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2018 (1) TMI 332 - AT - Income TaxAddition u/s 68 - Held that:- A.O. did not bring any evidence on record that the investments made by the investor companies were actually emanated from the coffers of the assessee company so as to enable it to be treated as undisclosed income of the assessee. The A.O. cannot ask the assessee to prove source of the source. Therefore, the facts and circumstances clearly proved that assessee discharged initial onus to prove identity of the investor companies, their creditworthiness and genuineness of the transaction in the matter. The Ld. CIT(A) on proper appreciation of evidence before him, correctly deleted the addition. No interference is called for in the matter. The Ld. CIT(A) correctly deleted the addition of ₹ 3.35 crores under section 68 of the I.T. Act. The decisions relied upon by the Ld. D.R. would not support the case of the Revenue in view of the fact that no enquiry have been taken by A.O. in this case to dispute the documentary evidences filed by the assessee. The departmental appeal has no merit and is accordingly dismissed. Assessment u/s 143(3)/153A - Held that:- Delhi High Court in the case of BDR Builders & Developers Pvt. Ltd. [2017 (8) TMI 42 - DELHI HIGH COURT] held that when assessee company ceases to exist from appointed date, was not liable for assessment under section 153A of the I.T. Act. The assessment under section 153A is void abinitio. The Hon’ble Delhi High Court similarly in the case of Maruti Suzuki Ltd. [2017 (9) TMI 387 - DELHI HIGH COURT] held that assessment order in the name of amalgamating company is not a procedural irregularity. Assessment order in the name of non- existing amalgamating company untenable. Considering the facts and circumstances of the case and in the light of judgment of the Hon’ble Delhi High Court dated 19th January, 2011, we are of the view that assessment framed against the assessee under section 143(3)/153A is bad in law and void abinitio. Resultantly, we set aside the orders of the authorities below and quash the assessment order. In the result, ground No.1 of cross objection of assessee is allowed. Disallowance under section 14A read with Rule 8D - Held that:- The working given by the assessee has not been disputed and further no satisfaction as required under section 14A have been recorded by the A.O. that assessee did incur any expenditure to earn exempt income. The Hon’ble Punjab & Haryana High Court in the case of Metalman Auto Ltd. [2011 (2) TMI 330 - PUNJAB AND HARYANA HIGH COURT] held that no expenses incurred for earning exempt income Section 14A do not apply. Onus is on the A.O. to record satisfaction that interest bearing funds used for investment to earn tax free income. In the present case, the A.O. did not deal with contention of assessee in assessment order and did not record any satisfaction that assessee did not incur any expenditure to earn exempt income. The Ld. CIT(A), therefore, correctly allowed part relief of assessee on this ground. Deemed dividend under section 2(22)(e) - Held that:- No interference is called for in the matter. The A.O. in the assessment order itself has recorded that in the original assessment completed under section 143(3), addition of ₹ 2.70 crore under section 2(22)(e) have been made but assessee did not provide any information, therefore, same addition was repeated in assessment year under appeal. Since, this similar addition has been deleted by the Ld. CIT(A) against the original assessment order, therefore, there were no justification to make addition in proceeding under section 153A of the I.T. Act against the assessee. The departmental appeal has no merit and the same is dismissed.
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