TMI Blog2018 (6) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... umber of identity of these share applicants and the assessee has specifically requested the Assessing Officer to enforce the attendance of Director of these companies. The assessee has prima facie discharged the onus on it. Further the statement of Shri Aseem Kumar Gupta was not provided to the assessee and no opportunity to cross examine was also given in spite of the specific request of the assessee. Thus, not providing the opportunity to cross examine, there is a violation of principles of nature justice. The Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. CCE [2015 (10) TMI 442 - SUPREME COURT] has clearly held that denial of opportunity to the assessee to cross examine the witnesses whose statements were made the sole basis of the assessment is a serious flaw rendering the order a nullity. - Decided in favour of assessee. - ITA No. 178/JP/2015, C.O. No. 18/JP/2015 - - - Dated:- 8-6-2018 - Shri Vijay Pal Rao, JM And Shri Bhagchand, AM Revenue by : Smt. Seema Meena (JCIT) Assessee by : Shri P. C. Parwal (CA) ORDER Per : Bhagchand, A. M. The appeal by revenue and cross objection by assessee arise from the order dated 30/12/2014 of Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court, in the case of CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195, will apply here and addition made by the AO is uncalled for. 3.3.2.1 Burden of proof is not static. Once the assessee has provided relevant evidences then the burden shifts on the AO to disapprove their genuineness with new facts. However on the basis of documentary evidences such as (i) PANs of all fourteen (14) concerns who have subscribed to the share capital (ii) Bank statements (iii) cheque details (iv) confirmations received from share holders (v) Copy of ROC return filed and (vi) Share allotment details, it can be concluded that assessee had been able to prove its case and that AO could not shift the burden back on to the assessee without producing any tangible material to doubt the veracity of documents furnished by the assessee. Therefore, assessee has been able to discharge its burden to establish their identity, creditworthiness and genuineness as regards the transactions concerning the allotment of shares. From ROC return, it is also seen that once share allotment is done, whole process of share capital subscription starting from share capital application received from af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , by merely saying that these parties were not traceable and treating the share application money as unexplained money under section 68 was not correct. The assessee had filed necessary details for the purpose of proving that it had received actual share application money and the shares had been allotted. Shares had been allotted to the respective companies. The assessee- company was showing the shareholders in its balance sheet and these companies were also showing the assets in their balance sheet in the shape of shares in the assessee-company. All these companies were assessed to tax and, therefore, the addition sustained by the Commissioner (Appeals) was not justified . (Stress supplied) Further, ITAT Jodhpur Bench in case of Dadhimati Syntex P Ltd 259/Jodh/2013 Dated 31/7/13 has also endorsed this view. (iii) It is also settled law that it is mandatory for the AO to confront the assessee with any material collected by the AO at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc. will be rendered on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and source of the source. (vi) Further, I find that the Hon ble Apex Court in CIT v Lovely Exports (P) Ltd. (2008) 216 CTR 195 has held that the even if the share application money received by the appellant company is from alleged bogus shareholder, whose identity is produced by the appellant company, the revenue can always proceed against such shareholders and if necessary reopen their individual assessment. Similar decision is also taken in the case of CIT v. Steller Investment Ltd. (1991) 192 ITR 287 (Del.), (2000) 251 ITR 287 (SC), CIT v. Sophia Finance Ltd. 205 ITR 98 (Del.)(FB), CIT v. Divine Leasing Finance Ltd. (SLP no. CC 375/2008 arising out of ITA no. 53/2005 of the High Court of Delhi), CIT (Kolkata) v. M/s Shipra Retailers (P) Ltd. SLP no. CC 451/2008 arising out of ITA no. 576/2004 of the High Court of Calcutta), CIT v. Pondy Metal Rolling Mills (P) Ltd. (SLP no. CC 12860/2007 arising out of ITA no. 788/2006 of the High Court of Delhi) and CIT v. General Exports Ltd. (SLP no. 21349/2007 arising out of ITA No. 880/2006 of the High Court of Delhi). Following the aforesaid decision of the Apex Court in CIT v. Lovely Exports (P) Ltd. (supra), the Hon'ble Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) the Hon'ble Delhi High Court vide its common order dated 02.08.2010 has inter alia observed as under: 7. Consequently, the doctrine of merger would apply and the judgment of the Supreme Court in Lovely Exports (P) Ltd. (supra) would cover the field with regard to interpretation of Section 68 of Act, 1961. 8. In any matter, the onus of proof is not a static one. Though in Section 68 proceedings, the initial burden of proof lies on the assessee yet once he proves the identity of the creditors/share applicants by either furnishing their PAN number or income tax assessment number and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the Revenue. Just because the creditors/share applicants, could not be found at the address given. It would not give the Revenue the right to invoke Section 68. One must not lose sight of the fact that it is the Revenue which has all the power and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the source of source . .. 10. We are also informed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of Mr. Mahesh Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the assessing officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the assessing officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of Section 68. 7. Having regard to the entirety of facts and circumstances, the Court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (supra). 8. The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (supra). Where the assessee adduces evidence in support of the share application monies, it is open to the assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has flown from the assessee s own money. In view of the facts and circumstances as discussed and also ratio of the above decision in favour of the appellant as discussed in above paras, the addition of ₹ 1,09,00,000/- made U/s 68 of the Act cannot be justified, hence deleted. Assessee gets a relief of ₹ 1,09,00,000/-. 4. Now the revenue is in appeal before the ITAT by taking following grounds of appeal: On the facts and in the circumstances of the cases and in law the ld. CIT(Appeal)-I, Jaipur has erred in:- 1. Whether on the facts and in the circumstances of the case and in law the ld.CIT(A) has erred in deleting the addition of ₹ 1,09,00,000/- made u/s 68 on account of unexplained cash credits in the form of share capital issued by the assessee. 2. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in holding that assessee has discharged its onus of establishing the identity, creditworthiness and genuineness as regards the transactions concerning the allotment of shares ignoring the facts that contrary evidences in the form of cash paid and cheques received were found and seized during the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of shareholders, minute books and the date of allotment of shares and particulars of shares allotted. 2. The AO issued letter u/s 133(6) on 26.02.2013 to all the above parties seeking further information as mentioned at pg 10, para 17 of the assessment order. The fate of the summons issued and the reasons for which the AO considered the share capital received from these companies as unexplained is tabulated as under:- S.No Name, address and PAN of the Company Amount invested (Rs.) Reasons for making addition 1 M/s SAM Portfolio Pvt. Ltd. WP-501,3rd Floor, Shiv Market, Wazirpur, Ashok Vihar, Delhi-110052 New Address: 2-G, MIG DDA Flats, Gulab Bagh, Delhi-110007 PAN: AAHCS6810N 5,00,000 -In response to summons, balance sheet filed but it did not furnish Schedule-5 of the Balance Sheet which shows investment of ₹ 93,60,900/- to verify whether it has invested in share capital of the assessee or not. - Sh. Aseem Kumar Gupta in his statement has stated that he was engaged in providing accommodation entries through this company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 M/s Newage Exim Pvt. Ltd. H-003, Saraswati Appt., 97 I.P. Extn., Patparganj, Delhi- 110092 PAN: AAEFN3888R 10,00,000 7 M/s Telstar Editing Studio Pvt. Ltd. 228A, Pocket A, Mayur Vihar-II, Delhi-110091 PAN:AAACT8962B 5,00,000 8 M/s Chhoti Leasing Finance Pvt. Ltd. D-11, Nanda Devi Tower, 2nd Floor, Central Market, Prashant Vihar, New Delhi- 85 PAN: AABCC8851H 10,00,000 9 M/s B.T. Technet Pvt. Ltd. 16B/9, Bolni Chambers, D.B Gupta Road, Dev Nagar, New Delhi-110005 PAN:AABCB9573F 10,00,000 10 M/s Priti Merchantile Pvt. Ltd. 15/76, Old Rajinder Nagar, IInd Floor, New Delhi-110060 PAN: AADCP1611J 5,00,000 11 M/s Time Computech Services 2727/102, Ist Floor, Challan Street, Daryaganj, New Delhi-11002 PAN: AAACT2715L 5,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the CIT(A). 2. In case of M/s KMC Portfolio Pvt. Ltd. the AO treated the share capital amount as unexplained because in Annexure-3 of the Balance Sheet furnished by the company which shows the details of the investments made in share application money in different companies, the name of the assessee does not appear. However, AO has not made any further enquiry from the company more particularly when the investment is verifiable from its bank account (PB 43). Further in respect of this company assessee has filed the share application form and confirmation (PB 41-42). The AO in spite of the request of the assessee has not issued summon to the director of this company for his personal presence and no opportunity to cross examine Sh. Aseem Kumar Gupta was given. Thus, the addition of ₹ 5 lacs made by AO is rightly deleted by the CIT(A). 3. The share capital amount received by assessee from M/s Ravnet Solutions Pvt. Ltd. was treated as unexplained by the AO because the company has not furnished Schedule-5 of the Balance Sheet which shows the details of investments. Only because Schedule-5 to the Balance Sheet is not furnished by the company, the investment made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his statement as being used for providing accommodation entries (PB 21-30). Further as per his statement the bank account no. 252 of Corporation Bank of M/s Chhoti Leasing Finance Pvt. Ltd. was used for providing accommodation entries whereas assessee has received the amount from bank a/c no. 5043 on 08.09.2005 as evident from his bank statement placed at PB 62.Thus, this account is a different account than the account used by Aseem Gupta for providing accommodation entries. In these circumstances, assessee has discharged his primary burden of proving the identity of the share applicant, genuineness of the transaction and creditworthiness of the creditor. Thus, the share capital money received from these ten parties aggregating to ₹ 69 lacs is fully explained and the addition made by the AO is rightly deleted by the CIT(A). 6. The AO without providing any opportunity to cross examine Sh. Assem Gupta has made the addition which is against the principle of natural justice and illegal bad in law. Even from the assessment order it is not discernible that any of these persons had stated that investment made by these companies in the share capital of the assessee is bogu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of share allottees; (iv) balance sheets; and (v) copies of share allotment certificates and of Board's resolution of the share applicants. Identity of applicants was established by production of copies of PAN cards and registration certificate with the Registrar of Companies. Financial capacity was also proved by filing of copies of the bank accounts from where the share application money was transferred through banking channels to the assessee. The genuineness of the transaction had been established by filing of the documents and in view of the confirmation by both the companies of the respective transaction. On this basis, the Tribunal held that the assessee had discharged the onus placed upon him by sec. 68. Findings of the case The assessee undoubtedly had to discharge the onus of establishing the identity and credit worthiness of the applicant companies and the genuineness of the transaction. In this regard, both the CIT(A) and the Tribunal had noted that the assessee had established all the three aspects by producing, during the course of the assessment, necessary documentary material such as the share application forms, copies of bank accounts, income tax ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted on the information received from the Investigation Wing without verifying the details furnished by the assessee company and also not placing before the assessee the information and findings of the Investigation Wing violating the principles of natural justice. If there is any discrepancy in the books of accounts maintained by the investing companies, there is a case for reopening of the assessment of the respective shareholders/investing companies. The assessee cannot be penalized for the mistakes/faults committed by the share holders. The AO has not found any discrepancy in the books of account and bank accounts maintained by the assessee. CIT Vs. Supertech Diamond Tools Pvt. Ltd. 229 Taxman 62 (Raj.) (HC) AO made addition u/s 68 on account of amount received for share capital, its premium and amount paid as commission for arranging it on basis of statement made by third parties who were related to purchasing companies stating that these companies were engaged in providing accommodation entries in lieu of commission. It was held that the said third party statement was made behind back of assessee and no opportunity of being heard or cross-examining third parties w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h it could have filed in support of its contention of having received the share application money from each of these shareholder companies. 14. The Assessing Officer has issued summons to the directors of these shareholder companies. In response there to, the directors have not attended. Assessing Officer has not conducted any further inquiry for non-attendance of the persons. Non-attendance on issuing summons itself cannot be a ground for rejecting all the relevant documents furnished by the assessee company. Summons issued by Assessing Officer have not been received back as unserved. Therefore, it cannot be said that these companies were not in existence at the given addresses. The documents filed with the Registrar of Companies show that these companies were active during the relevant period. Assessing Officer has not verified any of the relevant documents submitted by Assessing Officer for discharging onus u/s 68 of the Act. We also note that the Assessing Officer has not referred nor discussed about the so-called alleged statement of entry providers against the assessee company. It is also not known whether assessee s name figured in that statement. The contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee company could not be accepted-AO passed Order u/s 153 and made addition of ₹ 60,00,000 on account of alleged unexplained share capital received by assessee company from following persons-CIT(A) upheld addition made by AO- Held, AO could issue notice u/s 143(2)-In assessee s case, search was conducted on 06/5/2010 and AO issued notice on 16/09/2011 u/s 153A read with s 143(2)-During course of search, no incriminating documents were found therefore, no notice could be issued u/s 153A read with s 143(3) because no proceeding was pending before AO which abated for issue of notice on date of initiation of search-Thus, on technical ground, order passed u/s 153A read with s 143(3) was held void ab initio-Further Assessee before AO had produced copy of share application, confirmation of cash creditors, copy of PAN, copy of Board resolution, copy of Director s report, auditor s report, copy of balance sheet, copy of P L account, copy of bank account to prove the identity, genuineness and creditworthiness of cash creditors-AO made addition on basis of investigation conducted by ITO, but AO did not clarify what inquiry had been conducted and what evidences collected which had go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough J K Bank. From this bank account, investment of ₹ 5,00,000/- made by it is fully verifiable. Even Aseem Gupta in his statement while providing the list of entities providing the accommodation entries has not stated that J K Bank of SAM portfolio Pvt. Ltd. has been used by him for providing the accommodation entries. Further in spite of the specific request made by the assessee, the AO has not utilised his power under the Act to enforce the attendance of the Director of the company. The assessee was also not provided an opportunity to cross examine Sh. Aseem Kumar Gupta who is alleged to have stated to provide accommodation entry. The assessee has filed the share application form, confirmation and the bank statement with regard to this company. Thus, assessee has discharged his primary burden of proving the identity of the share applicant, genuineness of the transaction and creditworthiness of the creditor. Thus, the share capital money received from this company is fully explained. Similarly in case of M/s KMC Portfolio Pvt. Ltd. the AO treated the share capital amount as unexplained because in Annexure-3 of the Balance Sheet furnished by the company which shows the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd.) are also not covered in the list given by Sh. Aseem Gupta in his statement as being used for providing accommodation entries. As per the statement of Shri Aseem Gupta, the bank account no. 252 of Corporation Bank of M/s Chhoti Leasing Finance Pvt. Ltd. was used for providing accommodation entries whereas assessee has received the amount from bank a/c no. 5043 on 08.09.2005 as evident from his bank statement placed at page No. 62 of the paper book. By filing number of identity of these share applicants and the assessee has specifically requested the Assessing Officer to enforce the attendance of Director of these companies. The assessee has prima facie discharged the onus on it. Further the statement of Shri Aseem Kumar Gupta was not provided to the assessee and no opportunity to cross examine was also given in spite of the specific request of the assessee. Thus, not providing the opportunity to cross examine, there is a violation of principles of nature justice. The Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. CCE (supra) has clearly held that denial of opportunity to the assessee to cross examine the witnesses whose statements were made the sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome tax and discharged the onus cast on it. All the amounts were received, through banking channels by way of cheques issued in favour of the appellant company towards share application money. The shares were allotted as per the documents furnished before ROC. The assessee has produced possible/best evidence to support its claim. The AO has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee company and also not placing before the assessee the information and findings of the Investigation Wing violating the principles of natural justice. If there is any discrepancy in the books of accounts maintained by the investing companies, there is a case for reopening of the assessment of the respective shareholders/investing companies. The assessee cannot be penalized for the mistakes/faults committed by the share holders. The AO has not found any discrepancy in the books of account and bank accounts maintained by the assessee. The Hon ble Rajasthan High Court in the case of CIT Vs. Supertech Diamond Tools Pvt. Ltd. (supra) has held as under: AO made addition u/s 68 on account of amount received for share cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that assessee has discharged its onus and accordingly deleted the addition. The Hon ble ITAT held as under:- 13. We have heard both the parties. The only issue here is the addition of ₹ 60 lacs made by the Assessing Officer as unexplained credit on account of the share application money. On going through the facts of the case, we notice that assessee has filed the relevant details which it could have filed in support of its contention of having received the share application money from each of these shareholder companies. 14. The Assessing Officer has issued summons to the directors of these shareholder companies. In response there to, the directors have not attended. Assessing Officer has not conducted any further inquiry for non-attendance of the persons. Non-attendance on issuing summons itself cannot be a ground for rejecting all the relevant documents furnished by the assessee company. Summons issued by Assessing Officer have not been received back as unserved. Therefore, it cannot be said that these companies were not in existence at the given addresses. The documents filed with the Registrar of Companies show that these companies were active during the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Assessee-AO observed that during year under consideration, assessee showed total turnover of ₹ 2.05 crores on which assessee returned a net loss of ₹ 13,29,220-AO observed that assessee had obtained share capital and share application money from various companies-AO held that amount received from stated companies in form of share capital was only accommodation entries and genuineness of Share capital received by assessee company could not be accepted-AO passed Order u/s 153 and made addition of ₹ 60,00,000 on account of alleged unexplained share capital received by assessee company from following persons-CIT(A) upheld addition made by AO- Held, AO could issue notice u/s 143(2)-In assessee s case, search was conducted on 06/5/2010 and AO issued notice on 16/09/2011 u/s 153A read with s 143(2)-During course of search, no incriminating documents were found therefore, no notice could be issued u/s 153A read with s 143(3) because no proceeding was pending before AO which abated for issue of notice on date of initiation of search-Thus, on technical ground, order passed u/s 153A read with s 143(3) was held void ab initio-Further Assessee before AO had produced copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be carried out before any tax liability is fastened on the assessee. In the instant case, we find that the assessee company has submitted detail documentation in regard to these companies from whom a total amount of ₹ 35 lakhs was received namely (i) share application form (ii) copy of Board Resolution (iii) Copy of Bank Statements reflecting payment through cheque (iv) Audited Statement of Accounts and Acknowledgement of ITR (v) Copy of certificate of Incorporation and Certificate of Commencement of Business (vi) Copy of PAN Card. Where the assessee furnishes the documentation and necessary explanation, the AO should examine whether the documents so submitted and explanation so offered establishes the three ingredients i.e. identity of the investor company, creditworthiness of investor company and genuineness of the transaction. Whether explanation of the assessee is reliable or acceptable? If yes, no further action is required and the sum so credited may not be charged to income tax. If the explanation so offered by the assessee is not acceptable or reliable, the AO should give a detailed reasoning in the assessment order for not accepting the same. The order passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted subsequently, the fact remains that the assessee deserves an opportunity to cross examine such persons as held by the Hon'ble Supreme Court in case of Andaman Timber Industries (supra). During the course of assessment proceedings, the assessee company has made specific request to the AO to allow cross examination of these persons which has however not being provided to the assessee company. In light of above discussions, we don't find any basis for making addition under section 68 of the Act. In the result, ground no.2 taken by the assessee company is allowed. 21. In the instant case, we find that the Assessing officer has relied solely on the information received from the Investigation Wing Delhi without carrying out any further examination of documents submitted during the course of reassessment proceedings and without carrying any independent investigation of these companies. The information so received from the Investigation Wing Delhi is sufficient to form a prima facie view and acquiring jurisdiction under section 147 of the Act. However, such a prima facie view has to be finalized and a firm view has to be taken on basis of examination of documents so broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h have been found in the documents so submitted by the assessee company to prove the identity, creditworthiness and genuineness of the share transaction and any satisfaction to that effect recorded by the AO, these documents cannot be summarily rejected as has been done by the AO in the instant case. Further, we find that there is no action taken by the AO in terms of calling information from these companies under section 133(6) and/or issuing summons to directors of these companies under section 131 of the Act. 22. Further, being the reassessment proceedings, where the AO is ceased of certain information and documents, it is incumbent upon him to confront the same to the assessee and allow the latter to file its objections and rebuttal. The additions made, merely relying on these information and documentation, without confronting the assessee cannot be accepted. Besides furnishing the reasons for reopening the assessment to the assessee company, there is nothing on record that such information/documentation was confronted to the assessee. Further, the AO has relied upon the statement of third parties namely, shri S.K. Jain, shri V.K. Jain, shri Assem Kumar Gupta and shri Raje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 148, it is stated therein that on the basis of information brought on record, the assessee company has taken accommodation entries of ₹ 35 lacs in the nature of bogus investments/share application from seven companies whose complete details in terms of name, address, date of payment, amount of investment, bank account and the branch through which the payment has been made were stated therein the reasons. It was further stated in the reasons that these companies are indulged in providing accommodation entries in lieu of cash obtained from the beneficiaries and not doing any genuine business activity as divulged during the course of search and seizure proceedings in case of Praveen Jain Group, Mumbai. It was further stated in the reasons so recorded that the assessee company is a beneficiary who has taken the accommodation entries in the nature of bogus investment/share application and the investor companies are not carrying on any genuine business activities and was providing accommodation entries in lieu of cash obtained from the beneficiaries. In view of the same, it was held by the AO that he has reasons to believe that income to the extent of ₹ 35 lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red view that there is no illegality in action of the AO in assuming jurisdiction under section 147 in the instant case. In the result, ground no. 1 of the assessee's appeal is hereby dismissed. 10. Now, coming to the merits of addition of ₹ 35 lacs made by the AO under section 68 of the Act. On careful examination of material available on record, we find that it is a case where the AO has relied blindly on information supplied by the Investigation Wing Mumbai without carrying out any further examination of documents submitted during the course of assessment proceedings and independent investigation of these investor companies. As we have noted above, the information so received from the Investigation Wing, Mumbai and after due examination thereof, the AO has formed a prima facie view and a reason to believe that the income has escaped assessment and has thus assumed jurisdiction u/s 147 of the Act. At the same time, such a prima facie view has to be finalized and a firm view has to be taken on basis of examination of documents so brought on record and further investigation to be carried out before any tax liability is fastened on the assessee. In the instant case, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e him by the assessee. If the Assessing Officer harbours any 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. We therefore agree with the contentions of the Id AR that in absence of any falsity which have been found in the documents so submitted by the assessee company to prove the identity, creditworthiness and genuineness of the share transaction, these documents cannot be summarily rejected as has been done by the AO in the instant case. Further, we find that there is no action taken by the AO in terms of calling information from these companies under section 133(6) and/or issuing summons to directors of these companies under section 131 of the Act. Further, where the AO relies upon the statement of third parties (Praveen Jain and others) recorded u/s 132(4), without getting into controversy whether the said statement was retracted subsequently, the fact remains that the assessee deserves an opportunity to cross examin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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