TMI Blog2006 (9) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... A No. 3842/Del./96, which are revenue-produced as under: "4. In view of the aforesaid, we do not feel obliged to go into the merits of the case but in, being fair to both the parties, we set aside the orders passed by the CIT (Appeals) restoring the appeal back to his file for a decision de novo on merits taking into account the fact of the case and the decision cited. In the view that we have taken, we do not find it necessary to decide each of the ground independently." 3. That the learned CIT(Appeals) is wrong and unjustified in passing appellate order, which is not a speaking order, disregarding the mandatory provisions of ( a ) section 250(6) of Income-tax Act, 1961 and ( b ) Order XVI, rule 31 of the Code of Civil Procedure and wrongly confirming the additions of Rs. 11,75,000 under section 68 without considering the following facts/documents/rulings of higher courts, which are the essence of the whole submission, filed by the appellant in support of his submission that the provisions of section 68 are not applicable." 2. Rival contentions have been heard and record perused. The facts in brief are that the original assessment in this case was completed at an income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. By the impugned order, the CIT(Appeals) confirmed the action of the Assessing Officer by observing as under: "I have gone through the assessment order and considered the submission of the appellant. In this appeal, the appellant has raised legal issue that no addition under section 68 can be made in the case of the company in respect of the share application money received by the appellant in view of Hon ble Supreme Court s decision in the case of CIT v. Staller Investment Ltd. 251 ITR 263. Therefore, before taking up the appeal on merits, I am deciding the above issue. No doubt, the Hon ble Supreme Court has affirmed the decision of Delhi High Court [192 ITR 287] in the case of CIT v. Staller Investment Ltd., however, I find that Hon ble Supreme Court has not overruled the Full Bench decision of the Delhi High Court in the case of CIT v. Sophia Finance Ltd. I further find that Hon ble Delhi High Court in the case of Staller Investment Ltd. did not consider the provisions of section 68 and therefore, the appellant s authorized representative is incorrect in saying that the provisions of section 68 cannot apply in view of decision in CIT v. Staller Investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer and appellate order passed by the CIT (Appeals) are contrary to the guidelines laid down in the case law of CIT v. L.G. Ramamurthi [1977] 110 ITR 453 , 462-63 in which Hon ble Madras High Court has held that no Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another Bench of the same Tribunal on the identical facts. He also drew our attention to various judgments of High Court and Tribunal in support of his contentions stated hereinabove as well as before the lower authorities. 6. On the other hand, Senior DR Shri Rattan Singh submitted that the Asstt. CIT in her order passed on 21-2-1995 made addition of Rs. 11,75,000 under section 68 of the Act, on the basis that identity of the persons from whom funds were received was not proved. He further submitted that the assessee was required to explain the nature and source of various deposits in its bank account amounting to Rs. 11,75,000. It was stated that in spite of the directions of the CIT (Appeals) while setting aside the above issue, the assessee had not filed any information or relied on the query despite clear cut directions given by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sophia Finance Ltd. [1994] 205 ITR 98 (FB) held that credits on account of share money is also covered by section 68 of the Income-tax Act, and the same can be investigated by the Assessing Officer. In case an assessee fails to satisfactorily explain those credits, the provisions of section 68 would apply. In the present case, in the original assessment as well as in the fresh assessments repeated opportunities have been given to the assessee to produce evidence in support of the claim that this money genuinely represented share application money. There is a complete failure on this front on the part of the assessee. What further clinches the case is the admission of the assessee through its director Shri V.K. Gupta that the money is either of the shareholders or of the companies in which this money was subsequently invested. This is a clear-cut admission that the assessee-company is resiling from its claim that the money is a genuine shareholders money. 8. As per our considered view as and when section 68 is resorted to, it is incumbent on the assessee to prove and establish the identity of the subscribers, their creditworthiness and the genuineness of the transaction. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iple of law. The opinion so formed must be reasonable and based on materials and shall not be perverse. The extent of the power of the Assessing Officer while considering the materials produced by the assessee is very wide. The Assessing Officer is empowered to lift the corporate veil and examine the real nature of the transaction. In the process, it may exercise its power of examining the materials. It may require the assessee to produce further materials if so required. It may seek information from other sources on the basis of the material produced. In the process of enquiry, the assessee has all the right of hearing. The assessee has also a right to challenge the conclusion arrived at on the basis of the enquiry made. The assessee may point out the perversity in the finding. It may question the validity of the process undertaken. It may point out that a particular material was not considered. It may also point out that the enquiry made was not reasonable or was half-heartedly done. The process of enquiry is such that the assessee has to offer the explanation and produce the material in support of such explanation and then it can do no further. The onus then shifts on the re ..... 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