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2017 (12) TMI 368

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..... see as to lack of opportunity to cross-examine the Bank Manager or other witnesses, is largely inconsequential. Even if such opportunity has been granted to the assessee by the Assessing Officer, it would have led to no different result inasmuch as since the assessee failed to establish the identity of the investors, the genuineness of the transaction itself gets disapproved for the reason that for a genuine transaction there must first exist genuine person to perform that transaction. Also, for that reason, the creditworthiness of the investors could never be established once it was found that there was no person existing who may have entered into such a transaction. - Decided against the assessee and in favour of the revenue. - Income Tax Appeal No. 34 of 2016 - - - Dated:- 29-11-2017 - Hon'ble Bharati Sapru And Hon'ble Saumitra Dayal Singh, JJ. For the Appellant : Rahul Agarwal For the Respondent : S.C.,S.S.C. I.T. ORDER Heard Sri Rahul Agarwal, learned counsel for the appellant and Sri Praveen Kumar, learned counsel for the revenue. This appeal has been filed by the assessee under Section 260-A of the Income Tax Act, 1961 (hereinafter referred t .....

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..... n are not being referred to here because in the order passed by the Tribunal giving rise to the present appeal the Tribunal has chosen not to rely on that opinion of the handwriting expert. The inquiries with regard to PAN details also resulted in negative confirmation inasmuch as Assessee Information System (in short AIS) database of the department did not support/confirm the claim made by the assessee with regard to the identity of the persons who the assessee claimed had made the investment. Thus, the Assessing Officer disbelieved the explanation furnished by the assessee in support of cash credit entries amounting to ₹ 3.46 crores found recorded in the books of account of the assessee and consequently he made an addition of that amount to the income of the assessee. Upon appeal, the CIT (Appeals) however, accepted the explanation furnished by the assessee and allowed the appeal. Being aggrieved, the revenue carried the matter to the Tribunal. While considering the case of the parties before it, the Tribunal noted in paragraph 38 of its order that the assessee, being a private limited company had admitted in its correspondence with the Assessing Officer that the inve .....

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..... ssee. It was not open to the assessee to thereafter submit that it cannot be burdened to lead any further evidence to establish the identity of the investors or the genuineness of the transactions. According to him, the order of the Tribunal is wholly just. In any case, the said order records a finding of fact based on appraisal of evidence and therefore, warrants no interference by this Court. Having considered the arguments so advanced by learned counsel for the parties, we find that the Tribunal has dealt with the issue elaborately and thereafter recorded its finding on the issues raised by the assessee. In the first place, it found that the investors as disclosed by the assessee did not exist at the addresses disclosed by the assessee. It was then found that two of the investors as disclosed by the assessee effectively denied the fact of having made the investment. The PAN details of the alleged investors also did not establish the identity of such persons. In that view of the matter, the Tribunal recorded its finding that the identity of the investors was not established. The Tribunal disapproved the reasoning given by the CIT (Appeals) to accept the claim of the investment .....

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..... y because the cash credit entries have been shown as share capital cannot be cited as a reason to resist the addition under section 68 of the Act on a plea that no company can subscribe to its share capital (as has also been suggested during the course of arguments). Once it is found that the entries itself are bogus and the investors as disclosed are non-existent, the reflection of the amount in the books of account of the assesse is only a tax evasion device or a mere pretence. It is not an entry based on or arising from a real transaction. There being no transaction, the entry is a paper entry or a bogus entry. It cannot upon be relied to create any legal effect when there exists no factual basis for it's existence. The Tribunal has also reasoned, once the inspector's report in pursuance of the inquiry made under Section 133(6) of the Act resulted in negative confirmation of the claim made by the assessee, the onus shifted back to the assessee to lead evidence in support of it's claim. The assessee having not led any further evidence, it could not derive any benefit from the fact that the Assessing Officer did not allow the assessee any opportunity to cross-examin .....

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