TMI Blog2003 (4) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ative and in order to claim benefit of carry forward, the assessee must show that there has been trading in such shares. Thus, the claim of the assessee for carry forward of the said loss was rejected. 2.1 The AO also observed that there was increase in the subscribed and paid share capital by Rs. 22,73,900. Out of the same, share capital of Rs. 22,13,900 was contributed by Purva Chits (P) Ltd. and was accepted as genuine. The AO further observed that three persons, namely, S/Shri Tejpal Gupta, Rakesh Gupta and Kashmir Singh had also contributed share capital of Rs. 10,000, Rs. 10,000 and Rs. 40,000, respectively. These three persons were not existing assessees. During the course of original assessment proceedings, the assessee filed confirmations of these three persons. However, the AO called upon the assessee to produce the three persons to establish the identity, creditworthiness and genuineness of the transactions. These persons were, however, not produced. Therefore, the AO made an addition of Rs. 60,000 being unexplained cash credits on the ground that the assessee failed to prove the source and genuineness of the same. Thus, the AO completed the assessment under s. 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment year under reference had been completed. As per order dt. 28th Jan., 1993, for the asst. yr. 1989-90, income was determined at Rs. 25,590. Since the assessment for the asst. yr. 1990-91 already stood completed, the assessee could not revise its return for the asst. yr. 1990-91. Therefore, the claim for brought forward loss made in the return for the asst. yr. 1990-91 was bona fide for which no penalty under s. 271(1)(c) was leviable. However, the AO did not accept such submission of the assessee on the ground that for the asst. yr. 1989-90, there was positive income of Rs. 25,590. Hence, there were no losses which were required to be adjusted against the income of the assessment year under reference. The CIT(A), therefore, upheld the penalty in respect of income of Rs. 2,04,470 determined as per regular assessment for furnishing inaccurate particulars and also read with Expln. 1 to s. 271(1)(c). The assessee is aggrieved by the order of the CIT(A). 4. The learned counsel for the assessee drew our attention to a copy of the assessment order for the asst. yr. 1989-90 placed at pp. 37 to 39 of the paper book. He submitted that the assessee had filed the return decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason that the management of the company had changed and the said shareholders were known only to the old directors of the company. It was also pointed out that there has been dispute among the old and new directors, which is subject-matter of litigation for quite some time. Therefore, these parties could not be produced. He further drew our attention to p. 17 of the paper book, which is a copy of the acknowledgement to the complaint filed by the managing director of the company. Copy of the complaint made to police is at pp. 18 to 20 of the paper book. A copy of counter-complaint is also on pp. 24 to 32 of the paper book. The learned counsel further submitted that these documents were submitted before the CIT(A). However, she declined to take cognisance of the same. But the fact remains that due to these reasons, the assessee could not produce the creditors before the AO. Further, relying on the judgment of the Supreme Court in the case of CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC), the learned counsel submitted that no addition on account of share capital could be made in the hands of the company. Thus, he submitted that the assessee had nei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 271(1)(c) for the asst. yr. 1989-90. This being a consequential claim based on bona fide belief, we are of the considered opinion that the CIT(A) was not justified in sustaining the penalty in respect of brought forward loss of the asst. yr. 1989-90. 7. Now, the next issue in respect of which penalty has been sustained by the CIT(A) relates to addition of Rs. 60,000 made on account of unexplained cash credits. The assessee has separately filed an appeal against the addition sustained by the CIT(A) and vide our separate order dt. 2nd April, 2003, in ITA No. 406/Chd/1996 for the asst. yr. 1990-91, we have already upheld the addition of Rs. 60,000 by recording the following findings in para 7 of the said order: "7. We have heard both the parties at some length and given our utmost consideration to the rival submissions. We have also examined the facts, evidence and material on record. From the facts discussed above, it is obvious that the original assessment completed by the AO was set aside by the CIT(A) with a direction to produce the three creditors and furnish other evidence to prove the source and genuineness of the cash credits. Inspite of several opportunities allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition if he finds that the explanation offered by the assessee is not satisfactory. However, in a case where penalty is proposed to be levied under s. 271(1)(c) r/w Expln. 1, the AO is required to come to the conclusion that explanation furnished by the assessee was false or such person is not able to substantiate and fails to prove that such explanation was bona fide, and that all the facts relating to the same and material to the computation of his total income have not been disclosed by the assessee. In this case, the amount in question represents contribution of the creditors towards share capital. All the facts relating to the names and addresses of the persons from whom such share application money was received were also furnished. The assessee had also filed confirmations of the creditors during the course of assessment proceedings. In the written submissions filed before the CIT(A), the assessee had also explained the reasons as to why it could not produce the creditors before the AO. It was submitted that the old management to whom the creditors were known had been changed and there were disputes between the old management and the present management. Necessary evide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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