TMI Blog2011 (6) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of ₹ 37,528/- made on account of commission under section 68 of Income Tax Act, 1961 holding that since the addition made on account of unexplained cash credit under section 68 has been deleted, there remains no justification for sustaining this addition; 3. That on the facts and circumstances of the case as well as in law, the ld. CIT (Appeals) erred in ignoring the fact that the judgement of the Supreme Court in the case of Lovely Exports (P) Ltd. 216 CTR 199 (SC) cannot be extended to a situation where a mechanism has been formed to introduced unaccounted money in the books of accounts with the help of accommodation entry providers, which has been exposed by deep and detailed investigation carried out by the Investigation wing of the Department; 4. That the CIT (Appeals) has erred in applying the judgement of the Hon ble Supreme Court in the case of Lovely Exports (P) Ltd. 216 CTR 199 (SC) which is not applicable where the share application is not received in a Public issue. Assessment year 2004-05 1. That on the facts and the circumstances of the case and in law the ld. CIT (Appeals) erred in deleting the addition of Rs.Rs.16,01,660/- made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Financial Services [Rs.4,00,415/-]. 4. During the course of assessment proceedings in order to ascertain genuineness and creditworthiness of the companies who have applied for allotment of shares, summons were issued, which were received back with the postal remarks No such firm . The AO deputed Inspector of Income-tax for verification of the existence, genuineness, creditworthiness of the parties. The Inspector of Income-tax reported that no such company was in existence at the address available with the Department. Further the assessing officer issued show cause notice to the assessee on 23rd October, 2007 for both the years and asked it to produce the principal officers of the said companies from whom share application moneys was received. The assessee company failed to produce the Directors of the said companies. The AO, therefore, in the absence of any verification of the information treated the transaction as non-genuine and made the additions in the hands of the assessee for both the years under section 68 of the Act. The AO also added an amount of ₹ 37,528/- as commission which might have been paid by the assessee to the entry operators and in assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey can be made in the hands of the assessee. The AO had not affected any enquiries to bring out any facts which could suggest that those parties have given accommodation entries to the assessee and that money received from those parties was assessee s own undisclosed income and routed back to the assessee in the guise of share application. The ld. CIT (A) also relied on the decision of the Hon ble Delhi High Court in the case of Divine Leasing Co. Ltd. and also the decision of Hon ble Delhi High Court in the case of CIT Vs. M/s. Pondy Mills dated 19/02/2007. Since the assessee had filed copy of PAN numbers, the initial onus cast upon the assessee to discharge obligation of establishing the identity of the subscribers and bonafide of the transactions have been discharged. The AO, therefore, could not make addition merely relying on the report of the Investigation Wing. The ld. CIT (A) accordingly deleted the addition. 6. Before us, the ld. Sr. DR submitted that the AO had issued summons to the assessee which have been returned back unserved. The Inspector of Income-tax also reported that share applicants were not available at the addresses given by the assessee. The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed under section 143(3) of the Act in the case of Rampal party (AOP) for assessment year 2004-05 that M/s. Novel Deal Capital Management Services Ltd., a member of above AOP has contributed in the said AOP an amount of ₹ 40,00,000/- and added the income in the hands of AOP on substantive basis. The assessee was asked to explain the source of the ₹ 40,00,000/-. The assessee filed account statement of M/s. Subey Singh and stated that the company had invested the said amount as capital of the firm. This money was refunded to the company on 27th June, 2003, which was further invested into capital of M/s. Rampal party. The AO of Ward 25(1), New Delhi, had wrongly added the capital of Novel Deal in the hands of M/s. Rampal party on wrong presumption. The AO, however, was of the view that source of the deposit in M/s. Rampal party had not been explained. He added the amount in the hands of the assessee on protective basis. 10. Before the ld. CIT (Appeals) it was submitted that the assessee company was partner in three AOP firms, M/s. Brij Lal, M/s. Subey Singh Co. and M/s. Rampal party. The assessee had shown investment in these AOP firms under Schedu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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