TMI Blog2009 (12) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... and were allotted the shares. The fact also remains that now the shares are acquired by the family members of the directors at much lesser price. This fact also should have been examined. The CIT (A) has deleted the addition for the reason that since the AO has not made any enquiry after the appellant furnished all these particulars, it has discharged its onus and no addition is called for u/s 68. The CIT (A) has also not examined whether the share applicant had any creditworthiness and the transaction was genuine. In such a situation the CIT (A) erred in deleting the addition as the AO failed to make any enquiry. Rather it was incumbent upon the CIT (A) to carry the enquiry further and should have done what the AO failed to do. As decided in Kapurchand Shrimal v. CIT[ 1981 (8) TMI 2 - SUPREME COURT] it is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh, unless forbidden from doing so by statute. Since no further evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee-company. (vi) PAN card. (vii) A photocopy of acknowledgment for filing return of income for the assessment year 2001-02. (viii) A photocopy of audited balance-sheet and the profit and loss account for the year ended March 31, 2002. The assessee also a filed a photocopy of bank statement showing payment cheque to the appellant in respect of the following companies : (1) Amba Alloys (P.) Ltd. (2) Saurabh Petrochem (P.) Ltd. (3) Landmark Communication (P.) Ltd. As regards books of account of these companies the assessee submitted that it is unable to produce the same and the same may be asked from the respective companies directly. The Assessing Officer called for the bank statement of all the companies from the bank. He noted that all the companies have account with Jai Laxmi Co-operative Bank Ltd. which cannot be a mere coincidence. He analysed the bank statement and concluded that before issuance of cheque for share capital, amount is deposited in cash. Out of the total deposit in all the bank accounts majority deposit is by way of cash. The Assessing Officer rejected the affidavit of the respective applicants as it did not bear any date. The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d these shares having face value of ₹ 10 each were allegedly sold/transferred at the price of ₹ 5 each share. The Assessing Officer thereafter held that it is not a normal transaction. The amount was never received as share capital/share application money but a camouflaged transaction. Accordingly the amount was added as unexplained cash credit under section 68 of the Act. The learned Commissioner of Income-tax (Appeals) after considering the submission made before him held : (1) The addition has been made by the Assessing Officer on the basis of information received from the investigation wing. (2) When the assessee was asked to produce principal officer for examination, the assessee submitted confirmation of the said companies and other documentary evidence but be could not produce the directors of the said company. (3) The assessee has provided documentary evidence as described herein above. Though the Assessing Officer obtained bank statement of investor company and the investments were duly reflected, these evidences were disregarded. (4) Though the evidence of investor companies are filed, they were not entertained by the Assessing Officer witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (13) The assessee has discharged the initial onus of genuineness of transaction and the Assessing Officer was not justified in ignoring various evidence provided to him. Nothing adverse has been brought on record by the Assessing Officer that the share application money represents its own undisclosed income. (14) If there was doubt about source of investment then addition should have been made in the case of those companies and not in the hands of the assessee. The addition is made solely on the basis of information received from the investigation wing without making any further investigation by the Assessing Officer. He accordingly held that the transaction was genuine and the same were not accommodation entries. He, therefore, deleted the addition of ₹ 12,50,000 under section 68 of the Act. The Revenue is in further appeal before us. Whereas the learned Departmental representative sought to rely upon the finding of the Assessing Officer, learned counsel for the assessee submitted that all the evidences to prove that the amount received was by the share application has been filed and hence in the absence of any contrary evidence, addition was rightly deleted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e address provided to the assessee by the share applicants. Therefore, the papers submitted itself by the assessee do not prove the existence of share applicant factually. Therefore in the present case we find that the existence of share applicants were not proved. Therefore merely on certain papers produced by the assessee it cannot be said that these share applicants were in existence who have actually applied for shares and were allotted the shares. The fact also remains that now the shares are acquired by the family members of the directors at much lesser price. This fact also should have been examined. The Commissioner (Appeals) has deleted the addition for the reason that since the Assessing Officer has not made any enquiry after the appellant furnished all these particulars, it has discharged its onus and no addition is called for under section 68 of the Act. The Commissioner (Appeals) has also not examined whether the share applicant had any creditworthiness and the transaction was genuine. In such a situation the Commissioner (Appeals) erred in deleting the addition as the Assessing Officer failed to make any enquiry. Rather it was incumbent upon the Commissioner (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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