Commissionerof Income Taxpetitionerthroughmr. Sanjeev Sabharwal,Advocate v. Odeon Builderspvt. Ltd. Ltd

f * IN THE HIGH COURT OF DELHI AT NEW DELHI%Judgment reserved on :22"''August, 2013Judgment pronounced on: 29**^ November,2013 +ITANos.247/2012COMMISSIONEROF INCOME TAXPetitionerThroughMr. Sanjeev Sabharwal,AdvocateCOMMISSIONEROF INCOME TAXPetitionerThroughMr. Sanjeev Sabharwal,Advocate VersusODEON BUILDERS PVT. LTD...... RespondentThroughMr.Ved Jain, AdvocateCORAM:HON'BLE MR. JUSTICE SANJIV KHANNAHON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJEEV SACHDEVA. J. For orders see ITA No.246/2012. SANJEEV SACHDEVA, J. KSANJIV KHANNA,J: 29*" NOVEMBER,2013SV ITA247/2012 Page1of1 Vi' * IN THE HIGH COURT OF DELHI AT NEW DELHI o/oreservedon :Judgment 22""^ August,2013 Judgment pronouncedon: 29 November,2013 +ITANos.246/2012 COMMISSIONEROF INCOME TAXPetitionerThroughMr. Sanjeev Sabharwal,Advocate Versus ODEON BUILDERSPVT. LTD. LTD. PVT. LTD. LTD.RespondentThroughMr.Ved Jain, Advocate + ITANos.247/2012 COMMISSIONEROF INCOMETAXPetitioner ThroughMr. Sanjeev Sabharwal,Advocate Versus ODEON BUILDERSPVT. LTD- RespondentThroughMr.Ved Jain, Advocate STA Nos. 248/212 + COMMISSIONEROF INCOME TAX Petitioner ThroughMr. Sanjeev Sabharwal,Advocate Versus ODEON BUILDERSPVT. LTDThrough Respondent Mr.Ved Jain, Advocate ITA 246 /2012, ITA 247 /2012&I.T.A248/2012 CQRAM: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE SANJEEV SACHDEVA SAMJEEV SACHDEVA, J.. 1.The revenue has filed these appeals against thecommon order dated 30.9.2011 passed by the IncomeTax AppellateTribunal (for short. 'ITAT') whereby theITAT dismissed the appealsfiled by the revenueagainstthe orders of the Commissionerof IncomeTax(Appeals) (for short, CIT (Appeals))for the relevantassessment as mentioned below. The ITAT yearsconfirmedthe orders passed by the CIT (Appeals)andupheld the deletion made in the hands of theAssessee.forthe three assessment On accountyears.of the order passed by the ITAT with regard to thedeletion, the cross objections by the Assessee toSection148(3)were dismissedas not pressed. ITA246 /2012, ITA 247 /2012&I.T.A248/2012 ^ 2.Though the Assessmentyears and the AssessmentOrders for the three appeals are different, the ordersof the CIT (Appeals) for all the three Assessmentyears are identical and the ITAT vide a commonJudgment has disposed of the Appeals. Threeseparateappealshave been preferredby the Revenueagainstthe common impugnedJudgmentof the ITAT.Since the legal issue arising in all the three appealsare identical,we are disposingof all the three appealsby a common orders but we will be referring to thefactual matrix of each appeal separately. 3.The following question of law was framed vide orderdated 10.12.2012 inall the three appeals forconsiderationby this Court.dated 10.12.2012 inall the three appeals forconsiderationby this Court. "Did the Tribunalfall into error inthat holding holdingthe addition made under Section 68 was notjustifiedin the facts and circumstancesof thecases?"justifiedin the facts and circumstancesof thecases?" ITA 246 /2012, ITA 247 /2012&I.T.A248/2012 4. STA 246 of 2012 The present appeal is for assessmentyear 2003-04.thereturnofIncomedeclaringanincomeofRs.93,79,390/-was filed on 15.10.2003.The samewas assessedunderSection143(3)of theAct on28.02.2006. 5. Information was received from the Investigation WingoftheIncomeTaxDepartmentregardingentryoperators and their beneficiaries. . Asper theinformationreceivedtheAssesseehadreceivedaccommodationentry of Rs.60,00,000/-pertaining tothe assessment year 2003-04 as mentioned below; ITA246/2012,ITA 247/2012&I.T.A248/2012 ITA246/2012,ITA 247/2012&I.T.A248/2012 6.On the basis of the information,notice under Section148 of the Act was issued on 21.11.2006 for theassessment in Notice was served on year question.the Assessee on 23.11.2006. The Assessee videletter dated 19.12.2006stated that the original return of income may be treated as return filed in complianceto notice under Section 148 of the Act. 7. 5. Information was received from the Investigation WingoftheIncomeTaxDepartmentregardingentryoperators and their beneficiaries. . Asper theinformationreceivedtheAssesseehadreceivedaccommodationentry of Rs.60,00,000/-pertaining tothe assessment year 2003-04 as mentioned below; ITA246/2012,ITA 247/2012&I.T.A248/2012 ITA246/2012,ITA 247/2012&I.T.A248/2012 6.On the basis of the information,notice under Section148 of the Act was issued on 21.11.2006 for theassessment in Notice was served on year question.the Assessee on 23.11.2006. The Assessee videletter dated 19.12.2006stated that the original return of income may be treated as return filed in complianceto notice under Section 148 of the Act. 7. Notices under Section 142(1) and 133(6) were issuedon 21.6.2007 to the Assesseeto show cause as towhy accommodation entries of Rs.60 lacs andcommission at 2% be not added to the. income of theAssessee. 8.The assessing officer noticed that in the return ofincomefor the year 2003-04there was increase in theshare capital of Rs.41,90,000/-and there was sharepremium of Rs.35,15,000/-. The Assesseewas askedto give details of the increase in share capital duringthe relevant year. 9.The Assessee vide its letter dated 10.12.2007provideddetails of increasein share capitalfor Rs.30lacs and stated that the share introducedwas capitalRs.30 lacs and not Rs.60 lacs as mentioned in thenotice under Section133(6)of the Act. The Assessee ITA246 /2012, ITA 247 /2012&I.T.A248/2012 submitteda copy of the bank statementto show thedepositof chequesreceived from the saidparties.The Assesseealso filed the shareapplicationforms,copy of acknowledgementof IT return, copy of bankstatementand copy of return to ROC in respect of thewho hadinvestedin sharepersonscapital. TheAssesseefiled the party-wisedetails of the companiesout of which two companies were operatedby MaheshGarg, the Entry Provider. The party-wise details of thesaid companiesare as under; 7.TranspanFinancialP. Ltd.3,00,000/-TOTAL30,00,000/- 10.The detailsof the investmentby the two companiesoperatedby Mr. IViaheshGarg,entry operatorare asunder; 11.Theassessingofficerinvokedtheprovisionsof^Section131 of the Act and the bank statementsof M/sTranspanFinancialServices,M/s Shree GupteshwarMarketingP. Ltd., were sought from the banks.TheAssesseewasalsodirectedtoproducethepartieswho had introducedthe sharecapitalduringrelevantprevious year. 12. The assessingofficer vide his order dated 19.12.2007heldthatmerefurnishingof thePANNumberorassessmentparticulars,copy of share applicationwasnot enough as the said documentsdid not facilitateincross-verificationand could be treatedat best as onlyperipheral documentsand the mere acknowledgementof returnwas not sufficientto prove the identityof aperson or his correct and true address.The assessingofficer held that none of the parties who had investedin the share capital were producedin cross-verificationofdocumentssubmittedbytheAssessee.Theassessingofficer further held that the Assessee was aprivatelimited companyandtherewascloseandproximaterelationshipbetweenthepromoters/directorsandshareholdersandthatthecloselyheld companiesaccept subscriptionsof sharecapital or deposits only from the friends or relatives ofthe promoters/directorsand such companieswere notallowedto acceptthesubscriptionor depositfrom general public.The assessingofficer held that in suchcircumstancesthere should have been no difficultyonthe part of the Assesseeto producea representativefromthe companieswhohad investedin the sharecapital. general public.The assessingofficer held that in suchcircumstancesthere should have been no difficultyonthe part of the Assesseeto producea representativefromthe companieswhohad investedin the sharecapital. 13.The assessingofficer also held that mere payment byanaccountpayeechequewasnot sacrosanctnorcouldit make a non-genuinetransactionas genuine.Theassessingofficeronperusalofthebankstatementobtainedin case of three partiesmentionedabovefoundthattherewasauniformpatternoftransactioni.e.issuanceof chequewas immediatelyprecededby depositof an equivalentamountin theaccounteither in the form of cash or throughcheque/transferentryand at the endof the day the creditbalanceintheaccountmostlyremainedbelowRs.10,000/-.The assessingofficerheld that unlessthe identity and creditworthinessof the entity and thetransactionrepresentedby theentriesin thebank wereco-relatedwiththebusinessactivityandthebooksof accountof the saidentity,thepatternandfrequencyof depositsand withdrawalat short intervalslentcredenceto thefactthattheamounthadbeenused only for the purpose of providingaccommodationentries. 14.The assessingofficer, thus, made an additionof Rs.40lacs to the incomeof the Assesseeunder Section68of the Act and as a sequiturtheretomade an additionof Rs.80,000/-as commissionat 2% on Rs.40,00,000/-paid to the entry operators. 15. On an appealby the Assessee,the CIT(Appeals)videorder dated 9.6.2009deleted the additionmade by theassessingofficerof Rs.40,00,000/-under Section68of the Act and the consequentadditionof Rs.80,000/-@ 2% commissionpaid to the entry providers. ITA 246 /2012, ITA 247 /2012 & I.T.A 248/2012 16.The presentappealis for the assessmentyear 2004-05.TheAssesseefiledthereturnofincomeon28.10.2004declaringanincomeofRs.72,11,780/-.Informationwas receivedfrom the InvestigationWingoftheIncomeTaxDepartmentregardingentryoperatorsandthebeneficiaries.Thereturnwasprocessedunder Section 143(1), however, as the casewasselectedforscrutiny,noticedated25.5.2006underSection143(2)/142(1)wasservedandsubsequentlyduringthescrutinyproceedingsittranspiredthattheAssesseehadreceivedshareapplicationmoney from 65 partiesduring the relevantprevious year out of which Rs.9,58,53,500/-was lyingin share applicationmoney account of 30 parties at theend of the previousyear,i.e., on 31.3.2004.Balance35partieshadbeenallottedshareandtheshareapplicationamountreceivedfromthemwastransferredto share capital at Rs.9,30,500/-and share ITA 246 /2012, ITA 247 /2012 & I.T.A 248/2012 premium account at Rs.1,76,79,500/- as mentioned below: ITA 246 /2012, ITA 247 /2012& I.T.A 248/2012 17.The assessingofficerdirectedthe Assesseeto fileconfirmationoftheshareapplicationmoney/sharecapital/sharepremium received by the Assesseeandto justify the creditsin the accountof the Assesseeand to file the confirmationfrom the respectiveparties.TheAssesseevideordersheetentriesdated30.11.2006was directedto file the followingevidences: 1.identify of the person. 2.Genuinenessof the transaction. 3.Sourceofcreditworthinessofthe investment. ITA 246 /2012, ITA 247 /2012 & I.T.A 248/2012 4.Latestconfirmationofthepartynotmorethan30 daysoldwithcompleteaddress.PAN/WardCircle."morethan30 daysoldwithcompleteaddress.PAN/WardCircle." 18.The assessingofficer vide his order dated 26.12.2006has recorded that the Assessee was specificallyaskedthese detailswith respectto partiesmentionedin theabovelistfromserialNo.19 to 35.AftervariousadjournmentstheARoftheAssesseefiledconfirmationsofthepartieswithcopyofbankaccountsand acknowledgmentof return of income forthe parties mention in the above list from serial No. 1to 15 for the share applicationmoney on 13.12.2006.However, the Assesseedid not file any confirmationorany of the evidences for the 20 parties mentioned at SINo. 16 to 35 in the above table from which Assesseehadreceiveda totalsumof Rs.1Crore(Rs.5lacseach).Assessee was again directed to file the abovementioneddetails,confirmationvide order sheet entrydated13.12.2006for the 20 partiesmentionedfrom ITA 246 /2012, ITA 247 /2012&I.T.A248/2012 Page17 of43 ITA 246 /2012, ITA 247 /2012&I.T.A248/2012 Page17 of43 serial.No. 16 to 35. The Assesseewas also directedtoproducethese20partiestoconfirmentries.However,theAssesseefiledundatedgeneralcertificatesas confirmationqua said parties just beforetime barring date of the assessment. 19.The Assesseewas asked to show cause why in somecasesconfirmationwasnotfurnished,establishgenuinenessof transactions,produce the partiesandwhy the above sums creditedin the books of accountofAssesseeonaccountofshareapplicationmoney/sharecapital/sharepremiumamountingto Rs.1 Croreduringthe year under consideration,shouldnot be treatedas Assessee'sundisclosedincomeu/s68 of theI.T.Act.The Assesseewasalsoaskedtofurnishthe detailsof thepartieswhowouldnot beappearingso that summonsu/s 131 of the Act couldbe issued to enforce their attendance. ITA246 /2012, ITA 247 /2012&I.T.A248/2012 20.The assessingofficer in his order has noticed that the20 companies mentioned at serial No. 16 to 35 of thelist extractedabove from whom the Assesseereceivedshare application money were companies operated byMaheshGargwhowasinvolvedinprovidingaccommodationentries. 21.Theassessingofficer hasalsonoticedthattheconfirmations filed by the Assessee were undated andhad been takenat the time of taking the entriesforshareapplication/sharecapital/sharepremiumcheques.The assessing officernoticed that out of the35 persons from whom the Assessee had receivedshareapplication money, the Assesseecould file confirmations for theproperonly qua 15 parties andremaining 20partieswhich werethecompaniesoperated by the said Mahesh Garg, the confirmationsfiled were undated. 22.The assessingofficerheld that the Assesseehad notdischargeditsonusandcouldnotprovethegenuinenessofthetransactionsaswellasthecreditworthinessor propersourcesofreceivingtheshareapplicationmoney/sharecapital/sharepremiumof Rs.1crorefrom these20 parties.The assessingofficertreatedthesaidmoneyas themoneyof theAssesseeroutedthroughthecompaniesrunbyMaheshGarg who, as per the assessingofficer,wasan entry provider.The assessingofficer,thus, addedthe sum of Rs.1 crorealongwithcommissionbeingchargedby the entry provider@ 1% to the incomeofthe Assessee.dischargeditsonusandcouldnotprovethegenuinenessofthetransactionsaswellasthecreditworthinessor propersourcesofreceivingtheshareapplicationmoney/sharecapital/sharepremiumof Rs.1crorefrom these20 parties.The assessingofficertreatedthesaidmoneyas themoneyof theAssesseeroutedthroughthecompaniesrunbyMaheshGarg who, as per the assessingofficer,wasan entry provider.The assessingofficer,thus, addedthe sum of Rs.1 crorealongwithcommissionbeingchargedby the entry provider@ 1% to the incomeofthe Assessee. 23.TheAssesseefiledanappealbeforetheCommissionerofIncomeTax(Appeals).TheCommissionerofIncomeTax(Appeals)videorderdated 9.6.2009deletedthe additionof Rs.lcroremadeunder Section68 of the Act and consequentadditionof commissionat 1%.CommissionerofIncomeTax(Appeals).TheCommissionerofIncomeTax(Appeals)videorderdated 9.6.2009deletedthe additionof Rs.lcroremadeunder Section68 of the Act and consequentadditionof commissionat 1%. ITA 246 /2012, ITA 247 /2012 & I.T.A 248/2012 ITA 248 of 2012 24. The present appeal is for the assessmentyear 2002-03.Thereturnof incomedeclaringanincomeofRs.68,43,440/-was filed on 30.10.2002.The samewas processedunder Section143(1) of the Act. on22.02.2003.InformationwasreceivedfromtheInvestigation Wing of theIncome Tax Departmentregarding entry operators and the beneficiaries.Asper the information received the Assesseecompanyhad receivedaccommodationentry of Rs.74,00,000/-pertaining totheassessmentyear2002-03 asmentionedbelow: 25.Onthebasisof theinformationreceivedfromtheInvestigationWing, noticeunder Section148 of theAct was issued on 21.11.2006for the assessmentyearin question.Notice was servedon the Assesseeon23.11.2006.TheAssesseevideletterdatedInvestigationWing, noticeunder Section148 of theAct was issued on 21.11.2006for the assessmentyearin question.Notice was servedon the Assesseeon23.11.2006.TheAssesseevideletterdated 25.Onthebasisof theinformationreceivedfromtheInvestigationWing, noticeunder Section148 of theAct was issued on 21.11.2006for the assessmentyearin question.Notice was servedon the Assesseeon23.11.2006.TheAssesseevideletterdatedInvestigationWing, noticeunder Section148 of theAct was issued on 21.11.2006for the assessmentyearin question.Notice was servedon the Assesseeon23.11.2006.TheAssesseevideletterdated 19.12.2006statedthat theoriginalreturnof incomemay be treatedas returnfiledin complianceof noticeunder Section148 of the Act. 26.Noticesunder Section142(1) and 133(6) were issuedon 21.6.2007to the Assesseeto showcauseas towhyaccommodationentriesofRs.74lacsandcommissionat 2% be not addedto the incomeof theAssessee. 27.Theassessingofficernoticedthatin thereturnofincome for the year 2002-03 there was increasein thesharecapitalofRs.37lacsandtherewassharepremium of Rs. 35,15,000/-.The Assessee was askedto give detailsof the increasein sharecapitalduringthe relevant year. 28.TheAssesseevideitsletterdated14.12.2007provideddetailsof increasein share capitalof Rs.37lacs and statedthat the share capitalintroducedwasRs.37lacsandnotRs.74lacsasmentionedin the notice under Section 133(6) of the Act.The Assesseesubmittedacopyof thebankstatementtoshowdepositof chequesreceivedfrom the saidparties.The Assesseealso filedthe shareapplicationforms,copy of acknowledgementof IT return, copy of bankstatementand copy of return to ROC in respect of thewho had investedin shareThepersonscapital.Assessee filed the party-wisedetails as under; ITA 246 /2012, ITA 247 /2012 & I.T.A 248/2012 Total 37,00,000/- 29.TheassessingofficerinvotcedtheprovisionsofSection131 of the Act and the bank statementsof M/sTranspan.FinancialServices,M/s BIC ConsultantsP.Ltd, M/s Sober AssociateP. Ltd. were sought fromthebanks.TheAssesseewasalsodirectedtoproduce the parties who had introduced the sharecapital during relevant previous year.Section131 of the Act and the bank statementsof M/sTranspan.FinancialServices,M/s BIC ConsultantsP.Ltd, M/s Sober AssociateP. Ltd. were sought fromthebanks.TheAssesseewasalsodirectedtoproduce the parties who had introduced the sharecapital during relevant previous year.30.The assessingofficer vide his order dated 19.12.2007heldthatmerefurnishingof thePANNumberorassessmentparticulars,copy of share application wasnot enough as the said documents did not facilitate incross-verificationand could be treatedat best as onlyperipheral documents and the mere acknowledgementof return was not sufficientto prove the identityof aperson or his correct and true address.The assessingofficer held that none of the parties who had investedheldthatmerefurnishingof thePANNumberorassessmentparticulars,copy of share application wasnot enough as the said documents did not facilitate incross-verificationand could be treatedat best as onlyperipheral documents and the mere acknowledgementof return was not sufficientto prove the identityof aperson or his correct and true address.The assessingofficer held that none of the parties who had invested ITA246 /2012, ITA 247 /2012&I.T.A248/2012 in the share capital were producedin cross-verificationofdocumentssubmittedbytheAssessee.Theassessingofficer further held that the Assesseewas aprivatelimitedcompanyandtherewascloseandproximaterelationshipbetweenthepromoters/directorsandshareholdersandthatthecloselyheld companiesaccept subscriptionsof sharecapital or deposits only from the friends or relatives ofthe promoters/directorsand such companies were notallowedto acceptthesubscriptionor depositfromgeneral public. The assessingofficer held that in suchcircumstancesthere should have been no difficultyonthe part of the Assesseeto produce a representativefrom the companieswho had investedIn the sharecapital. 31.The assessingofficer also held that mere payment byan accountpayeechequewasnot sacrosanctnorcouldit make a non-genuinetransactionas genuine.Theassessingofficeronperusalofthebank ITA 246 /2012, ITA 247 /2012&LT.A248/2012 31.The assessingofficer also held that mere payment byan accountpayeechequewasnot sacrosanctnorcouldit make a non-genuinetransactionas genuine.Theassessingofficeronperusalofthebank ITA 246 /2012, ITA 247 /2012&LT.A248/2012 statementobtainedin case of three partiesmentionedabovefoundthattherewasauniformpatternoftransactioni.e.issuanceof chequewas immediatelyprecededby depositof an equivalentamountin theaccounteitherin the form of cash or throughcheque/transferentryand at the endof the day the creditbalanceintheaccountmostlyremainedbelowRs.10,000/-.The assessingofficerheld that unlessthe identity and creditworthinessof the entity and thetransactionrepresentedby theentriesin thebankwereco-relatedwiththebusinessactivityandthebooksof accountof the saidentity,the patternandfrequency of deposits and withdrawal at short intervalslent credenceto the fact that the amounthad beenused only for the purpose of providing accommodationentries. 32.The assessingofficer, thus, made an addition of Rs.37lacs to the income of the Assesseeunder Section68of the Act and as a sequitur theretomade an addition of Rs.74,000/-as commissionat 2% on Rs.37,00,000/-paid to the entry operators. 33.On an appeal by the Assesses,the CIT(Appeals)videorder dated 8.6.2009deletedthe additionmade by theassessingofficerof Rs.37,00,000/-under Section68of the Act and consequentlyadditionof Rs.74,000/-@2% commissionpaid to the entry providers.order dated 8.6.2009deletedthe additionmade by theassessingofficerof Rs.37,00,000/-under Section68of the Act and consequentlyadditionof Rs.74,000/-@2% commissionpaid to the entry providers. 34.TheordersoftheCIT(Appeals)forthethreeassessmentyearsis identicaland as such are beingcommonly dealt with hereinafter.assessmentyearsis identicaland as such are beingcommonly dealt with hereinafter.35.TheCIT(Appeals)heldthattheAssesseehadsubmittedthe followingdocumentsto substantiatethegenuinenessofthetransactionthoughcouldnotproduce the said parties for confirmations:submittedthe followingdocumentsto substantiatethegenuinenessofthetransactionthoughcouldnotproduce the said parties for confirmations: "a)ShareApplicationformsreceivedfromInvestorCompaniescontainingfulldetailsofinvestmentinAssesseecompanytheiraddresses& PAN etc.InvestorCompaniescontainingfulldetailsofinvestmentinAssesseecompanytheiraddresses& PAN etc. b)Board Resolutionsof Investor Companiesfor making investmentin Assesseecompany. c)Certificatesissued by investor CompaniesconfirmingtheinvestmentinAssesseecompanySi sourcethereofalongwiththeirPAN & assessmentparticulars. d)PANandaddressproofofInvestorCompanies. e)IT returnAcknowledgementreceipt/l.T.Asstt. orders etc. of Investor Companies. f)CertificateofIncorporationandotherrelevantdocumentsofR.O.CrelatingtoInvestor Companies." 36.The CIT (Appeals) held that the statementof MaheshGarg recorded by the Addl. D.l.(lnv.) Unlt-I was shownto the Assesseeonly on 18.12.2006at the fag end ofthe proceedings.The C!T (Appeals) held that the saidstatementwasgeneralwithnoreferencetothetransactionswith the appellant.The CIT (Appeals)held that the assessingofficer had simply relied uponGarg recorded by the Addl. D.l.(lnv.) Unlt-I was shownto the Assesseeonly on 18.12.2006at the fag end ofthe proceedings.The C!T (Appeals) held that the saidstatementwasgeneralwithnoreferencetothetransactionswith the appellant.The CIT (Appeals)held that the assessingofficer had simply relied upon 37. the informationreceivedfrom the InvestigationWing ofthe Departmentwithoutmakingany concreteeffort toverify the facts stated thereinand has not brought anypositivematerialorevidencetoindicatethattheshareholderswerebenamidars,fictitiouspersonsorany part of the sharecapitalmoneyrepresentedtheincome from undisclosedsources. 37. the informationreceivedfrom the InvestigationWing ofthe Departmentwithoutmakingany concreteeffort toverify the facts stated thereinand has not brought anypositivematerialorevidencetoindicatethattheshareholderswerebenamidars,fictitiouspersonsorany part of the sharecapitalmoneyrepresentedtheincome from undisclosedsources. TheCIT(Appeals)heldthattheassessingofficerreturnedthe findingthat the investorcompanieswereonlypaperentitiesfloatedforthepurposesofarrangingaccommodationentriesandtheshareapplicationmoneyreceivedwasaccommodationentrieswithoutanyfactualbasisonwhichthisconclusionwas drawn.The CIT (Appeals)further heldthat the Assesseewas not affordedan opportunitytocrossexaminethesaidpartiesbasedonwhichadverseinferencewas drawn by the assessingofficer. 38.The CIT (Appeals),thus,held that the appellanthaddischargetheinitialonusof establishingthebonafides of the transactionsand the assessingofficer wasnot justifiedin ignoringvariousevidencesprovidedtohimandhadnotbroughtonrecordanyadversematerialtoshowthattheshareapplicationmoneyreceivedbytheAssesseefromthesaidpartiesrepresentedits own undisclosedincome.dischargetheinitialonusof establishingthebonafides of the transactionsand the assessingofficer wasnot justifiedin ignoringvariousevidencesprovidedtohimandhadnotbroughtonrecordanyadversematerialtoshowthattheshareapplicationmoneyreceivedbytheAssesseefromthesaidpartiesrepresentedits own undisclosedincome. 39.The CIT (Appeals),thus,deletedthe additionsmadeby the assessingofficerunder Section68 of the Actand the consequentadditionof commissionpaid@1or 2% (as the case may be) for obtainingthe entriesfrom the entry provider.by the assessingofficerunder Section68 of the Actand the consequentadditionof commissionpaid@1or 2% (as the case may be) for obtainingthe entriesfrom the entry provider. 40.Aggrievedby thedecisionof theCIT (appeals)theRevenuefiledan appealto theITAT.TheITAT hasupheld the order of the CIT (Appeals)and held that theadditionaldocumentssubmittedbytheAssesseesupportedtheidentityandcreditworthinessof theRevenuefiledan appealto theITAT.TheITAT hasupheld the order of the CIT (Appeals)and held that theadditionaldocumentssubmittedbytheAssesseesupportedtheidentityandcreditworthinessof the ITA 246 /2012, ITA 247 /2CI12 & I.T.A 248/2012 investorcompaniesandprovedthattheshareapplicationtransactionentry by the Assesseewith thesaid investorstransactionswere genuinetransactionsand confirmedthe deletion. 41. Aggrievedby the said decisionthe Revenueis up inappeal before us. 42. We have heard the learned counsel for the parties. Weare of the consideredopinionthat the ordersof theCIT (Appeals)and the ITAT in deletingthe additionmade by the AO of Rs. 40,00,000/-under Section 68of the Act and the consequentadditionof Rs.80,000/-as commissionpaid @ 2% for obtainingthe entry ofRs.40,00,000/-are clearly unsustainable. 43. Recentlyin Coiwimiissioner ofIncowie Tax vsNRPORTFOLBO Pvt. Ltd (Incowie Tax Appeal No. 1018 of2011 AND 1019 OF 2011) vide Judgment dated 22"''November,2013 we have held that when an Assesseedoesnotproduceevidenceortriestoavoid ITA 246 /2012, ITA 247 /2012&I.T.A248/2012 before theappearance assessingofficer, it necessarilycreatesdifficultiesand preventsascertainmentof trueand correctfactsas the assessingofficeris deniedadvantageof the contentionor factual assertionby theAssesseebeforehim.IncaseanAssesseedeliberately and intentionally fails to produce evidencebefore the assessingofficer with the desire to preventinquiry or investigation, an adverse inference shouldbe drawn. 44. The said case,i.e.,N.R. PortfolioPrbvateLiimited(supra),wasalsooneofthecaseswhereaccommodationentrieswerebeing'providedbyMaheshGargGroup of entry providersasin thepresent case.It has been noticed in that case that themodusoperand!usedby theentryprovidersforprovidingaccommodationentrytodifferentpersons/beneficiaries was very similar to the one inthe present case.It has been further noticed that thebankstatementsoftheentryoperatorsshowed ITA246 /2012, ITA 247 /2012&I.T.A248/2012 44. The said case,i.e.,N.R. PortfolioPrbvateLiimited(supra),wasalsooneofthecaseswhereaccommodationentrieswerebeing'providedbyMaheshGargGroup of entry providersasin thepresent case.It has been noticed in that case that themodusoperand!usedby theentryprovidersforprovidingaccommodationentrytodifferentpersons/beneficiaries was very similar to the one inthe present case.It has been further noticed that thebankstatementsoftheentryoperatorsshowed ITA246 /2012, ITA 247 /2012&I.T.A248/2012 substantialdepositof cash in the bank accountsandsubsequentissuanceof chequesto the beneficiaries.The entry providers were not carryingon any businessactivitybut the only activity was for providingentries.It has beenheld thata privatelimitedcompanyis acloselyheldcompanyhavingproximaterelationshipbetweenpromotersand shareholdersandusuallyincloselyheld companies,share capitalsubscriptionisfrom friends,relativesand not from unrelated/unknownthird parties/generalpublic. Wehavefurtherin N.R.PortfolioPrivateLiwiited(Supra)held that mere production of PAN Number orassessmentparticularsdoes not establishthe identityof a person.The identificationof a personincludesthe placeof work, the staff and the fact that it wasactually carrying on business and further recognition ofthe said company/individualin the eyes of public.Wehave further noticed that PAN Numbers are allottedonthebasisofapplicationswithoutactualdefacto verificationof theidentityorascertainmentof theactivenatureof businessactivity.PANNumberisallottedasafacilitytorevenuetokeeptrackoftransactions.The PAN Number cannot be blindly andwithoutconsiderationofsurroundingcircumstancestreatedassufficientlydisclosingtheidentityof theindividual. 46.FollowingCIT vsMovaProwiotersandFinleasePrivateLimited case (2012) 342 BTR 169 (Delhi)wehaveheld thatin view of thelink betweenthe entryproviders and incriminating evidence, ,mere filing ofPANNumber,acknowledgementofIncomeTaxReturnsoftheentryproviders,bankaccountstatementis not sufficientto dischargethe onus on theAssessee. 47.,In the caseof privatelimitedcompanies,,generallyperson known to the directorsor shareholdersdirectlyor indirectlybuy or subscribeto shares.The shareperson known to the directorsor shareholdersdirectlyor indirectlybuy or subscribeto shares.The share ITA246 /2012, ITA 247 /2012 &I.T.A248/2012 subscriberspostinvestmentdonotlosetoucliorbecome incommunicado.In the case of privatelimitedcompanieswherenormallythereis closeproximitybetweenthecompany,i.e.,thedirectorsandshareholdersand the investors.The Assesseecannotsimplyfurnishdetailsandremainquietevenwhensummonsissuedto the shareholdersunderSection131arereturnedunservedanduncomplied.BnN.R.PortfolioPrivateLimited (supra) we have heldthattheAssesseecannotpleadasageneralpreposition that they had received summonsand itwas for the assessingofficer to enforce the attendanceof the share holders.We have further held that the Court or Tribunal shouldbe convincedabout the identity,creditworthinessandgenuinenessof the transactions.The onus to provethe three factumis on the Assesseeas the facts arewithin the personalknowledgeof the Assessee.Mereproductionof incorporationdetails,PAN Numbersor ITA246 /2012, ITA 247 /2012&I.T.A248/2012 ' 49. incometaxreturnsmaynotbesufficientwhensurroundingand attendingfactspredicatea cover up.The productionof incorporationdetails,PAN numbersor income tax detailsmay indicatetowardscompletionofpaperworkordocumentationbutgenuineness,creditworthinessandidentityof investmentandtheinvestorsaredeeperandobtrusivethanmerecompletionof paper work or documentation. As we have held that PAN Numbers are allottedon thebasisofapplicationswithoutactualdefactoverificationof theidentityorascertainmentof theactivenatureof businessactivity.PANNumberisallottedasafacilitytorevenuetokeeptrackoftransactions.The PAN Number cannot be blindly andwithoutconsiderationofsurroundingcircumstancestreatedassufficientlydisclosingtheidentityof theindividual.The mere filingof shareapplicationis notenoughasthesaidapplicationisnotanunimpeachabledocumentanddoesnotonitsown As we have held that PAN Numbers are allottedon thebasisofapplicationswithoutactualdefactoverificationof theidentityorascertainmentof theactivenatureof businessactivity.PANNumberisallottedasafacilitytorevenuetokeeptrackoftransactions.The PAN Number cannot be blindly andwithoutconsiderationofsurroundingcircumstancestreatedassufficientlydisclosingtheidentityof theindividual.The mere filingof shareapplicationis notenoughasthesaidapplicationisnotanunimpeachabledocumentanddoesnotonitsown provethegenuinenessorauthenticityofthetransaction.Itcanatbestbetreatedasacorroborativedocument.Sincethe shareapplicationform is not an unimpeachabledocument,it cannot onitsownbetreatedassufficientforestablishinggenuinenessof the transaction or credit worthiness ofthe shareapplicant.Theidentificationof a personincludes the place of work, the staff and the fact that itwasactuallycarryingonbusinessandfurtherrecognition of the said company/individualin the eyesof public. 50.The Assesseeis a privatelimited companyand hasreceivedsubstantialamountsofRs.9,30,500/-asshareapplicationmoneyandRs1,76,79,500/-asshare premium in the Assessment Years 2004-05 andshare capital of Rs. 37,00,000/- and share premium ofRs. 35,15,000/- in the Assessment Years 2002-03 andshare capital of Rs. 41,90,000/- and Share Premium ofRs. 35,15,000/-in AssessmentYears2003-04.The share subscriberspost investmentdo not lose touch orbecomeinvisible.Natureandnormalconductis thatthey would protect and seek return on their investmentif the same is genuine.This failure,the bank accountstatements,hugepremiumreceivedarepalpablesurroundingfacts,whichhavetobegivenduecredenceandrelevance.The Assesseecannotinthese circumstancessimply furnishdetails and remainquiet even when summons issued to the shareholdersunderSection131arereturnedunservedanduncomplied.The Assesseecannotpleadin thefactualmatrix that they had receivedsummons and itwas for the assessingofficer to enforce appearanceofthe share holders. 51.Noneof thepartiesthat hadinvestedin the sharecapital were produced for examination/verification ofthedocuments,transactionsortoprovethegenuineness of the transactions. Reason and cause tomake investmentremains unknown and unexplained. ITA 246 /2012, ITA 247 /2012&I.T.A248/2012 -1^ 52.Theassessingofficeronperusalofthebankstatementsobtainedin case of three parties has foundthat therewas a uniformpatternof transactioni.e.issuanceof cheque immediately precededby depositof an equivalent arriount in the account either in theform of cash or through cheque/ transfer entry and atthe end of the day the credit balance in the accountmostly remaining below Rs.10,000/-. 53. Another aspect of the matter that was noticed bythe Assessing officer in the ITA 247 of 2013 is thatsome of the confirmationsfiled by the Assesseewere undated and had been taken at the time oftaking the entries for share application/sharecapital/share premium cheques.We finditstrange thatanAssesseealongwith shareapplicationmoneywould obtainconfirmationsfromthe investors to confirm genuinenessof thetransaction.In a normal business transaction, no ITA 246 /2012, ITA 247 /2012&I.T.A248/2012 suchconfirmationwouldbeobtainedbyanycompanyfrompersonsinvestinginitssharecapital.ThefactthattheAssesseefeltthenecessityof obtainingsuchconfirmationsat thetime of receivingshare applicationmoney raises asuspiciononthegenuinenessoftheverytransaction. 54.The assessingofficer found and rightly so that unlessthe identity and creditworthinessof the entity andgenuineness of the transactions were co-related withthe businessactivity and the books of account of thesaid entity, the pattern and frequency of deposits andwithdrawal at short intervals lent credenceto the factthat the amount had been used only for the purpose ofproviding accommodationentries. 55.We are of the consideredopinion that the Assesseehas not been able to discharge the initial onus and hasnotbeenabletoestablishtheidentity,ITA246/2012, ITA 247 /2012 &. l.T.A248/201242 of43 creditworthinessoftheshareapplicantsandthegenuinenessof the transaction. 56. 54.The assessingofficer found and rightly so that unlessthe identity and creditworthinessof the entity andgenuineness of the transactions were co-related withthe businessactivity and the books of account of thesaid entity, the pattern and frequency of deposits andwithdrawal at short intervals lent credenceto the factthat the amount had been used only for the purpose ofproviding accommodationentries. 55.We are of the consideredopinion that the Assesseehas not been able to discharge the initial onus and hasnotbeenabletoestablishtheidentity,ITA246/2012, ITA 247 /2012 &. l.T.A248/201242 of43 creditworthinessoftheshareapplicantsandthegenuinenessof the transaction. 56. The substantialquestionof lawis thusansweredinfavouroftheAppellant/RevenueandagainsttheRespondent/Assessee.Theappealsareaccordinglyallowedwith costs that are assessedat Rs. 20,000/-ineach case. cxa}„_ SANJEEV SACHDEVA,J. 29*^ NOVEMBER,2013 SV •IISANJIV KHANNA, J.