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TMI Blog2017 (5) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... ities in question were not found to be existing on the given addresses and that none of the parties were produced nor was there any material on record to rebut the objections of the AO regarding capacity of the alleged investors to make the investment. Mere payment by account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine. The bank accounts of various entities show uniform pattern of transactions and that invariably, the issue of cheques is immediately preceded by the deposits of equivalent amounts in the account either in cash or through cheque/transfer entries. Unless the transactions represented by the entries in the bank accounts are correlated with the business activities and the books of account of the said entities, no justification to disregard the finding of the AO that the above pattern and the frequency of deposits and withdrawals at short intervals would render the accounts, having been used only for the purpose of providing accommodation entries and therefore, it cannot be said that the assessee has explained the source of credits or the transactions to be genuine. - Decided against assessee. - ITA No. 2041/Del./2011 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent by issuing notice u/s. 148 of the Act and recording reasons. In response, the assessee claimed the above amount as share capital money received from aforesaid companies/parties. It was submitted that the assessee had received the share application from the companies as referred in the reasons recorded and shares were allotted to them on 31.03.2003 which stands corroborated from the fact that the issued and subscribed capital of the company had also been increased during the year under consideration. The assessee also submitted some evidences like PAN, details of allotment of shares in form No. 2, confirmations etc. of the above creditors. Relying on the decision of Hon ble Supreme Court in the case of CIT vs. Lovely Exports P. Ltd., 216 CTR (SC) 195., the assessee submitted that no addition can, thus, be made in the hands of the respondent u/s. 68 of the Act. The Assessing Officer issued summons to the alleged share applicants u/s. 133(6), but the same returned back with the postal remarks No such Person . The AO also directed the assessee to produce any of the principal officer (s) or director (s) of the above companies, but the assessee failed to do so. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He, therefore, urged for sustenance of the order of the AO. 5. None is present on behalf of the assessee before us despite the date of hearing was fixed on the written request of the assessee s counsel. No adjournment application has come on record from the side of assessee. We, therefore, find no alternative except to decide the appeal on merits on the basis of materials available on record and after hearing the submissions of ld. Departmental Representative. 6. Having considered the submissions of the ld. DR, the contents of the orders of authorities below, the enquiry made by the AO with respect to existence of share applicants/lenders and the genuineness of transactions made therewith, we find that the ld. CIT(A) is not justified in deleting the impugned additions. It is notable that the assessee is legally obliged to satisfy the three ingredients of section 68, namely, identity creditworthiness of creditors and genuineness of the transactions. In the instant case, it is not in dispute that the alleged creditors were not found in existence as per remarks of the postal authorities given on the summons issued by the AO to them u/s. 133(6) of the Act. The assessee also di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the entries in the bank accounts are correlated with the business activities and the books of account of the said entities, we do not find any justification to disregard the finding of the AO that the above pattern and the frequency of deposits and withdrawals at short intervals would render the accounts, having been used only for the purpose of providing accommodation entries and therefore, it cannot be said that the assessee has explained the source of credits or the transactions to be genuine. The ld. CIT(A) has relied on various decisions including the decision of Hon ble Supreme Court in the case of Lovely Exports (supra), which are distinguishable on the facts attending to the present case. However, Our aforesaid view stands fortified by the decision of Hon ble Jurisdictional High Court in the case CIT vs. N. Tarika Properties Investment Pvt. Ltd. (2014) 264 CTR 472(Del.), where in the identical facts and circumstances, the Hon ble court after considering the decision of Hon ble Supreme Court in the case of Lovely Export Pvt. Ltd. (supra), has held as under : 26. We have further held that the Court or Tribunal should be convinced about the identity, creditworthiness a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. and M/s. SJ Hosiery Pvt. Ltd., the Assessing Officer has noticed that the pay order/DDs in respect of both the companies were made out of the bank account of M/s. Bhawani Engineering Pvt. Ltd. The AO has held that the transactions in the bank accounts showed that there was a corresponding withdrawal of the amount in cash on the very same day of the crediting of cheques and there was immediate issuance of cheques/DDs on deposit of cash. 30. The Judgment in the case of M/S GANGESHWARI METALS PVT. LTD. (SUPRA), does not advance the case of the respondent inasmuch as in the said judgment it has been held that there are two types of cases, One in which the assessing officer carries out the exercise which is required in law and the other in which the assessing officer sits back with folded hands' till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The High Court held that case to be falling in the second category. In the present case the assessing officer has not sat back with folded hands but has conducted the enquiry. He has requisitioned and examined the bank accounts and fo ..... 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