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TMI Blog2016 (3) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 receipt. d) The Ld CIT (A) 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. e) The Ld CIT (A) failed to appreciate that the case laws relied by the AO and rejection of the case law relied by the assessee were well discussed and the addition made on the basis of proper enquiry and after confrontation to the assessee could not be said to based on suspicion, conjectures or surmises. f) The Ld CIT (A) failed to appreciate that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the assessee failed to produce the books of accounts and other relevant details called for, which were necessary to examine the case in full details." 1.6 "On the facts and in the circumstances of the case and in law the Ld CIT(A) has wrongly held that the assessee filed the requisite details and produced the books of accounts during the assessment proceedings." 1.7 On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in relying on the various case laws, which had no similarities of facts of the assessee, especially in view of the information regarding beneficiary for accommodation entries on records and the information gathered during the assessment proceedings through proper investigation. 1.8 On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Rs. 4.50 Lac without appreciating the facts of the case just by accepting the submission of the assessee that the credit amounts was sale proceeds of shares". 3.1 "On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of Rs. 4.50 without appreciating the facts that the assessee did not produce any documentary evidence related to sale of shares as claimed". 3.2 "On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of Rs. 4.50 without appreciating the facts as revealed from enquiries conducted by the AO accepting the submission as correct on face value without rebutting the finding of the AO during the assessment proceedings or during the appellate proceedings." 3.3 "On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of Rs. 4.50 ignoring the facts revealed from enquiry as discussed in the assessment order under the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts 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 Rs. 10 Lac accepting additional evidence in form of bank alc in the books of the assessee without allowing an opportunity to the AO to give his comments in contravention of Rule 46A of the Income Tax Rules." 6. "On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of Rs. 40000/-- 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." 6.1 "On the facts and in the circumstances of the case and in law the Ld.CIT (A) has erred in deleting the addition of Rs. 40000/- made by the AO by accepting additional evidence in form of confirmation of alc from M/s Modline Build up Cap Pvt Ltd without allowing an opportunity to the AO to give his comments in contravention of Rule 46A of the Income Tax Rules." 7. "On the facts and in the circumstances of the case and in law the Ld CIT (A) has erred in deleting the addition of Rs. 2 Lac made by the AO ignoring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance 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 the reasons for issue of notice u/s. 148 has been recorded in a mechanical manner and without application of mind and without independent examination. Therefore, he requested that on this legal issue, the reassessment may be quashed and Revenue's Appeal may be dismissed accordingly. 7. On the other hand, Ld. DR relied upon the order of the CIT(A) on this issue and strongly opposed the Application filed by the assessee under Rule 27 of the ITAT Rules, 1963 and stated that assessee has challenged the notice u/s. 148 issued by the AO in the Hon'ble High Court of Delhi in WP(C) No. 8260/2010 and CM 2124/2010 in the case of Vivsun Properties (P) Ltd. vs. CIT & Anr. wherein the Hon'ble High Court of Delhi has held that the reopening of the assessment is justified. In view of the decision of the Hon'ble High Court, he requested that legal issue raised by the assessee vide Application u/R 27 may be dismissed. 8. We have heard both the parties and perused the contentions raised by the assessee in the Application filed under Rule 27 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - "9. Share Application money /Share Capital: The assessee company received share application money / share capital from the following persons / companies and the details furnished are as under:- S.No Name & Address Share Capital Including share premium (Rs.) Remarks 1. Geefcee Finance Ltd. 13/34, WEA, 4th floor, Main Arya Samaj Road, New Delhi -110 005 20,00,000.00 Date incorporation: 17.5.1990 PAN: AAACG1103H 2 Mahanivesh India Ltd. 13/34, WEA, 4th Floor, Main Arya Samaj Certificate Road, New Delhi- 110005 10,00,000.00 Copies of Ale, Bala nce ""'" Certificate Date of incorporation: PAN: AAACM 3 Combine Overseas Ltd. E-65, 6th Floor, Himalaya House, 23, K.G. Marg, New Delhi-110001 40,00,000.00 Copies of Share PAN: AAACC 4 Ojswi Traders Investment & Finance Lt , 5/5761, Dev Nagar, Karol Bagh, New Delhi-110005 7,00,000.00 Copies of Share PAN: AAACO 5 Diplomat International Pvt. Ltd. C-I/2, Model Town, Delhi-I 10009 10,00,000.00 Copies of Share Affidavit of the Account Copy of India, Ansari Ward-1 0(3), New PAN: AAACD 6 Mr. Umesh Khetan 57, Model Town, G.T. Road, Gaziabad (U.P) 40,00,000.00 Copies of Share PAN: AFEPK 7 Ms. Kusum Agarwal 45A, Bloc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expected to know every details pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of section 68 and 69 of the Income Tax Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbors doubts of the legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company.' 'Further, a distillation of the precedents yields the following proposition of law in the context of section 68 of the Income Tax Act. The Assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely: whether it has been transmitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the assessee company even from the 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. Accordingly, addition made under s. 68 which was deleted by the Hon'ble High Court was upheld by Hon'ble Supreme Court. A perusal of the orders of the Hon'ble Supreme Court in the case of Divine Leasing & Finance Ltd. referred to supra is in regard to SLP filed by the Revenue against the order of the Hon'ble jurisdictional High Court. The Hon'ble Supreme' Court has specifically with a speaking order dismissed the SLP. The Hon'ble Supreme Court in the various decisions referred to by the learned Authorized Representative has categorically held that the addition in regard to the share capital cannot be treated as the undisclosed income of the assessee if the share application money is received by the assessee company from alleged bogus shareholders whose names are given to the AO. Further the Hon'ble Supreme -, Court has categorically held that the Revenue is free to proceed to reopen the individual assessments of such alleged bogus shareholders. The decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted in many other companies. 12. The AO in the assessment order reproduced extensively the notings of order sheet, questioners issued and replies furnished by the appellant. The AO observed that the facts of the case are distinguishable from the facts of the cases which were considered by the various judicial fora. It is more or less settled position of law that once identity is established, the better course suggested by the judicial authorities is to reopen the assessments of share applicants. In respect of share applicants other than M/ s Mahanivesh India Ltd. and M/s Geefcee Finance Ltd., nothing adverse was brought on record. 13. The law of evidence mandates that if the best evidence is not placed before the court, an adverse inference can be drawn against the person who ought to have produced it. As stated above the assessee has produced possible/best evidence to support its claim. The assessee cannot be fastened with, tax liability for failing to do an impossible/unjustified act of production of directors of investing companies after lapse of 5/6 years. 14. If there is any discrepancy in the books of accounts maintained by the investing companies, there is a case f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law that once identity is established, the better course suggested by the judicial authorities is to reopen the assessments of share applicants. In respect of share applicants other than M/ s Mahanivesh India Ltd. and M/s Geefcee Finance Ltd., nothing adverse was brought on record. The law of evidence mandates that if the best evidence is not placed before the court, an adverse inference can be drawn against the person who ought to have produced it. As stated above the assessee has produced possible/best evidence to support its claim. The assessee cannot be fastened with, tax liability for failing to do an impossible/unjustified act of production of directors of investing companies after lapse of 5/6 years. If there is any discrepancy in the books of accounts maintained by the investing companies, there is a case for reopening of the assessment of the respective shareholders/investing companies. The assessee cannot be penalized for the mistakes/faults committed by the share holders. The AO has not found any discrepancy in the books of account and bank accounts maintained by the assessee. 10.5 In the background of the aforesaid discussions, we find that Ld. CIT(A) has discussed ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of Rs. 4,50,000/- and shares of Highthrow Corp Ltd. for Rs. 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. We further note that AO has not disputed the acquisition of shares of the assessee. 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. Ground No. 3 to 3.4 raised by the Revenue. 13. Apropos deletion of addition of Rs. 2,25,000/- and Rs. 6,08,850/- as unexplained credits. 13.1 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. 13.2 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. 13.3 We have heard both the parties and perused the records, especially the Orders of the revenue authorities. We find that the AO made the addition in respect of the amounts received on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised in the grounds of appeal filed by the Revenue. He stated that assessee has not furnished any documentary evidence has also not produced the books of accounts, hence, the AO has rightly made the addition of Rs. 40,000/- on this account which may be upheld. 15.2 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. 15.3 We have heard both the parties and perused the records, especially the Orders of the revenue authorities. We find that assessee has issued a cheque no. 581616 for Rs. 40,000/- on 21.5.2003 and the amount was received back on 31.3.2004 vide cheque no. 124066. We further note that the assessee has furnished confirmed account copy. M/s Modiline Build Cap Pvt. Ltd. does possess a PAN : AACCM1716A and Ld. CIT(A) has verified the bank account and found that the transaction were duly recorded, hence, CIT(A) has rightly deleted the addition of Rs. 40,000/-, which does not need any interference on our part, hence, we uphold the same and dismiss the ground no. 6 to 6.1 raised by the Revenue. 16. Apropos deletion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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