TMI Blog2018 (3) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... business. The ld.CIT(A) has rightly confirmed the disallowance. - Decided against assessee. - ITA.No.3619/Ahd/2015 - - - Dated:- 1-3-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER For The Assessee : Shri P.F. Jain, AR For The Revenue : Shri Rajdeep Singh, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Assessee is in appeal before the Tribunal against order of ld.CIT(A)-6 Ahmedabad dated 23.10.2015 passed for the Asstt.Year 2011-12. 2. In the first ground of appeal, grievance of the assessee is that the ld.CIT(A) has erred in confirming addition of ₹ 35.00 lakhs. 3. Brief facts of the case are that the assessee-company is engaged in manufacturing of iron and steel roll. It has filed its return of income on 30.9.2011 electronically declaring total income at ₹ 3,46,00,080/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Act was issued on 28.9.2012 which was duly served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee has introduced new share capital of ₹ 50 lakhs. He directed the assessee to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee to produce share applicants, who are individuals, additions cannot be made in the hands of the assessee. In support of his contentions, he relied upon large number of decisions: i) CIT Vs. Oasis Hospitalities P.Ltd. and Others, 333 ITR 119 (Delhi) ii) CIT Vs. STL Extrusion P.Ltd., 333 ITR 269 (MP) iii) CIT Vs. Creative World Telefils Ltd., 333 ITR 100 (Mum) iv) CIT Vs. Ask Brothers Ltd., 333 ITR 111 (Kar) 6. He further relied upon decision of the Hon ble Delhi High Court in the case of Pr.Commissioner of Income Tax Vs. Softline Creations P.Ltd., 387 ITR 636. He also made reference to decision of the Hon ble Delhi High Court in the case of CIT Vs. Kamdhenu Steel Alloys Ltd, 248 CTR 33 = 206 taxman.com 254. The ld.DR on the other hand relied upon order of the Revenue authorities below. 7. We have duly considered rival contentions and gone through the record carefully. before we embark upon an inquiry on the facts of the present appeal, in order to find out whether the share capital and share premium money received by the assessee during the year is required to be treated as its unexplained credit and deserves to be added under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conditions required to be fulfilled by an assessee. In other words, the assessee is required to give explanation which will exhibit nature of transaction and also explain the source of such credit. The explanation should be to the satisfaction of the AO. In order to give such type of explanation which could satisfy the AO, the assessee should fulfill three ingredients viz. (a) identity of the share applicants, (b) genuineness of the transaction, and (c) credit-worthiness of share applicants. As far as construction of section 68 and to understand its meaning is concerned, there is no much difficulty. Difficulty arises when we apply the conditions formulated in this section on the given facts and circumstances. In other words, it has been propounded in various decisions that section 68 contemplates that there should be a credit of amounts in the books of an assessee maintained by the assessee, (b) such amount has to be a sum received during the previous year, (c) the assessee offers no explanation about the nature and source of such credit found in the books, or (d) the explanation offered by the assessee is not, in the opinion of the Assessing Officer, satisfactory. The Hon ble De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows (page 152) : This court has considered the submissions of the parties. In this case the discussion by the Commissioner of Income-tax (Appeals) would reveal that the assessee has filed documents including certified copies issued by the Registrar of Companies in relation to the share application, affidavits of the directors, Form 2 filed with the Registrar of Companies by such applicants confirmations by the applicant for company's shares, certificates by auditors etc. Unfortunately, the Assessing Officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr. Mahesh Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the Assessing Officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission in support of return of income was served upon the assessee on 28.9.2012. Thereafter questionnaire under section 142(1) was issued on 26.12.2012. The AO has passed assessment order on 21.2.104. He expected the assessee to produce depositors on 14.2.2014 just in a few days before finalization of the assessment order. The Hon ble Delhi High Court in all these cases have propounded that if the assessee has discharged primary onus by submitting confirmation, bank statements, copies of income-tax returns, PAN data then it would be construed that the assessee has discharged primary onus put upon it by virtue of section 68. It is the AO who has to carry out investigation and demonstrate that these materials are not sufficient for discharging the onus cast upon assessee by section 68. No such steps have been taken by the AO. He simply assumed that since the assessee was directed to produce applicants and it failed to produce, therefore, everything is to be construed as manipulated. The Hon ble Delhi High Court did not approve such steps at end of the assessee. We also make reference to the decision of the Hon ble Delhi High Court in the case of CIT Vs. Goel Sons Golden Estate Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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