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TMI Blog2018 (9) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai (hereinafter called "the tribunal") read as under:- "1) On facts & circumstances of the case and in law learned CIT(A) confirmed addition of Rs. 1, 00, 00, 000/- being subscription to share capital. 2) On facts & circumstances of the case & in law the learned CIT(A) did not consider confirmatory letters of subscriber of share capital wherein their names, address & PAN were duly reflected. 3) On facts & circumstances of the case & in law the learned CIT(A) failed to appreciate the fact that the details of balance sheet and other details called for pertains to 17 years back & subscriber of share capital were not obliged to maintain the said records. II) PRAYER :- 1) It is therefore prayed that addition of Rs. 1, 00. 00, 000/- be deleted. III. The appellant craves leave to add, amend, delete and 7 or modify any grounds of appeal. " 3. The brief facts of the case are that the assessee is engaged in the business of trading in cloth, manufacturing of yarn & export of readymade garments. The assessee filed return of income for the impugned assessment year 1995-96 declaring „Nil‟ income on 30. 11. 1995. Regular assessment was framed by Revenue u/s. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d share capital of Rs. 1, 00, 00, 000/-. The tribunal in first round of litigation vide orders dated 30. 12. 2011 in ITA no. 1382/Mum/2005 based on paper book filed by the assessee and after considering that the assessee has furnished complete list of shareholders but no enquiries were made by the authorities below, inter-alia remitted this issue of unexplained share capital back to the file of the AO for fresh consideration of the issue after making necessary enquiries from the share holders as on 31. 03. 95 . 6. The AO in second round of litigation observed that the assessee Director has given list of share holders along with their GIR/ PAN numbers . Following the directions of Hon‟ble ITAT, the AO issued notices u/s. 133(6) to the shareholders who subscribed share capital of Rs. 1, 00, 000, 000/- calling for all details/information from those shareholders. The AO received confirmation from these parties who had subscribed to share capital of the assessee company to the tune of Rs. 1, 00, 00, 000/- wherein they confirmed to having subscribed to equity shares of the assessee company as also confirmed to have paid the total amount to the assessee company. In the confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the facts of the case and also gone through the appellant's submission. It is seen that during the course of assessment proceedings, the appellant was asked to file confirmations of various parties in whose name share capital of Rs. 1 crore was raised. Confirmation received by the AO revealed that various parties have subscribed to the share capital and also amount was paid by these persons to the appellant company. Since only confirmation was filed, the AO asked the appellant company to provide evidence to establish the genuineness of the transaction and creditworthiness of various persons. It was also submitted by the appellant during the course of assessment proceedings that these parties do not have any record such as balance sheet, bank statement etc. to prove creditworthiness of these parties. Appellant only maintained that the amount was received by cheque. In the case of Mangilal Jain vs. ITO (Mad. ) 315 ITR 105 it was held that 'Mere proof of identity of . creditor or that transaction was by cheque, is not sufficient. In the case of CIT vs. Nivedan Vanijya Niyojan Ltd. (Cal) 263 ITR 623 it has been held that section 68 is applicable even to share application mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of their subscription to the share capital of the assessee company in aggregate to the tune of Rs. 1, 00, 00, 000/- which also included their PAN/GIR numbers. These shareholders also confirmed that they subscribed to share capital of the assessee company to the tune of Rs. 1, 00, 00, 000/- out of their own capital and payments were made by cheque. The AO was still not satisfied with the replies/information filed by respective shareholders in compliance of notices issued u/s 133(6) by the AO in second round of litigation. The AO asked the assessee to produce either Balance Sheet, Capital account or bank statement of these shareholders. The assessee expressed its inability to produce these documents called for by the AO citing that more than 17 years have elapsed and at this stage it is not possible to supply these documents. The assessee submitted that it has discharged its primary onus. The AO ignored the fact that the directions were issued by tribunal in first round of litigation to AO to make necessary enquiries from these shareholders who had subscribed to share capital of the assessee to the tune of Rs. 1, 00, 00, 000/-. The AO ought to have issued fresh notices u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otices /summons to these parties. The learned CIT(A) in second round of litigation in appellate proceedings also committed the same mistake by not issuing notice u/s. 133(6) or summons u/s. 131 of the Act to these shareholders despite being aware about the direction of the tribunal vide its order in the first round of litigation. The Ld. CIT(A) merely confirmed the order of the AO in second round of litigation by rejecting contentions of the assessee without making any further enquiries. Needless to say that powers of Ld. CIT(A) are co-terminus with the powers of the AO. At this stage of proceedings before us when more than 23 years have already elapsed since the investments were made by these shareholders in assesseee‟s share capital, no further opportunities can be given to the revenue to start fresh round of litigation more-so nothing incriminating has been brought on record by the authorities below. It is matter of record that these shareholders name, addresses, GIR/PAN etc are all on record along with their confirmation letter confirming that they made investments in the assessee company. These shareholders have also confirmed that these share investments were made out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised figures albeit pertaining to previous year figures for financial year 1995-96 were incorporated in the audited balance sheet of next accounting year 1996-97. So far as the coinciding of date of audit report issued by the afore-stated both the chartered accountants, the assessee explained the same to be typing error on part of the auditors M/s Motilal & Associates. Mainly, there was a difference of Rs. 91, 09, 444/- in these two sets of audited accounts which were on account of licence sale of Rs. 67, 30, 933/-, raw material consumed of Rs. 18, 29, 804/- and employment cost of Rs. 5, 48, 707/-, which was shown in the figure of last year i. e. financial year 1995-96 in the audited account prepared for the financial year ended 31. 03. 1997, but the same were not shown in the audited accounts of the assessee for financial year 1995-96. The assessee had contended that there is no change in computation of income for AY 1997-98 and hence there was no requirement of filing revised return of income for AY 1997-98 as there was no omission or wrong statement in the return of income filed with the revenue. The AO had observed that the assesseee has not disclosed the same as income in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be collected from the tax payers. It is incumbent on the part of the tax-payers to file correct return of income declaring correct income and pay correct taxes to Government. Similarly it is incumbent on the part of Revenue to asssess correct income chargeable to tax within mandate of the provisions of the 1961 Act so that consequently correct taxes can be assessed and paid by the tax-payer. These are not adversarial proceedings but proceedings to arrive at correct income which satisfy mandate of the 1961 Act so that correct taxes can be paid to Revenue. The assessee for whatever reasons has got prepared two sets of audited balance sheets/accounts both dated 25. 11. 1996 from two different chartered accountants and there was a difference of Rs. 91, 09, 444/- in these two sets of audited balance sheets in the figure of Reserves and Surplus in the previous year figures for year ended on 31. 03. 1996, in the audited sets of accounts prepared for the year ended 31. 03. 2017, which difference it is stated to have arisen mainly on account of license sale of Rs. 67, 30, 933/-, raw material consumed of Rs. 18, 29, 804/- and employment cost of Rs. 5, 48, 707/- . The endeavour of both t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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