9911796707
TMI Blog2010 (7) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... plained cash credit, whereas grievance of the revenue relates to deletion of ₹ 8,27,000/- added by the AO on account of unexplained cash credit appearing in the books of assessee. 2. The brief facts of the case are that assessee is a company engaged in the manufacturing of packing material. It has filed its return of income on 30th November, 1996 declaring net loss of ₹ 1,78,220/-. The case of the assessee was selected for scrutiny assessment. On scrutiny of the accounts Ld. AO found that 22 persons have applied for the shares of assessee company and remitted a total sum of ₹ 14,82,000/-. The AO directed the assessee to prove identity of the share applicant, genuineness of the transactions and their creditworthiness. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant comes out with a conclusion that these persons do not have the source for applying shares. He, therefore, again disbelieved the contention of assessee and confirmed the addition of ₹ 14,82,000/-. 4. Dissatisfied with the action of AO assessee carried the matter in appeal before the Ld. CIT(A). It pointed out that in order to discharge the onus put upon it assessee has produced 13 persons before the AO . Meaning thereby, identity of the 13 persons was not in doubt. The assessee has received small money as a share application money from all these persons ranging in between 25000 to 1 lac. All the persons have duly confirmed for making share application and payment of money. The amounts have been received through account payee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the addition is that assessee failed to prove the identity of these 9 persons. 5. Ld. Counsel for the assessee while impugning the order of Ld. CIT(A) contended that the first person who could not be produced before the AO is Shri Lokesh Kumar. This man attended the office of AO and waited upto 6 PM. His turn could not come, therefore, he went because he was not keeping good health. The assessee has filed a confirmation from this person and proof of identity by producing driving license. Copy of acknowledgement of return was also filed. The next person in the list is Aparna Shukla the assessee has filed affidavit. It has filed confirmation from the bank, confirming her address. The assessee filed confirmation in the original proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or procuring their presence. Shri Taneja Ld. Counsel for the assessee at the time of hearing specifically took us through this judgment. He also referred the other judgments which are on the similar line and pointed out that nowhere in the asstt. order AO has held that addressed given by the assessee are wrong. In a way AO presumed that it is the assessee who has to produce all the share applicants before him only. Thereafter share applicant amount can be considered as explained one. Referring to the decision of M/s Devine Leasing & Finance Ltd., he pointed out that the moment assessee proved the identity of the creditor and genuineness of the transactions then it is for the AO to make an investigation in the case of share applicant . His e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention and gone through the record carefully. The issue was set aside in the first round of litigation by the ITAT to the Ld. AO on the ground that time provided to the assessee to produce the share applicant or details in respect of them was not sufficient. The AO in the original assessment order had issued notices u/s 133 (6) of the Act. These notices were returned back unserved in respect of three applicants 10 applicants were not found available at the given address. The production of 13 persons and recording of their statement do indicate the quality of inquiry conducted by the AO in the original assessment proceeding. In the second round inspite of request at the end of assessee the AO did not explore the possibility to procure the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not under obligation to produce them before the AO. The observations of the Hon'ble High Court in the case of Victor Electodes Ltd. referred in ITA No. 586/2010 are worth to note which read as under :- 9. "There was no legal obligation on the assessee to produce some Director or other representative of the applicant companies before the Assessing Officer. Therefore, failure of assessee to produce them could not, bv itself, have justified the additions made by the Assessing Officer, when the assessee had furnished documents, on the basis of which, the Assessing Officer, if he so wanted, could have summoned them for verification. No attempt was made by the Assessing Officer to summon the Directors of the applicant companies. The addres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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