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2016 (9) TMI 382 - AT - Income TaxAddition u/s 68 on account of unexplained share capital - Held that:- The assessee is a private limited company whose functioning capability strengths etc. would be known only to its close knit circle of friends and Directors and promoters who would be privy to this information. The Private Ltd. Company and such known concerns known to the said company would operate on internal information available to them and it is generally not easily available in the public domain. Thus necessarily the shareholders are limited to persons or concerns managed by the close knit circle of family and friends of the assessee. Accordingly the benefit of arm’s length distance between a shareholder of a Public Ltd. Company with the company cannot be claimed by a shareholder in a Private Ltd. Company as the shareholders necessarily would be companies/entities managed and controlled by friends, relatives, business partners etc. of the Private Ltd. Company The fact that bogus transactions have been accepted by Director, Sh. Rajendra Agarwal in 2009-10 AY and a surrender has been made of ₹ 45 lakhs is sufficient evidence for the Revenue to conclude that such behavior for Director was a norm and not an aberration. Accordingly the company having been given an opportunity to prove that the transactions were genuine the onus in the peculiar facts and circumstances cannot be said to be discharged by placing insufficient evidences. The evidences now on record stated to be filed all along a position disputed by the Revenue and negated by the AO needs to be reconciled and the evidences relied upon need to be addressed. We note that the finding of fact that relevant documents were not filed before the AO has not been assailed by the assessee by way of any affidavit before the CIT(A) or before us that facts are incorrectly recorded. The impugned order in view of these obvious shortcomings is set aside and the matter is restored to the AO for fresh determination. The AO accordingly is directed to pass a speaking order in accordance with law on the jurisdictional aspect first and thereafter if need be on merits after giving the assessee a reasonable opportunity of being heard.
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