TMI Blog2010 (1) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... balancesheet that during the year the assessee company has issued 18000 shares of ₹ 10/- each at a premium of ₹ 90. During the course of asstt. Proceedings the AR of the assessee was asked to file the details in respect of this. From the details filed it was seen that the assessee has allegedly received ₹ 9,00,000/- each from M/s. G.C. Technology India Pvt. Ltd. And M/s. Fair `N/ Square Exports Pvt. Ltd. And shares having face value of ₹ 10/- were allegedly allotted to them at a premium of ₹ 90/-. The AR of the assessee filed copy of ack. of IT return filed by these companies and their balance-sheet and confirmation on affidavit dated 4.3.2005. The AR of the assessee was asked vide ordersheet entry dated 7.8.2007 to produce the Principal Officer of these parties along with their copy of bank statement and books of account for verification. The assessee after taking such a long time submitted vide its letter dated 10.9.2007 that: It is submitted that we have already filed the confirmation of the above referred two shareholders alongwith copies of their Balance Sheets, Income Tax Returns acknowledgment receipts in evidence of filing the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring in two or more stages. Thus, the beneficiary s money sails through several accounts before reaching him/it in the end. Interestingly, most of the concerns/individual, who are operating as Entry Operator, have obtained PAN from the department and are filing returns as well. But what is shown in the return are not actual state of affairs. They create such a fa ade that on the face of it all things appear to be in order such as they have PAN and are filing income-tax returns etc. Shri Rajan Jassal, Director of M/s. Fair `N Square Exports Pvt. Ltd. and Shri Mukesh Gupta, Director of M/s. G.C. Technology India Pvt. Ltd. had in their statement, recorded on oath by Shri P.S. Tomar, the then Addl. DIT (Investigation) categorically stated that these companies under their control were not doing any genuine business and were merely providing accommodation entries. In view of this, the photocopies of the so called confirmation on affidavit dt. 04.03.2005 from these parties i.e. the date even prior to the clearance of alleged cheques from the bank, have no evidentiary value. It is important to mention here that in the case of CIT Vs Durga Prasad More (1971) 82 ITR 540 (SC) it was he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsory look at P L A/c balance-sheet of this company filed by the shows that this company is not capable of depositing such a huge amount of cash in its accounts as the total revenue as per its P L A/c is ₹ 3,52,142/- only. In view of these facts and the assessee s inability/unwillingness to produce these parties summons u/s 131 dated 10.10.2007 were issued in the name of M/s. G.C. Technology India Pvt. Ltd. and M/s. Fair `N Square Exports Pvt. Ltd. requiring them to appear on 17.10.2007 and to produce the followings:- Bank statement for F.Y. 2004-05 i.e. relevant to A.Y. 2005-06. Copy of acknowledgement of filing of income-tax return for A.Y. 2005-06 and for the current assessment year i.e. A.Y. 2006-07, along with copy of audited balance sheet for A.Y. 2005-06. Supporting documents in respect source of investment in shares of M/s. Optibelt Pvt. Ltd. during A.Y. 2005- 06, along with complete ledger and cash book. Photocopy of share certificate, if any allotted by M/s. Optibelt Pvt. Ltd. The summons were sent through speed post at the address given by the assessee but neither these were received back unserved nor anybody attended in response to this no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moters/directors and the shareholders. The closely held companies are permitted to accept the subscription of share capital or deposits from the friends or relatives of the promoters. As such there should have been no difficulty on the part of the assessee to produce somebody from the said entity, had the whole apparatus not been merely a conduit to plough back the money of the assessee company in the garb of share capital. Mere payment by A/c payee cheque is not sacrosanct nor can it make a non genuine transaction genuine. The assessee was failed to discharge its onus and to produce these parties to prove beyond doubt, the genuineness of the transaction and the existence and creditworthiness of these parties. In view of the above facts, I am satisfied that the amount of ₹ 18,00,000/- allegedly received from M/s. G.C. Technology India Pvt. Ltd. and M/s. Fair `N Square Exports Pvt. Ltd. was never received as share capital premium. It was a camouflaged transaction to avail the benefit of favorable judicial pronouncement on share capital. Thus, keeping in view the totality of the facts, the amount of ₹ 18,00,000/- is added back to the income of the u/s 68 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of any contrary evidence, the addition has rightly been deleted by the learned CIT(A). 6. We have considered the facts of the case and the arguments made by the parties and the decisions cited. The learned DR at the outset relied upon the order of ITAT Delhi Bench `B in the case of ITO vs. M/s. Omega Biotech Ltd. in ITA No.2860/Del/09, dated 31.12.2009 on identical issue. We have gone through the said decision, which is on the identical facts as in the present case. The decision of the said Bench of ITAT in the case of M/s. Omega Biotech Ltd. (supra) for the sake of clarity in Para 7 to 10 is reproduced in entirety hereunder:- 7. We have carefully considered the relevant facts arguments advanced and the decisions cited. After the assessee filed various documents in respect of share applicants the AO tried to examine whether this person exist. The inquiry revealed that all these companies do not exist at the places mentioned. This fact was brought to the notice of assessee also. Thereafter the assessee has not tried to prove the existence of such share applicants. On the contrary It has been stated that the so called shares allotted to the share applicants have been ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) to carry the enquiry further and should have done what the Assessing Officer failed to do. Hon ble Supreme Court in the case of Kapurchand Shrimal vs. CIT, 131 ITR 451 held It is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by statute. 9. Since no further evidence is available before us to give a finding that the cash credit during the year has been proved, and since the authorities below also failed to conduct necessary enquiries in this regard, we remit the matter back to the file of the Assessing Officer to examine the nature of credit and then to satisfy whether the credit is properly explained or not. The assessee is directed to place necessary evidence so as to justify the identity and creditworthiness of the creditor and genuineness of the transaction. 10. For statistical purposes, the appeal is treated as allowed. 7. In the present case on enquiry by the Inspe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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