TMI Blog2012 (10) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... production of the persons, who subscribed to the share capital, as is evident from the extracts of findings of the AO. - onus shifts on the AO, to bring credible material on record to show the non-existence of such subscribers and non-genuineness of such transactions. - Addition deleted - decided in favor of assessee. Decision of Apex Court in CIT V Steller Investment Ltd. [2000 (7) TMI 76 - SUPREME COURT] followed - ITA No. 685/CHD/2011 CO No. 63/CHD/2011 - - - Dated:- 22-6-2012 - Ms. SUSHMA CHOWLA, AND SHRI MEHAR SINGH, JJ. Department by : Smt. Jaishree Sharma Respondent : Shri Sudhir Sehgal ORDER PER MEHAR SINGH, AM The present appeal filed by the Revenue and the Cross Objections filed by the assessee, are directed against the order dated 13.04.2011 passed by the ld. CI T(A) u/s 250(6) of the Income-tax Act,1961 (in short 'the Act'). 2. In this appeal, the Revenue has raised the following Grounds of Appeal: "1. That the ld. CIT(A) has erred in law and on f acts in deleting the addition of Rs.1,95,00,000/- made by the AO on account of disallowance on the issue of new share capital . 2. That the order of the CIT(A)-II be set aside and that of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f (-) Rs.26,764/- The AO, received information from the Investigation Wing, as mentioned in the reasons recorded by the AO u/s 148 of the Act, that assessee company is a beneficiary of accommodation entries, provided by Shri Tarun Goyal, Karol Bagh, New Delhi. The reasons recorded reveal the modus- operandi resorted by Shri Tarun Goyal. A bare perusal of the reasons recorded by the AO, on 13.04.2011, and as reproduced by the CIT(A), in para 3.1 of his appellate order, under reference, reveals that the AO, acted upon the information provided by the Investigation Wing, in respect of the entries provided by Shri Tarun Goyal, to the assessee alongwith the detail of such entries. The report, submitted by the Investigation Wing, to the AO, is a report on certain facts, which can certainly serve as the basis, for initiating re-assessment proceedings, u/s 147 read with Section 148 of the Act. A bare perusal of the reasons recorded reveals that the AO, has duly applied his mind, to the report submitted by the Investigation Wing. 6. Ld. CIT(A), has considered the factual matrix of the case as also the decisions relied upon by the assessee. Ld. CIT(A) referred to the decision of the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assumption of jurisdiction, for the purpose of re-assessment in a case. In such a situation, only prima- facie belief, formed by the AO, in the matter of escapement of income, chargeable to tax, is essential. In this case, the notice u/s 148 of the Act has been issued before the expiry of four years, hence, the proviso to Section 147 of the Act is not applicable. It is, further, essential to mention here that there is no statutory bar, in invoking the provision of Section 147 read with Section 148 of the Act, on the basis of valid information supplied by the Investigation Wing of the Income Tax Department. Where the information is factual and not false one and the same has merely been communicated to the AO, he would be within his statutory right to invoke the provisions of Section 147 read with Section 148 of the Act. Needless to stress that communication of information from any source, is different from the interpretation of the same. The AO, has been supplied with information by the Investigation Wing and he applied his mind to such information, hence, there is no infirmity or illegality in issuance of notice u/s 148 of the Act by the AO. 10. We have considered the case laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered. It was open to the assessee to participate in the re-assessment proceedings and put forth its stand in detail to satisfy the AO that there was no escapement of taxable income." 11(ii). A letter received from the ADI that hundi loans in the names specified therein, shown by the assessee were fictitious. There is rational connection between the letter and the belief of the Income Tax Officer that income had escaped assessment and the assessment was held valid in the case of Midland Fruit Vegetable Products (India) Ltd. V CI T (1994) 208 ITR 226 (Del). 11(iii) The decision of the Hon'ble Delhi High Court in the case of Rajat Export Import India Pvt. Ltd. V I TO (2012) 341 ITR 135 (Del) directly support the issue in question in the present appeal. The relevant part of the same is reproduced hereunder: "Held, dismissing the petition that in the reasons recorded the AO had ref erred to the investigation made by the Director of Income-tax (Investigation), who was in charge of the investigation into groups that operated as entry providers or entry operators, in the case of a group which was found to have operated multiple accounts in various branches of banks to intro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of new share capital, as is evident from perusal of Ground No.1. 14. Ld. 'DR' contended that findings of the AO deserve to be upheld, having regard to the fact-situation of the present case. Ld. 'DR' placed reliance on the decision in the case of Aggarwal Coal Corporation Pvt. Ltd. V Addl.CIT (2011) 142 TTJ (Ind) 409 and Power Drugs Ltd. V CIT Anr. 245 CTR 623 (P H). No other decision, to support the case of the revenue was cited or brought to the notice of the Bench by the ld. 'DR'. 15. Ld. 'AR' referred to the submissions filed by the appellant before the CI T(A). In the submissions, before the CIT(A), the assessee placed reliance on the decision in the case of CI T V Steller Investments (P) Ltd. 251 I TR 263 (S.C), M/s Lovely Exports Pvt. Ltd. 216 CTR 195 (S.C) He contended that the case of the appellant is squarely covered by these decisions. 15(i) Ld. 'AR' referred to Paper Books filed by him, wherein necessary details regarding identity of the subscriber to the share capital, credit worthiness of the same and genuineness of the transaction, were filed. Ld. 'AR' filed affidavit relating to the application and allotment of shares, acknowledgement of Income tax re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Karol Bagh trading Limited - Affidavit relating to the application and allotment of shares - Acknowledgement of Income Tax Return of the company for A/ Y 2004-05 2006-07 - Copy of PAN - Bank Account of the company showing the transaction - Cheque relating to credit entry in the bank on 22.09.2005 - Notice for the AGM, Director's Report, Auditor's Report, Balance Sheet and Profit Los s Account of the comp any for the A/Y 2006-07 g. M/s Adonis Financial Services Private Limited - Affidavit relating to the application and allotment of shares - Acknowledgement of Income Tax Return of the company for A/Y 2004-05 2006-07 - Letter by the Department allotting PAN to the company - Source of money applied for the allotment of the shares of the assesse - Notice for the AGM, Director's Report, Auditor's Report, Balance Sheet and Profit Loss Account of the company for the A/Y 2006-07 h. M/s Countrywide Credit Securities Private Limited - Affidavit relating to the application and allotment of shares - Acknowledgement of Income Tax Return of the company for A/Y 2004-05 2006-07 - Copy of PAN of the company - Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prakash Chand Nahta V CIT 301 IT R 134 (MP) 8. Anil Kumar Midha 9HUF) V ITO 100 TTJ 644 (Jodh-Trib) 9. APS Associates (P) Ltd. V ACIT 101 TTJ (Asr-Trib) 15 10 Golden Remedies (P) Ltd. V ITO 18 SOT 260 (Del-Trib) 11. ITO V Nova Promoters Finlease (P) Ltd. 44 DTR 9 (Del-Trib) 12. Master Abhinav Malhotra V ACIT 89 TTJ 144 (Del- Trib) 13. ITO V Purvi Fabrics Texturise (P) Ltd. 47 DTR 225 (Del-Trib) 14. CIT V Emerald Commercial Ltd. 250 ITR 539 (Cal) 15. Prashant Khosla Pneumatics Ltd. v ACIT 54 ITD 229 (Del-Trib). 15(iii) The ld. 'AR', further, placed reliance, on a number of decisions to support his contentions. However, ratio of a few decisions are reproduced hereunder : 1. CIT V Shri Dadu Auto (P) Ltd. (supra) "Having heard ld. Counsel f or the Revenue, we are of the considered vie w that no exception is provided to admit the appeal especially when the vie w of Hon'ble the Supreme Court in various judgements is absolutely clear The proper course f or the Assessing Off icer could have been to re-open the assessment of the share applicants/shareholders rather than making addition against the assessee-respondent. There is thus no merit in the appeal. Dismissed." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Ltd. 263 I TR 692 (Cal), Parkash Natha V CI T 301 I TR 134 (MP), Anil Kumar Midha (HUF) V ITO 100 TTJ (Jod-Trib) 644, APS Associates (P) Ltd. V ACIT 101 TTJ (ASR-Trib) 15, Golden Remedies (P) Ltd. V ITO 18 SOT (Del-Trib) 260, it has been held that where a request has been made by the assessee to the AO, for issuing summons u/s 131 of the Act, it is incumbent on the AO to issue such summons, with a view to enabling the assessee to avail of the opportunity u/s 68 of the Act to prove the genuineness of transactions and where the AO failed to issue such summons, no addition can be made. 16. We have carefully perused the rival submissions, facts of the case and the relevant records, including the case laws, cited by the parties and Paper Books, filed by the assessee. The AO made an addition of Rs.1,95,00,000/-, as undisclosed income of the assessee, on the ground that persons who subscribed to the share capital were not produced before him. The AO, after a consideration of the submissions, filed by the assessee, recorded his findings at page 17 of the assessment order, dated, 22.12.2010, passed u/s 143(3)/147 of the Act. The relevant part of the findings of the AO are reproduced here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed i.e. filling of documents in proof of establishing the identity of the Shareholder, genuineness of transaction, creditworthiness of Shareholders, Regd. Address, PAN of Shareholders, Proof of filing of Income-tax return, Balance Sheet of the shareholders showing the Investment in their books, confirmation from shareholders, copy of Bank statement evidencing the mode of payment by the shareholders and the proof of filing of return of allotment by the appellant. The Id. A.O. has not rebutted the evidence led by the appellant, the copy of which was provided to the A.O. During appellate proceedings both A.O. and counsel attended and the A.O. was specifically asked that whether he has in his possession any specific concrete adverse material to support his contention and in reply to that the A.O. just relied upon his assessment order and reiterated the same fact as stated in assessment order. The Counsel emphasized that as for as the appellant is concerned there is no element of bogus capital from the applicant companies involved. The Id. Counsel has also brought to my notice a number of judgements of ITAT, Jurisdictional High Court and Apex Court where the addition made under identica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the present case are materially different and distinguishable and hence, not applicable to the present case. 19. In view of the evidences filed by the assessee appellant, it cannot be said, as rightly held by the CIT(A), that the appellant has failed to discharge the onus cast on him, within the meaning of provisions of Section 68 of the Act. The decisions cited by the CIT(A) in his findings, reproduced above, currently hold the field. On the contrary, the AO, has failed to bring on record cogent and corroborative material (except information from Investigation Wing of the Department), to support his conclusion, in the matter. The appellant has discharged onus, within the meaning of Section 68 of the Act and also in consonance with the general principles of law. The AO made the impugned addition, primarily on the ground of non-production of the persons, who subscribed to the share capital, as is evident from the extracts of findings of the AO, reproduced above. The assessee vide letter, dated 22.12.2010, made a submission to the Asstt. CIT, Circle, Khanna, whereby it had been mentioned that the assessment in the case was framed u/s 143(3) of the Act vide order dated 24.12.2008. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany during the F.Y. 01.04.2005 to 31.3.2006 to the following companies (para 3 of the assessment order in question). Thus, the factum of allotment of shares to various companies, remains undisputed, even as per the observations of the AO, in the matter. The assessee has filed affidavit, confirmation indicating number of shares, amount invested, mode of investment as cheque, bank account number, source of funds, occupation and receipt of share certificate, Income Tax PIN number, photo copy of the acknowledgement of return of income, statement of bank account, audited Profit Loss Account and Balance Sheet, to prove the identity and existence of the subscribers as also the evidence of investment in shares through banking channels. In such a fact-situation, onus shifts on the AO, to bring credible material on record to show the non-existence of such subscribers and non-genuineness of such transactions. Similarly, evidence in the form of statement of bank account filed by the assessee, remained un-rebutted. 20. Having regard to the above legal and factual discussion and considering the decisions relied upon by the CIT(A), in his findings as also the decision cited before us, we do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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