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2015 (11) TMI 292 - ITAT DELHI

2015 (11) TMI 292 - ITAT DELHI - TMI - Unexplained receipts of share application money - CIT(A) deleted the addition on the ground that the assessee had provided all the necessary details, including confirmation letters, share application forms, ward/circle where the share applicants/investing companies were assessed, and thus have discharged the burden of proof that lay on the assessee also the AO had made enquiries by issuing summons u/s 131 to the share applicants and that all the share appli .....

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n favour of assessee. - ITA No. 3299/Del/2011 - Dated:- 8-10-2015 - G. C. Gupta, VP And J. S. Reddy, AM For the Petitioner : Shri J P Chandrekar, Sr. DR For the Respondent : Shri Satish Aggarwal, CA ORDER Per J Sudhakar Reddy, Accountant Member The present appeal has been filed by the Revenue for Assessment Year 2003-04 against the order passed by the ld. CIT(A) dated 25.04.2011 on the following grounds: 1. "The ld. CIT(A) has erred on facts and in law by deleting addition of ₹ 20,75, .....

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1 sent to the share applicants did not evoke any response in most of the cases even though the summons were sent at their addresses as furnished by the assessee company. (iii) Statements recorded by the AO in cases of share applicants where the assessee was able to produce the individual share applicants or principal officers of the share applicant companies clearly showed that they did not have the creditworthiness to advance the share application money. (iv) As per the findings of the Investig .....

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grounds of appeal at any time before or during the hearing of appeal." 2. The factual matrix of the appeal under consideration are as under: "Return of income was filed on 06.02.2004 declaring income of ₹ 13,218/- which was processed u/s 143(1) of I.T. Act. The AO received information from the Investigation Wing of the Department, that the companies/persons which contributed towards share application money/share capital were involved in providing accommodation entries. In view o .....

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alleged entry operator made the assessment u/s 143(3) /147 of the Act. That the ld. Assessing Officer has grossly erred in making an addition of ₹ 4,77,500/- [which was reduced to ₹ 2,07,500/- vide order dated 24/01/2011 passed u/s 154/143(3)] u/s 68 being the alleged 10% commission assumed to have been paid for obtaining the accommodation entries on conjectures and surmises and without any basis or justification." 3. The ld. CIT(A) deleted the addition made by the AO on the gr .....

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lso. The ld. CIT(A) therefore, deleted the additions as nothing adverse was found by the A.O. Hence, the present appeal. 4. After hearing rival submissions and considering the papers on record and orders of the authorities below, we hold as follows. 5. The First Appellate Authority has held that the assessee filed all necessary details, including the assessment details of the share applicants/investment companies before the A.O. The amounts are stated to have been received through banking channe .....

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he A.O. 6. The legal position enunciated by the Jurisdictional High Court is as follows. a) In the case of CIT vs. Gangeshwari Metal P.Ltd. in ITA no.597/2012 judgement dt. 21.1.2013 , the Hon'ble High Court after considering the decisions in the case of Nova Promoters and Finlease Pvt.Ltd. 342 ITR 169 and jdugement in the case of CIT vs. Lovely Exports 319 ITR (Sat.5)(S.C.) held as follows. "As can be seen from the above extract, two types of cases have been indicated. One in which the .....

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ent order to the following effect- "Investigation made by the Investigation Wing of the 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.l,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 .....

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ntioned 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 .....

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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 of the Income Tax Act, 1961. Consequently, the question is answered in the negative. The decision of the Tribunal is correct in law. b) In the case of Finlease Pvt.Ltd. 342 ITR 169 (supra) in ITA 232/2012 judgement dt. 22.11.2012 at para 6 to 8, it is held as follows. "6. This Court has conside .....

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drawn from the reading of the investigation report and the statement of Mr.Mahes 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 .....

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