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2015 (5) TMI 761 - AT - Income TaxUnexplained share capital - CIT(A)deleting the addition of ₹ 9 lacs out of the addition of ₹ 30 lacs made by the AO - Held that:- Assessing Officer is not justified on the basis of this inspector report to hold that the identity of the shareholder company [A.C. Steels & Holdings Pvt. Ltd, Grewal Steels & Holdings Pvt. Ltd. & Sumit Credit Co. Pvt. Ltd. ] has not been established. On the contrary, as rightly pointed out, the common surname “Grewal” is good enough to indicate that the office of these companies were at that premises. The inspector did not make any effort to make any further enquiry about these companies and also Assessing Officer did not make any effort to carry the investigation further. The sole basis for making addition about these companies is the inspector report. No doubts have been raised by the Assessing Officer about the documents filed by the assessee company. The inspector report as alleged above cannot be a basis for disbelieving the assessee’s version. Further in the case of Sofed Comtrade Pvt. Ltd. we note that no enquiry whatsoever has been done by the AO. The observations made by him are only raising a doubt without carrying out any investigation. Surprisingly we note that the AO was having doubt in mind but he never issued any notice or summon to any of the directors. It is not a case where any confessional statement has been recorded by any entry provider of accommodation entry. It is a case of a doubt raised by the Assessing Officer but such doubt has not been converted into any evidence or material so as to substantiate the addition. We are of the view that the additions made by the AO in respect of share capital received from these four companies are not justified and accordingly the same is directed to be deleted. As regards the fifth company i.e. Prime Vyapar Pvt. Ltd. we note that the inspector has carried out the enquiry and in this report the inspector has pointed out that on local enquiry it is revealed that there is no company called this name at the address and there is only a residential place at the said premise. The Ld. AR during the course of the hearing could not rebut this finding of the inspector. In view of this specific finding of the inspector which remains unrebutted, we are of the view that addition of ₹ 5 lacs in respect of the share capital received from Prime Vyapar Pvt. Ltd. has been rightly been made by the Assessing Officer and accordingly this addition is confirmed. - Decided partly in favour of assessee and revenue. Disallowance u/s 14A read with Rule 8D - Held that:- The assessment year under consideration is 2005-06 and Rule 8D is effective from assessment year 2008-09. Accordingly the Assessing Officer was not justified in invoking the provisions of Rule 8D for the assessment year under consideration. We further note that assessee’s investment is mainly in group companies. Considering these facts we delete this addition - Decided in favour of assessee.
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