TMI Blog2016 (3) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... nd any discrepancy in the books of account and bank accounts maintained by the assessee. CIT(A) has discussed each and every aspect of the issue in dispute and has passed a well reasoned order which does not need any interference on our part, hence, we uphold the same and dismiss the ground nos. 1 to 1.10 raised by the Revenue. Addition of advance given to Sh. K.K. Kapur (HUF) - Held that:- the assessee has received back the advance in the Financial Year relevant to the impugned assessment year through cheques. Since the advance was not doubted by the AO, the recovery of the advance is outside the scope of Section 68, therefore, the Ld. CIT(A) has rightly deleted the addition in dispute, which does not need any interference on our part, hence, we uphold the same and dismiss the ground nos. 2 to 2.2. raised by the Revenue. Unexplained investment - Held that:- Assessee has explained in the course of assessment proceedings that amount of ₹ 4,50,000/- and shares of Highthrow Corp Ltd. for ₹ 50,000/-. These are already credited to the P&L a/c as sale of shares. The AO simply brushed aside the submission of the AR without appreciating the evidence brought on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue has filed this Appeal against the impugned Order dated 1.8.2011 passed by the Ld. CIT(A)-XIX, New Delhi relevant to assessment year 2004-05. 2. The grounds raised in the Revenue s Appeal No. 4786/Del/2011 reads as under:- The Ld CIT(A) has erred on facts and in law in deleting the following additions by not deciding entirely on merits the contentions of the AO discussed in detail in the assessment order and by ignoring that: On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of ₹ 13200000/- made by the AO because:- a) The AO made necessary enquiries in the case of M/s Geefcee Finance Ltd and M/s Mahanivesh (India) Ltd before coming to the conclusion of that credits claimed to be on account of share application money were actually bogus credits representing the accommodation entries. b) The assessee could not rebut the above finding either during the assessment proceedings or during the appellate proceedings. c) Merely because the accommodation entries were received through public limited company does not make the credit a genuine credit or genuine share application money r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) Merely because the accommodation entries were received through public limited company does not make the credit a genuine credit or genuine share application money receipt. 1.3 On the facts and in the circumstances of the case and in law the Ld CIT (A) has failed to appreciate that facts of the case were so peculiar, especially with regard to non compliance to notices/summons issued during the assessment proceedings, {even after the Hon'ble High Court had held the reopening of assessment as per law and extended the limitation period upto 28 Feb 2011), that he (Ld CIT(A should have allowed the AO the an opportunity of hearing before allowing relief to the assessee. 1.4 On the facts and in the circumstances of the case and in law the Ld CIT (A) has failed to appreciate that the case laws relied upon by the AO and rejection of the case law relied by the assessee were well discussed and the addition was made on the basis of proper enquiry and after confrontation to the assessee which cannot be said to be based on suspicion, conjectures or surmises. 1.5 On the facts and in the circumstances of the case and in law the Ld CIT (A) has failed to appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in deleting the addition of ₹ 15 Lac made by the AO as unexplained cash credit without appreciating the facts that none of the part receipt of ₹ 15 Lac was received from KK Kapur HUF as revealed from enquiry made by the AO . 2.1 On the facts and in the circumstances of the case and in law the Ld CIT(A) has erred in accepting the submission of the assessee that the credit amounts were repayment of loan by KK Kapur HUF on face value without rebutting the finding of the AO by the assessee during the assessment proceedings or during the appellate proceedings. 2.2 On the facts and in the circumstances of the case and in law the Ld CIT(A) has erred in deleting the addition of ₹ 15 lacs by observing that the recovery of the advance is outside the scope of s.68 without appreciating that unless the assessee explain the nature and source of credit to the satisfaction of the AO, the provisions of section 68 will apply. 3. On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of ₹ 4.50 Lac without appreciating the facts of the case just by accepting the submission of the assessee that the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 2.25 Lac and ₹ 608850/- ignoring the facts revealed from enquiry as discussed in the assessment order under the heading ''''Enquiry from State Bank Of India, East Patel Nagar, New Delhi and Enquiry from HDFC Bank Ashok Vihar Phase-1, Delhi and the Standard Chartered Bank, Karol Bagh. 4.4 On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of ₹ 2.25 Lac and ₹ 608850/- without allowing the AO an opportunity of being heard. 5. On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of ₹ 10 Lac made by the AO ignoring the finding of the AO based on the bank a/c statement of the assessee. 5.1 On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of ₹ 10 Lac made by the AO ignoring the fact that the assessee did not produce the books of accounts despite the adequate opportunity allowed to the assessee. 5.2 On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of ₹ 10 Lac acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he share application money / share capital and also certain credit entries / deposits in the Bank account maintained by the assessee company and made various additions by passing an assessment order dated 28.2.2011 u/s. 143(3)/147 of the I.T. Act, 1961. 4. Aggrieved by the aforesaid order of the Assessing Officer dated 28.2.2011 passed u/s. 143(3)/147, assessee filed an appeal before the Ld. First Appellate Authority, who vide impugned Order dated 01.08.2011 had deleted the additions in dispute in favour of the assessee by partly allowing the appeal of the Assessee. 5. Aggrieved with the aforesaid finding of the Ld. CIT(A), Revenue is in appeal before the Tribunal. 6. At the time of hearing, Ld. Counsel of the assessee drawn our attention towards the Application filed by the Assessee u/R 27 of the Income Tax (Appellate Tribunal rules, 1963) in which he has stated that the Notice u/s. 148 issued in the case of assessee is bad in law and without jurisdiction as the requisite sanction u/s. 151 of the Income Tax Act, 1961 for issuance of notice u/s. 148 has not been obtained. Secondly, he argued that notice u/s. 148 issued in this case is bad in law and without jurisdiction as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d genuineness of the transactions, therefore, the AO has rightly held that initial onus cast upon the assessee who has not been satisfactorily discharged, hence, the addition was rightly made by the AO and may be upheld accordingly. 10.2 On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference and the same may be upheld. He stated that basic details which were required for verification to fulfill the conditions viz. identity of the creditor, creditworthiness of the creditor and genuineness of transaction as laid down by higher judicial authorities for examining the issue u/s. 68. 10.3 We have heard both the parties and perused the records, especially the Orders of the revenue authorities. We find that the Ld. CIT(A) has elaborately discussed the issue and gave his finding vide para no. 9 to 18 at page nos. 4 to 9 of his impugned order. For the sake of convenience, the relevant finding of the Ld. CIT(A) is reproduced below:- 9. Share Application money /Share Capital: The assessee company received share application money / share capital from the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... *An addition of ₹ 1,32,00,000/- was made u/s 68 out of ₹ 1,32,01,980 being share application money/share capital received in F.Y. 2003-04. 10.1 The assessee has filed the following documents In the course of a) assessment proceedings to prove the transactions. b) Name and address of the shareholders. c) Income Tax Particulars of shareholders/PAN Details d) Share Application Forms e) Bank Statement f) Affidavits 10.2 In a nutshell the main allegation of the AO is that receipt of Share application money/share capital was an arranged affair. The other observation of the AO is that the genuineness and credit worthiness of the transaction remained unproved. On the other hand, the main contention of the AR is' that the burden cast on it was discharged by providing basic details required for verification as envisaged ix] s 68. The AR further stated that principles of natural justice were not followed. 10.3 The assessee has discharged its burden of providing basic details which were required for verification to fulfill the conditions viz. identity of the creditor, credit worthiness of the creditor and genuineness of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be justified in drawing an adverse inference only because the creditor/subscribe fails or neglects to respond to its notice; (6) the onus would not stand discharged if the creditor/subscriber denied of repudiated the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, without more, against the assessee; (7) the Assessing Officer is dutybound to investigate the credit worthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation. With regard to the issue of share application money, while dismissing the SLP filed by the Department, the Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd. (216 CTR 195) observed as under: Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application' money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is noticed that the Revenue has not been able to specifically show that the investments had emanated from the coffers of the assessee in this case. In these circumstances, respectfully following the decision of the Hon 'ble jurisdictional High Court as also Hon'ble Supreme Court referred to supra, the addition made by the AO and confirmed by the learned CIT(A) in regard to the alleged bogus shareholders represented by the increase in share capital of the assessee cannot be treated as unexplained cash credits in the hands of the assessee. Respectfully following the decision of the Hon'ble Supreme Court we direct the AO to delete the addition made under s.68. However, the Department is free to proceed to reopen the individual assessments of the share applicants in accordance with law. We direct accordingly. 11.1 From the details furnished, one can conclude that the assessee has provided necessary basic details including the ward/circle where the share applicants/ investing companies were assessed to income tax and discharged the onus cast on it. All the amounts were received through Banking channels by way of cheques issued in favour of the Appellant Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by the Hon'ble Supreme Court in the following cases. a) Dhirajlal Girdharilal v CIT 26 ITR 736 b) Omar Salay Mohammed Sait v CIT 37 ITR 151 c) Dhakeshwari Cotton Mills Ltd. v CIT 26 ITR 775 d) Lalchand Bhagat Ambica Ram v CIT 37 ITR 288 17. In the case of Acchyalal Shaw vs. ITO (2009) 30 SOT 44 (Kol.) (URO), the Hon'ble ITAT observed as under: Suspicion cannot replace evidential document. Simple argument or allegation of manipulation is not sufficient without proper evidence. 18. In view of the above facts and circumstances and available legal position, the share application money/share capital to the extent of ₹ 1,32,00,000/- stands explained. 10.4 We find that the assessee has furnished the details including the ward/circle where the share applicants/ investing companies were assessed to income tax and discharged the onus cast on it. All the amounts were received through Banking channels by way of cheques issued in favour of the Assessee Company towards share application money / share capital. Both M/ s Mahanivesh India Ltd. and M/s Geefcee Finance Ltd. are Public Limited companies and the investment in the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds of appeal filed by the Revenue. 11.2 On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference and the same may be upheld. 11.3 We have heard both the parties and perused the records, especially the Orders of the revenue authorities. We find that the assessee had advanced ₹ 15,00,000/- to Sh. K.K. Kapur (HUF) in FY 2001-02. We further note that the assessee has received back the advance in the Financial Year relevant to the impugned assessment year through cheques. Since the advance was not doubted by the AO, the recovery of the advance is outside the scope of Section 68, therefore, the Ld. CIT(A) has rightly deleted the addition in dispute, which does not need any interference on our part, hence, we uphold the same and dismiss the ground nos. 2 to 2.2. raised by the Revenue. 12. Apropos deletion of addition of ₹ 4,50,000/- as unexplained investment. 12.1 On this issue, Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal filed by the Revenue. In connection with addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur part, hence, we uphold the same and dismiss the ground nos. Ground No.4 to 4.4 raised by the Revenue. 14. Apropos deletion of addition of ₹ 10 lacs as unexplained investment u/s. 69 in FDRs. 14.1 On this issue, Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal filed by the Revenue. He stated that assessee has failed to explain the source of investment of ₹ 10 in FDR with State Bank of Mysore. Therefore, he stated that the AO has rightly made the addition of ₹ 10 lacs on this account which may be upheld. 14.2 On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference and the same may be upheld. 14.3 We have heard both the parties and perused the records, especially the Orders of the revenue authorities. We find that assessee has made the Fixed Deposit with State Bank of Mysore and FDR No. 012020455263 dated 10.10.2003. The AO has added the amount as unexplained investment u/s. 69B. We note that the same was reflected in the books of account. We further note that Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the books of accounts, nor its genuineness established. Therefore, he stated that the AO has rightly made the addition of ₹ 2 lacs on this account which may be upheld. 16.2 On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference and the same may be upheld. 16.3 We have heard both the parties and perused the records, especially the Orders of the revenue authorities. We find that on 12.3.2004, the assessee has sold shares of Aparna Capital Services Pvt. Ltd. for ₹ 2 lacs and the same was reflected in the sale of shares credited to P L account and the transaction passed through the Bank account. Therefore, the Ld. CIT(A) has rightly held that there is no scope for addition of ₹ 2 lacs. In our considered opinion, the Ld. CIT(A) has passed a well reasoned order on this account, hence, we uphold the same and dismiss the ground no. 7 to 7.3 raised by the Revenue. 17. In the result, the Revenue s Appeal No. 4786/Del/2011 (AY 2004-05) stands dismissed. Order pronounced in the Open Court on 01/03/2016. - - TaxTMI - TMITax - Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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