2018 (1) TMI 1119 - ITAT RAIPUR

Assessment u/s 153A - Unexplained cash credits u/s.68 - identity and creditworthiness of the creditors not established - notice u/s.133(6) issued - Held that:- We have not been able to appreciate that how from the non-maintenance of statutory registers under the Companies Act it can be inferred that a part of share application money received by the assessee company was not genuine. The DR could not demonstrate before us the relation between the absence of statutory registers and genuineness or otherwise of the share application money received during the year.

It is not in dispute that all the share applicants had responded to the notice issued by the AO to them and have affirmed the fact of their investing money as their share application with the assessee company. The above fact at least demonstrates that all the share applicants were identifiable.

The entire share application money of ₹ 8,56,00,000/- in the assessment year 2010-2011 and ₹ 9,64,00,000/- in the assessment year 2011-2012 were received through banking channel and the share applicants have duly disclosed their investment in share application to the assessee in their balance sheets and transactions were also appearing in their bank statements. We find that though the AO had observed that after going through the balance sheet of the share applicants he was not satisfied with the creditworthiness of the share applicants but could not give any cogent reasons in the assessment order for his above finding.

DR also could not bring any material before us to show that what was the reason to arrive at the said finding. Thus such a non-speaking order is bad in law and unsustainable. The CIT(A) has returned a finding that the identity of share applicants, genuineness of the share transactions and creditworthiness of the share applicants were established by the various documents like bank statements, balance sheets etc. furnished by the share applicants to the AO in pursuance to the notice issued to them u/s.133(6) of the Act. - Decided against revenue

Additions made on account of applying net profit rate - rejection of books of accounts u/s.145 - Held that:- As during the course of the assessment proceedings, the assessee has duly produced its books of accounts along with the bills and vouchers before the AO. No defect in such books of accounts could be brought on record by the AO after examination and verification of the same. The reasons stated by the AO in the order of assessment are the reason to doubt or suspect the correctness of books of accounts which required the AO to examine the books of accounts more cautiously. The said reason does not empower the AO to reject the books of accounts. For rejecting the books of accounts the AO must point out such defect in the books of accounts which shows that the books of accounts are incomplete or incorrect or where the method of accounting provided u/s.145(1) or Accounting Standard notified u/s.145(2) have not been regularly followed by the assessee.

No defect could be brought on record by the AO. In absence of the same, the AO was not justified in rejecting the books of account and brushing aside the book results and estimating the business income of the assessee. We, therefore, do not find any good reason to interfere with the order of CIT(A). Therefore, this ground of appeal of Revenue is dismissed.