TMI Blog2014 (11) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation and hence did not discharge the onus that shifted to it, the contentions of the assessee is upheld – Decided in favour of assessee. - I.T.A.No.4908/Del/2013 - - - Dated:- 21-3-2014 - SHRI J. S. REDDY AND SHRI RAJPAL YADAV, JJ For The Appellant by : Shri Salil Aggarwal Shri Salesh Gupta, C. A, For The Respondent by : Ms. Meenakshi Vohra.Sr.DR. ORDER PER J. S. REDDY, ACCOUNTANT MEMBER This is an appeal filed by the assessee and is directed against the order of the learned Commissioner of Income-tax (Appeals)-II, New Delhi dated 24.07.2013 for the assessment year 2009-10. 2. Facts in brief:- The assessee is a company and is in the business of real estate. It filed its return of income on 17.08.2010 declaring nil income. A return of income was selected for scrutiny. 3. The Assessing Officer observed that the assessee had received share capital, which was issued at the premium. The assessee was asked on 23.12.2011 to explain this receipt of share premium money and also to produce on 29/12/2011, a person from the investor company , M/s VIP Leasing and Finance (Pvt.) Ltd. In the mean time on 27.12.2011 a letter through post was received from this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduction of the party before the Assessing Officer did not comprise its burden or that the failure of that party to attend before the Assessing Officer should not result in application of section 68 in its case. The addition of ₹ 50,00,000/- on the ground of non-appearance of VIP Leasing and Finance Pvt. Ltd. is upheld since the appellant failed to render satisfactory explanation with regard to its claim of share application. The case laws relied by the appellant are not applicable to the facts of the case. Thus, ground 1-5 are dismissed. 6. Aggrieved the assessee is in appeal on the following grounds: a) That the Ld. CIT (A) has erred in upholding the action of the Assessing Officer in making an addition of ₹ 50,00,000/- u/s 68 of the Act on the allegation of accommodation entries on account of share application money received by the assessee company during the instant year. b) That the Ld. CIT (A) has erred in holding that non production of the share applicant before the Assessing Officer amounted to furnishing of a non satisfactory explanation with regard to the share capital, even though the assessee had discharged the onus to prove the complete identity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in 214 taxman 423. iii. Order of Hon ble Delhi ITAT in the case of ITO vs M/s Excellent Town Planners Pvt. Ltd. in ITA No.871/Del/2010. iv. Order of Hon ble Delhi ITAT in the cases of ITO vs. M/s Apogee Investments P. Ltd. in ITA No.2751/Del/2011. v. Order of Hon ble Delhi ITAT in the case of ITO vs. M/s Fabric World Pvt. Ltd. in ITA No.2552/Del/2010. vi. Order of Hon ble Delhi ITAT in the case of ACIT vs. M/s Panchanan International Pvt. Ltd. in ITA No. 50/Del/2011. 9. He further relied on the case laws reported in 306 ITR 35 (Del) 357 ITR 184. 10. The Ld. Departmental Representative on the other hand, Ms. Vohra vehemently opposed the contentions of the assessee. She submitted that the assessee is a private company and a company in the private sector has invested in the shares of assessee company . She submitted that under those circumstances, it is the bounden duty of the assessee to produce the Directors of the investing company before the A.O. to prove the genuineness of the transaction. She relied on the order of the CIT (A) and submitted that the judgment of the Delhi High Court in the case of Nova Promoters (supra) covers the issue on hand. She also r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been relied upon by the Delhi ITAT in the order in the case of Babita Gupta , in ITA No. 2897/06, wherein it is held that in the facts of the case before us it may be seen that from the very beginning Ld. Assessing Officer had shifted entire burden upon the assessee and no material was brought by him to prove his allegation that the impugned amount represented assessee company s undisclosed income. Therefore, on the ground alone the entire addition deserves to be deleted and may kindly be held so. (Emphasis ours). (c ) In case of CIT vs. Jay Dee Securities and Finance Ltd. ITA 327/2010 159/2010 (Allahabad High Court), the Hon ble Court held as follows: The Tribunal recorded findings that the assessee had produced that return of income filed by the relevant shareholders who had paid share application money. The assessee had also produced the confirmation of share holders indicating the details of addresses, PAN and particulars of cheques through which the amount was paid towards the share application money. The Tribunal thereafter relied upon the judgment of the Supreme Court in Lovely Exports vs. CIT (216 CTR 195 SC) wherein it was held that if the assessee produces th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned above and asserted that the question of addition in the income of the assessee does not arise. This explanation of the assessee has been duly considered and found not acceptable. This entry remains unexplained in the hands of the assessee as has been arrived by the Investigation wing of the department. As such entries of ₹ 55,50,000/- received by the assessee are treated as an unexplained cash credit in the hands of the assessee and added to its income. Since I am satisfied that the assessee has furnished inaccurate particulars of its income, penalty proceedings under Section 271(1)(c ) are being initiated separately. The facts of Nova Promoters and Finlease (P) Ltd. (supra) fall in the former category and that is why this Court decided in favour of the revenue in that case. However, the facts of the present case are clearly distinguishable and fall in the second category and are more in line with facts of Lovely Exports (P) Ltd. (supra). There was a clear lack of inquiry on the part of the Assessing Officer once the assessee had furnished all the material which we have already referred to above. In such an eventuality no addition can be made under Section 68 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (P) Ltd. (supra) relied upon by the revenue. We are therefore not to be understood to convey that in all cases of share capital added under Section 68, the ratio of Lovely Exports (supra) is attracted, irrespective of the facts, evidence and material. 11.3. Coming to the decision relied upon by the Departmental Representative as well as the Ld. CIT (A), we find that in the case of CIT vs. Mohankala (Supra) the Supreme Court was dealing with gifts and not shown capital investment. On the facts of that case, preponderance probabilities were the basis of the Hon ble Court coming to a conclusion that the numerous gifts received are bogus. In the case of Nipun Builders and Developers Pvt. Ltd, the creditworthiness of the investors was found to be inadequate. Surrounding circumstances were found to show that M/s Nipun Builders and Developers do not have financial capability. In the case N. R. Portfolio Pvt. Ltd. (Supra), the Assessing Officer made certain attempts to contact the share holders and that was without success. The Court observed as follows if on verification, or during the proceedings, the Assessing Officer cannot contact the share applicant, or that the none of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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