TMI Blog2016 (8) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... 009 in quantum proceedings and order dated 15.12.2009 in penalty proceedings, pertaining to same assessment year i.e. 2002-03. Since the issue are inter-connected, hence, these appeals were heard together and are being disposed of by this common order for the sake of convenience. 2. The Revenue has raised the following grounds in its appeal No. 306/Del/2010:- 1. The order of the Ld. CIT(A) is erroneous and contrary to fact and law. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 70,00,000/- made u/s. 68 of the I.T. Act, 1961 being the unexplained / bogus cash credit and ₹ 70,000/- being the unaccounted cash paid for obtaining the accommodation entries. 2.1 The ld. CIT(A) has ignored the fact that the assessee did not discharge the onus of proving the creditworthiness of creditors and genuineness of the transaction. 3. The appellant craves leave to add, to alter, or amend any grounds of the appeal raised above at the time of the hearing. 3. The Revenue has raised the following grounds in its appeal No. 647/Del/2010:- 1. The order of the Ld. CIT(A) is erroneous and contrary to fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the transactions in terms of provision of section 68 of the I.T. Act, 1961, hence, the unexplained amount of ₹ 70 lacs was treated as income of the assessee u/s. 68 of the Act and the same was added to its total income and ₹ 70,000/- was also added back to the total income of the assessee as commission paid to the entry operators being 1% of the undisclosed income and AO completed the assessment at an income of ₹ 70,77,290/- u/s. 144/147 of the I.T. Act, 1961 vide order dated 29.11.2007. 5. Against the aforesaid assessment order, the assessee appealed before the Ld. CIT(A), who vide impugned order dated 27.11.2009 has partly allowed the appeal of the assessee and deleted the additions in dispute. 6. Aggrieved with the impugned order, the Revenue is in appeal before the Tribunal. 7. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. 8. On the contrary, Ld. Authorised Representative of the assessee has relied upon the order of the Ld. CIT(A) and stated that the order of the Ld. CIT(A) is a well reasoned order and therefore, the same may be upheld and Revenue s appeal may be dismissed accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces as sufficient opportunities have been given by the AO which has not been availed by the assessee. 5.2 At this juncture, reference may be made to Rule-46 which provides that the assessee shall not be entitled to produce before the first appellate authority any evidence other than that produced during the course of proceedings before the AO., except in the circumstances mentioned in clause (a) to (d). These clauses deal with the situations where the AO. had refused to admit evidences or where the assessee was prevented by sufficient cause from producing such evidences or the A.O. had not allowed sufficient opportunity to the assessee. In the instant case, the circumstances mentioned in clauses (b) to (d) do exist. The AO. was also given opportunity in terms of Rule-46A (3) to examine the aforementioned evidences but he has not made any comments on the merits of these additional evidences. Under the circumstances stated above, it can be safely presumed that the Assessing Officer has no objection against the additional evidences on merits. It is also significant to note that the assessment has been completed under section 144 of the Act. Considering the totality of facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld no! be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the IT Act. The burden of proof can seldom be discharged to the hill by the assessee; if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the Company. 16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of section 68 of the Income-tax Act. The assessee has to prima facie prove (1) the identity of the creditor/sub-scriber: (2) the genuineness of the transaction, namely: whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber; (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 26 DTR (Del.) 358; and v) Bhav Shakti Steel Mines (P) Ltd. vs. CrT (2009) 179 Taxman 25, wherein the Hon ble Delhi High Court has observed as under:- In any event we also note that the Supreme Court in the case of CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 considered the question as to whether the share application money can be regarded as undisclosed income under section 68 of the Income-tax Act, 1961. The Supreme Court dismissing the SLP observed that if the share money is received by the assessee company from alleged bogus shareholders whose names are given to the Assessing Officer, then the Department is free to proceed to assess them individually, in accordance with law. The Supreme Court did not find any infirmity with the impugned judgment of the High Court which was a common order along with the decision in CIT v. Divine Leasing Finance Ltd. [2008} 299 ITR 268 (Delhi). Since the Commissioner of Income-tax (A) has not only found that the identity of each of the shareholders stood established, but has also examined the fact that each of them were income-tax assessees and had disclosed the share application money in their accounts which were duly refle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,if any and he did not afford any opportunity of cross examination of all the adverse material on the basis of which impugned addition has been made in the assessment order. It is settled proposition of law that the information gathered behind the back of the assessee cannot be used against him unless until an opportunity of rebutting the same is given to the assessee. It is against the principle of natural justice. Reliance is placed on the decision of Hon'ble Supreme Court in case of Prakash Chand Nahta v. Union of India [2001] 247 ITR 274 in support of the proposition that crossexamination of the witness is must, before the A.O. relies on the statement of the witness for making addition. Reliance is also placed on the decision of Allahabad High Court in the case of Nathu Ram Premchand v. CIT [1963] 49 ITR 561, wherein the Hon'ble Court explained that it was the duty of the Assessing Officer to enforce the attendance of a witness, if his witness is material in exercise of his powers under order 16, r. 10 of CPC and where the officer does not do so, no inference can be drawn against the assessee. Reliance is also placed on the decision of the jurisdictional High Court i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies to the assessee company, their master data with ROC and vii) Copy of Share Register of the assessee company showing issue of shares to these companies. After receiving the aforesaid documentary evidences filed by the assessee, the Ld. First Appellate Authority has given an opportunity to the AO to verify the same, but the AO has not availed the opportunity granted by the Ld. CIT(A) to him. After going through all the evidences produced by the Assessee before the Ld. CIT(A), the Ld. CIT(A) has deleted the addition in dispute by holding that once the identity, creditworthiness of the share holders and genuineness of the transactions is proved by furnishing all particulars of the share applicants alongwith other documentary evidences, then the Assessee has discharged its onus and there cannot be any addition in the hands of the assessee company in the matter of share application money or share capital. The view of the Ld. CIT(A) has also been supported by the decision of the Hon ble Supreme Court of India as well as the Hon ble Delhi High Court in the case of CIT vs. Lovely Exports Pvt. Ltd. (2008) 216 CTR 195 and CIT vs. Divine Leasing and Finance Ltd. (2007) 299 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r raising this amount and levied the penalty of ₹ 25,23,990/- u/s. 271(1)(c) of the I.T. Act being 100% of tax sought to be evaded vide his order dated 30.5.2008. 11. Against the aforesaid penalty order, the assessee appealed before the Ld. CIT(A), who vide impugned order dated 15.12.2009 who has deleted the penalty in dispute and allowed the appeal of the assessee. 12. Aggrieved with the impugned order, the Revenue is in appeal before the Tribunal. 13. Ld. DR relied upon the penalty order of the AO and reiterated the contentions raised in the grounds of appeal. 14. On the contrary, Ld. Authorised Representative of the assessee has relied upon the order of the Ld. CIT(A) and stated that the order of the Ld. CIT(A) is a well reasoned order and therefore, the same may be upheld and Revenue s appeal may be dismissed accordingly. 15. We have heard both the parties and perused the relevant records, especially the orders of the authorities below. We find that Ld. First Appellate Authority has elaborately discussed the issue in dispute raised in ground no. 2 by considering the submissions of the Ld. Counsel of the assessee and adjudicated the same vide para no. 3 to 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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