I. T. A. No. 572/Chd/2015

Bhavnesh Saini (Judicial Member) And Rano Jain (Accountant Member)

Ashwani Kumar For the Petitioner :
Manoj Mishra For the Respondent :

ORDER

Bhavnesh Saini (Judicial Member)- This appeal by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals)-II, Ludhiana dated March 27, 2015, for the assessment year 2009-10 on the following grounds :

(1) That order passed under section 250(6) of the Income-tax Act, 1961, by the learned Commissioner of Income-tax (Appeals)-II, Ludhiana is against law and facts on the file in as much he was not justified to uphold the action of the learned Assessing Officer in resorting to the provisions of section 148 of the Income-tax Act, 1961.

(2) That the learned Commissioner of Income-tax (Appeals) further gravely erred in upholding the action of the learned Assessing Officer in making an addition of Rs. 3,74,00,000 received by the appellant-company as share application money/share capital/share premium as alleged unexplained cash credit under section 68 of the Income-tax Act, 1961.

(3) That he was further not justified to uphold the addition of Rs. 8,41,500 made by the learned Assessing Officer under section 69C as alleged payment of commission on the alleged accommodation entries.

2. We have heard the learned representatives of both parties, perused the findings of the authorities below and considered material available on record.

3. Briefly the facts of the case are that original assessment in this case was completed under section 143(3) of the Act on December 30, 2011, at loss of Rs. 64,92,340 against returned loss of Rs. 1,50,37,116 by making additions on account of low gross profit, under valuation of closing stock, the disallowance of depreciation, disallowance of interest and disallowance of expenses, etc. (paper book 1). Subsequently, information was received from the Investigation Wing of the Income-tax Department at Delhi that the assessee-company had received accommodation entries as share application money/share capital/share premium during the year under consideration from paper companies controlled by one person. The case was reopened under section 148 of the Act by recording the reasons for reopening of the assessment dated December 17, 2012. The copy of the same is filed at pages 12 to 17 of the paper book and reads as under :
Reasons for issuance of notice under section 148 of the Income-tax Act, 1961

The assessee filed its return of income on September 27, 2009, declaring nil income. The assessment was completed under section 143(3) on December 30, 2011, by the Income-tax Officer, Ward-IV(3), Malerkotla, at nil income. However, the loss to be carried forward was reduced from Rs. 1,50,37,116 to Rs. 64,92,340 as total additions/disallowances amount ing to Rs. 85,44,773 were made on various accounts.

While dealing with the appellate order of the hon'ble Income-tax Appellate Tribunal, Chandigarh in the caseof Kisco Castings (P) Ltd., Khanna, for the assessment year 2006-07, it was noticed that the Investigation Wing of the Income-tax Department at Delhi had unearthed a scandal of providing accommodation entries in the form of share capital/ share application money to the desiring companies. The brief facts of the said caseare that a search under section 132(1) was conducted by the Investigation Wing of the Income-tax Department Delhi at 13/34 WEA Karol Bagh, New Delhi, which was the office of one Sh. Tarun Goyal, chartered accountant. It was noticed by the Investigation Wing that he had floated a number of companies for the purpose of providing accommodation entries to the desiring persons. During the study of the assessment file of M/s. Kisco Castings (P) Ltd., it was seen that the information received from the Investigation Wing at New Delhi, contains reference to the asses see-company, i.e., M/s. A. P. Refinery P. Ltd., also. As per that, this company had also been provided accommodation entries by Sh. Tarun Goyal during the financial year 2008-09 relevant to the assessment year 2009-10. On-going through the assessment file, it was noticed that the assessee-company had raised an amount of Rs. 761.75 lakhs as share cap ital, share application money and share premium during the financial year 2008-09 as per the following details :

Out of these, the following companies belong to the group controlled by Shri Tarun Goyal :

The detailed facts relating to these, as coming out from the report of the Investigation Wing and as analysed in the case of M/s. Kisco Castings (P) Ltd. are as below :

(i) Sh. Tarun Goyal had floated about 90 companies for the purpose or providing accommodation entries.

(ii) None of these companies was carrying out any genuine activities and were merely being used to provide accommodation entries only. All the companies were operating from the office of Sh. Tarun Goyal at 13/34 WEA, Arya Samaj Road, Karol Bagh, New Delhi.

(iii) During the period April 1, 2002, to October 31, 2008, cash to the tune of Rs. (approximate) 200 crores was deposited in the bank accounts of these companies or its associate persons. These amounts were used to give accommodation entries directly or by layering through different accounts.
(iv) The directors of all these companies were only the former and the present employees of Sh. Tarun Goyal. Sh. Tarun Goyal had been misusing his position as their employer by getting various documents and bank cheques signed by them and using them for transporting and exchanging cash and cheques to provide accommodation entries.

(v) The employees present during search admitted the above facts in their statements on oath and stated that they were signing various documents as and when asked by Sh. Tarun Goyal.

For example an employee named Usha had been made director in six companies. Bank accounts had been opened in her name and even return of income in her name was filed. However, she had no knowledge about all these. Even bank accounts in fictitious names using her photo were opened regarding which also she expressed total ignorance.

Similarly another employee Sh. Harpreet Singh was made director in five companies. However he did not know anything about the activities of these companies. He categorically stated that he only signed the cheques and documents as per direction of Sh. Tarun Goyal and main work of all these companies were managed by Sh. Tarun Goyal. He had signed on the blank cheques in advance for use by Sh. Tarun Goyal and this was stated to be done on the guidance of Sh. Tarun Goyal.

Further, Smt. Ritu Saxena another employee was shown as director in five companies. She was working as receptionist in the office of Sh. Tarun Goyal and she had no knowledge that she was shown as director in any company. A bank account was opened in her name by misleading her. She has categorically denied her association with any of the companies.

(vi) All the pass books, cheque books, permanent account number cards of these companies were in the possession of Sh. Tarun Goyal. All the bank account opening forms appear to be filled-in in the handwriting of Sh. Tarun Goyal.

(vii) All the books of account of all these companies have been retrieved from the computers/laptop of Sh. Tarun Goyal.

(viii) Sh. Tarun Goyal gave letters for release of bank account of the companies which had been put under restraint after search. No such appli cation was from the so-called directors of these companies. Even the various proceedings in respect of these companies before the Assessing Officers or the appellate authorities were also attended by Sh. Tarun Goyal only.

(ix) Sh. Tarun Goyal could not produce the directors of various companies before the Income-tax authorities.

(x) Even the auditors of various companies admitted that they had no knowledge about the directors of the companies and the audits were done by them at the instructions of Sh. Tarun Goyal. Sh. Rakesh Sharma, who signed the audit reports of seven companies stated that he came to know about these companies through Sh. Tarun Goyal, he had no knowledge of the directors or shareholders of these companies.

Similarly, Sh. Mahavir Prashad, another auditor, stated that he audited 20 companies. The address of all these was 13/34 WEA, Arya Samaj Road, Karol Bag, New Delhi, which was the office address of Sh. Tarun Goyal. He had no knowledge about the directors or shareholding patterns of these companies. He had qualified the audit report by mentioning that proper records for transactions and contracts of shares could not be verified. It was also stated that it could not be verified as to whether the shares were actually allotted to the company.

Similarly, Sh. Suresh Bhatia another auditor also could not tell the names of directors of the companies audited by him. He stated that he discussed the matters regarding these companies with Sh. Tarun Goyal as the directors were not personally known to him.

(xi) From all the above facts, it was more than clear that these companies were stage managed by Sh. Tarun Goyal and the only real purpose was to provide accommodation entries by accepting cash, depositing the same in the bank accounts of various companies and issuing cheques/ drafts to the needy beneficiaries. Accordingly, Sh. Tarun Goyal was confronted about the above and his statement was recorded on oath. It was admitted by him that he was providing accommodation entries and his various companies were used for this purpose. He also described the modus operandi for providing these, accommodation entries. He confirmed that the accounts of M/s. Max Weil Securities P. Ltd. and M/s. Adonis Finance Ltd. were mostly used for accommodation entries. He further admitted that the total amount of accommodation entries given by him in the preceding six years was around Rs. 30-35 crores. He detailed the names of certain companies/groups which had been given accommodation entries by him.

From the above facts, it is clear that the above companies had no real work or business. Their real worth is not such that they may be able to contribute such huge amounts. These have been floated with the only purpose of converting the unaccounted funds of the desiring persons into share capital through accommodation entries. The above amounts of Rs. 2,49,00,000 are in facts the unaccounted funds of the assessee-company. These are liable to be treated as income of the assessee-company under section 68 of the Income-tax Act, 1961. It would be worthwhile to note that the above facts are similar to the case of CIT v. Nova Promoters and Finlease (P) Ltd. reported at [2012] 342 ITR 169 (Delhi). The observation of the hon'ble High Court are reproduced as below (page 191) :

"30. The findings of the Tribunal cannot be upheld as they are based on irrelevant material or have been entered by ignoring the relevant material. The finding that the share application monies have come through account payee cheques is, at best neutral. The question required a thorough examination and not a superficial examination. If anything, in the light of the material gathered by the Investigation Wing about the modus operandi followed by the entry providers, the statements of Mukesh Gupta and Rajan Jassal the plea that the money was sent through banking channels, loses all force. The Tribunal ought to have seen that the modus operandi involves receipt by the entry providers of equivalent amount of cash from the asses see. The facts that the companies which subscribed to the shares were borne on the file of the Registrar of Companies is again a neutral fact. Every company incorporated under the Companies Act, 1956 has to comply with statutory formalities. That these companies were complying with such formalities does not add any credibility or evidentiary value. In any case, it does not ipso facto prove that the transactions are genuine. The finding that Mukesh Gupta and Rajan Jassal were involved with only 4 out of the 16 companies which advanced monies is only part of the picture. They had stated before the Investigation Wing that their operations were routed through 22 companies whose names were also given. Fifteen out of those 22 companies have subscribed to the shares of the assessee. Therefore even if they were not directors of 12 companies, the facts remains, as admitted by them, that their entry providing operations were carried out through 22 companies, 15 of which have subscribed to the shares of the assessee-company. The Tribunal has ignored this vital aspect and has examined the issue rather superficially. Compliance with statutory norms and requirements is only one aspect, but in the present case a deeper scrutiny was required and the camouflage adopted was the primary aspect that required adjudication. This aspect has been ignored. Bona fide and genuineness of the transac tions was the issue. . . .

39. . . . We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed 'accommodation entry providers', whose business it is to help asses sees bring into their books of account their unaccounted monies through the medium of share subscription, and the assessee. The ratio is inapplicable to a case, again such as the present one, where the involvement of the assessee in such modus operandi is clearly indicated by valid material made available to the Assessing Officer as a result of investigations carried out by the Revenue authorities into the activities of such 'entry providers'. The existence with the Assessing Officer of material showing that the share subscriptions were collected as part of a pre-meditated plan-a smokescreen-conceived and exe cuted with the connivance or involvement of the assessee excludes the applicability of the ratio. In our understanding, the ratio is attracted to a case where it is a simple question of whether the assessee has dis charged the burden placed upon him under section 68 to prove and establish the identity and creditworthiness of the share applicant and the genuineness of the transaction. In such a case, the Assessing Officer cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. The casebefore us does not fall under this category and it would be a travesty of truth and justice to express a view to the contrary."

After going into the factual matrix of the case as above, the hon'ble High Court has held as below (page 199) :

"43. In the case before us, not only did the material before the Assessing Officer show the link between the entry providers and the assessee-company, but the Assessing Officer had also provided the statements of Mukesh Gupta and Rajan Jassal to the assessee in compliance with the rules of natural justice. Out of the 22 companies whose name figured in the information given by them to the Investigation Wing, 15 companies had provided the so-called 'share subscription monies' to the assessee. There was thus specific involvement of the assessee-company in the modus operandi followed by Mukesh Gupta and Rajan Jassal. Thus, on crucial factual aspects the present case stands on a completely different footing from the case of the CIT v. Oasis Hospitalities P. Ltd. [2011] 333 ITR 119 (Delhi).

44. In the light of the above discussion, we are unable to uphold the order of the Tribunal confirming the deletion of the addition of Rs. 1,18,50,000 made under section 68 of the Act as well as the consequential addition of Rs. 2,96,250. We accordingly answer the substantial questions of law in the negative and in favour of the Department. The assessee shall pay costs which we assess at Rs. 30,000."

The above facts have been analysed in detail and perused in the light of the decision of the hon'ble Delhi High Court (supra). After detailed consideration of the same, I have reason to believe that the amount of Rs. 2,49,00,000 which was liable to be treated as the income of the assessee-company had escaped assessment within the meaning of section 147 of the Income-tax Act, 1961. Accordingly it is a fit case for issuance of notice under section 148 of the Income-tax Act, 1961.

(Ravinder Mittal)
Deputy Commissioner of Income-tax,
Circle-TV, Ludhiana."

4. The Assessing Officer, accordingly, issued notice under section 148 of the Income-tax Act which was duly served upon the assessee. The assessee filed return on January 22, 2013, in response to notice under section 148 of the Act declaring loss of Rs. 1,50,37,116. The Assessing Officer after giving opportunity of being heard to the assessee passed reassessment order under section 143(3)/147 dated March 11, 2014, making addition of Rs. 3,74,00,000 under section 68 of the Act as well as addition of Rs. 8,41,500 under section 69C of the Act.

5. The assessee challenged the reopening of the assessment and above additions before the learned Commissioner of Income-tax (Appeals). The submissions of the assessee are incorporated in the impugned order in which the assessee briefly explained the unilateral admission of third party during the course of search cannot by itself lead to the conclusion as to the escapement of the income. There is no tangible/affirmative/direct evidence to the effect that income of the assessee-company has escaped assessment. The fact of the matter is that a sum of Rs. 3.74 crores were received from various companies allegedly belonging to the above persons which stood duly recorded in the books of account as an amount received from the said entities. The date of filing of the original return in the case of the assessee is September 27, 2009 for the assessment year under appeal. The date ofsearch under section 132 of the Act at the residence/premises of Shri Tarun Goyal is dated September 15, 2008 and the date of search at the premises of Shri Surinder Kumar Jain and Virender Jain is dated September 14, 2010. The original assessment in the case of the assessee under section 143(3) for the assessment year under appeal was completed on December 30, 2011. The perusal of the original assessment record will make it clear that matter relating to increase in share capital was duly dealt with, investigated and enquired into by the Assessing Officer. Moreover, the facts of the results of search conducted at the premises of Shri Tarun Goyal and Shri Surinder Kumar Jain and Shri Virender Kumar Jain was well within the knowledge of the Department at the time of assessment completed in the case of the assessee. In fact, the search in the case of Shri Tarun Goyal Jain conducted on September 15, 2008, i.e., much before even filing of the original return of income by the assessee. Thus, reassessment proceedings are not based on any fresh material/tangible evidence or any other information. Since the Assessing Officer examined this issue at the assessment stage, therefore, reassessment on mere change of opinion is not justified. The submissions of the assessee were forwarded to the Assessing Officer for his comments in which the Assessing Officer reiterated the same facts as have been noted in the reassessment order and explained that the investment carried out at Delhi was not within the knowledge of the Assessing Officer at Malerkotla.

6. The learned Commissioner of Income-tax (Appeals), considering the material on record noted that the Assessing Officer received specific information with regard to advance of Rs. 2.49 crores in the form of share application money received from four parties, i.e., M/s. Campari Fiscal Services (P.) Ltd. (Rs. 62 lakhs), M/s. Taurus Iron and Steel Co. P. Ltd. (Rs. 1.05 crores), M/s. Tejasvi Investments (P.) Ltd. (Rs. 27 lakhs) and M/s. Thar Steel (P.) Ltd. (Rs. 55 lakhs) (total Rs. 2.49 crores). The learned Commissioner of Income-tax (Appeals) noted that Shri Tarun Goyal at the time ofsearch has admitted in his statement that he was in business of providing accommodation entries through various companies floated by him and as such bogus entries have been received by the assessee and, accordingly, confirmed reopening of the assessment.

7. The learned Commissioner of Income-tax (Appeals) also on the same reasoning considered the share application money received by the assessee to be bogus in respect of 5 parties, i.e., 4 mentioned above and M/s. Shalini Holdings Ltd. (Rs. 1,25,00,000) and thus confirmed the addition of Rs. 3,74,00,000 as well as confirmed the consequential addition of Rs. 8,41,500 under section 69C of the Act.

8. Learned counsel for the assessee reiterated the submissions made before the authorities below. He has submitted that at the original assessment proceedings, the Assessing Officer issued query letters regarding receipt of share application money through the notice dated December 13, 2011, and dated November 2, 2011, as well as issued notice under section 142 calling for the information regarding receipt of share application money in respect of the above parties under reference. He has submitted that the Assessing Officer asked the assessee to prove the identity, creditworthiness and genuineness of the transaction in the matter and also directed to file evidence regarding the same. He has submitted that the assessee has submitted various replies before the Assessing Officer, copy of the reply dated December 26, 2011, and December 28, 2011, are placed on record in which the assessee explained the identity of the shareholders, their creditworthiness and genuineness of the transaction. It was also explained that these companies have confirmed giving share application money to the assessee in their replies directly submitted to the Assessing Officer. The transactions were conducted through banking channel. The assessee relied upon various decisions in support of the contention of receipt of genuine share application money including the judgment of the hon'ble Supreme Court in the case of CIT v. Lovely Exports Pvt. Ltd. [2008] 216 CTR (SC) 195; [2009] 319 ITR (St.) 5 (SC). The assessee also explained that all these companies have confirmed their transactions with the assessee and are existing companies and registered with the Registrar of Companies. The assessee-company has filed confirmation from these companies, proof of return filed, bank account, permanent account number and company master details. These companies have confirmed making investment in the assessee-company in response to the notice under section 133(6) of the Act.

9. Learned counsel for the assessee also referred to paper book pages 128 to 151 which are the copies of the confirmation, bank accounts, Income-tax reports of the five investee companies which were filed before the Assessing Officer at the original assessment stage. Learned counsel for the assessee, therefore, submitted that the Assessing Officer has examined the issue of share application money at original assessment stage and accepted the claim of the assessee. He has referred to original assessment order dated December 30, 2011, in which the Assessing Officer at the end of the assessment year has appended a note, "information with respect to investment in the company has been considered and passed on to the respective Assessing Officer". Learned counsel for the assessee, therefore, submitted that the Assessing Officer has accepted the genuineness of the share application money received by the assessee from these five companies, therefore, it is a case of mere change of opinion later on and without bringing any material on record. He has referred to objections filed by the assessee before the Assessing Officer in reassessment proceedings (paper book page-24) challenging the reopening of the assessment in which same facts have been pleaded. The order of the Assessing Officer on objections filed by the assessee is dated May 20, 2013 copy of which is filed at page 34 of the paper book in which the Assessing Officer has noted the fact that the assessment under section 143(3) was completed keeping into consideration the facts on record at that time which included the information called from the share applicants under section 133(6) of the Income-tax Act. The Assessing Officer further noted that, "However, the search in the case of Shri Tarun Goyal was not on record of the Assessing Officer and whatever replies have been filed by the assessee would not disclose that everything was alright". Therefore, the objections of the assessee were rejected. Learned counsel for the assessee, therefore, submitted that the order of the Assessing Officer itself shows that the Assessing Officer at the original assessment stage examined the entire matter in issue with regard to issue of the share capital and amount received by the assessee from various companies including the five companies in reference. Therefore, on mere change of opinion, the Assessing Officer should not reopen the assessment. He has also filed copy of the statement of Shri Tarun Goyal on the day of search dated September 15, 2008 and next date September 16, 2008, copy of which is filed at paper book pages 36 to 51 and submitted that Shri Tarun Goyal has not named the assessee-company of giving any accommodation entry. Learned counsel for the assessee relied upon the decision of the Delhi High Court in the case of Swarovski India Pvt. Ltd. v. Deputy CIT [2016] 6 ITR (OL) 4 (Delhi) dated September 29, 2015, in Writ Petition No. 1772 of 2014 in which in paragraph 16, hon'ble Delhi High Court held as under (page 12) :

"16. In the present case, this is exactly what has happened as queries and issues have been specifically raised and answered by the assessee in the original assessment proceedings. Thus, even though the Assessing Officer did not make any addition in the assessment order, it would have to be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make any addition or to reject the stand of the assessee. Consequently, it will have to be presumed that the Assessing Officer had formed an opinion which is now sought to be changed through the reassessment notice, which cannot be permitted.

10. Learned counsel for the assessee also relied upon the decision of the hon'ble Punjab and Haryana High Court in the case of CIT v. Smt. Paramjit Kaur [2009] 311 ITR 38 (P&H) in which it was held, "When Assessing Officer failed to examine information received before recording satisfaction-income has escaped assessment-reassessment proceedings not valid".

11. Learned counsel for the assessee even on merits submitted that since the assessee filed confirmation from all the five companies along with their bank accounts, Income-tax returns and other documents and these companies in response to the information called by the Assessing Officer under section 133(6) confirmed giving share application money to the assessee, the initial burden on the assessee has been discharged. To prove genuine receipt of share application money in the matter, he has relied upon recent order of the Income-tax Appellate Tribunal, Chandigarh Bench in the case of Lotus Integrated Taxpark Ltd. v. Deputy CIT [2016] 6 ITR (Trib)-OL 9 (Chandigarh) (I. T. A. Nos. 1138 of 2014 and 1139 of 2014 dated October 1, 2015) in which the identical addition on merit has been deleted by following various judgments as well as considering the identical evidences on record. He has, therefore, submitted that even on merit, issue is covered in favour of the assessee by the aforesaid judgment of the Tribunal, copy of which is placed on record.
12. On the other hand, the learned Departmental representative relied upon the orders of the authorities below and submitted that Shri Tarun Goyal was providing accommodation entries by floating large number of companies. Investigation wing conducted enquiry into the matter and has collected material to show that Shri Tarun Goyal has provided bogus entries to the assessee and others. Therefore, reopening of the assessment is justified along with additions on merit. He has submitted that the assessee has not discharged initial onus, therefore, addition is justified and relied upon the decisions of the Delhi High Court in the cases of CIT v. Nova Promoters and Finlease (P) Ltd. [2012] 342 ITR 369 (Delhi) and CIT v. Navodaya Castles P. Ltd. [2014] 367 ITR 306 (Delhi). The learned Departmental representative placed on record letter dated April 6, 8, 2009, issued by the ADIT (Investigation) Unit-IV, New Delhi, to the Commissioner of Income-tax-I Ludhiana with list of beneficiaries of accommodation entries provided by Shri Tarun Goyal.

13. After considering the rival submissions, we do not find any justification to sustain the impugned orders regarding re-opening of the assessment under section 147/148 of the Act. The hon'ble Full Bench of the Delhi High Court in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 (Delhi) [FB] by following Circular No. 549 of the Central Board of Direct Taxes ([1990] 182 ITR (St.) 1 ) held that on mere change of opinion of the Assessing Officer cannot be a ground for reassessment and that amendment of section 147 with effect from April 1, 1989 has not altered the position. The hon'ble Gujarat High Court in the case of Garden Silk Mills P. Ltd. v. Deputy CIT [1999] 237 ITR 668 (Guj) held that "however wide the scope of taking action under section 148 of the Income-tax Act, it does not confirm jurisdiction on change of the interpretation of a particular provision earlier adopted by the assessing authority. For coming to the conclusion that there has been excessive loss or depreciation allowance or that there has been under assessment or assessment at a lower rate or for applying other provisions of Explanation 2 to section 147, it must be on material and it should have nexus for holding such opinion contrary to what has been expressed earlier. Even after the amendment of section 147, mere change of opinion does not confirm jurisdiction on the Income-tax Officer to initiate proceeding for reassessment merely by resorting to Explanation 1 to section 147". The hon'ble Calcutta High Court in the case of Berger Paints India Ltd. v. Joint CIT [2000] 245 ITR 645 (Cal) held when any particular issue has been considered by the Income-tax Officer and the Commissioner of Income-tax (Appeals) and when there is no failure to disclose the facts, the reassessment proceedings are not valid. The hon'ble Supreme Court in the case of CIT v. Foramer France [2003] 264 ITR 566 (SC) held reassessment-not on basis of mere change of opinion-law same before and after amendment by Direct Tax Laws. The hon'ble Supreme Court in thecase of Indian Oil Corporation v. ITO [1986] 159 ITR 956 (SC) held that no case under section 148 is made out when the facts were known all along with the Revenue while making the original assessment. The hon'ble Supreme Court in the case of Associated Stone Industries (Kotah) Ltd. v. CIT [1997] 224 ITR 560 (SC) held that the assessee shall have to disclose only the primary facts. The hon'ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) confirmed the decision of the Delhi High Court in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 (Delhi) [FB] holding that "the concept of change of opinion must be treated as an in-built test to check the abuse of power". The hon'ble Bombay High Court in the case of Titanor Components Ltd. v. Asst. CIT [2012] 343 ITR 183 (Bom) held as under (headnote) :

"Where a reassessment is sought to be made after four years the power conferred by section 147 of the Income-tax Act, 1961, does not provide a fresh opportunity to the Assessing Officer to correct an incorrect assessment made earlier unless the mistake in the assess ment so made is the result of a failure of the assessee to fully and truly disclose all materials facts necessary for assessment. There is a difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the asses see by withholding the material facts fully and truly. It is only in the latter case that the Assessing Officer would be entitled to proceed under section 147.

Held, allowing the petition, that the Assessing Officer had not recorded the failure on the part of the petitioner to fully and truly disclose all material facts necessary for the assessment year 1997-98. What was recorded was that the petitioner had wrongly claimed certain deductions which he was not entitled to. The reassessment proceedings initiated in the year 2004 were not valid.

14. The hon'ble Delhi High Court also in the case of Swarovski India P. Ltd. (supra) did not approve the reopening of the assessment on mere change of opinion when the Assessing Officer has raised a query and answered by the assessee at the original assessment proceedings. The hon'ble Punjab and Haryana High Court in the case of CIT v. Smt. Paramjit Kaur [2009] 311 ITR 38 (P&H) held as under (headnote) :

"Held, that the Assessing Officer had not examined the information received from the survey circle before recording his own satis faction of escaped income and initiating reassessment proceedings. The Assessing Officer had thus acted only on the basis of suspicion and it could not be said that it was based on belief that the income chargeable to tax had escaped income. The Assessing Officer had to act on the basis of 'reasons to believe' and not on 'reasons to suspect'. The Tribunal rightly concluded that the Assessing Officer had failed to incorporate the material and his satisfaction for reopening the assessment and therefore the issuance of notice under section 148 of the Act for reassessment proceedings was not valid."

15. The hon'ble Delhi High Court in the case of Signature Hotels P. Ltd. v. ITO [2011] 338 ITR 51 (Delhi) held as under (headnote) :

"Held, allowing the petition, that the reassessment proceedings were initiated on the basis of information received from the Director of Income-tax (Investigation) that the petitioner had introduced money amounting to Rs. 5 lakhs during financial year 2002-03 as stated in the annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of Rs. 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September, 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to be quashed."

16. It is not in dispute that the assessee has received share application money from many companies/parties which are recorded in the reasons for reopening of the assessment in a sum of Rs. 7.61 crores (approximately). However, the Assessing Officer in the reasons for reopening of the assessment has considered four parties, i.e., M/s. Campari Fiscal Services Pvt. Ltd., M/s. Taurus Iron and Steel Co. P. Ltd., M/s. Tejasvi Investments (P) Ltd. and M/s. Thar Steel Pvt. Co. for considering investment in a sum of Rs. 2.49 crores. However, at the time of passing of the assessment order, the Assessing Officer made addition of Rs. 3.74 crores under section 68 of the Income-tax Act by including M/s. Shalini Holdings for making investment in the assessee-company in a sum of Rs. 1.25 crores. Learned counsel for the assessee has placed on record copies of the enquiry letters issued by the Assessing Officer at the original assessment stage in which the Assessing Officer called for the details of additions in share capital money by giving their names and complete addresses of the persons along with evidences on their identity, creditworthiness, copies of their bank statements and their sources. The assessee submitted his replies before the Assessing Officer at assessment stage in which the assessee clearly stated that the assessee has already filed copies of the confirmations of all these share applicant companies confirming giving of share application money to the assessee, copy of proof of filing of Income-tax return, copy of their bank statements, copy of permanent account number and company master details. It was also explained that all these entries are existing and have been registered with the Registrar of Companies. Copies of all these evidences are filed in the paper book in respect of all these five parties/ companies at pages 128-151 of the paper book. In these evidences, the share applicant companies have confirmed making investment in the assessee-company through their banking channel and the particulars have been disclosed in their return of income. The Assessing Officer called for information from all these companies directly under section 133(6) of the Income-tax Act and all these share applicant companies confirmed giving of share application money to the assessee in their replies to the notice under section 133(6) of the Income-tax Act. The Assessing Officer, thus, did not doubt the identity of the share applicants, their creditworthiness and genuineness of the transaction in the matter. The copy of the original assessment order under section 143(3) dated December 30, 2011, is filed at pages 1-10 of the paper book. It would reveal that at the end of the assessment order, the Assessing Officer has appended a note to the assessment order that information with respect to investments in the company has been considered and passed on to the respective Assessing Officer. It would indicate that the Assessing Officer was satisfied with the genuineness of the share application money received by the assessee through banking channel. Thus, the same issue could not be reopened in reassessment proceedings because there is no failure on the part of the assessee to disclose all the relevant facts and material to the Assessing Officer in their return as well as at the assessment stage. The letter dated April 6/8, 2009, of the ADIT (Investigation), New Delhi, was received by the Commissioner of Income-tax-I Ludhiana and as such was part of record even before the assessee filed return on September 27, 2009.

17. It may also be noted here that original return of income was filed on September 27, 2009 and the search under section 132 of the Act was conducted in the case of Shri Tarun Goyal on September 15, 2008. The assessment in the case of the assessee was completed on December 30, 2011, therefore, the information regarding accommodation entry provided by Shri Tarun Goyal was well within the knowledge of the Income-tax Department but this fact was not taken into consideration against the assessee because the Assessing Officer accepted the genuineness of the share application money in the case of the assessee. It may also be noted here that copies of the statements of Shri Tarun Goyal recorded on the date of search on September 15, 2008, and September 16, 2008, are filed on record in which Shri Tarun Goyal has not made any specific statement against the assessee-company for providing accommodation entry to the assessee-company. Even the Assessing Officer has not examined the information received from Investigation Wing before recording the reasons for reopening of the assessment. Therefore, there was nothing on record to justify reopening of the assessment on the basis of these materials which were within the knowledge of the Assessing Officer. Thus, the Assessing Officer acted merely on suspicion which would not prove to be a case of escapement of income. It is admitted fact that the assessee, at the stage of re-opening of the assessment, objected to the reopening of the assessment and the Assessing Officer passed the order on May 20, 2013, copy of which is filed at page 34 of the paper book in which the Assessing Officer has specifically noted that the original assessment was completed on the basis of evidences and material on record which included information called from the lender company under section 133(6) of the Income-tax Act. It would, therefore, show that the Assessing Officer at the original assessment, applied his mind to the evidences and material on record including letter of the ADIT (Investigation), New Delhi and the investigation revealed that the assessee-company received genuine share capital money from these five companies. There was, thus, no fresh or tangible material within the knowledge of the Assessing Officer at the time of reopening of assessment. It is, therefore, a case of mere change of opinion for reopening of the assessment on the issue of share application money which was already examined and investigated into by the Assessing Officer at the original assessment stage. No specific material was provided by the Investigation Wing to show how the assessee has received accommodation entry from Shri Tarun Goyal. In the statement recorded on the date of survey did not indicate if the assessee received any accommodation entry from Shri Tarun Goyal. It may also be noted here that the Assessing Officer might not have received any fresh information from the Investigation Wing against the assessee because in the reasons for reopening of the assessment, the Assessing Officer has referred to the study of the assessment record of M/s. Kisco Castings Pvt. Ltd. from where it was revealed that Investigation Wing has made same reference against the assessee but there is no direct reference of receipt of any accommodation entry by the assessee-company.

18. Considering the above discussion, it is clear that the Assessing Officer merely acted on suspicion against the assessee. It is a mere case of change of opinion and the Assessing Officer has not examined any material against the assessee for reopening of the assessment. The Assessing Officer was having no specific evidence or material against the assessee for reopening of the assessment. No fresh material has been brought on record to justify reopening of the assessment, therefore, the Assessing Officer has not validly assumed jurisdiction under section 148 of the Income-tax Act for reopening of the assessment in the matter. The decisions relied upon by the learned Departmental representative are not applicable to the facts and circumstances of the case. We, accordingly, set aside the reopening of the assessment and quash the impugned orders under section 147/148 of the Income-tax Act.

19. In view of the above, there is no need to consider the issue of additions on merit in detail, however, the evidences on record, as noted above and the share applicant companies in their reply confirmed giving share application money to the assessee before the Assessing Officer clearly show that the initial burden on the assessee has been discharged to prove the identity of the share applicant companies, their creditworthiness and genuineness of the transaction in the matter. The identical issue was considered by this Bench in the case of Lotus Integrated Taxpark Ltd. v. Deputy CIT [2016] 6 ITR (Trib)-OL 9 (Chandigarh) in which in paragraphs 10 to 13, similar addition has been deleted. The findings of the Tribunal in paragraphs 10 to 13 of this order are reproduced as under (page 21) :

"10. We have considered the rival submissions. It is not in dispute that the assessee has allocated 7,40,000 shares to M/s. Glacis Investment Ltd. at premium. The Assessing Officer has not disputed the shares issued to this company at premium value. No investments have been made in this regard. The learned Departmental representative also admitted that the reasons for issuing the shares to the subscriber company at paid-up value and at premium have not been investigated by the Assessing Officer at assessment stage. The asses see has filed copy of the certificate of incorporation of M/s. Glacis Investment Ltd. which is a registered company in Republic of Mauritius. The learned Commissioner of Income-tax (Appeals) considering the subscriber company to be a company being legal entity held that the identity of the shareholder is proved. The assessee also filed copy of the tax residence certificate issued by Mauritius Revenue authorities, certifying that M/s. Glacis Investment Ltd. incorporated in Mauritius is a company resident in Mauritius for income- tax purposes under the Income-tax Act. The assessee also produced the certificate of the Reserve Bank of India in which the Reserve Bank of India by referring to letter of the assessee has referred to the trans action held between the assessee and M/s. Glacis Investment Ltd., Mauritius for issuing the shares at paid-up value and premium for 7,40,000 equity shares were recorded by the Reserve Bank of India in their records. The learned Departmental representative submitted that the name of M/s. Glacis Investment Ltd. is wrongly recorded in the Reserve Bank of India certificate. It appears to be typographical error and is not having much significance on the same because the assessee has issued 7,40,000 equity shares to the shareholder company which is the same and only transaction carried out between the assessee and the shareholder company. The assessee also filed copy of the share certificate to show that actual share certificates 7,40,000 in number have been issued to the shareholder company. The shareholder company has also issued a confirmatory letter in favour of the assessee certifying that M/s. Glacis Investment Ltd. has invested Rs. 3,70,00,000 for allotment of 7,40,000 equity shares in assessment year under appeal. The Republic of Mauritius also certified that global business licence under Financial Services Act have been granted to M/s. Glacis Investment Ltd. The balance-sheet of the shareholder company M/s. Glacis Investment Ltd. is also filed on record which is admitted as additional evidence which proved that the principal activity of this company is that of investment holding and was having the sufficient funds/assets to make investment in the assessee-company and that the investment made in the assessee- company have been certified in the balance-sheet. The bank statement of the assessee is also filed on record which support the contention of the assessee that Rs. 3,70,00,000 have been invested by shareholder company in the assessee-company through transfer entries, i.e., banking channels. The decisions relied upon by learned counsel for the assessee clearly support the contention of the assessee that the assessee has proved the creditworthiness of the shareholder company and genuineness of the transaction in the matter. The documentary evidences produced on record also support the contention of the assessee that the shareholder company M/s. Glacis Investment Ltd., Mauritius has made investment in assessee-company in 7,40,000 equity shares by investing Rs. 3,70,00,000. The shareholder company also filed confirmation to that effect which is supported by tax residence certificate, allotment of share certificates and global business licence granted by Republic of Mauritius and the bank statement of the assessee.

(i) In the case of Lovely Exports P. Ltd. (supra), the hon'ble Supreme Court held that if share application money is received by the assessee-company from alleged bogus shareholders, whose names are given to the Assessing Officer, then the Department is free to proceed to reopen their individual assessments in accordance with law but this amount of share money cannot be regarded as undis closed income under section 68 of the Act of the assessee-company. The other decisions relied upon by learned counsel for the assessee support the fact that the assessee has received genuine share application money from the shareholder company.

(ii) The Income-tax Appellate Tribunal, Indore Bench in the case of CIT v. Peoples General Hospital Ltd. in I. T. A. No. 57 of 2007 vide order dated September 28, 2007 considering the identical issue held in paras 11 to 12.2 as under :

'11. We have considered the rival submissions and material on record. We have bestowed our careful consideration and do not find any justification to interfere in the order of the learned Commissioner of Income-tax (Appeals).

11.1 Full Bench of the Delhi High Court in the case of CIT v. Sophia Finance Ltd. [1994] 205 ITR 98 (Delhi) [FB] held "under section 68 of the Income-tax Act, 1961, the Income-tax Officer has jurisdiction to make enquiries with regard to the nature and source of a sum credited in the books of account of the assessee and it is immaterial as to whether the amount so credited is given the colour of a loan or a sum representing sale proceeds or even receipt of share application money. The use of the words 'any sum found credited in the books' in section 68 indicates that the section is very widely worded and the Income tax Officer is not precluded from making an enquiry as to the true nature and source of a sum credited in the account books even if it is credited as receipt of share application money. The mere fact that the (assessee) company chooses to show the receipt of the money as capital does not preclude the Income-tax Officer from going into the question whether this is actually so. Where, therefore, an assessee-company represents that it had issued shares on the receipt of share application money then the amount so received would be credited in the books of account of the company.

The Income-tax Officer would be entitled, and it would indeed be his duty, to enquire whether the alleged shareholders do in fact exist or not. If the shareholders exist then, possibly, no further enquiry need be made. But if the Income-tax Officer finds that the alleged share holders do not exist then, in effect, it would mean that there is no valid issuance of share capital. Shares cannot be issued in the name of non-existing persons. The use of the words 'may be charged' in section 68 clearly indicates that the Income-tax Officer would then have the jurisdiction, if the facts so warrant, to treat such a credit to be the income of the assessee.

If the shareholders are identified and it is established that they have invested money in the purchase of shares, then the amount received by the company would be regarded as a capital receipt and to that extent the observations in CIT v. Stellar Investment Ltd. [1991] 192 ITR 287 (Delhi), are correct ; but the observations in that case to the effect that even if the subscribers to the capital were not genuine 'under no circumstance could the amount of share capital be regarded as undisclosed income of the company' are not."

Madhya Pradesh High Court in the case of CIT v. Dhar Ispat P. Ltd. [2004] 134 Taxman 747 (MP) ; [2003] 180 CTR (MP) 491, held "section 68 is applicable in respect of share application money ; however, the question of genuineness of the entries regarding share application money is a question of fact to be decided by the assessee authority on the basis of evidence available on record".

Delhi High Court in the case of CIT v. Stellar Investment Ltd. [1991] 192 ITR 287 (Delhi), held "that, even if it be assumed that the subscribers to the increased share capital were not genuine, under no circumstances could the amount of share capital be regarded as undisclosed income of the company. No question of law arose out of the Tribunal's order".

The hon'ble Supreme Court in the case of CIT v. Steller Investment Ltd. [2001] 251 ITR 263 (SC), held "we have read the question which the High Court answered against the Revenue. We are in agreement with the High Court. Plainly, the Tribunal came to a conclusion on facts and no interference is called for. The appeal is dismissed. No order as to costs".

Delhi High Court in the case of CIT v. Dolphin Canpack Ltd. [2006] 283 ITR 190 (Delhi), held (headnote) "in its return for the assessment year 1998-99, the assessee claimed to have received share application money of Rs. 62 lakhs. The Assessing Officer rejected the explanation of the assessee and added the amount to the taxable income of the assessee. The Tribunal found that the assessee had furnished complete details to the Assessing Officer regarding the transactions in question, which included confirmation details of bank accounts and the permanent account numbers of the parties in whose favour the share capital was subscribed. The Tribunal also noted that all the payments were received by the assessee by cheques and that the assessee had, in the process, fully discharged the onus that lay upon it for proving the identity of the subscribers and the genuine ness of the transactions. On that basis, it deleted the addition made by the authorities below. On appeal to the High Court :

Held, dismissing the appeal, that in the absence of any perversity in the view taken by the Tribunal or anything to establish conclusively that the finding regarding the genuineness of the subscribers and the transactions suffered from any irrationality, no substantial question of law arose from the order of the Tribunal. The deletion of the amount was justified".

Gauhati High Court in the case of CIT v. Down Town Hospital Pvt. Ltd. [2004] 267 ITR 439 (Gauhati), held "that regarding amounts received as share application moneys, the Tribunal had given clear finding after appreciation of the materials on record that the assessee had filed the details regarding the source of funds of shares and their Income-tax file numbers before the Assessing Officer. According to the Tribunal the assessee had also submitted before the Assessing Officer the confirmation from the creditors where full addresses, Income-tax file number, etc., were given. The Tribunal was justified in deleting the addition".

Rajasthan High Court in the case of Shree Barkha Synthetics Ltd. v. Asst. CIT [2006] 283 ITR 377 (Raj), held (headnote) "if the trans actions are made through banking channels and once the existence of persons by name in the share applications in whose name the shares have been issued is shown, the assessee-company cannot be held responsible to prove whether that person himself has invested the said money or some other person had made investment in the name of that person. The burden then shifts on the Revenue to establish that such investment has come from the assessee-company itself".

Delhi High Court in the case of CIT v. Dwarkadhish Financial Services [2005] 148 Taxman 54 (Delhi), held "the assessee had produced all relevant evidence to establish that the share application money received by the assessee was a result of genuine transaction. It had been noticed even in the impugned order that evidence was produced by the assessee including affidavits, copies of the share application forms, copies of the confirmation from the applicant- companies, copies of board of directors' resolution approving such transactions as well as cheque number, branch and address of the bank through which the investment was made.

It was also noticed that the Assessing Officer himself had noticed in his order that the applicant-shareholders were Income-tax payees. In such circumstances, it could not be presumed that the shareholder who was assessed to tax was not in existence. That would tantamount to contradiction in the stand of the Department itself".

Income-tax Appellate Tribunal, Jodhpur Bench (TM) in the case of Uma Polymers P. Ltd. v. Deputy CIT [2006] 284 ITR (AT) 1 (Jodh pur) ; [2006] 101 TTJ (Jodhpur) 124, held "in respect of share capital money, the assessee-company has to prove only the existence of the person in whose name share application is received and there is no further burden on the assessee to prove whether that person himself has invested the money or some other person has made the Investment in his name ; distinction between a public company and a private company is not very material for this purpose".

Madhya Pradesh High Court in the case of CIT v. Metachem Industries [2000] 245 ITR 160 (MP), held (headnote) "once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee is over. Whether that person is an Income-tax payer or not and where he had brought this money from, is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm or the purposes of Income-tax".

The Income-tax Appellate Tribunal, Indore Bench in the case of ACIT v. Vindhya Soya Ltd., I. T. A. No. 227/IND/2004, held "in the instant case, the Commissioner of Income-tax (Appeals) in annexure of his order has mentioned details of the shareholder, their addresses, holding of agricultural land, permanent account number of some of the shareholders, amount of deposit, their occupation and evidence filed in form of confirmation letter, copy of acknowledgment receipt of some of the shareholders filing return of income, evidence of agricultural holding, etc. We have also noted that the assessee- company has furnished complete details of all the shareholders.

Therefore, before drawing any conclusion the Assessing Officer should have issued summons under section 131 to these shareholders to arrive at the truth about the investment made by them. However, no such exercise was carried out by the Assessing Officer and simply for the reason that the amount was deposited in cash, he held that the creditworthiness and genuineness of transaction was not proved. The Assessing Officer has not doubted the identity of the shareholders. From the above it appears that the Assessing Officer made the addition on surmises and conjectures. Therefore, in view of the above facts and circumstances and placing reliance on the decisions discussed (supra), we do not find any infirmity in the order of the Commissioner of Income-tax (Appeals). Hence, the appeal of the Revenue is dismissed".

Delhi High Court in the case of CIT v. Glocom Impex P. Ltd. [2006] 205 CTR (Delhi) 571; [2008] 299 ITR 39 (Delhi), held "once it was established that the shareholder was a genuine person and also creditworthy and that she had the requisite amount for making the investment in question, no addition could be made under section 68 in the hands of the assessee-company ; the Revenue could not go further to find out whether the person from whom the shareholder had received money through cheque was also a genuine party and creditworthy".

The hon'ble Gauhati High Court in the case of Nemi Chand Koth ari v. CIT [2003] 264 ITR 254 (Gauhati), held (headnote) "that the assessee had established the identity of the creditors. The assessee had also shown, in accordance with the burden, which rested on him under section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors which was not in dispute. Once the assessee had established these, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter, the burden had shifted to the Assessing Officer to prove the contrary. The failure on the part of the creditors to show that their sub-creditors had creditworthiness to advance the said loan amounts to the assessee, could not, under the law be treated as the income from undisclosed sources of the asses see himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. The Assessing Officer failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. Therefore, the Assessing Officer could not have treated the said amounts as income derived by the assessee from undisclosed sources".

The hon'ble Rajasthan High Court in the case of CIT v. First Point Finance Ltd. [2006] 286 ITR 477 (Raj), held (headnote) "that it was not denied that all the shareholders/share applicants were genuinely existing persons. It was also not denied that each of them was an Income-tax assessee and copies of the return of their income were also placed before the Assessing Officer. There was no presumption that the assessee was the benami owner of the Investment made by the existing persons. The Tribunal was justified in deleting the addition".

The hon'ble Delhi High Court in the recent decision in the case of CIT v. Illac Investment P. Ltd. [2006] 287 ITR 135 (Delhi), held (page 136) "the respondent-assessee had for the assessment year 1989-90 disclosed in its return sum of Rs. 4,75,000 received as share application money. The Assessing Officer added the said amount to the taxable income of the assessee under section 68 of the Income-tax Act, 1961, on the ground that the identity of the subscribers had not been established. In an appeal filed by the assessee against the said order, the Commissioner of Income-tax (Appeals) held that the asses see had satisfactorily established identity of the share subscribers. The view taken with the Assessing Officer was, accordingly, reversed. The Income-tax Appellate Tribunal has in a further appeal filed by the Revenue before it placed reliance upon the decision of this court in CIT v. Antartica Investment Pvt. Ltd. [2003] 262 ITR 493 (Delhi) and CIT v. Sophia Finance Ltd. [1994] 205 ITR 98 (Delhi) [FB] to hold that the respondent assessee had discharged the onus by reference to the material produced to establish the identity of the subscribers. The Tribunal has observed :

'On going through the various orders to which reference has been made by the learned counsel for the assessee, it is found that on similar facts the additions made by the Assessing Officer have been deleted. So far as the present case is concerned, the learned Commissioner of Income-tax (Appeals) has considered the facts and circumstances in detail and has recorded findings of fact. He has also placed reliance on the decision in the case of CIT v. Sophia Finance Ltd. [1994] 205 ITR 98 (Delhi) [FB]. The learned Commissioner of Income-tax (Appeals) has also considered the provisions of sections 72, 75 and 77 of the Companies Act and has also taken into consideration the details furnished by the assessee before the Assessing Officer including the certificate of incorporation of subscribers, copies of their bank statements and copies of their assessment orders as well as the copies of their audited accounts. The findings recorded by the learned Commissioner of Income-tax (Appeals) are based on a proper appraisal of the material and we do not find any scope to interfere with the same. Consequently, the order of the learned Commissioner of Income-tax (Appeals) is upheld'. "

12. It is admitted fact that the assessee filed the confirmation letter from M/s. Alliance Industries Ltd. confirming that it has transferred foreign currency from their bank to the account of the assessee and in the said confirmation all the details of several payments are mentioned. It is also admitted fact that the said non-resident Indian company is a registered company and which fact is also proved by the certificate of incorporation of M/s. Alliance Industries Ltd. which is also certified by the Notary Public and is countersigned by the Governor and Commander in Chief of the city of Gibraltar. These certificates are supported by later on by Faria and Associates Chartered Accountants. The identity of the foreign investor M/s. Alliance Industries Ltd. is therefore established beyond doubt. The Assessing Officer also did not dispute the identity and existence of the share holder M/s. Alliance Industries Ltd. The Assessing Officer also did not dispute transfer of money by M/s. Alliance Industries Ltd. to the assessee for the purchase of shares of the assessee-company and the amount invested in the assessee-company on account of share capital/share premium. The assessee from the certificate of the Government of India has established that M/s. Alliance Industries Ltd. invested the money in the business of the assessee after obtain ing the permission of the Government of India. The forms filed with the Reserve Bank of India would also indicate that the foreign remit tances received from M/s. Alliance Industries Ltd. were duly approved by the Reserve Bank of India for investment in the shareholding of the assessee-company. The assessee also filed several certificates issued time to time by the State Bank of India, Commercial Branch, Bhopal explaining therein that on several dates the foreign remittances were ordered, to be credited to the account of the assessee with the State Bank of India, by M/s. Alliance Industries Ltd. The assessee at the appellate stage filed a consolidated certificate issued by the State Bank of India, Commercial Branch, Bhopal explaining therein that Standard Chartered Bank, Dubai has confirmed  that all the remittances sent in favour of the assessee-company by M/s. Alliance Industries Ltd. are routed through the bank account of M/s. Alliance Industries Ltd. The details of payments, date and USD are the same as have been mentioned in the confirmation letter of M/s. Alliance Industries Ltd. filed before the Assessing Officer and are on the same line on which the assessee filed several certificates before the Assessing Officer. The Standard Chartered Bank also filed certificate confirming the above position and that M/s. Alliance Industries Ltd. maintained bank account with them and the account is conducted to their satisfaction. The Assessing Officer neither at the assessment stage nor at the appellate stage disputed the genuineness of these documentary evidences and also did not make any meaningful inquiry on such evidences. State Bank of India, Bhopal confirmed the name of M/s. Alliance Industries Ltd. in the certificates who has transferred the USD to the assessee. The entries in the confirmation are therefore confirmed by the State Bank of India, Bhopal also. From the above it is clearly proved by the assessee that the amount in question have come to the assessee-company from the bank account of M/s. Alliance Industries Ltd. through proper banking channel and it is the money of M/s. Alliance Industries Ltd. that has come to the asses see and that M/s. Alliance Industries Ltd. had the capacity to invest this much of the amount during the financial year relevant to the assessment year in question. The transfer of foreign currency from the bank account of M/s. Alliance Industries Ltd. clearly proved the creditworthiness of M/s. Alliance Industries Ltd. It is a settled law that the Income-tax authority cannot ask the assessee to prove source of the source. All the issue of the shares to M/s. Alliance Industries Ltd. have already been reported by the assessee to the Registrar of Companies. As per submission of learned counsel for the assessee though the Directorate of Enforcement Government of India conducted certain inquiries against the assessee under the provisions of Foreign Exchange Management Act but no further inquiry has been made into the matter. It would also prove that the money in question flow from M/s. Alliance Industries Ltd. therefore the Assessing Officer was not justified in drawing adverse inference against the assessee. The Assessing Officer has not brought any evidence on record that the share application money received by assessee from M/ s. Alliance Industries Ltd. belong to the assessee or that it was the assessee's own money which it had received in the shape of dollars from the non-resident Indian company. It is therefore not in the nature of income of the assessee because the money received was on account of share capital/share premium. The learned Commissioner of Income-tax (Appeals) has given categorical finding in the impugned order that the Assessing Officer himself had accepted the similar deposits in the earlier assessment years 2001-02 and 2002-03 as genuine. He also observed in fact the assessment order relating to the assessment year 2001-02 was passed after inquiry under section 143(3) wherein similar investment from same non-resident Indian company M/s. Alliance Industries Ltd. to the tune of Rs. 4,64,71,322 was accepted as genuine and investment of Rs. 9,47,81,895 from the same company was also accepted in subsequent assessment year 2002-03 under section 143(1). Learned counsel for the assessee also argued and made the above submission before the Tribunal as considered by the learned Commissioner of Income-tax (Appeals). During the course of arguments, the learned Departmental representative did not dispute the above facts recorded by the learned Commissioner of Income-tax (Appeals) in the impugned order and therefore it stands proved that in the earlier years the Assessing Officer did not dispute the identity of M/s. Alliance Industries Ltd., genuineness of transaction and its creditworthiness in respect of share application money remitted by the above foreign investor. We do not find if there is any deviation of the facts of the investment in respect of the same non-resident Indian company M/s. Alliance Industries Ltd. We may also note that in the assessment year 2001-02, the assessment order under section 143(3) was passed by the same Assessing Officer Shri Yogendra Dubey, Assistant Commissioner of Income-tax-2(1), Bhopal accepting the identical submission of the assessee. Therefore, there was no justification on the part of same Assessing Officer Shri Yogendra Dubey for not accepting the credits in this year as genuine. The learned Departmental representative submitted that principle of res judicata is not applicable and the Assessing Officer is competent to make inquiry on the same facts in the subsequent year. The hon'ble Madhya Pradesh High Court in the case of CIT v. Godavari Corporation Ltd. [1985] 156 ITR 835 (MP) held "with regard to the third point, we would like to say that the question posed before us is not whether the Tribunal has committed an error of law in applying the principle of res judicata. However, though it is true that the principle of res judicata do not apply, the rule of consistency does apply. In the instant case, the Department has failed to point out that the circumstances for treating the gain in the transactions for the assessment year 1972-73 as a capital gain were different from those in the assessment years 1962-63 and 1963- 64 and, as such, the finding has to be consistent. The Tribunal has, therefore, not committed any error. In this respect, we would like to set out hereinbelow an excerpt from the decision of the Orissa High Court in CIT v. Belpahar Refractories Ltd. [1981] 128 ITR 610 (Orissa) at pages 613-614".

The hon'ble Punjab and Haryana High Court in the case of CIT v. Vikas Chemi Gum India [2005] 276 ITR 32 (P&H) held (headnote) "that since the appellant did not challenge the order passed by the Tribunal in relation to the assessment year 1986-87 by which it confirmed the order of the Commissioner (Appeals) deleting the addition made by the Assessing Officer on account of value of 'bardana' used for storing 'churi and korma', it could not challenge a similar order passed in relation to the assessment year 1988-89".

The hon'ble Supreme Court in the case of Berger Paints India Ltd. v. CIT [2004] 266 ITR 99 (SC) held "High Court-decision in the case of one assessee-Department accepting and not challenging correctness-Not open to the Department to challenge in the case of other assessees, without just cause".

In view of the above facts and decisions noted, we do not find any merit in the submission of the learned Departmental representative, the same is therefore rejected. The learned Departmental represent ative also submitted that balance-sheet of M/s. Alliance Industries Ltd. is not filed as is considered relevant in the case of M/s. Kalani Industries Ltd. (supra). We do not agree with the submission of the learned Departmental representative because every case has its own facts and the findings are dependant upon the appreciation of the evidence available on record. In the case of present assessee, the entire documentary evidence available on record and the previous history of assessee noted above in respect of the same non-resident Indian company M/s. Alliance Industries Ltd. clearly proved the case of the assessee that the share application money received by the assessee is not in the nature of income of the assessee. The assessee was also able to prove creditworthiness of M/s. Alliance Industries Ltd. This contention of the learned Departmental representative is also rejected. The learned Departmental representative also contended that the Assessing Officer raised serious doubt about the genuineness of transaction because no prudent businessman would make huge investment for getting lesser shareholding in the company. It appears from the above submission from the learned Departmental representative that he himself contradicted his submission because according to his submission for proving genuine credit under section 68 the assessee shall have to prove identity of creditor, genuineness of transaction and creditworthiness of the creditor which the assessee in this case has already proved. What the businessman has taken a decision is entirely dependant upon their business needs which is not open to challenge by the Revenue therefore it was not relevant criteria to disbelieve the version of the assessee. The learned Departmental representative also submitted that non-resident Indian company was not knowing much about the assessee before making the huge investment. It appears that the learned Departmental representative forgot to note that the same non-resident Indian company had made investment in the assessee-company in the earlier years which is not disputed by the Assessing Officer therefore the contentions of the learned Departmental representative have no merits and are rejected. The reliance of the learned Departmental representative on the order of the Income-tax Appellate Tribunal, Delhi Bench in the case of A-One Housing Complex Ltd. (supra) is misplaced because ultimately in this case it was held 'whether onus of assessee in the case of share capital by public issue is lighter one and therefore such onus would stand discharged if identity of share appli cant is established-held-Yes'. This case is not applicable in favour of the Revenue because the amount is not received from close relative or friend.

12.1 On going through the above documentary evidences on records and the judicial pronouncements referred to above, it is clear neither the Assessing Officer nor the learned Departmental representative appearing for the Revenue have disputed the documentary evidences filed by the assessee before the authorities below. The only point agitated by the Assessing Officer was creditworthiness of M/s. Alliance Industries Ltd. which is also satisfactorily proved by the assessee. The decision of the Full Bench of the Delhi High Court in the case of CIT v. Sophia Finance Ltd. [1994] 205 ITR 98 (Delhi) [FB] holds the field. The hon'ble Madhya Pradesh High Court in the case of CIT v. Dhar Ispat P. Ltd. held that the question of genuineness of entries regarding share application money is a question of fact to be decided on the basis of evidence available on record. The assessee on the basis of evidence available on record has been able to prove creditworthiness of  M/s. Alliance Industries Ltd. The ratio of the decisions relied upon by learned counsel for the assessee and referred to by us in this order are squarely applicable to the facts and circumstances of this case. The assessee through the evidences on record has been able to prove the identity of shareholder, its existence and transfer of money from the bank account of M/s. Alliance Industries Ltd., which fact have not been disputed by the Assessing Officer. The assessee produced sufficient and reliable material and evidence before the Assessing Officer to prove that the amount in question have been invested by M/s. Alliance Industries Ltd. The learned Commissioner of Income-tax (Appeals) on the basis of the material on record was justified in accepting the contention of the assessee that the share applicants in fact exist. The creditworthiness of the shareholder is also proved because all the payments have been made through banking channel through the account payee cheque which fact could be verified from the respective bank and in fact the respective banks namely SBI, Bhopal and Standard Chartered Bank have certified the same fact. The genuineness of the transaction is not disputed. Considering the totality of facts and circumstances of the case in the light of the material and evidence on record, we are of the view that the assessee has discharged the onus lay upon it to prove identity and existence of the shareholder M/s. Alliance Industries Ltd., its credit worthiness and genuineness of transaction. The Assessing Officer has however not brought any evidence contrary to the evidence filed by the assessee. The decisions cited by the learned Departmental representative have been considered in the light of facts and circumstances of thecase and we are of the opinion that the same could not support the contention of the learned Departmental representative. We may also note that the hon'ble Supreme Court in the case of CIT v. P. Mohanakala [2007] 291 ITR 278 (SC), as relied upon by the learned Departmental representative has considered the fact in which the Assessing Officer held that the gift though apparent were not real and accordingly treated all the amounts of the gift as income of the assessee under section 68 of the Income-tax Act. The assessee did not contend that even if their explanation was not satisfactory, the amount were not of the nature of income. The learned Commissioner of Income-tax (Appeals) confirmed the order and the Tribunal through majority view confirmed the orders of the authorities below. On an appeal, the High Court reappreciated the evidence and substituted its own finding and came to the conclusion that the reasons assigned by the Tribunal were in the realm of surmises, conjecture and suspicion. The hon'ble Supreme Court on such facts "held, reversing the decision of the High Court, that the findings of the Assessing Officer, the Commissioner (Appeals) and the Tribunal were based on the material on record and not on any conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction was not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent findings of fact".

However, the facts and circumstances of the appeal before us are clearly distinguishable as noted above. The reliance of the learned Departmental representative on the cases referred to above are there fore misplaced.

12.2 Considering the above discussion, we do not find any infirmity in the order of the learned Commissioner of Income-tax (Appeals). The appeal of the Revenue has no merit and is accordingly dismissed. No other point is argued or pressed.'

11. The aforesaid order of the Indore Bench have been confirmed by the hon'ble Madhya Pradesh High Court in the case of CIT v. Peoples General Hospital Ltd. [2013] 356 ITR 65 (MP) in which the hon'ble High Court following the decision of the hon'ble Supreme Court in the case of Lovely Exports Pvt. Ltd. (supra) held as under (headnote) :

'Held, dismissing the appeals, that if the assessee had received subscriptions to the public or rights issue through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 of the Income-tax Act, 1961, in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented the company's own income from undisclosed sources. It was nobody'scase that the non-resident Indian company was a bogus or non-existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who had provided the share subscription and that the trans action was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in this case, the establishment of the identity of the investor alone was to be seen. Thus, the addition was rightly deleted.'

12. In the present case, the assessee-company had received money on allotment of shares from M/s. Glacis Investment Ltd. through banking channel and furnished complete details of the shareholder, no addition would be made under section 68 of the Act, in the absence of any positive material or evidence to indicate that the shareholder company was benamidar or fictitious company or that any part of the share capital represented the assessee's own income from undisclosed sources. The assessee on the basis of the documentary evidence on record has been able to prove that non-resident company, i.e. M/s. Glacis Investment Ltd. was an existing company and that the shareholder company made investment in the assessee-company would prove that the assessee received genuine share application money from this non-resident company. Thus, the assessee had established the identity of the shareholder company and that transaction was genuine. The assessee has also proved the creditworthiness of the shareholder company, therefore, the authorities below were not justified in making the huge addition against the assessee.

13. Considering the totality of the facts and circumstances on the basis of the evidences on record and in the light of the judicial pronouncements noted above, we are of the view that the assessee has been able to prove the identity of the creditor which is not in dispute, creditworthiness of the shareholder company and genuine ness of the transaction in the matter. Therefore, addition of Rs. 3.70 crores under section 68 of the Act is wholly unjustified. We, accordingly, set aside the orders of the authorities below and delete addition of Rs. 3.70 crores. In the result, ground No. 1 of appeal of the assessee is allowed."

20. In view of the above, we find that the issue on the merits is also covered in favour of the assessee by the order of the Income-tax Appellate Tribunal, Chandigarh Bench in the case of Lotus Integrated Taxpark Ltd. (supra) and as such, no addition could be made against the assessee. In view of the above findings and discussion, we set aside the orders of the authorities below and quash the reassessment proceedings under section 148 of the Income-tax Act, resultantly, all additions made therein stand deleted.

21. In the result, the appeal of the assessee is allowed.