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2019 (6) TMI 158 - AT - Income TaxAddition u/s 68 - share capital and share premium - unexplained cash credit - HELD THAT:- The ld AO is duty bound to confront the assessee with the enquiries made and information gathered and the principal of nature justice demands that the assessee should be allowed an opportunity to give its rebuttal and/or explain its case in light of the enquiries allegedly made by the ld AO. In the present case, we find that the ld AO merely stated that he had made "discreet enquiries" which led to him forming conclusion that the share application monies received during the year were in nature of accommodation entries. However the nature & findings of enquiries were unknown. The ld AO never confronted the assessee with the information borne out of the so called "discreet enquiries". In fact from the material on record, we find that no enquiries were conducted by the ld AO under the provisions of Section 133(6) and/or 131 from the share subscribers who had actually paid the monies to the assessee. The ld AO seems to have sat back with folded hands just so as to arbitrarily reject the documents & evidences placed by the assessee at the end of the assessment proceedings with a pre-conceived notion in order to reach to pre-decided destination. The ld AO was unable to bring an iota of evidence so as to substantiate his allegation that the capital raised by the assessee was in the nature of accommodation entries or that the monies were routed back to SGJHL and its associates as alleged in the impugned order. In the course of assessment proceedings, the assessee had furnished the documentary evidences as were made available to the assessee by the share subscribing companies. The documents furnished proved the identity & creditworthiness of the shareholders. The transactions were carried through banking channels. Although the documents were submitted before the ld AO, no enquiry was conducted by the ld AO either from the Departmental records or from the bankers of the share subscribers. Hence it could be safely concluded that the adverse inference drawn by the ld AO was based on surmise & conjecture having no relation whatsoever with the facts of the case. It is well established that the assessee by producing necessary documents viz. detailed chart of inflow and outflow of funds, IT records, audited Balance Sheets, bank statement copy etc of self and all other parties involved., has sufficiently established the identity and creditworthiness of the share subscribers and the genuineness of the share transaction. As such, the addition made by the ld AO is sheerly based on surmises and wrong appreciation of the facts of the case. Hence we find that the ld CITA had rightly appreciated the contentions of the assessee, which in our considered opinion, does not require any interference. Accordingly, the grounds raised by the revenue are dismissed.
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