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TMI Blog2010 (8) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. The relevant facts are that the respondent-assessee was incorporated on 23rd March, 1985. It was engaged in the business of financing and trading of shares. On 22nd October, 2001, assessee filed a return declaring NIL income. The return was initially processed under Section 143(1) of Act, 1961. However, subsequently on 21st October, 2002 the case was selected for scrutiny and notice under Section 143(2) of Act, 1961 was issued to the respondent-assessee. On scrutiny of accounts, the Assessing Officer (in short "AO") found an addition of Rs. 71,75,000/- in the share capital of the assessee. The AO sought an explanation of the assessee about this addition in the share capital. The assessee vide letter dated 13th August, 2003 offered a detailed explanation. 3. However, according to the AO, the assessee failed to explain the addition of share application money from five of its subscribers. Accordingly, AO made an addition of Rs. 35,50,000/- with the aid of Section 68 of Act, 1961 on account of unexplained cash credits appearing in the books of the assessee. However, in appeal, the Commissioner of Income Tax (Appeals) [in short "CIT(A)"] deleted the addition on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es application money) has also been verified from the website of Department of Companies Affairs. The existence of the shareholders, therefore cannot be doubted. 2.22 In the interest of justice, I scrutinized all the available information and I am of the view that in the facts and circumstances, this is not a fit case for not accepting the genuineness of the deposits. The identity of the subscribers and the genuineness of the transactions have been established....." 4. The ITAT confirmed the order of the CIT(A) as it was also of the opinion that the assessee had been able to prove the identity of the share applicants and the share application money had been received by way of account payee cheques. In reaching this conclusion, the ITAT had relied upon a Division Bench judgment of this Court in Commissioner of Income Tax Vs. Divine Leasing & Finance Ltd., (2008) 299 ITR 268 (Delhi). 5. Mr. N.P. Sahni, learned standing counsel for the Revenue submitted that the ITAT had erred in law in deleting the addition made by the AO under Section 68 of Act, 1961 as the assessee had failed to discharge the burden in respect of the identity of the share applicants, genuineness of transaction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Secondly, depending upon the facts of each case, the Income tax Officer may even be justified in trying to ascertain the source of the depositor, assuming he is identified, in order to determine whether that depositor is a mere name lender or not. Be that as it may, it is clear that the Income tax Officer has jurisdiction to make enquiries with regard to the nature and source of a sum credited in the books of account of an assessee and it would be immaterial as to whether the amount so credited is given the colour of a loan or a sum representing the sale proceeds or even receipt of share application money. The use of the words "any sum found credited in the books" in section 68 indicates that the said section is very widely worded and an Income tax officer is not precluded from making an enquiry as to the true nature and source thereof even if the same is credited as receipt of share application money. xxxx xxxx xxxx xxxx .............. On the basis of the language used under Section 68 and the various decisions of different High Courts and the Apex Court, the only conclusion which could be arrived at is: (i)that there is no distinction between the cash credit entry existing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the income of the firm and can be accordingly taxed. The view taken by the Tribunal appears to be erroneous of the face of it." F) Sumati Dayal vs. CIT, 214 ITR 801 (SC) wherein the Apex Court has held as under:- "It is no doubt true that in all cases in which a receipt is sought to be taxed as Income, the burden lies upon the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of provind that it is not taxable because it falls within the exemption provided by the Act lies upon the assessee. (See Parimisetti Seetharamamma [1965] 57 ITR 532 at page 536). But, in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such a case there is, prima facie, evidence against the assessee, viz. the receipt of money, and if he fails to rebut it the said evidence being unrebutted, can be used against him by holding that it was a receipt o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering all the relevant judgments, we do not have to reconsider all the judgments referred to by Mr. Sahni which are prior in date and time to the aforesaid judgment. In fact, a Special Leave Petition filed against the said Division Bench judgment was dismissed by the Supreme Court by way of a speaking order in Commissioner of Income Tax Vs. Lovely Exports (P) Ltd., 216 CTR 195 (SC). The Supreme Court in Lovely Exports (P) Ltd. (supra), has held as under:- "2. Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment......" 7. Consequently, the doctrine of merger would apply and the judgment of the Supreme Court in Lovely Exports (P) Ltd. (supra) would cover the field with regard to interpretation of Section 68 of Act, 1961. 8. In any matter, the onus of proof is not a static one. Though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Despite reminders, no response was received from the Assessing Officer by the CIT(A) on the additional evidence. The CIT(A) then admitted the additional evidence. After examining the entire record, the CIT(A) deleted the addition on account of the unexplained share application money for.......... 6. In the appeal by the Revenue, the Tribunal found that the facts of the case were no different from those in the case of the group company of the present Assessee namely M/s. Dwarikadhish Financial Services. In the said case the Tribunal had deleted the addition made by the Assessing Officer on account of unexplained share application money. The said decision was upheld by this Court in its order in CIT v. Dwarkadhish Financial Services [2005] 148 Taxman 54. 7. That apart, the Tribunal again examined the documents giving the details of each of the applicants. It noted that ? the above documents were available on the file of the AO.? Accordingly it dismissed the Revenue's appeals. Learned counsel for the Revenue sought to distinguish this Court's decision in the case of the group company of the assessees, on the ground that the facts there were different. However, we find that the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. 11. Consequently, we are of the view that the present appeals amount to relitigation. The Supreme Court in K.K. Modi Vs. K.N. Modi and Ors., (1998) 3 SCC 573 has held, "It is an abuse of the process of the court and contrary to justice and public policy for a party to relitigate the same issue which has already been tried and decided earlier against him. The reagitation may or may not be barred as res judicata. But if the same issue is sought to be reagitated, it also amounts to an abuse of the process of the court.....". 12. Though we were initially inclined to impose costs yet we are of the opinion that ends of justice would be met by giving a direction to the Revenue to be more careful before filing appeals in a routine manner. In our view, appeal should not be filed in matters where either no question of law arises or the issue of law is a settled one. We give this direction because the "judicial capital" in terms of manpower and resources is extremely limited. 13. Registry is directed to communicate copies of this order to all the Chief Commissioners of Income Tax in Delhi for necessary action. With the aforesaid direction, the present appeals are dismissed in limine but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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