TMI Blog2002 (12) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2.50 lacs in SBI public issues and IFCI public issue. The amount of Rs. 2,50,000 invested in application money of the aforesaid public issues was surrendered after detailed discussion and assurance given by the ADIT to purchase peace. The letter written to the ADIT is placed at PB 20 to 22. After detailed discussion with the ADIT the assessee came forward with clean hands and as per advice and assurance of the ADIT, a total amount of Rs. 9.41 lacs on account of investment in public issues of SBI IFCI was offered for taxation in the hands of himself and his family members: 1. Shri Vijendra Mamodia 2.50 Lacs 2. Smt. Sushila Mamodia 1.50 Lacs 3. Shri Ritesh Mamodia 2.30 Lacs 4. Shri Rakesh Gutpa 1.21 Lacs 5. Shri Prahalad Kumar Sharma 1.90 Lacs 9.41 Lacs Accordingly returns of income were furnished by the abovenoted person offering total amount of Rs. 9.41 lacs as per detail given below: S. No. Name Asst. yr. Date of filing of return Name of ITO Ward Income returned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cogent reasons for inclusion of application money invested by various persons in the hands of the assessee. She has made additions on the ground that the assessee could not produce any evidence in support of his claim that the investments were made by the various other persons. To prove that a person is benami of another, the onus lies on the learned AO which she failed to discharge. The learned AO has taken the undisclosed investment in application moneys at Rs. 13,14,509 without mentioning any details regarding names of persons, amount, their relationship with the assessee, etc. It is not understood that how the figure of Rs. 13,14,500 has been worked out. The learned AO has referred to and placed reliance on the alleged conclusion of ADIT that whole of investment in SBI/IFCI public issues was made by the assessee. The AO included the investments made by the above referred investors in the hands of assessee for the following reasons given in the assessment order. 1. The assessment order of the learned AO is based on some report of ADI. 2. The addresses given by the various investors were connected with the assessee. 3. The assessee was asked to explain the sources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment made by them have not flowed from the assessee. The AO failed to bring on record and consider the vital fact and submission made by the assessee that the amount of Rs. 9.41 lacs was surrendered by the various investors as per advice and assurance of ADIT. 3. It is strange that the learned AO asked the assessee to prove the investment made by the various investors. It is settled law that onus to prove lies on a person who asserts. It was the duty of AO to prove beyond doubt by cogent evidence that the funds flowed from the assessee and that the other investors were benami of the assessee. In this case the question to be considered is whether all the investors namely Smt. Sushila Mamodia, Sh. Ritesh Mamodia, Sh. Rakesh Gupta and Sh. Prahlad Kumar Sharma are the benamis of the assessee, so that the investments made by them could be considered as income of the assessee. It is by now well settled that burden of proof that a particular person is benamidar of another lies on the person who alleges as such. In the present case the stand of the Department is that the abovenoted persons are benamidars of the assessee. Therefore, the burden lies on the Department to prove by mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife. Apart from the assessee and his wife, 3 persons namely, Svs Ritesh Mamodia, Rakesh Gupta and Prahlad Kumar Sharma were not filing their returns of income and it was for the first time that they have filed their returns of income as a result of proceedings under s. 131 of the IT Act. The details in returns of income of the 4 persons apart from the assessee show that in respect of Smt. Sushila Mamodia, there is only rental income to the tune of Rs. 3,03,240 and in respect of Shri Ritesh Mamodia, Shri Rakesh Gutpa and Shri Prahlad Kumar Sharma, there is no income at all apart from the one disclosed on account of investment in the shares. From the fact there is no other income in the returns of these three persons, it is seen that the persons in whose name investments were made do not have financial capacity to make such investments. In addition to this fact, it is also a matter of record that the proceedings under s. 131 before the ADIT was represented by Shri Vijendra Kumar Mamodia on behalf of the other 4 persons. In fact Shri Vijendra Kumar Mamodia alone has made surrender of the investment on account of all these persons. The vital fact cannot be ignored that disclosure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments were made in vehicles. Here enough material on record. Narpatraj Chandanmal Co. vs. ITO 21-Tax World-350 Burden of proof regarding benami is upon the one who alleges benami. The circumstances under which transaction took place are guiding factors. This case is favouring Revenue because the circumstances reflect the benami nature 3(A). Parties have been heard with reference to material on record and case laws relied upon by them. One the basis of information collected by ITO, investment in public issue of IFCI and SBI was found to have been made from common address where the assessee resides. The Addl. DIT (Investigation) issued summons to the assessee asking about the investment made in public issue on the address which belongs to him. The assessee emphatically denied the liability for explaining the investment on account of application made by various persons as they were other persons like brother, uncle and the relative who are separate and the investment made by them or another persons from his address cannot be treated his investment. The copy of such reply was also filed before ADIT and enclosed with his written submission before the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inability. The assessee was also not confronted with the same at any stage. For the failure on the part of the Revenue even to specify the names in which investment could have been alleged to have been made by the assessee, the addition could not have been made. Such an addition is unjust and unwarranted. The same is directed to be deleted. The balance amount that remains for our consideration is Rs. 6,91,000 in the name of four persons about whom the AO required to establish the source of investment through order-sheet dt. 4th Dec., 1998. The assessee before the ADIT (Investigation) has agreed to get the investment made by such persons disclosed in their respective returns. The assessee honoured this. The returns of such persons were got filed with their respective AO and tax thereon were also duly paid. All returns have been accepted by the respective AOs except in the case of Shri Ritesh Mamodia son of the assessee whose assessment was completed on protective basis. The investment by this person is Rs. 2,30,000. The assessee has filed copies of these returns. The AO did not call for the record of these persons and even without examining these persons he proceeded in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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