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TMI Blog2014 (10) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... 76,08,000/-. Hence the total share capital increased was to the tune of Rs. 95,10,000/-. On being called for explanation in this respect, the assessee submitted a list of 23 parties, who had allegedly subscribed to the shares of the assessee and the number of shares allotted. Assessee further filed copy of acknowledgements of the returns of income for the assessment year in the question i.e. A.Y.2007-08 in the cases of 20 of the said subscribers. However, the AO was not satisfied with the details submitted by the assessee. He doubted the genuineness of the transactions and creditworthiness of the subscribers to the assessee's shares. He therefore issued notices under section 131 of the Act to all the 23 subscribers. However, the said notices were received un-served except to one person. The AO noted that the assessee had not filed the basic details like mode of receipt of funds and the accounts from which the said amounts had been claimed to have been received. Even the said subscribers were not found available at the addresses submitted by the assessee. He therefore required the assessee to produce the said subscribers so as to verify the genuineness of the transactions and credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hird contentions are related so discussed and disposed off together: Assessee in these contentions merely tried to reason the causes for non availability of the so called subscribers to share capital at the stated addresses. But no latest address where these persons might be available had not been shared with the Department. It is upon the assessee to discharge this primary onus as this information is in his exclusive domain especially in view of the admitted fact that these persons are his "business partners" and they shift as per requirements of work. Further, if they have been deployed at different place, then it is for the assessee to disclose the same to the department for further necessary action. These excuses can not be by any reasoning be a substitute for the basic evidence to explain the nature and source of the sum. 4.10.3. In the case of the two parties namely Deora Kanshingh Ishwar Singh & Rajgor Haresh Ratnaji who had submitted confirmations through tapal, it is to note that both of them have also filed balance sheets. The balance sheets are reproduced below for ready reference. Deora Kanshingh Ishwar Singh As could be seen- - the total capital with both parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uine" (CIT v. Precision Finance Pvt. Ltd. 208 ITR 465, 470, 471. The same opinion was echoed in the case of Nizam Wool Agency V CIT(193 ITR 318). Further in the case of CIT v Korlay Trading Co Ltd. 232 ITR 820,824 the Court held that mere filing of the income-tax file number of the creditor was not enough to prove the genuineness of the cash credit. The creditor should be identified. There should be creditworthiness. There should be a genuine transaction. The income-tax file number had been given but that was not enough to prove the genuineness of cash credit. Admittedly, there was no affidavit to this effect, by the creditor, on record." iv. In the instant case, the assessee failed to advance any verifiable proof on any of the basic ingredients that withstood scrutiny/cross verification. In almost none of the cases were any evidences filed to confirm the genuineness of the transaction. In the two cases where the confirmations were tiled, it was found the they do not have credit worthiness to carry out the transaction. In the case of the remaining 21 parties no evidence to substantiate the genuineness of the transaction and creditworthiness of the transaction have been submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s produced in the course of assessment proceedings. She further reported that none of the said persons was available at the given addresses when inquiry was made in the course of assessment proceedings. The AO, therefore, observed that the said affidavits were nothing but another elaborate devious attempt of the assessee to explain the unexplainable. The AO therefore reported that mere filing of confirmation letters, payment through account payee cheques and PAN number etc. of the subscribers did not discharge the onus, that was upon the assessee, to establish the creditworthiness of the creditors and the genuineness of transactions. The AO, thus, justified the additions in the remand report. The assessee filed rejoinder to the said remand report of the AO. It was submitted that it was duly explained that the evidences could not be submitted during the assessment proceedings due to paucity of time. The list containing the names and addresses of 23 parties, who subscribed to the share capital, along with copies of share application forms, PAN numbers and the details of amounts from each of them, copies of acknowledgements for filing of return of income for assessment year 2007-08, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A(1) of the Income tax Rules. These evidences were forwarded to the AO in terms of Rule 46A(3) of the Income tax Rules in order to enable her to examine them, to ask the appellant to produce the concerned persons to cross-examine or to produce any evidence or document or any witness in rebuttal of the affidavits furnished by the appellant. The AO has merely raised suspicion on the credibility of the affidavits stating that they represent nothing but another elaborate, devious attempt of the appellant to explain the unexplainable. She chose neither to examine the witnesses nor produce any material in rebuttal of the affidavits. 7.2 In order to establish the genuineness of the credits, the creditor should be identified, its creditworthiness should be established which in turn establishes the genuineness of the transactions. In order to appreciate the contentions of the AO and the appellant it would be appropriate to notice section 68 of the Act which is reproduced: "68. Cash credits.-Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. 7.4 In the instant case, the appellant furnished copies of share applications made by all the 23 new shareholders. Each gives the name and address of the shareholder, his or her PAN, name and branch of the Bank and cheque number. The AO has not disputed them. In my opinion it cannot be said that the Department has issued bogus PAN nor has any material been brought on record by the AO that the PAN quoted are either wrong or non existent. PAN establishes the identity of the creditor. The appellant has also furnished copies of acknowledgment of filing return of income by the creditors. The copies of balance sheet reflect investment in the shares of the applicant. The AO also states that in most of the cases match ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come regularly, maintaining bank account and made payments to the assessee of the impugned amounts through the said bank accounts. He therefore has held that the contents of the affidavits of the said subscribers have remained uncontroverted. Based on the above findings as reproduced above, the ld. CIT(A) concluded that the assessee has discharged its burden to prove the genuineness of the transactions and creditworthiness of the creditors. We have gone through the said affidavits/additional evidences, copies of which find place at page 89 to 111 of the paper book attached with the appeal file, copy of the remand report dated 21.09.10 is also placed at page 112 and reply to remand report at page 120 of the paper book. 7. We have considered the rival contentions of the ld. representative parties and also have gone through the additional evidences, remand report etc. as mentioned above. A perusal of the assessment order reveals that out of the 23 parties, notices received back unserved in case of 22 parties, because of the reason that the persons were not available at the said addresses. The assessee had claimed before the AO that the said persons were his business partners, but, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h cheque No.396581, Mr. Govind Singh Deora through cheque No.396571 and so on. The above facts reveal that all the said persons had been issued cheque books almost of the same series and almost on the same day and all the persons used first cheque of their cheque book for making the payment to the assessee. All the persons had filed their income tax return only during this relevant year. Previously all the persons were not found at their addresses when summons were sent to them by the AO. All the persons produced affidavit, the stamp paper of which was procured on a particular date and executed the said affidavits between particular dates i.e. from 08.04.10 to 13.04.10. The assessee, though, had claimed them to be his business partners but had failed to produce even a single person before the AO despite specifically asked for the same by the AO. All these facts on the file prove beyond doubt that the evidences have been managed by the assessee to conceal the truth and to justify the genuineness of the transactions in question. The AO, in the assessment order as reproduced above, has observed from the balance sheet of two persons that the total capital of the said parties was a litt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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