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TMI Blog2018 (4) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Aggrieved by the order of the AO, the assessee filed an appeal before the CIT(A) and made various submissions. The CIT(A) not being satisfied with the explanation and evidences of the assessee confirmed the addition made by the AO. 3. Aggrieved by the order of the CIT(A), the assessee is in appeal before us and has raised the following grounds of appeal: "1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2(i) On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 86,00,000/- made by AO on account of share application money. 3. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition made by the AO rejecting the explanation and evidences brought on record to prove the identity and creditworthiness of the shareholder and genuineness of the transaction. 4. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the AO has not been ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Rs. 20,00,000/- 3. M/s Shalini Holdings Ltd. Rs. 30,00,000/- 4. M/s Stranger Hotels (P) Ltd. Rs. 6,00,000/- 5. It was pointed out by the Ld. AR that there is no adverse comment by the AO in the assessment order other than the allegation that replies have not been received from 4 shareholders which has led to this addition. It was contended by the Ld. AR that firstly, this allegation of the AO that he did not receive the reply from the above 4 shareholders is not correct. In this regard, the Ld. AR in support of this contention invited attention to PB. Pg. 109, which is the reply along with evidences in response to notice under Section 133(6), sent by Euro Asia Mercantile Pvt. Ltd. dated 11th February, 2013 addressed to the AO. Attention was also invited to PB. Pg. 122, which is a reply dated 11th February, 2013 submitted by the Shalini Holdings Ltd. to the AO in response to notice under Section 133(6) received by it from the AO. The Ld. AO also invited attention to PB. Pg. 141 which is a reply submitted to the AO by the Stranger Hotels Pvt. Ltd. and PB. Pg. 145, which is a reply submitted by Attractive Finlease Ltd. It was further submitted that on being brought to its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought on record by the AO nor by the CIT(A). 7. The Ld. AR invited attention to PB. Pg. 65 to 145, which are the evidences in the form of confirmation, acknowledgement of income tax return, share application form, bank statement and audited balance sheet of each of the 4 shareholders to substantiate that it has discharged its onus under Section 68 in respect of these 4 shareholders. The Ld. AR also referred to the bank statement to demonstrate that there is no cash deposits in the bank account. The Ld. AR also invited attention to the balance sheet of each of these companies to demonstrate that the net worth of each of these shareholders was substantial. The Ld. AR submitted that having discharged its onus fully about identity, creditworthiness and genuineness, the CIT(A) has gone wrong in confirming the addition made by the AO. The Ld. AR further placed reliance on the following judgments in support of its contention: * CIT vs. Lovely Exports Pvt. Ltd. [2009] 319 ITR 5 * CIT vs. Orissa Corporation Pvt. Ltd. [1986] 159 ITR 78 * CIT vs. Laxman Industrial Resources Pvt. Ltd. [2017] 397 ITR 106 * CIT vs. Rakam Money Matters Pvt. Ltd. ITA No. 778 of 2015 * CIT vs. Divine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee company has received a sum of Rs. 30,00,000/- from Attractive Finlease Ltd. This amount has been paid by this company from its bank account no. 224011618 with Axis bank on 28th May, 2009. Ongoing through the bank statements at PB. Pg. 92-94, we note that there is no cash deposit. This company has total net worth of Rs. 105.05 Crore as per the audited balance sheet on record. This company is also being assessed to Income Tax as per the ITR on record with ITO Company Ward 1(1) Delhi with PAN AAGCA3662F. (ii) The assessee company has received Rs. 20 Lakh from Euro Asia Mercantile Pvt. Ltd. As per the bank statement placed at PB. Pg. 106-107, this amount has been paid on 28th July, 2009 and there is no cash deposit in the bank account. This company has a substantial net worth of Rs. 48.11 Crore as per its audited balance sheet on record. It is being assessed to income tax with Income Tax Officer Ward 11(2) New Delhi at PAN No. AABCE7522P. (iii) The assessee company has received Rs. 30 Lakh from M/s Shalini Holdings Ltd. This amount has been paid from its current bank account placed at PB. Pg. 120. This company has also got substantial net worth of Rs. 124.87 Crore as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot draw adverse inference merely because reply has not been received. Submission of the reply in an independent enquiry being carried out by the AO by issue of notice under Section 133(6) from the person concerned directly is not in the hands of the assessee. The AO may be justified in certain circumstances when notice is not served or when an adverse reply is received in response to notice issued by him under Section 133(6), but merely non-receipt of reply can be a justification for drawing adverse inference. Our this view is supported by the judgment of the Hon'ble Supreme Court in the case of CIT vs. Orissa Corporation 159 ITR 78 where a similar issue has come up. The finding of the Hon'ble Court in this regard reads as under: "In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire circumstances of the case, we are satisfied that there was no material on which the Income-tax Officer could come to the conclusion that the firm was not genuine. There are many surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of proof in these matters." 13. The addition can be sustained when there are sufficient evidences to support such allegation. In the present case, we are of the view that CIT(A) has sustained the addition by indulging into surmises and merely on the basis of doubt. 14. The Ld. DR has relied upon the four judgments stated hereinabove. Without going much into each of the judgments referred by the Ld. DR, the common feature in all these judgments was the statement of the alleged entry operators which lead to the addition. In the present case, there is no such statement, nor there is any allegation by the AO as is evident from the assessment order. The Ld. AR has rightly pointed out that this is a normal scrutiny assessment, not an assessment consequent to the information being received of accommodation entries and statement of such entry providers. Thus, in our opinion the assessee company was required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Investigation Wing. This reveals spectacular disregard to an AO's duties in the remand proceedings which the Revenue seeks to inflict upon the assessee in this case." 16. The Bombay High Court in a recent case of CIT vs. Orchid Industries Pvt. Ltd. 397 ITR 136 had occasion to deal with a somewhat similar issue and held as under: "6] The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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