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2020 (2) TMI 932 - AT - Income TaxUnexplained share capital u/s 68 - neither the creditworthiness of these creditors nor the genuineness of transactions were established - CIT (A) has deleted the addition merely for the reason that the ld AO did not specify which director is to be presented - HELD THAT:- In case of M/s. Sunshine Infrabuild Pvt. Ltd at the Page No. 87 of the order of ld CIT(A) the assessee produced ‘supervisor” of that company and his statement was recorded, the ld CIT (A) deleted the addition on the statement of supervisor. We failed to appreciate that how the ld CIT (A) deleted the addition based on the statement of the supervisor who is not aware about the creditworthiness or genuineness of the transaction. We also failed to understand that when the directors were required to be produced, how the authorised representative could be produced in lieu of those directors. CIT (A) according to us has grossly erred in accepting the statement of authorised representative. He has also merely gone by the judicial precedents without looking at the fact that all these company who have invested with the assessee does not have adequate source of income as they are showing meager income. Those companies do not have any interest of any appreciation in the share value of the Assessee Company as well as receipt of any dividend from the assessee company. Assessee is a private limited company how it approached so many of the subscribers in different geographical locations and how they were convinced and on what conviction they invest in assessee company of such huge magnitude. AO has made the addition apart from other things the fact that despite repeated opportunities the assessee has failed to produce the directors of investor companies. The ld CIT (A) deleted the whole addition of non-Kolkata based companies even on the statement of the supervisor. Further, the assessee was asked to produce the directors of those companies at the fag end of the assessment proceedings. We failed to understand how the ld CIT (A) has deleted the addition of non-Kolkata based entities without examining the directors. He also did not exercise his own powers of inquiry. We set aside the appeal of the revenue as well as of the assessee back to the file of the ld AO with a direction to the assessee to prove the identity, creditworthiness of those depositors as well as genuineness of the whole transactions. The assessee is specifically directed to produce directors of the companies who are investors in the assessee company before the ld AO within four months from the date of this order. AO may examine the details produced by the assessee and examine the directors of all the companies to test identity, creditworthiness of their investment as well as genuineness of the transactions. Assessee may substantiate its claim by producing any further evidences, which it could not produce before ld AO due to the opportunity at the fag end of the assessment proceedings; the ld AO may also conduct any such inquiry, which is required to be carried out by him. After that, ld AO may decide the issue of applicability of section 68 of the act on these appeals afresh in accordance with law. - Appeals allowed for statistical purposes
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