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TMI Blog2012 (8) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that in the return of income for the Assessment Year 2006-07, the assessee declared a total income of Rs.72,741/-. The assessee had declared book profits of Rs.3,50,40,745/- and paid tax under Section 115 JB. The assessee claimed deduction under Section 80IC of the Act for the same amount as its manufacturing facility was located in a notified area. The return was processed and selected for scrutiny and a notice was issued under Section 143(2). The Assessing Officer computed the total income of the assessee at Rs. 1,03,86,980/-. The AO noticed that the assessee had received a sum of Rs.1,00,40,000/- as Share Capital money from the four parties - Sh. Virender Singh, M/s. U.P. Electricals Pvt. Ltd., M/s. Salwan Developers and Promoters Pvt. Ltd. and M/s. Jain Project and Financial Consultants Pvt. Ltd. The AO observed that the last three of these applicants were subject to enquiries by the Investigation Wing and that according to the materials in the form of returns, they were only accommodation entry providers. The assessee was asked to lead evidence in support of its claim that amounts were received towards Share Capital money. Accordingly it filed confirmations, copies of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shes how cash has been deposited in one account and then the same has been routed through two or more accounts before the amounts have returned back to the assessee company in the garb of share application money. It is not sheer coincidence that multiple entities have accounts exiting in the same bank branch. This expedient is resorted to because it facilitates quick and easy transfer of funds from one account to another. XXXXXX XXXXXX XXXXXX As can be seen from the discussion above, multiple companies/concerns have been got registered with the same address (e.g. A-4/181, Sector-17, Rohini, New Delhi 85" and 2A/65, Ground Floor, Ramesh Nagar, Delhi"). For example, the address "A-4/181, Sector-17, Rohini, New Delhi-85" (which is shown to be the business address of M/s. Salwan Developer & Promoters P. Ltd.), has been used as the address in the case of more than a dozen of such "companies"/"concerns" including M/s. Maestro Marketing & Advertising P. Ltd. into the bank account of which, a cash running into crores has been found deposited. However, the local inquiries have shown that it is a small residential quarter with no sign whatsoever of any business activity with reference to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the four persons from whom the money had been received. Copies of their I.T.R. were also filed. The amounts were admittedly received through account payee cheques. The assessee had filed Form No.2 with the ROC in respect of allotment of share capital of Rs.1,00,40,000/-. A copy thereof was also provided to the Assessing Officer. The parties were also not proved to be non-existent. It was on the basis of these facts that the CIT(A) deleted and, in our considered opinion, rightly so, the additions wrongly made. As correctly observed by the CIT(A), the Hon'ble Delhi High Court in the case of "Dwarkadhish Capital Pvt. Ltd.", in I.T.A. Nos.911 & 913/2010, vide order dated 02.08.2010, has held that the onus of proof is not static; that once the assessee has proved the identity of the applicants by furnishing their PANS or income-tax assessment numbers and shows the genuineness of the transactions by reflecting the money in his books either by account payee cheques, or by draft, or by any other mode, the onus of proof shifts to the Revenue; that just because creditors/share applicants could not be found at the given address, it would not give the Revenue the right to invoke section 68 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd." (supra), the same is not applicable to the facts of the present case. In that case, the assessee had not even furnished basic requirements of share capital i.e., cheque number, date, amount(s) and details of drawee bank, etc. The assessee's bank account was also not produced. It was in this background that it was observed that the assessee had not been able to discharge its onus and that the addition had been rightly made. In the present case, however, as discussed hereinabove, the assessee has duly furnished all relevant material evidence before the Assessing Officer, thereby discharging its primary onus u/s 68 of the Act, in keeping "CIT vs. Lovely Exports Pvt. Ltd.' (supra) and "Dwarkadish Capital" (supra). XXXXXX XXXXXX XXXXXX" 8. The Revenue argues that the decision of the Tribunal cannot be sustained, because it mechanically and in a straight-jacketed manner accepted the Appellate Commissioner's order. Counsel argued that the Tribunal should have seen the AO's order, which was painstaking in details. Counsel highlighted the fact that so far as the assessee is concerned, the inquiry does not end nor does the burden (of proving that the suspect entries being genuine) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2011) 333 ITR 119 a Division Bench of this Court considered the previous decisions on the question of the appropriate procedure and approach which every Assessing Officer has to adopt while deciding if income has to be added back under Section 68 of the Act. The relevant observations are in the following terms: "20. The observations of the Supreme Court in the case of Lovely Exports (supra) go to suggest that the Department is free to proceed to reopen the individual assessment in case of alleged bogus shareholders in accordance with law and, thus, not remediless. It is, thus, for the AO to make further inquiries with regard to the status of these parties to bring on record any adverse findings regarding their creditworthiness. This would be moreso where the assessee is a public limited company and has issued the share capital to the public at large, as in such cases the company cannot be expected to know every detail pertaining to the identity and the financial worth of the subscribers. Further initial burden on the assessee would be somewhat heavy in case the assessee is a private limited company where the shareholders ITA Nos.2093, 2094, 2095 of 2010, 514 of 2007 & 539 of 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the nature and source of such credits found in the books or (b) the explanation offered by the assessee, in the opinion of the AO, is not satisfactory. It is only then that the sum so credited may be charged to income tax as the income of the assessee of that previous year. The expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The opinion of the AO for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion of the AO is required to be formed objectively with reference to the material on record. Application of mind is the sine qua non for forming the opinion. In cases where the explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz., the receipt of money. The burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the recent judgment of a Division Bench of this court in CIT v. Oasis Hospitalities Private Limited, (2011) 333 ITR 119. We have given utmost consideration to the judgment. It disposes of several appeals in the case of different assessees. Except the case of CIT v Oasis Hospitalities P Ltd. (ITA Nos.2093 & 2095/2010), the other cases fall under the category of Orissa Corporation (supra). However, in the case of Oasis Hospitalities P Ltd., there is reference to information received by the Assessing Officer from the investigation wing of the revenue on the basis of which it was found that six investors belong to one Mahesh Garg Group who were not carrying on any real business activity and were engaged in the business of providing accommodation entries. They were entry operators and the assessee in that case was alleged to be a beneficiary. While disposing of these appeals, this court observed: - "The assessees filed copies of PAN, acknowledgement of filing income tax returns of the companies, their bank account statements for the relevant period, i.e., for the period when the cheques were cleared. However, the parties were not produced in spite of specific direction of the AO instea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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