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2017 (3) TMI 1859 - AT - Income TaxValidity of reopening of assessment u/s 147 - eligibility of reasons to believe - addition on account of unexplained investment in the subscribed & paid up share capital u/s 69 - mandation to discharge of initial onus - HELD THAT:- Assessee company, being a private limited company which has received the amount towards the share subscription again from two other private limited companies has failed to discharge the initial onus placed on it. Mere fact that the money has been received through banking channel is not sufficient enough to discharge the burden. The confirmations, on the letterheads of the assessee company without specifying any date of confirmation, identification by way name and designation of the person signing those confirmations on behalf of the investee companies, have been filed during the appellate proceedings, however the letters issued by the Assessing officer to these two investee companies have been returned undelivered and even the new addresses submitted are incomplete which raises a serious question mark on the confirmations so filed as the same is not wholesome, credible and verifiable. The creditworthiness and genuineness of the transaction is therefore not proved by showing merely issue and receipt of demand drafts when circumstances requires that there should be some more evidence of positive nature to show that the subscribers have made genuine investment. AO clearly harbours doubts about the legitimacy of share subscription in the books of the assessee company and has gone about issuing letters seeking confirmation and calling for the personal attendance of the directors of the investee companies. Whilst it does appear that at the time of assessment proceedings, the assessee’s premises were locked due to some Court proceedings and the assessee couldn’t submit appropriate documentation, however the assessee was given sufficient opportunity during the appellate proceedings by the ld CIT(A) and by the AO during the remand proceedings, genuine doubts as to the identity, creditworthiness and genuineness of transaction continue to persist in the minds of the Assessing officer. The explanation about the nature and source of such sum found credited in its books of accounts has not been found satisfactory and the initial burden on the assessee cannot be said to be have been discharged in the instant case - Decided against assessee. Adhoc additions made by the Assessing officer - assessee has shown an increase in subscribed & paid up capital, Addition of Vanaspati Ghee, accrued/earned on FDR loans, bills/vouchers of expenses have not been produced for verification and increase in unsecured loans from others - HELD THAT:- CIT(A) has given a finding that the assessee company has produced the books of accounts during the course of remand proceedings but the ld. AO has not verified the contents of the books of account and no specific defects had been pointed out by the AO in his remand report on all the additions. It is also noted that adhoc additions have been made by the Assessing officer (except for an amount in respect of unsecured loans) which cannot be sustained in the eye of law. In light of the same, we hereby direct the deletion of all these additions made by the AO in respect of additional issues no. 2 to 4 - Decided in favour of assessee.
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