9911796707
TMI Blog2015 (1) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... under:- "During the course of proceedings summons u/s 131 of the I.T.Act1961 was issued to the these persons to attend personally with certain details as mentioned in the summons. No detail was filed nor did anyone appear on his behalf. During the course of assessment proceedings the assessee had only filed an affidavit with confirmations from these persons in support of their providing the money to the company. In its letter the assessee had also requested that an opportunity was to be given to them to cross examine the persons who have given statement against them. It was with this view that summons u/s. 131 dated 18.12.2009 was issued to the persons to attend the office personally. But as stated none appeared nor any reply filed till date of this order. Hence in view of this the share capital of Rs. 9,96,000/- stands unconfirmed. On the facts and various judicial pronouncement on the applicability of provisions of section 68 of the I.T. Act 1961 I hold the amount of Rs. 9,96,000/- would be added back to the income of the assessee u/s 68 of the Act." 4. Being aggrieved, the assessee preferred an appeal before the ld CIT(A), who upheld the action of the AO u/s 147 of the Act, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ora of case laws in support of his claim. On careful consideration of the matter, I find that the above contention of the Id. AR cannot be rejected on merit. The AO has also not been able to bring on record any valid material evidence to disprove the claim of the appellant in this regard." 5. Now the Revenue, is in appeal and has raised the following ground:- "1. In the facts and circumstances of the case, the ld CIT(A) has erred in law and on facts in deleting addition of Rs. 9,96,000/- u/s 68 of the IT Act on account on unexplained cash credits." 6. The ld DR, submitted that the assessee had not discharged the burden u/s 68 of the Act and ld CIT(A) was not justified in deleting the impugned addition. According to the ld DR, on the face of the investigation carried out by the investigation wing, there was sufficient evidence to show that the assessee had failed to explain the credit. Moreover, the purported investors did not attend in response to the summons issued u/s 131 of the Act. 7. The ld AR on the other hand supported the conclusion of the ld CIT(A) in respect to deletion of the addition. He submitted that the assessee received share-application money of Rs. 26,12,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s considered the submissions of the parties. In this case the discussion by the CIT(Appeals) would reveal that the assessee has filed documents including certified copies issued by the Registrar of Companies in relation to the share application, affidavits of the Directors, Form 2 filed with the ROC by such applicants confirmations by the applicant for company's shares, certificates by auditors etc. Unfortunately, the assessing officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr. Mahesh Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the assessing officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed vas untrustworthy or lacked credibility the assessing officer merely concluded on the basis of enquiry report, which collected certain facts and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department clearly showed that this was nothing but a sham transaction of accommodation entry. The assessee was asked to explain as to why the said amount of Rs. 1,11,50,000/- may not be added to its income. In response, the assessee has submitted that there is no such credit in the books of the assessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was Rs. 55,50,000/- and not Rs. 1,11,50,000/- as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is found correct. As such the unexplained amount is to be taken at Rs. 55,50,000/-. The assessee has further tries to explain the source of this amount of Rs. 55,50,000/- by furnishing copies of share application money, balance4 sheet etc. of the parties 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 depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or lacked credibility the Assessing Officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description ofS.68 of the Income Tax Act 1961. Having regard to the entirety of facts and circumstances, the Court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (supra). The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (supra). Where the assessee adduces evidence in support of the share application monies, it is open to the Assessing Officer to examine it and reject it on tenable grounds. In case he wishes to rely on the report of the investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between the assessee and the alleged hawala operators, such a link was shown to be present in the case of Nova Promoters & Finlease (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 Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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