TMI Blog2015 (7) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... e are unable to uphold the order of CIT(Appeals) and hereby confirm the addition made by A.O. - Decided in favour of revenue. - I.T.A. No. 5779/Del/2012 - - - Dated:- 25-6-2015 - Shri I. C. Sudhir And Shri Inturi Rama Rao,JJ. For the Appellant : Shri P. Dum Kanunjana, Sr. DR For the Respondent : Shri Rajesh Jain, FCA ORDER Per Inturi Rama Rao, AM: This is an appeal filed by Revenue for the Assessment Year 2008-09 against ht order of Ld. CIT(A) - XVI, New Delhi dated 16.07.2012 raising the following grounds of appeal: 1. Whether on the facts in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 30,00,000/- u/s 68 of the Act as unexplained share capital /share premium by not appreciating the fact that the assessee has failed to prove the physical identity, the credit worthiness and genuineness of transactions as the identify of share applicants is not proved by the mere filing of some papers. 2. Whether on the facts in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of ₹ 30,00,000/- u/s 68 of the Act appreciating the fact that the details filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e companies alleged to be belonging to Shri Tarun Goyal and, therefore, he presumed that the appellant could have used his unaccounted money for the purpose of obtaining these book entries from those companies and he, therefore, doubted the genuineness and creditworthiness of those three companies. Even the respondent assessee was asked to produce the directors of those companies before the A.O. The respondent assessee had not produced directors before the A.O. The respondent assessee submitted that all the share applicants are corporate assessees, which are duly incorporated under the provisions of Companies Act, 1956 and assessed to income tax and they filed copies of their return of income and furnished particulars of PAN. The submissions made by the respondent assessee company did not find favour with the A.O. The A.O. held that receipt of share application money from those companies is a device for converting black money into white through entry providers and hence, A.O. made addition of ₹ 30 lacs to the income of assessee company u/s 68 of the Act. 4. Aggrieved by the above assessment order, an appeal was filed before Ld. CIT(A) XVI, New Delhi, who vide order dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed accommodation entry providers , whose business it is to help assessees bring into their books of account their unaccounted monies through the medium of share subscription, and the assessee. The ratio is inapplicable to a case, again such as the present one, where the involvement of the assessee in such modus operandi is clearly indicated by valid material made available to the Assessing Officer as a result of investigations carried out by the revenue authorities into the activities of such entry providers . The existence with the Assessing Officer of material showing that the share subscriptions were collected as part of a pre-meditated plan - a smokescreen - conceived and executed with the connivance or involvement of the assessee excludes the applicability of the ratio. In our understanding, the ratio is attracted to a case where it is a simple question of whether the assessee has discharged the burden placed upon him under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at case was alleged to be a beneficiary. While disposing of these appeals, this court observed: - The Assessees filed copies of PAN, acknowledgement of filing income tax returns of the companies, their bank account statements for the relevant period, i.e., for the period when the cheques were cleared. However, the parties were not produced in spite of specific direction of the AO instead of taking opportunities in this behalf. Since the socalled Directors of these companies were not produced on this ground coupled with the outcome of the detailed inquiry made by the Investigating Wing of the Department, the AO made the addition. This addition could not be sustained as the primary onus was discharged by the Assessee by producing PAN number, bank account, copies of income tax returns of the share applicants, etc. We also find that the Assessing Officer was influenced by the information received by the Investigating Wing and on that basis generally modus operandi by such Entry Operators is discussed in detail. However, whether such modus operandi existed in the present case or not was not investigated by the AO. The Assessee was not confronted with the investigation carried out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants before the A.O. As held by Hon'ble Jurisdictional High Court in the case of Nova Promoters and Finlease (P) Ltd. that the ratio laid down by Hon'ble Supreme Court in the case of Lovely Exports Pvt. Ltd. is not applicable and CIT(A) adopted wrong approach in allowing the appeal by holding that the A.O. had failed to point out source from which money was received by the assessee company before making addition u/s 68. This observation goes against the ratio laid down by Hon'ble Supreme Court in the case of A. Govindarajulu Mudaliar Vs CIT 34 ITR 807 (S.C.), this argument advanced by the assessee was rejected by the Hon'ble Supreme Court Venkatarama Aiyar J., speaking for the court, observed as under (at page 810): Now, the contention of the appellant is that assuming that he had failed to establish the case put forward by him, it does not follow as a matter of law that the amounts in question were income received or accrued during the previous year, that it was the duty of the Department to adduce evidence to show from what source the income was derived and why it should be treated as concealed income. In the absence of such evidence, it is argued, the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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