TMI Blog2007 (2) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... shares or capital? (3) Whether the Appellate Tribunal is right in law in placing the onus of proof on the appellant to establish and substantiate his plea that there was no new investment in the assessment year 1997-98? (4) Whether the Income-tax Appellate Tribunal is correct in law in holding that section 2(24) (iv) would be applicable to the facts and circumstances of the case and that the addition of Rs. 46,28,108 paid by the firm on behalf of the appellant towards the credit card expenses was justified? (5) Whether the Income-tax Appellate Tribunal is correct in law in holding that section 2(24)(iv) would be applicable to the facts and circumstances of this case and that the addition of Rs. 26,668 paid by the firm on behalf of the appellant towards LIC premium was justified?" The assessees are individuals assessed to tax. Since the facts are identical, for convenience, the facts in T.C. No. 848 of 2005 is referred to here. In the course of the assessment proceedings for the assessment year 1997-98, the assessee was called upon to explain and give the details as regards the firms and companies in which he had interest either as a partner or director or as a shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied that no fresh share capital was raised by Sai Televisions Limited during the relevant assessment year. As such, there was no possibility of the assessee being allotted any shares during the period under consideration. He further stated that the share certificates produced by the bank represented the shares allotted to them as early as October 18, 1995, in marketable lot form and that the copy produced was only a jumbo certificate for one lakh shares issued on January 31, 1997. As such, this did not represent any additional investment. The assessing authority noted that the alleged balance-sheet belonging to Sai Television Limited carried no authentication from a responsible officer. Further, the said company had not filed the return of income for the assessment year 1997-98 relevant to the assessee up to March 13, 2000. As such, there was no material on record to prove that the said company had not issued any shares during the year 1996-97. The assessing authority further noted that as per the share certificates pledged with UTI Bank, it was clearly mentioned that the certificates were issued on January 31, 1997. There was no mentioning of the fact that the said jumbo certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g his personal needs and the payments were made by the defunct company Natural Energy Processing Company. On further investigation, it was seen from the bank statements that there was transfer of funds/issue of cheques by NEPC Micon Limited, now known as NEPC India Limited, the flagship company of the NEPC group, which was also maintaining the bank account in the banks referred to above. The assessing authority noted the details of these transactions and held that there had been diversion of funds from the company to the individuals through the defunct company to meet their individual needs. As per section 2(24)(iv), any benefit, perquisite obtained by the director or relative of the director from a company and any sum paid by the company on behalf of the director or relative of the director shall be deemed as income of the director or the relative of the director accordingly. Hence, by invoking section 2(24) (iv) of the Act, for the sum paid by the company, as a director, the assessee was liable to pay tax as an individual. A notice was issued to the assessee to place his objection. The assessee replied in two of his letters dated February 8, 2000, and March 24, 2000, stating that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was one of the directors, that having regard to the fact that the assessee had not come out with the required information, the Commissioner upheld the order of the assessing authority in making addition under section 69. On the question of credit cards, the appellate authority noted that the NEPC firm was a defunct company and its activities in the past were shown to be a dummy concern used only for the purpose of providing convenient book entries. Hence, on facts, after going through the nature of expenses, the appellate authority held that the credit card expenses incurred were purely personal in nature and that only to meet the expenses, and got the funds through the firm so that the legal hurdle for the company to meet the expenses was overcome. The funds were given by NEPC India Limited. In the circumstances, the appeal stood dismissed in this regard. As regards the payment to LIC, the appellate authority adopted the same line of reasoning and confirmed the same. Aggrieved the assessee went on appeal before the Tribunal. By a common order, the Tribunal considered the case of the assessees. The Tribunal directed learned counsel appearing for the assessees to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. He also pointed out that the Tribunal had accepted that the capital of the Sai Television Limited remained unchanged. It totally went on the erroneous conclusion that the assessee had not proved his case. He submitted that there were no fresh investments made during the year nor fresh certificate issued. Considering the fact that the jumbo certificate issued is a consolidation of the shares held, the Tribunal ought to have allowed the appeal to delete the addition made under section 69 of the Act. Heard counsel for both sides. Quite apart from the fact that the questions raised are purely questions of fact, a perusal of the certificate issued shows that the same were issued as early as January 31, 1997. It may not be out of place to point out herein that the photocopy of the certificate which is enclosed in the paper book given to the court carry different number altogether from the certificate filed in the paper book given to the Revenue. Handwritten endorsement made on the certificate also raises a serious doubt regarding the claim of the assessee. Leaving aside this aspect, a perusal of the order of the authorities below shows that consistently the assessee was asked t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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