TMI Blog2006 (12) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 in case of the assessee was made by the A.O. u/s 143(3) on 16.3.2004. Subsequently, CIT examined the assessment record and issued a show cause notice dated 15.10.2004 as to why the assessment should not be modified being erroneous and prejudicial to the revenue on the following grounds: i) The assessee increased its share capital by ₹ 14,91,000/-. The Entire investment was explained by the assessee but still A.O. made addition of only ₹ 4,00,000/-. Thus, concealed income of ₹ 10,91,000/- escaped assessment. ii) Assessee had declared closing stock of finished goods at Ms. 11,82,000/- while its value as per sec. 145A of the Income tax Act, 1961 comes to ₹ 14,89,320/-. Thus, taxable income of ₹ 3,0/,32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the Broker was neither filed before the A.O. nor during the present proceedings. Further, the list of persons who had subscribed to the share capital revealed that some persons in the list had same address. This only meant that some members of the family had contributed and if all the members of the family were taken together the contribution by the family was more than ₹ 50,000/- each. Why would any family from a remote village in Kotdwar subscribe to the share capital of such an unimportant company is not understood? The confirmations filed by the assessee during the course of assessment proceedings were also in the same handwriting and written by the same pen, creating doubt about the genuineness of the investments. All thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT. It was submitted that the A.O. had completed the assessment after examining the books and after obtaining the necessary details and there was no error in the order. The assessee had filed confirmations in respect of share application money whatever were required by the A.O. and ....of sale account was also given. The shares had been subscribed by small investors and there was no requirement of PAN number to be quoted as the investment in each case was not in excess of ₹ 20,000/-. The profit on sale of shares was duly mentioned in the letter dated 1.200-4 filed before the A.O. The A.O. in the assessment proceedings had thoroughly investigated the investment in shares and had agreed to the surrender of ₹ 4 lacs to buy pea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the rival contentions carefully. On careful perusal we find that there were certain aspects which needed inquiry in the matter which were not made by the A.O. In case of share applicants for the fresh share capital of ₹ 1491000/-, admittedly these persons did not have income tax file number and confirmation had not been filed in all the cases. The matter was, therefore required to be enquired into after obtaining the addresses of the shareholders so as to find out whether the shareholder existed and had actually contributed to the share capital. This was not done instead a conditional surrender of ₹ 4 lacs on this account was accepted for not initiating penalty proceedings for which the A.O. had no power. Similarly, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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