TMI Blog2010 (8) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... w, appeal should not be filed in matters where either no question of law arises or the issue of law is a settled one. We give this direction because the “judicial capital” in terms of manpower and resources is extremely limited - 911/2010, 913/2010 - - - Dated:- 2-8-2010 - Represented:- Through: Mr. N.P. Sahni, Senior Standing Counsel Through: None CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MANMOHAN J U D G M E N T MANMOHAN, J CM 12293/2010 in ITA 911/2010 Allowed, subject to all just exceptions. CM 12294/2010 in ITA 911/2010 CM 12296/2010 in ITA 913/2010 For the reasons stated in the applications, delay in re-filing the appeals is condoned. Applications stand disposed of. ITA 911/2010 ITA 913/2010 1. The present appeals have been filed under Section 260A of Income Tax Act, 1961 (for brevity "Act, 1961") challenging the common order dated 29th May, 2009 passed by the Income Tax Appellate Tribunal (in short "ITAT") in ITA Nos. 4799/Del/04 and 4800/Del/04, for the Assessment Year 2001-2002. Since similar issue is involved in both the appeals, we are passing a common order. However, for the purpose of noting the facts, we ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the addition made by the assessing officer on account of unexplained share application money cannot be sustained for the following reasons:- (i) The applicants concerned were identified. (ii) The applicants confirmed the payment of money to the appellant for purchase of shares. (iii) The transactions in question were by cheques. (iv) The affidavit of the subscribers were filed indicating their full address, details of deposits made with the appellant and sources where from money was obtained to make the deposits. Copies of bank accounts were furnished. These affidavits were notarized. There was no ground for disbelieving the contents of the affidavits. (v) Most of the subscribers were companies incorporated with the Registrar of Companies. Proper inquiries would have revealed the true facts of the case. The appellant cannot be faulted if there was no time to give them an opportunity to rebut the Inspector‟s report made at the back of the appellant. (vi) The deposits were not of an order that could not be believed. (vii) The shares have been allotted to the shareholders and letter of allotment have been submitted to the Registrar of Companies. (viii) The ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us lies. Unless sufficient materials are produced, the onus does not shift on the Revenue. But once the materials are scrutinized and the result of the scrutiny is communicated to the assessee, the onus shifts from the Revenue to the assessee. Then the assessee has to take appropriate steps for proving its case. Unless there are sufficient materials after such communication, produced by the assessee, the Income-tax Officer can do no further." C) Commissioner of Income Tax vs. Sophia Finance Limited, 205 ITR 98 ( Del ) wherein it has been held as under:- " ..As we read Section 68 it appears that whenever a sum is found credited in the books of account of the assessee then, irrespective of the colour or the nature of the sum received which is sought to be given by the assessee, the Income tax Officer has the jurisdiction to enquire from the assessee the nature and source of the said amount. When an explanation in regard thereto is given by the assessee, then it is for the Income tax Officer to be satisfied whether the said explanation is correct or not. It is in this regard that enquiries are usually made in order to find out as to whether, firstly, the persons from w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the partners, could not be assessed in the hands of the firm and in deleting the same. Since the matter was not considered by the Tribunal on the merits, the Tribunal would be free to hear the arguments of both the parties and decide afresh in view of the observations made above. Accordingly, the reference is answered in favour of the Revenue and against the assessee. D) CIT vs. Korlay Trading Co. Ltd., 232 ITR 820 ( Cal ) wherein it has been held as under:- " .There should be a genuine transaction. The income tax file number has been given but that is not enough to prove the genuineness of the cash credit. Admittedly, there is no affidavit to this effect, by the creditor, on record. Considering these facts, we find that the finding of the Tribunal in this regard is perverse. The assessee has failed to prove the genuineness of the cash credit E) CIT vs. Shiv Shakti Timber, 229 ITR 505 (MP) wherein it has been held as under:- " Therefore, from the series of decisions of various High Courts, it is well established that in such a situation where there is a credit entry in the books of account of the assessee and there is no satisfactory explanation, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f culpability and complexity of the assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of Sections 68 and 69 of the Income Tax Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company." 6. In our opinion, as Section 68 of Act, 1961 has been interpreted as recently as 2008 by a Division Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced hereinbelow:- "3. The Assessing Officer required the assessees to furnish details and documents. The assessees produced copies of sale and purchase bills of the share brokers through whom the transactions took place and photocopies of confirmations of persons who had contributed the fresh share application money. The assessees furnished the PAN (GIR) numbers of the applicants, the details of the cheque numbers and dates. The assessees contended that letters sent to the shareholders had not been responded to. 4. The Assessing Officer required the Assessee to furnish bank statement to substantiate the money availability with the Assessee and also to prove the genuineness of the transactions. This not having been done, the Assessing Officer got enquiries made through an Income Tax Inspector who found that none of the applicants were found to exist at the address given in the confirmations. However, the report of the Income Tax Inspector was furnished to the assessees on 22nd February 2000 and the Assessment order was passed on the very next day, that is, 23rd February 2000 giving the assessees no time to respond. 5. Before the CIT (A) the assessees furnished additional evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Forms, Share Transfer Register etc., it would constitute acceptable proof or acceptable explanation by the Assessee; (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the Assessee nor should the AO take such repudiation at face value and construe it, without more, against the Assessee. (7) The Assessing Officer is duty-bound to investigate the credit worthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation." (p. 453) 9. We are of the view that no substantial question of law arises in these appeals. Accordingly, these appeals are dismissed." 10. We are also informed that a Special Leave Petition against the aforesaid Division Bench judgment in the case of the respondent-assessee has been dismissed by the Supreme Court. Accordingly, we are of the opinion that no question of law arises in the present cases as the matter is fully covered by the judgment of the Supreme Court in Lovely Exports (P) Ltd. (supra) as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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