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TMI Blog2007 (10) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... aken up in scrutiny and due notice was given to the respondent assessee to explain the receipt of Rs. 5,00,000 from M/s Flag Synthetics, Rs. 5,00,000 from Palasiya Leasing and Investment (P) Ltd. and Rs. 5,00,000 from Patni Industries Ltd. on the ground that identity, genuineness and creditworthiness of these parties were not established. The assessee produced the confirmatory letters before the AO but the AO on making deeper probe learnt that in each case the sum of Rs. 5,00,000 was deposited on the same day on which the cheque was issued in favour of the assessee towards purchase of shares. The assessee was also given adequate opportunity to prove the genuineness of the transaction. 3. Finding that the assessee had failed to discharge hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 113 CTR (Del)(FB) 472 : (1994) 205 ITR 98 (Del)(FB). Their Lordships have duly observed that where an assessee company represents that it had issued shares on the receipt of share application money then the amount so received would be credited in the books of account of the company. In such a situation, the ITO would be entitled to enquire whether the alleged shareholders in fact, exist or not. Similar view was expressed by the Calcutta High Court in CIT vs. Kundan Investment Ltd. (2003) 182 CTR (Col) 608 : (2003) 263 ITR 626 (Cal.), in which it has been observed that the burden is on the assessee to prove the genuineness of the transaction and where no evidence of creditworthiness of the shareholders has been tendered, addition made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion offered by him is not, in the opinion of the AO, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." 9. For the purpose of resolving the controversy between the parties, it is first necessary to refer to the relevant portion of the assessment made by the AO. 10. The AO has duly observed that during the course of the proceedings, it was found from the balance sheet of the assessee company that the issue, subscribed and paid-up capital of the company had gone up by an amount of Rs. 16,90,000 from Rs. 87,95,000 last year to Rs. 14,85,000 this year. A questionnaire dt. 4th Oct., 2002 was issued calling upon the assessee to give the details of the entry in the share capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surface the staggering facts. It was found that in each case the sum of Rs. 5,00,000 was deposited on the very day on which the cheque was issued for purchase of the shares of the company which also made the genuineness of the transaction quite dubious. 13. Learned counsel for the respondent, however, submits that as held by the Supreme Court in CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC) in such matters, no question of law arises as the findings of the Tribunal are based on appreciation of evidence. The facts of the case in Steller Investment Ltd. (supra) were materially different from the facts of the present case. In the said case the High Court had declined to call reference from the Tribunal on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the decision of the Delhi High Court containing observations that the CIT(A) had examined the bank account of these companies from where the cheques in question were issued and had found that numerous transactions of deposits and withdrawals were made. The companies were not found at the given addresses when AO issued the summons still addition was deleted and an observation was made that it could not be said in the circumstances that the companies were non-existent. 16. The case relied upon by the Tribunal was materially different and distinguishable from the case in hand. In the said case the CIT(A) had deleted the addition, while in the present case, the CIT(A) has maintained the addition. Without considering that the payments were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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