TMI Blog2014 (8) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... eging it as not so, i.e., the Revenue - The onus on the assessee – it of course cannot be required to prove a negative, would depend on the facts and circumstances of the case – the material is considered to be part of the record – relying upon Hukumchand Mills Limited Versus Commissioner Of Income-Tax, Central, Bombay [1966 (9) TMI 38 - SUPREME Court] – thus, the matter is to be remitted back to the CIT(A) for fresh adjudication. - I.T.A. No. 405/Mum/2012, I.T.A. No. 1424/Mum/2012 - - - Dated:- 13-8-2014 - Shri Sanjay Arora, AM And Shri Vivek Varma, JM,JJ. For the Petitioner : Shri Pramod Kumar Parida For the Respondent : Shri S. J. Singh ORDER Per Sanjay Arora, A. M.: This is a set of two appeals, i.e., by the Assessee and the Revenue for the assessment year (A.Y.) 2008-09, arising out of the Order by the Commissioner of Income Tax (Appeals)-9, Mumbai ( CIT(A) for short) dated 05.12.2011, partly allowing the assessee s appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 ( the Act hereinafter) vide order dated 23.12.2010. The appeals raising common issues, were taken up for hearing together and are being disposed of likewise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide letter dated 23/12/2010, the date of the assessment order. The assessee, in the opinion of the AO, had not at all proved, much less satisfactorily, the impugned credits, on the parameters of genuineness, capacity and identity, even failing to adduce the correct addresses of the investing companies. Accordingly, he deemed the entire capital raised as unexplained credit and brought the same to tax as income u/s. 68 of the Act, relying on the decisions in Velji Deoraj Co. v. CIT[1968] 68 ITR 708 (Bom) and A.D. Jayaveerapandia Nadar v. CIT [1964] 54 ITR 401 (Mad.) (pages 6-7 of the assessment order). In appeal, the assessee furnishing additional evidences, a remand report was called from the AO, the relevant part of which (dated 28/09/2011) is reproduced in the impugned order (pages 6-11). It stands explained thereby as to why the Revenue had chosen to concentrate on those six companies; the same having been subject to investigation by the investigating wing of the Department, consequent to a search seizure action u/s. 132 in the case of KSL Industries Ltd. and Reward Real Estate Co. Ltd. (forming part of KSL group of companies), who were, among others, alleged to have take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the addition under section 68 in principle, though allowed relief to the assessee to the extent of ₹ 41.925 lacs, being old credits, inasmuch as section 68 is applicable only to credits made in the assessee s books of account during the relevant year. Aggrieved, both the assessee and Revenue are in appeal. The respective cases 3. Before us, the assessee s principal case, made with reference to its additional ground 1(a), was of denial of natural justice. The ld. CIT(A) had relied on the statements recorded behind its back, i.e., without confronting the same to the assessee. Reliance in this regard was made to the case of Kishanchand Chellaram vs. CIT [1980] 125 ITR 713 (SC). The Revenue s case, on the other hand, was that the ld. CIT(A), in doing so, had only confirmed and buttressed the findings of the AO, who had clearly, and in unambiguous terms, stated his dissatisfaction, as well as reasons therefor, with the assessee s expalanation qua the impugned credits. The AO s non-satisfaction has nowhere being challenged by the assessee, which could only be on facts. Where, then, was the necessity of furnishing the said statements to the assessee. Reliance was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s companies chose to invest in the assessee-company, a loss making company. This is particularly so as the assesseecompany is a private limited company and, therefore, its shares have extremely limited transferability, so that the investment is, for all intents and purposes, illiquid. What is the source of funds, i.e., accumulated surpluses or further capital raised by them, either as equity or debt. The shares are subscribed to in private placement, and therefore not in response to a public offering. What, then, forms the connecting link between the assessee and the investing companies; the share subscription, being risk capital, in a private company being generally limited to friends and relatives of the directors of the investeecompany. These questions, even otherwise relevant, assume critical significance in view of the Revenue clarifying a link by way of the assessee being one of the beneficiaries of bogus billing/accommodation entries racket being run by the persons controlling these companies, as also found on field enquiry during the course of assessment proceedings at its given address, i.e., of Om Procurement Projects Ltd., the only company which responded to section 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are certificates, have been furnished by the assessee, which rather confirm the factum of the credit and not of it being genuine. The issue is not of presentation of documentary evidences, but of the truth thereof. If not so considered, the credit entries as appearing in the assessee s books of account would itself be regarded as final. It is, given the prescription of s. 68, which is a rule of evidence, statutorily mandated, the truth of those documents or of the same as representing genuine transactions, that is to be established. But for s. 68, the principle that what is apparent is real would obtain, so that the onus to disprove it with evidences - would be on the person alleging it as not so, i.e., the Revenue. The onus on the assessee it of course cannot be required to prove a negative, would thus depend on the facts and circumstances of the case, and becomes accentuated in the wake of those as obtaining in the instant case, sought to be emphasized per the questions, deemed pertinent, as posed hereinbefore, equally applicable for those companies. The Revenue, its needs to be appreciated, is not required to, in invoking sec.68, disprove a credit, as it appears to have e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/2013), to which again reference is made. We, accordingly, consider it proper that the said material be considered as a part of the record. The reliance by the Revenue thereon has necessarily to be subject to the assessee being allowed due opportunity to explain its case with reference thereto. The final satisfaction or non-satisfaction, as the case may be, by the Revenue, the onus to lead satisfaction being on the assessee, has to be with reference to proven facts. Why, toward this, even the assessee argues, per its additional ground 1(c), that the addition u/s. 68 is to be made on the basis of facts, as determined, and not on the basis of statements. It, however, does not lie in the assessee s mouth to contend that the Revenue is not entitled to rely on those statements inasmuch as there can be no presumption that they are not true or represent untruth, unless and to the extent retracted. Where and to the extent they purport to clarify and elucidate facts, there is no reason that the Revenue cannot rely on the same. The argument is even inconsistent with the assessee s case of the Revenue having relied on the same without confronting the relevant materials to the assessee, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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