W)-
Mumbai-400050
4. Ganpati Vincon 207, Maharashi Devendra Road, Kolkata- 90,00,000/-
P Ltd 700007
5. Key Impex (I) P 28, Lal Building, 1st Floor,36, Goa Street 70,00,000/-
Ltd Bellard Estate, Fort, Mumbai-400050
6. Devrat Engg 601, St. Annes Apartment, 329, St. 85,00,000/-
Private Ltd Annes Road, Palimala Road, Bandra
(W)-Mumbai-400050
7. Lalit Kunj Metal 30, Boroda Street, Cabin-9, Carnac 80,00,000/-
P Ltd Bunder, Mumbai-400009
Total 5,50,00,000/-

(2) The Assessing Officer in the course of assessment proceedings had
desired the Appellant Company to furnish the details of the amount
received and evidence in support of identity and creditworthiness of the
parties and also the genuineness of the transaction of all the parties from
whom the share capital and share premium had been received. In
response, the Appellant Company vide letter dated 13.08.2012 filed with
the Assessing Officer copies of bank accounts, confirmation and Income
Tax Return acknowledgements from all the parties to establish the
identity, genuineness and sources of transaction regarding share capital
and share premium. The entire amount had been received by the
Appellant Company through normal banking channels by account payee
cheques/demand drafts. Furthermore, the said confirmations also
clearly reveal the source of funds, particulars of the bank account
through which payment has been received and the Income-Tax
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

particulars which go on to establish the identity and creditworthiness of
the respective share applicants authoritatively and conclusively.

(3) On the basis of the documents/details submitted, the Learned
Assessing Officer, has summarized as follows :-

S.No. Name of the Share Holder Returned Income Assessment
Year
1 BNR Consultancy P Ltd Rs 1,013/- 2007-08

2. Anikesh Trading Co P Ltd Rs 5,56,065/- 2007-08

3. Divya Infotech P Ltd Rs 2,09,367/- 2007-08

4. Ganpati Vincon P Ltd Rs 30,680/- 2007-08

5. Key Impex (I) P Ltd Rs 1,35,530/- 2007-08

6. Devrat Engg Private Ltd No ITR submitted 2007-08

7. Lalit Kunj Metal P Ltd Rs 35,700/- 2007-08

(4) In order to further verify the genuineness of all the parties
commissions u/s 131 were sent by the Learned Assessing Officer to the
respective Investigation agencies in Mumbai and Kolkata. In response to
which reports were received from the office of Addl CIT, Range-10(2),
Mumbai and Assistant Director of Income Tax (Inv) Unit-III(3), Kolkata.
The Addl Commissioner of Income Tax, Range 10(2), Mumbai and
Assistant Director of Income Tax (Inv), Unit-III(3), Kolkata also deputed
Inspectors of Income Tax to serve the summons and conduct field
enquiries. The results of the said enquiries are as follows :-
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

Report from Mumbai

S No. Name of the Shareholder Report as received in response to
commission from Mumbai
1. BNR Consultancy P Ltd Submission received has been
attached herewith as Exhibit-A. Report
of Inspector Ms. Neha Worlikar
Attached (Annexure-I). The report of
Ms. Neha Worlikar is as under:-

" As per your direction I went to M/S
BMR Conultancy Pvt Ltd at 111, Lotus
Bldg. Bhushan garden, Village Nifan
and Savroli, Taluka khalapur, khopoli,
District Raigada, Maharashtra 410202
with the notice u/s 131 of the IT Act,
1961, wherein it was found that the
said premises is a Guest House of
Bhushan Steel Ltd. On further inquiry
with the CA vasant S. Kothari Dy.
General Manager Accounts of Bhushan
Steel Ltd it was learnt that they had no
idea of the whereabouts of the case so
he contacted one Mr. Pankaj Agarwal
Accountant of Bhushan Steel in his
New Delhi Office having mobile no
09873055520 he provided with the
details that Shri Rajendra Singh and Mr
Harsh Khanna are the employee of
Bhushan Steel who are the Directors of
M/S BNR Consultancy P LTd but he
also said that they are out of town and
he does not have their mobile nos. On
further inquiry with Shri Vasant Kothari
Dy. General Manager Accountant of
Bhushan Steel of Mumbai Branch but
from the instruction on phone from Mr.
Pankaj Agarwal he was ready to accept
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

the summons and all the necessary
required documents will be provided to
this office on the date of hearing.
Hence, the notice u/s 131 was served
to shri Vasant S Kothari Dy. General
Manager(Accountant) of Bhushan Steel
Mumbai Branch on 30.11.2011 "

2. Anikesh Trading Co P Ltd Notice served on 29.11.2011 at the
given address but no reply received till
date. Copy of notice served
enclosed(annexure-2)

3. Divya Infotech P Ltd Notice could not be served as
assessee not available at the address
given The premises are owned by Shri
Deepak Jhaveri as per report of
Inspector Shri Anshu Gotwal
enclosed(annexure-3)

4. Key Impex (I) P Ltd Notice could not be served as
assessee not available at the address
given. The premises are owned by Shri
Mahendra B. Makhwana the owner of
New India Marine works as per report
of Inspector Shri Anshu Gotwal
enclosed(annexure-4)

5. Devrat Engg Private Ltd Notice could not be served as
assessee not available at the address
given. The premises are owned by Shri
Deepak Jhaveri as per report of
Inspector Shri anshu gotwal
enclosed(annexure-3)

6. Lalit Kunj Metal P Ltd Notice could not be served as premises
found locked on various days of visit as
per report of inspector Shri Hemant
Kumar enclosed(annexure-5)
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

Report from Kolkata

S No. Name of the Shareholder Report as received in response to
commission from Kolkata
1. Ganpati Vincon Pvt Ltd The assessee submitted that the name
of the company is changed to Ganapati
Vincome Pvt Ltd. Assessee made a
submission on 21.12.2011 through dak
and submitted that the company has
applied for 90000 equity share of Rs
10/- of BNR Infotech Pvt Ltd in F. Y.
2006-07 each at a premium of Rs 90/-
each and allotted the same. The
assessee has not given the reason for
paying such a high premium. The
assessee has enclosed bank statement
showing payment was made cheque
no 010139 dated 22.03.2007 for Rs
30,00,000/- cheque no 010140 dated
22.03.2007 for Rs 30,00,000/- drawn
on UTI Bank. The assessee has not
enclosed the bank statement showing
the source of fund for share application
money. The company has shown total
income of Rs 30,678/- for A.Y.2007-08

(5) On the basis of the said exercise, the Learned Assessing Officer
has observed and concluded as follows :-

 The identity and the creditworthiness of the investors are not
established as all the investors are showing a nominal income.
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I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

Neither the investor company and nor the assessee company has
produced any proof to substantiate the credit worthiness of the
investors (for example balance sheet of the investor company)

 The genuineness of the transactions is also in doubt as the
investors have not enclosed the bank statement showing the
source of fund for share application money.

(6) The Learned Assessing Officer has accordingly held that the
creditworthiness of the investors and the genuineness of the transactions
is in doubt and has accordingly treated share capital and share premium
amounting to Rs. 5,50,00,000/- as unexplained and added this same to
the taxable income of the Appellant Company u/s 68 of the Income -tax
Act, 1961.

(7) The Assessing Officer in the course of assessment proceedings had
desired the Appellant Company to furnish the details of the amount
received and evidence in support of identity and creditworthiness of the
applicants and also the genuineness of the transaction of all the parties
situated at Mumbai and Kolkata from whom the share capital and share
premium had been received. In response, the Appellant Company filed
copies of confirmations, Income Tax Return acknowledgements and bank
accounts from all the parties establishing the identity, genuineness and
sources of transaction regarding share capital and share premium with
the Assessing Officer. The entire share application money had been
received by the Appellant Company through normal banking channels
23
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

by account payee cheques/demand drafts. Furthermore, the said
confirmations also clearly reveal the source of funds, particulars of
the bank account through which payment has been received and the
Income-Tax particulars which go on to establish the identity
and creditworthiness of the various parties authoritatively and
conclusively.

(8) As a result of the above documents being filed before the Learned
Assessing Officer in respect of all the parties in respect of which no cause
exists as to recourse to the provisions of Section 68 of the Income-tax
Act, 1961 in as much as the onus cast on the Appellant Company vis-à-
vis the genuineness of the transaction and credit worthiness of the
parties has been effectively and completely discharged. The action of the
Learned Assessing Officer is not only against the spirit but also letter of
the provisions relating to establishing the identity of cash creditors as
embodied in the Income -tax Act, 1961. Independent investigations from
parties over which an Appellant Company does not have any control
cannot be used to form any conclusion, adverse of otherwise in respect of
the Appellant Company. As such the said addition is neither warranted
nor justified or sustainable on the facts of the case.

(9) The above factual statements and arguments can be further
buttressed and reinforced by an analysis of the relevant legal provisions
and legal pronouncements on the issue. Before proceeding further with
the matter it would be worthwhile to reproduce the provisions of S.68 of
the Income tax Act, 1961 which reads as follows:-
24
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

S 68. 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 officer,
satisfactory, the sum so credited may be charged to income-tax as
the income of the assessee of that previous year.

(10) The above Section enjoins upon an Appellant Company, the duty
to adequately, satisfactorily and substantively explain the source of any
cash credit in his books of accounts and no further. To put it differently
an Appellant Company's burden of proof would stand discharged if he is
able to prove the nature and source of the cash credit received and thus
his onus of proof cannot extend to failure to prove the source of the
proof with a view to arrive at the ultimate source of funds. As long as
the nature, source and identity of the investor is established, no further
onus of proof can be enjoined on it. In the instant case no case can be
made out to doubt the genuineness, existence or identity of the investors
and as such no cause exists for the invocation of S. 68.

(11) An analysis of the provisions of Section 68 of the Income-tax Act,
1961 would make it clear that in order to discharge the onus, the
Assessee must prove the following:-

(i) identity of the creditor;
(ii) capacity of the creditor to advance money; and
(iii) genuineness of the transaction.
25
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

(12) The question of the manner in which the onus u/s 68 has to be
discharged is to be looked at with different perspectives and varying
parameters in each different circumstance and no standards/guidelines
can be lead out in this regard.

(13) In the instant case there is no material on record to prove or even
remotely suggest that the share application money received actually
emanated for the Appellant Company. In fact it may be reiterated that
the share application money was received from independent legally
incorporated companies through normal and regular banking channels
which fact stands duly corroborated and confirmed by the confirmations
bank statements and Income Tax Returns of the share applicants duly
placed on record. In fact, no evidence, direct or indirect, conclusive, or
even circumstantial, exists to doubt in any manner the identity and
credit worthiness of the parties and genuineness of the transactions
entered into.

(14) The ld. AR submitted that the appellant company has
discharged its onus by satisfactorily dealing with all the issues in respect
of which onus has been cast on it u/s 68 of the Income-tax Act, 1961 as
would be clear from the following discussion :-

(i) With respect to the identity of the creditors the names,
addresses and PANs of the Assessee has been duly furnished and
provided to the Ld Assessing Officer during the course of the
assessment proceedings and no error or short coming has either
been determined or pointed out therein since all the share
26
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

applicants are duly identified with duly allotted PANs which are
subsisting in the record of the Income Tax Department. Moreover
all the share applicants are companies duly incorporated after
following the procedure laid out in the Companies Act, 1956.
Thus, no doubt exists or even arises with respect to the identity of
the creditors.

(ii) With respect to the capacity/credit worthiness of the share
applicants to advance money and the genuineness of the
transactions it needs to be understood, reiterated and re-
emphasized that the entire transaction was consummated through
account payee cheques through regular banking channels which
fact has not been disputed or denied in any manner. As such
given the entire factual situation of the case no doubt arises and
remains as to the capacity and credit worthiness of the parties and
genuineness of the transactions.

(15) In this connection Your Honour's attention is also invited to the
decision of the Hon'ble Delhi High Court in the case of Commissioner of
Income-Tax vs. Steller Investments Limited [(1991) 192 ITR 287 (Delhi)]
wherein it has been clearly held that any increased capital is not
assessable in the hands of the company. The relevant observations of
the Learned Judges are as follows :-

" It is evident that even if it be assumed that the subscribers to
the increased share capital were not genuine, nevertheless, under
no circumstances, can the amount of share capital be regarded
27
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

as undisclosed income of the assessee. It may be that there
are some bogus shareholders in whose names shares had been
issued and the money may have been provided by some other
persons. If the assessment of the persons who are alleged to have
really advanced the money is sought to be reopened, that would
have made some sense but we fail to understand as to how this
amount of increased share capital can be assessed in the hands
of the company itself. "

(16) Subsequent to the above an appeal filed by the Department
against the judgement/observations of the Supreme Court was also
dismissed and the Hon'ble Supreme Court did not find any reason to
interfere with the order of the High Court in the case of CIT vs Steller
Investment Ltd [(2001) 251 ITR 263 (SC)]. As such the observations of
the Hon'ble Delhi High Court have obtained the approval of their
Lordship of the Supreme Court and accordingly attained judicial finality
and stamp of approval.

(17) The ld. AR also invited our attention to the following judgement
of the Delhi High Court in the case of Commissioner of Income Tax
v Lovely Exports Pvt Ltd [(2008) 299 ITR 268 (Delhi)] holding as
follows :-

" In the case of a company the following are the propositions of law
under section 68. 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
28
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

of the address or PAN identity of the creditor / subscriber are
furnished to the Department alongwith copies of the shareholders'
register, share application forms, share transfer register, etc, it
would constitute acceptable proof or acceptable explanation by the
assessee; (5) the Department would not be justified in drawing an
adverse inference only because the creditor/ subscriber fails or
neglects to respond to its notices; (6) the onus would not stand
discharged if the creditor / subscriber denies or repudiates the
transaction set up by the assessee nor should the Assessing Officer
take such repudiation at face value and construe it, without more,
against the assessee; 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.
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 subscribes. 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. A delicate balance must be maintained
while walking the tightrope of sections 68 and 69 of the Income -
Tax Act. The burden of proof can seldom be discharged to the hilt
by the assessee; if the Assessing Officer harbours doubts of the
legitimacy of any subscription, he is empowered, to carry out
thorough investigations. But if the Assessing Officer fails to
unearth any wrong or illegal dealings, he cannot adhere to his
suspicions and treat the subscribed capital as the undisclosed
income of the company ".

(18) The ld. AR also cited the decision of their Lordship of the
Hon'ble Supreme Court in the case of CIT vs Lovely Exports Pvt Ltd.
[(2008) 216 CTR 195 (SC)] wherein the special leave petition filed by the
Department against the order of the Delhi High Court has been
dismissed with the following remarks :-
29
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

" We find no merit in this Special Leave Petition for the simple
reason that if the share application money is received by the
Assessee Company from alleged bogus shareholders, whose
names are given to the AO, then the Department is free to
proceed to reopen their individual assessments in accordance
with law. Hence, we find no infirmity with the impugned
judgement ".

(19) The above decision of the Hon'ble Supreme Court follows the
earlier decision of the Hon'ble Supreme Court in the case of Steller
Investment Ltd, cited supra and further reinforces the arguments put
forward for and on behalf of the Appellant Company.

(20) In particular, with regard to the issue of establishing the
creditworthiness of the parties, Your Honour's attention is invited to the
following recent judgements wherein it has been conclusively held,
relying on the decisions in the case of M/s Lovely Exports Pvt Ltd. cited
above, that as long as the identity of the share applicant was proved, the
burden of proving the creditworthiness was not on the Assessee :-

 Commissioner of Income-tax, Udaipur v. Bhaval Synthetics [(2013)
35 Taxmann.com 83 (Rajasthan)];
 Shree Barkha Synthetics Ltd v. Assistant Commissioner of Income-
tax [(2006) 155 Taxman 289 (Raj)];
 Commissioner of Income-tax, Bhopal (M.P) v. Peoples General
Hospital Ltd [(2013) 35 taxmann.com 444(Madhya Pradesh);
30
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

 Commissioner of Income-tax, Meerut v. Kamna Medical Centre (P)
Ltd [(2013) 35 taxmann.com 470(Allahabad)];
 Commissioner of Income-tax, Faridabad v. GP International Ltd
[(2010) 186 Taxman 229 (Pun &Har)];
 CIT v Dwarkadhish Investment Pvt Ltd and Dwarkadhish Capital
Pvt Ltd [(2011) 330 ITR 298 (Delhi)];
 CIT v. Winstral Petrochemicals Pvt Ltd [(2011) 330 ITR 603 (Delhi)];
 Commissioner of Income Tax v. Gangour Investment Ltd [(2011)
335 ITR 359 (Delhi)];
 MOD Creations Pvt Ltd vs. Income Tax Officer [(2012) 354 ITR
282(Delhi)].

(21) It should be specifically noted in the instant case there was
no denial at any stage of the investigation or the assessment proceedings
by any of the subscribers to the share capital of their having invested
money by way of share application money in the Appellant Company.
Moreover there is no shred of evidence, direct, indirect or even
peripheral of the share application money having emanated from the
coffers of the Appellant Company. In fact, the investor companies,
in their replies filed before the Department (in response to summons
u/s 131 of the Act), have duly confirmed, the factum of their having
made the investment and have further buttressed the same with the
following documents :-

(a) Confirmations;
(b) Acknowledgement for filing of Income Tax Returns;
31
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

(22) In view of the above, no doubt remains as to the identity of the
investors, their credit worthiness and the genuineness of the
transactions and correspondingly no adverse inference is called for.

(23) In fact, in the instant case, reliance is placed on the decision of
the Delhi High Court in the case of CIT vs Kamdhenu Steel & Alloys
Limited and Others [(2012)206 Taxman 254(Delhi)] wherein the
following has been held :

" 38. Even in that instant case, it is projected by the Revenue
that the Directorate of Income Tax (Investigation) had purportedly
found such a racket of floating bogus companies with sole purpose
of landing entries. But, it is unfortunate that all this exercise is
going in vain as few more steps which should have been taken by
the Revenue in order to find out causal connection between the
cash deposited in the bank accounts of the applicant banks and
the assessee were not taken. It is necessary to link the assessee
with the source when that link is missing, it is difficult to fasten the
assessee with such a liability.

39. We may repeat what is often said, that a delicate balance has
to be maintained while walking on the tight rope of sections 68 and
69 of the Act. On the one hand, no doubt, such kind of dubious
practices are rampant, on the other hand, merely because there is
an acknowledgement of such practices would not mean that in any
of such cases coming before the Court, the Court has to presume
that the assessee in questions as indulged in that practice. To
32
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

make the assessee responsible, there has to be proper evidence. It
is equally important that an innocent person cannot be fastened
with liability without cogent evidence. One has to see the matter
from the point of view of such companies (like the assessee herein)
who invite the share application money from different sources or
even public at large. It would be asking for a moon if such
companies are asked to find out from each and every share
applicant/subscribers to first satisfy the assessee companies about
the source of their funds before investing. It is for this reason the
balance is struck by catena of judgements in laying down that the
Department is not remediless and is free to proceed to reopen the
individual assessment of such alleged bogus shareholders in
accordance with the law. That was precisely the observation of the
Supreme Court in Lovely Export (supra) which holds the fields and
is binding.

40. In conclusion, we are of the opinion that once adequate
evidence/material is given, as stated by us above, which would
prima facie discharge the burden of the assessee in proving the
identity of shareholders, genuineness of the transaction and
creditworthiness of the shareholders, thereafter in case such
evidence is to be discarded or it is proved that it has 'created"
evidence, the Revenue is supposed to make thorough probe of
the nature indicated above before it could nail the assessee and
fasten the assessee with such a liability under Sections 68 and
69 of the Act.

(24) It would also be pertinent, and relevant to mention here that
the Special Leave Petition field before the Hon'ble Supreme Court by the
33
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

Revenue against the above decision of the Hon'ble Delhi High Court has
been subsequently dismissed by Their Lordship of the Supreme Courts
and as such the decision of the Delhi High Court in the case of CIT vs
Kamdhenu Steel & Alloys Limited and Others (supra) has attained
conclusive judicial finality.

(25) To conclude it may be said that on the basis of the facts
discussed supra and the ratio of the above judgements makes it clear
that if the share applicants are identified and it is established that they
have deposited money in the Company, no recourse can be made to the
provisions of S 68. The Appellant Company had provided all the
requisite particulars to establish the identity of the share applicants in
the confirmations, ITRs and bank statements already filed before the
Assessing Officer. The various arguments advanced by the Learned
Assessing Officer are frivolous and irrelevant and the onus enjoined upon
the Appellant Company by the provisions of section 68 stands not only
adequately but also completed satisfied.

(26) Accordingly since it is clear that if the shareholders /
share applicants are identified and it is established that they have
invested money in the purchase of shares, no recourse can be made
to the provisions of S 68. In the instant case the Appellant Company
had provided all the requisite particulars to establish the identity
of the share applicants in the confirmations already filed before the
Assessing Officer. In support he referred page Nos. 43 to 64 of the
paper book i.e. copies of confirmation of share applicants giving
therein the name, complete address and PAN along with bank statements
34
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

from where cheques were received and copy of ITR for assessment
year 2007-08.

The ld. AR also placed reliance on the following
decisions :-

(i) CIT Vs. Gangeshwari Metal Pvt. Ltd.

ITA. No. 597/2012 [judgement dated

21.01.2013 (Delhi High Court);

(ii) Pr. CIT Vs. N. C. Cables Ltd. (2017)

391 ITR 11 (Del.);

(iii) Pr. CIT Vs. Softline Creations P. Ltd. (2016)

387 ITR 636 (Del.);

(iv) CIT Vs. Real Time Marketing P. Ltd. (2008)

306 ITR 35 (Del.);

(v) CIT Vs. Value Capital Sergvices P. Ltd. (2008)

307 ITR 334 (Del.);

(vi) CIT Vs. Orbital Communication (P) Ltd. (2010)

327 ITR 560 (Del.);

(vii) CIT Vs. Winstral Petrochemicals P. Ltd. (2011)

330 ITR 603 (Del.);

(viii) CIT Vs. Kamdhenu Steel and Alloys Ltd. (2014)

361 ITR 220 (Del.).
35
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

17. Having gone through the above cited decisions, we find that

the ratio laid down therein is that the primary onus lies upon the

assessee to establish identity and creditworthiness of the creditors /

investors as well as genuineness of the transaction and after discharging

of the same, onus shifts upon the Revenue to prove the documents filed

by the assessee while discharging its primary onus, as false to attract

addition under section 68 of the Act. In its recent decision dated

11.01.2017 in the case of Pr. CIT Vs. N. C. Cables Ltd. (supra) the

Hon'ble jurisdictional High Court of Delhi has been pleased to hold

that no addition can be made under section 68 of the I. T. Act where

assessee in the case of share application money had furnished

documents to evidence genuineness of transactions and identity and

creditworthiness of parties, but there was failure on the part of the

Assessing Officer to conduct adequate and proper enquiry into

materials while invoking section 68 of the Act. Again in the case

of Pr. CIT Vs. Softline Creations P. Ltd. (supra), the assessee in

support of receipt of share application money had furnished PANs, bank

details of share applicants and affidavits of Directors of those share

applicant companies. The Hon'ble High Court of Delhi has been pleased

to hold that share application money cannot be considered as
36
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

unexplained cash credits in the hands of the assessee. In the case of CIT

Vs. Value Capital Services P. Ltd. (supra) the Hon'ble jurisdictional High

Court of Delhi while dismissing the appeal of the Revenue has been

pleased to hold that the additional burden was on the Department to

show that even if the share applicants did not have the means to make

the investment, investment made by them actually emanated from the

coffers of the assessee so as to enable it to be treated as the undisclosed

income of the assessee. In the case of CIT Vs. Orbital Communication P.

Ltd. (supra) the Hon'ble jurisdictional High Court of Delhi in the case of

the claimed share application money has been pleased to hold that where

substantial evidence has been produced by the assessee to prove

creditworthiness of the creditors and genuineness of share applications,

failure to produce creditor is not material. In the case of CIT Vs.

Winstral Petro Chemical P. Ltd. (supra) in the case of cash credits /

share application money, the Hon'ble jurisdictional High Court of Delhi

on the issue of burden of proof, has been pleased to hold that initial

burden is on assessee to prove identity of creditors, the burden then

shifts to Revenue to prove that credits were not genuine. In that case

while dismissing the appeal of the Revenue, the Hon'ble High Court was

pleased to hold that it had not been disputed that the share application
37
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

money was received by the assessee company by way of account payee

cheques through normal banking channels. Admittedly, copies of

application for allotment of shares were also provided to the Assessing

Officer. Since the applicant companies were duly incorporated, were

issued PAN Cards and had bank accounts from which money was

transferred to the assessee by way of account payee cheques, they could

not be said to be non-existent, even if they, after submitting the share

applications, had changed their addresses or had stop functioning, held

the Hon'ble High Court.

18. When we examine the facts of the present case in view of the

above cited ratio laid down by the Hon'ble jurisdictional High Court

of Delhi, we find that facts are almost similar. In the present case there

were 7 investor companies claimed to have invested Rs.5,50,00,000/-

in total in the assessee company. In support of their identity and

creditworthiness as well as genuineness of the transactions, as discussed

above, the assessee had filed before the Assessing Officer, their (investor

companies) confirmations, Income Tax return acknowledgements, bank

accounts with this submission that entire amount had been received by

the assessee company through normal banking channels by account
38
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

payee cheques / demand drafts. The confirmations filed revealed the

source of funds, particulars of the bank account through which

payments were received and the Income Tax particulars establishing the

identity and creditworthiness of the respective share applicants. We

thus find that the assessee had discharged its primary onus to establish

identity and creditworthiness of the investor companies as well as

genuineness of the transactions, as per the ratio laid down in the above

cited decisions of the Hon'ble High Court. The Assessing Officer, on the

other hand, had doubted the genuineness of the claimed receipt on the

basis that some of the investor companies could not be found at the

given address and that some of the investor companies responded to the

summons by post, but had not caused appearance before him. The

Assessing Officer also held that income of many of the investor

companies was too low or meager to enable them to make such large

investments in the share capital of the assessee company. The Assessing

Officer also observed that there appeared no justification for large

components of share premium paid to the assessee along with the share

capital. The Assessing Officer also remained suspicious about the

claimed investor companies on the basis of reasons recorded for

initiation of reopening of assessment proceedings based on the report
39
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

relating to survey conducted at the premises of the assessee that the

business premises of the assessee actually belong to Bhushan Steel Ltd.

and several other companies were having their Registered offices in the

same premises. The submission of the assessee in this regard remained

that there is no law that more than one company cannot have its

Registered office at one address and that there is no law that companies

cannot change their Registered offices. It was submitted that business

raise capital and such capital is rotated in economy for increasing

production and trade and for making more efficient use of capital.

Companies change and, sometimes in quick succession. This is the

normal formation of capital in any open economy and the process of

capital formation cannot be taken to be representing only unaccounted

funds or impeded. It was submitted that all the companies having

Registered office at the premises undisputedly belonged to Bhushan

Group. The sources of capital introduced in these companies were

established during the respective assessment proceedings. It was further

contended that no evidence was found during search to indicate

introduction of cash in the form of share capital. It is also pertinent to

mention over here that out of total 7 investor companies, notices could

not be served in case of 3 companies as they were not available on the
40
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

given addresses and in case of 1 company notice could not be served as

the premises was found locked on various days. The remaining 3

companies had responded and had filed their submissions. However,

there is no dispute that in case of all the 7 investor companies, the

assessee had filed primary documents and had accordingly discharged

its initial onus to establish identity and creditworthiness of the investor

companies and genuineness of the transaction as there is no dispute

that all the transactions have been done through banking channels i.e.

through account payee cheques and demand drafts. We thus find that

the Assessing Officer has failed to discharge its onus to prove that the

documents filed by the assessee, as discussed above, were false or

fabricated as the Assessing Officer has not made any efforts to verify

those documents especially when there is no dispute that all the investor

companies were filing their returns of income and were being assessed by

the Department. The Assessing Officer on the contrary remained

suspicious on the claimed receipt from the investor companies on some

other factors like some of them were not found on their given addresses,

some of them had furnished their submissions through posts and some

of them were not having sufficient income etc. as discussed above.

Under these circumstances, we are of the view that the ld. CIT (Appeals)
41
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

was justified in deleting the addition of Rs.5,50,00,000./- made under

section 68 of the Act on account of unexplained share capital and share

premium. Since the first appellate order is based upon the ratio laid

down in the above cited decisions of the Hon'ble jurisdictional High Court

of Delhi, we do not find reason to interfere therewith. The same is

upheld. The ground is accordingly rejected.

19. In result, appeal is dismissed.

20. Consequently, cross objection preferred by the assessee and the

appeal filed by the Revenue, are dismissed.

21. The order is pronounced in the Open Court on: 18th August, 2017.

Sd/- Sd/-
( L. P. SAHU ) ( I. C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : the 18th August, 2017.

*MEHTA*

Copy of the Order forwarded to :-

1. Appellants;

2. Respondents;
42
I.T. Appeal No. 6171/Del/2013
AND C. O. No. 256/Del/2015
Assessment Year : 2007-08.

3. CIT;

4. CIT (Appeals);

5. DR, ITAT, ND.
BY ORDER

ASSISTANT REGISTRAR Date Draft dictated on 18.08.2017 Draft placed before author 18.08.2017 Draft proposed & placed before the second member Draft discussed/approved by Second Member.

Approved Draft comes to the Sr.PS/PS Kept for pronouncement on File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk.

Date of dispatch of Order.

I.T. Appeal No. 6171/Del/2013 AND C. O. No. 256/Del/2015 Assessment Year : 2007-08.

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Income Tax Appellate Tribunal - Delhi

Acit, New Delhi vs M/S. Bnr Infotech Pvt. Ltd., New Delhi on 18 August, 2017