TMI Blog2015 (5) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... e absence of proper explanation of credits, the only option available with the A.O. was to make addition u/s 68 of the Act. The assessee cannot be allowed relief simply holding that assessee had discharged its onus by filing certain documents and the A.O. had failed to take further action. As decided in CIT v/s M/s Jansampark Advertising And Marketing (p) ltd. [2015 (3) TMI 410 - DELHI HIGH COURT] where A.O. has failed to discharge his obligation to conduct proper inquiry to make additions the Ld. CIT(A) could not have closed the chapter by simply allowing the appeal and deleting the addition relying upon certain case laws and ignoring the facts that no documents for establishing creditworthiness of alleged shareholders were filed and income tax returns also related to earlier years. In view of above facts and circumstances, we set aside the issue to the office of Ld. CIT(A) who should pass a well reasoned and speaking order based upon the facts of the case after affording reasonable opportunity of being heard to the assessee. - Decided in favour of revenue for statistical purposes. - I.T.A. No. 1620/Del/2011 - - - Dated:- 16-4-2015 - Smt. Diva Singh And Shri T.S. Kapoor JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef by holding as under: 4. Finding on Ground of Appeal It is seen from the submissions and paper book filed by the appellant that in order to substantiate the claim that the above mentioned six share applicants are existing and the transactions are genuine, the appellant had filed the following documents before the AO:- a. Copy of share application Form. b. Confirmation for share capital contribution from the above shareholders, giving details of the cheque and Bank through which the share application has been made. c. PAN details and assessing officers jurisdiction of the shareholders. d. IT returns copies of the shareholders. e. Copy of resolution passed by Board of share applicant companies in respect of authorization to invest in shares in the appellant company. f. Copy of Bank Statement g. Certificate of Incorporation of share holder company From No. 18 32 filed with ROC h. Memorandum and articles of association of the share holder company as well as their Balance sheet, Profit and loss Account with schedules. I. Form of annual return in Form 2-B filed with ROC. Thus from the above details and placing reliance on the latest decision of jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / subscriber (4) if relevant details of the address PAN identity of the creditor/subscriber are furnished to the Department along with the copies of the shareholders Register, Shared Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee. (5) The department would not be justified in drawing an adverse inference only because the creditor subscriber fails or neglects to responds to its notices: (6) the onus would not stand discharged if the creditor /subscriber denies or repudiates the transaction set up by the assessee nor should the AO take such repudiation at face value and construe it without more against the assessee. (7) The AO is duty bound to investigation the credit worthiness or the creditor/ subscriber the genuineness of the transaction and the veracity of the repudiation. It is observed from the facts of the case that the AO has made the addition due to the reason that certain information had been received from Director of Income Tax (Investigation) that an amount of ₹ 4 lacs has been received by the appellant from Kuberco Sales P. Ltd and for ₹ 4.50 lacs from Sparrow Marketing P. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pond to the notices sent to them. If the AO so wanted, he could have found out the current address of those applicants, who, according to the report of the Inspector, were not found functioning at the address given to the AO, by summoning the Directors, etc., of those companies and asking them to furnish the current address of the company. The names and addresses of the Directors, if not available with the assessee, could have been obtained from the office of the ROC or from the Banks on which the cheque were drawn. No such attempt, however, was made by the AD. In these circumstances, we find no reason to disturb the finding recorded by the Tribunal. Further the observation of the jurisdiction H.C. in Dwarkadhish Investment (Supra) made in para 8 thereof are also relevant in the facts of the appellant case. The relevant part of this judgment is as under:- In any matter, the onus of proof is not a static one. Though in Section 68 proceedings, the initial burden of proof lies on the assessee yet once he proves the identity of the creditors/share applicants by either furnishing their PAN number or income tax assessment number and shows the genuineness of transaction by showing mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as no cross examination was allowed to the assessee on basis of whose statement the said addition was made. In view of the above discussion it is held that the appellant's case is squarely covered by the ratio of various decisions of the High Court's Supreme Court discussed above. From the necessary evidences I details provided to the AO during the proceedings it is seen that the initial onus has been duly discharged by the appellant company. As discussed above, the investigation done by the AO is not sufficient / adequate to controvert the appellant's explanation and to hold that the impugned share application money is the undisclosed income of the appellant. Respectfully following the decisions of jurisdictional High Court and the Hon'ble Supreme court (supra) particularly the latest judgment of Dwarkadhish Investment CP) Ltd. 20 I 0- TlOL-617-HS-DEL-IT, the addition made for ₹ 31,00,0001- is directed to be deleted. The other grounds of appeal are general and consequential in nature and therefore no adjudication is required. 4. Aggrieved, the revenue is in appeal before us. At the outset, Ld. D.R. submitted that the assessee did not file copies o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on relying upon a number of case laws whereas Ld. CIT(A) has allowed relief to the assessee again relying upon a number of case laws. However, the fact of the matter remained that the assessee had accepted the share application money from 6 share applicants whose identity was though proved but the other two essential ingredients such as creditworthiness and genuineness of transactions was not proved as assessee had not filed copies of Income tax returns for the relevant period and Ld. CIT(A) has also not made any comment on the creditworthiness of share applicants. Simply submitting certain documents such as copy of share application forms, documents showing allotment of shares, copies of annual returns, PAN details does not make the transactions genuine specifically in view of the fact that there was information available with the A.O. through Director (Investigation) that some of share applicants were accommodation entry providers. The fact that the funds were received through banking channels cannot itself make the basis to claim that genuineness of transactions was proved. In any case, involving receipt of funds through accommodation entries, the funds are always routed through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, in the absence of proper explanation for cash credits, the A.O. was bound to make additions u/s 68. Ld. CIT(A) should have continued from where A.O. had left and instead of doing so he allowed the relief simply by holding that assessee had completed its part of onus, which in our opinion is not the proper discharge of onus as onus had again shifted to assessee when A.O. brought to the notice of assessee about the defects in documents. In the hierarchy of income tax proceedings, the A.O. is placed at the bottom of the jurisdiction and CIT(A) lies above A.O. and ITAT lies above CIT(A). The A.O. is bound to conduct proper inquiry and arrive at proper finding based upon facts and circumstances of each case and in the case of failure of A.O. to conduct such inquiry, the obligation moves towards Ld. CIT(A). In the present case, Ld. CIT(A) has allowed relief relying upon the ratio of certain case laws and has not conducted any inquiry which he should have conducted to compensate the non action of the A.O. if any. Hon'ble Delhi High Court in the case of CITVs Jansampark Advertising and Marketing Pvt. Ltd. vide its judgement delivered on 11.03.2015 under similar circumstances, ela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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