9911796707
TMI Blog2019 (2) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... are incomplete and the reopening was objected by the assessee. The crux of the argument is that the reasons so recorded cannot be improved upon by the Ld. Assessing Officer at the later stage. Our attention was invited to the statement of facts available at Page-3 of the paper book. It was pleaded that the assessment was reopened on 25/03/2013 whereas the search was carried out on 01/10/2013. Plea was also raised that the payment is through banking channel and even the Ld. Commissioner of Income Tax (Appeal) granted relief to the assessee amounting to Rs. 2.76 crores, which has been challenged by the Revenue by way of cross appeal. On the other hand, the Ld. DR, Shri Rajiv Gubgotra, defended the reopening of assessment by submitting that the Ld. Assessing Officer received information with respect to the transactions, therefore, the reasons recorded by the Ld. Assessing Officer are sufficient. The reopening of assessment was defended. 2.1. We have considered the rival submissions and perused the material available on record. So far as, reopening of assessment u/s 147/148 of the Act on the plea that the Ld. Assessing Officer ignored the fact that there was no reason to believe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act is analyzed, we find that after insertion of Explanation -3 to section 147 of the Act by the Finance (No.2) Act of 2009 with effect from 01/04/1989 section 147 has an effect that Assessing officer has to assess or reassess income (such income) which has escaped assessment and which was basis of formation of belief and, if he does so, he can also assess or reassess any other income which has escaped assessment and which came to the notice during the course of proceedings. Identical ratio was laid down by Hon'ble jurisdictional High Court in CIT vs Jet Airways India Pvt. Ltd. (2010) 195 taxman 117 (Mum.) and the full Bench decision from Hon'ble Kerala High Court in CIT vs Best Wood Industries and Saw Mills (2011) 11 taxman.com 278 (Kerala)(FB). A plain reading of explanation-3 to section 147 clearly depicts that the Assessing Officer has power to make addition, where he arrived to a conclusion that income has escaped assessment which came to his notice during the course of proceedings of reassessment u/s 147/148 of the Act. Our view is fortified by the decision in Majinder Singh Kang vs CIT (2012) 25 taxman.com 124/344 ITR 358 (P & H) and Jay Bharat Maruti Ltd. Vs CIT (2010) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Kay Engineering Co. Pvt. Ltd. (2001) 247 ITR 818 (SC) held that merely because the case of the assessee was correct in original assessment for the relevant assessment year, it does not preclude the ITO to reopen the assessment of an earlier year on the basis of finding of facts that fresh material came to his knowledge. 2.5. Under section 147, as substituted with effect from 01/04/1989, the scope of reassessment has been widened. After such substitution, the only restriction, put in that section is that "reason to believe". That reason has to be a reason of a prudent person which should be fair and not necessarily due to failure of the assessee to disclose fully and partially some material facts relevant for assessment (Dr. Amin's Pathology Laboratory vs JCIT (2001) 252 ITR 673, 682 (Bom.) Identical ratio was laid down by Hon'ble Delhi High court in United Electrical Company Pvt. Ltd. vs CIT (2002) 258 ITR 317, 322 (Del.) and Prafull Chunnilal Patel vs ACIT 236 ITR 832, 838 (Guj.). The essential requirement for initiating reassessment proceeding u/s 147 r.w.s 148 of the Act is that the ld. Assessing Officer must have reason to believe that any income chargeable to tax has escape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngfully claim deduction u/s 80IA. Therefore, the Assessing Officer had reason to believe that income had escaped assessment for assessment year 1994- 95." Identically in the case of Srichand Lalchand Talreja v. Asst. CIT, (1998) 98 Taxman 14, 19 (Bom), where the information regarding acquisition of the asset was not available with the Assessing Officer during the relevant assessment year 1992-93 and such information was disclosed in the return for the assessment year 1995- 96, the Hon'ble jurisdictional High Court held that the Assessing Officer can form a bona fide belief that there was escapement of income in relation to assessment year 1992-93. 2.9. The Hon'ble jurisdictional High Court in Export Credit Guarantee Corporation of India Ltd. v. Addl. CIT, (2013) 350 ITR 651 (Bom), where there had been no application of mind to the relevant facts during the course of the assessment proceedings by the Assessing Officer, the reopening of the assessment was held to be valid. 2.10. The Hon'ble jurisdictional High Court in Girilal & Co. v. S.L. Meena, ITO, (2008) 300 ITR 432 (Bom), held that in order to invoke the extraordinary jurisdiction of the court the petitioner must also mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jab & Haryana High Court in Mrs. Rama Sinha v. CIT, (2002) 256 ITR 481, 483, 486, where the reassessment notice has been issued on the basis of definite information from CBI regarding investments by the assessee which had not been disclosed during the original assessment proceedings, such initiation has been upheld. 2.13. In the case of Pal Jain v. ITO, (2004) 267 ITR 540, 544-45, 548, 549 (P & H), applying Phool Chand Bajrang Lal v. ITO, (1993) 203 ITR 456 (SC), although the transaction of sale of shares was disclosed and accepted in the original assessment, but the subsequent discovery by the DDI (Investigation) revealed that the transaction was not genuine, a reassessment notice after four years has been held to be valid because there was no true disclosure of the material facts. In this regard, the petitioner-assessee cannot draw any support from the statement for challenging the validity of the notice for reassessment. It goes without saying that for the purpose of making the assessment, the Assessing Officer shall have to confront the petitioner with the entire material in his possession on the basis of which he proposes to make the additions. In Punjab Leasing Pvt. Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Likewise, in Tilak Raj Bedi v. Joint CIT, (2009) 319 ITR 385 (P & H), wherein, facts coming to light in a subsequent assessment year could validly form the basis for initiating reassessment proceedings, in view of Explanation 2 to section 147. The action of the income tax authorities in reopening the assessment of the assessee and restricting the deduction under section 80-IB was held to be valid. 2.16. In the case of Smt. Usha Rani v. CIT, (2008) 301 ITR 121 (P & H), there was nothing on record to show the relationship between the donor and the donee, capacity of the donor to make gifts and the occasion therefore. The assessee had failed to discharge the onus to prove the gifts. The reassessment proceedings were held to be valid. In the case of Usha Beltron Ltd. v. Joint CIT, (1999) 240 ITR 728, 736-37, 739 (Pat), where the investigation report indicated that the Officer had reason to believe that on account of failure on the part of the petitioner-assessee to disclose true and full facts, income had been grossly under assessed, reassessment proceedings were held validly initiated. 2.17. In the case of Kapoor Brothers v. Union of India, (2001) 247 ITR 324, 331, 332-33 (Pat), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons recorded in detail illegal. 2.19 In the case of Desh Raj Udyog : Chaman Udyog v. ITO, (2009) 318 ITR 6 (All), in the assessment years in question, the matter was still to be decided finally by the assessing authority whether the income should be treated under the head 'Business income' or 'property income'. The assessee would get opportunity to show sufficient cause to the assessing authority during the course of assessment. Thus, it could not be said that there was no relevant material to initiate proceedings under section 147. In the case of Kartikeya International v. CIT, (2010) 329 ITR 539 (All), in view of the matter, the petitioner was not entitled for the deduction on the duty drawback amount under section 80-IB and since it had been allowed in the assessment order passed under section 143(1), it had escaped assessment. On these facts the initiation of the proceedings under section 147 read with section 148 for assessment years 2005-06 and 2006-07 was legal and in accordance with law. 2.20. Likewise, in the case of Sunil Kumar lain: Suresh Chandra lain v. ITO, (2006) 284 ITR 626 (All), notwithstanding the fact that the amount had been assessed to tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct particulars and therefore, the reopening of the assessment was held to be justified. 2.22. In the case of CIT v. Kerala State Cashew Development Corporation Ltd., (2006) 286 ITR 553 (Ker), wherein, the assessee was following the mercantile system of accounting should not have claimed deduction of penal interest which had accrued not in the previous year relevant to the assessment year but in earlier years. This the assessee had not disclosed. The reassessment was held to be valid. Likewise, in Kusum Industries P. Ltd. v. CIT, (2008) 296 ITR 242 (All), as the award had become final it would be taken that the directors of the assessee had accepted the factum of earning of secret profit not reflected in the books of account, which was also binding on the company. The non-appearance of one of the arbitrators and one of the directors in respect of the summon issued under section 131 would not make the reassessment invalid. The Hon'ble Kerala High Court in CIT v. Indo Marine Agencies (Kerala) P. Ltd., (2005) 279 ITR 372 (Ker), held that the entry would amount to an order under section 144. The mere fact that it was not communicated to the assessee would not make such an assessment re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings had been validly initiated. 2.25. Likewise, in CIT v. Abdul Khader Ahamed, (2006) 285 ITR 57 (Ker), it was clear from the reasons recorded by the Deputy CIT that he prima facie had reason to believe that the assessee had omitted to disclose fully and truly the material facts and that as a consequence income had escaped assessment. The reassessment was held to be valid. In the case of U.P. State Brassware Corporation Ltd. v. CIT, (2005) 277 ITR 40 (All), the principles laid down by the Calcutta High Court in CIT v. New Central Jute Mills Co. Ltd. : (1979) 118 ITR 1005 (Cal) did constitute information on a point of law which should be taken into consideration by the ITO in forming his belief that the income to that extent had escaped assessment to tax and, the reassessment was held to be valid. In Sunder Carpet Industries v. ITO, (2010) 324 ITR 417 (All), held that the Departmental Valuer's Report constituted material for entertaining a belief of escaped income in the years under consideration. The reassessment proceeding was held to be valid. 2.26. In Aurobindo Sanitary Stores v. CIT, (2005) 276 ITR 549 (Ori), there being a substantial difference between the figures of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 357 ITR 177 (Del), where there being prima facie material in the possession of the Assessing Officer to form a tentative belief that section 9(1)(i) held attracted, said reason by itself constituted a relevant ground to reopen the assessment of the assessee. Reference may also be made to i. Ajai Verma v. CIT [(2008) 304 ITR 30 (All)]; ii. Ashok Arora v. CIT [(2010) 321 ITR 171 (Del)]; iii. CIT v. Chandrasekhar BaLagopaL [(2010) 328 ITR 619 (Ker)]; iv. Jayaram Paper Mills Ltd. v. CIT [(2010) 321 ITR 56 (Mad)]; v. Kerala Financial Corporation v. Joint CIT [(2009) 308 ITR 434 (Ker)]; vi. Mavis Satcom Ltd. v. Deputy CIT [(2010) 325 ITR 428 (Mad)]; vii. CIT v. Madhya Bharat Energy Corporation Ltd. [(2011) 337 ITR 389 (Del)]; viii. Kone Elevator India P. Ltd. v. ITO [(2012) 340 ITR 454 (Mad)]; ix. Vijay Kumar Saboo v. Asst. CIT [(2012) 340 ITR 382 (Karn)]; x. Siemens Information Systems Ltd. v. Asst. CIT [(2012) 343 ITR 188 (Bom)]; xi. I.P. Patel & Co. v. Deputy CIT [(2012) 346 ITR 207 (Guj)]; xii. Dishman Pharmaceuticals & Chemicals Ltd. v. Deputy CIT [(2012) 346 ITR 228 (Guj)]; xiii. Video Electronics Ltd. v. Joint CIT [(2013) 353 ITR 73 (Del)]; xiv. A G G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration and were alloted equity shares by purported investment of sizeable share capital and share premium amounts. On verification of such materials, the Assessing Officer noted that the assessee had received share capital/share premium amount, since the investor companies were found to be shell companies indulging in providing accommodation entries, the Assessing Officer was of the opinion that the share capital/share premium claimed to have been received from the company by the assessee was not genuine. Amount is nothing but assessee's own money introduced in the garb of share capital/share premium from the shell companies and therefore, such amount is liable to be taxed under section 68. He therefore, recorded his satisfaction that the income had escaped assessment and that this was due to the assessee having failed to disclose truly and fully all facts. [Para 7] Section 147 provides inter alia that if the Assessing Officer has the reason to believe that any income chargeable to tax has escaped assessment, he may subject to the provisions of sections 148 to 153, assess or reassess such income. Proviso to section 147 of course requires that where the assessment under sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions were scrutinised by the Assessing Officer during the original assessment also would not preclude him from reopening the assessment. His scrutiny during the assessment will necessarily be on the basis of the disclosures made by the assessee. [Para 8] The contention that there was no failure on part of the assessee to disclose truly and fully facts cannot be accepted. The Assessing Officer, as noted, received fresh material after the assessment was over, prima facie, suggesting that the assessee company had received bogus share application/premium money from number of shell companies. [Para 10] Merely because the transactions in question were examined by the Assessing Officer during the original assessment would not make any difference. The scrutiny was on the basis of disclosures made and materials supplied by the assessee. Such material is found to be prima facie untrue and disclosures not truthful. Earlier scrutiny or examination on the basis of such disclosures or materials would not debar a fresh assessment. Each individual case of this nature is bound to have slight difference in facts. [Para 11] The next contention that the Assessing Officer did not demons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esorting to reopening of the assessment. The Assessing Officer had perused the materials placed for his consideration and thereupon, upon examination of such materials formed a belief that income chargeable to tax had escaped assessment. [Para 16] In the result, petition is dismissed. [Para 17]" 2.31. The Hon'ble Gujarat High Court while validating the reopening of assessment under section 147/148 of the Act in a later order (aforesaid) dated 20/02/2018 on the issue of cash credit (share application money) duly considered the arguments of both sides and followed the following the decisions I. Jayant Security and Finance Ltd. v. Asstt. CIT [Special Civil Application No. 18921 of 2017, dated 12-2-2018] (para 12); II. Raymond Woolen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) (para 13); III. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 (SC) (para 13) IV. Pr. CIT v. Gokul Ceramics [2016] 241 Taxman 1/71 taxmann.com 341 (Guj.) (para 16) And distinguished the following decisions i. Allied Strips Ltd. v. Asstt. CIT [2016] 384 ITR 424/69 taxmann.com 444 (Delhi) (para 11) and ii. Yogendrakumar Gupta v. ITO [2014] 366 ITR 186/46 taxmann. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation Wing at Mumbai, therefore, the Ld. Assessing Officer was under a reasonable belief that income chargeable to tax has escaped assessment as the Ld. Assessing Officer had not formed any opinion and this information was received at the later stage, which in our opinion was sufficient to initiate reassessment proceedings. Explanation-1 to section 147 of the Act supports our view. Referring to the said explanation in consolidated Photo & Finvest Ltd. (2006) 281 ITR 394 (Del.), Hon'ble High Court observed as under:- "8. It is clear from the above that the two critical aspects which need to be addressed in any action under section 147 are whether the Assessing Officer has "reason to believe" that any income chargeable to tax has escaped assessment and whether the proposed reassessment is within the period of limitation prescribed under the proviso to section 147. Explanation (1 ) to the said provision makes it clear that production of account books or other evidence from which the Assessing Officer could with due diligence discover material evidence would not necessarily amount to disclosure within the meaning of the proviso that stipulates an extended period of limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 68 of the Act is concerned, we note that the assessee received share capital/premium from 12 parties, which are summarized hereunder:- Sr. No. Name of the Person Amount in Rs. 1 Eagle Infratech Pvt. Ltd. 22,10,000 2 Finage Leasing & Finance (I) Ltd. 22,10,000 3 Lotus Realcon Pvt. Ltd. 8,50.000 4 Mega Top Promoters Pvt. Ltd. 22,10,000 5 Manimala Delhi Properties Pvt.Ld. 22,10,000 6 Shalini Holding Ltd. 22,10,000 7 Singhal Securities Pvt. Ltd. 22,10,000 8 V.I. P. Leasing and Finance Pvt. Ltd. 22,10,000 9 Virgin Capital Services Pvt. Ltd. 22,10,000 10 Zenith Automotive Pvt. Ltd. 22,10,000 11 Microland Developers Pvt. Ltd. 22,10,000 12 Brite Industires Resources Ltd. 20,10,000 Total 2,76,70,000 So far as, the above share capital/premium from twelve parties is concerned, the same was deleted by the First Appellate Authority by observing as under:- "5.7 I have circumspected the spectrum of facts and circumstances of the case and have also carefully considered the finding of the Assessing Officer and counter representation of the appellant. I have also perused the paper book containing 258 pages and various case laws relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se entries in those Bank Statements. It is not the case of the AO that the appellant had not produced the requisite accounts for his examination before him during re-assessment proceedings. His stand that since assessee could not confirm from his books that he had not received such amounts, and therefore addition is called for u/s. 68, is highly unjustified. Nobody under Law is burdened to prove a negative fact. Rather, AO was under obligation to establish the fact that these amounts are actually received by the appellant, if he alleges the same. The question of onus probandi is certainly important in the early stage of a case. It may also assume importance where no evidence at all is led on the question in dispute by either side; in such a contingency the party on whom the onus lies to prove a certain fact must fail. Where, however, evidence has been led by the contesting parties on the question in issue, abstract considerations of onus are out of place; the truth or otherwise of the case must always be adjudged on the evidence led by the parties (Kalwa Devadattam v. Union of India, (1963) 49 ITR (SC) 165, 175), Such stand and approach of the Assessing Officers has been disapprove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies only on papers, there is no propriety on the part of the Assessing Officer to presume that these companies are paper floated companies, having no existence or source of income or there is no genuine transaction of such investment under reference. Such conclusive evidences filed by the appellant during the course of assessment proceedings has been ignored by the Assessing Officer without any contrary evidence in possession. It is relevant to mention that by letter dated 14.3.2014, the Ld. A.R. of the appellant had submitted the copies of the assessment order u/s.153C of the I.T. Act of these companies who had made investments in shares, hence unless otherwise is established , such conclusive evidence has to be accepted. 5.12 Further, an important evidence is also worth highlighting that during the course of assessment proceedings itself, Assessing Officer has issued summons to the following parties who had duly replied to the Assessing Officer and had communicated the fact of investment in equity shares of the appellant company - i. Zenith Automotive Pvt. Ltd. ii, VT Leasing Finance Pvt, Ltd. iii. Virgin Capital Services Pvt. Ltd. iv, Shalini Holdings Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has obviously not disproved the genuineness of the above documents nor has established otherwise, therefore, his finding for making addition cannot be subscribed. Further it is very important to point out that by letter dated 10.03.2014, appellant has very categorically challenged the show cause notice dated 04.02.2014 that because of above evidences and replies of the companies, no addition could be made and there was not accommodation entries, and addition could not be made uJs.68, then Assessing Officer had to meet out the various objections with fresh evidences, subsequently, but Ld. Assessing Officer had failed to do so, hence the explanation and evidences relied upon by the appellant has to be accepted. Thus it is very evident that appellant has successfully established the genuineness of transactions, identity of shareholders and creditworthiness of such companies, though all these three criteria are not applicable in the case of share capital. Obviously, initial burden on the appellant was discharged, hence if any addition was to be made, the burden shifted upon the Assessing Officer to prove that investment made by them actually emanated from the assessee. Obv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. vs. Provid Trade Impex Pvt.Ltd in IT appellant No. 2219/Mum/2009 2. I.T.O. vs. Alex Securities Pvt.Ltd. In ITappellant No. 4241/Mum/2009 3. CIT vs. Creative World Tele-films Ltd. [333 ITR 100] 4. CIT vs. Lovely Exports Pvt.Ltd. [2009] 319 ITR (st.)5. (SC) 5. Shree Barkha Synthetics Ltd. Vs. Asst. CIT(283 ITR 377) 6. M/s. Uma Polymers Pvt.Ltd vs. DCIT [100 ITD1, (tm) 7. CIT vs Dwrkadhish Investment (P) Ltd. (330 ITR 298 9. CIT vs. Value Capital Services Ltd. (307 ITR 334, Delhi) 10.CIT vs. Arunananda Textiles Pvt.Ltd. (333 ITR 116 Kar) 11. Aim properties vs Income-tax Officer, I.T. Appellate No. 7426/Mum/2012 Recently the Delhi High Court in the case of Kamdhenu Steel (surpa) summarized all the earlier judgment of all the courts including the judgment of Hon'ble Bombay High Court in the case of Creative world (supra) and held that when the assessee has submitted the details of Identity, genuineness and creditworthiness of the transaction he has discharged its burden and now it is for the revenue to prove that the amount came from the coffers of the assessee. 5.18 The case of the appellant is on better footing as not only the details of the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discussed above. I find that there is no dispute that shares to these parties have been duly issued through their share applications and the parties have confirmed the payment of share application money along with their return of Income, Balance Sheet, Copy of Bank Statement from where cheques for payment of shares application money were appearing before the AO in response to the notices issued u/s 133(6) of the IT Act, 1961 during the re-assessment proceedings. Further, the appellant company has also filed copy of the board resolution, MOA, copy of return of Allotment filed with the ROC. Thus, I find that the appellant company has discharged its onus under section 68 of the Act by proving the Identity of the parties, genuineness of the transactions and creditworthiness of the parties and the AO had not found any foul play in that. He has simply made the addition relying on the report of the Investigation wing without rebutting properly the evidence came in his way through these confirmations and documents. 5.21 The Learned AO has disputed on the creditworthiness of the parties on the ground that during the year under consideration the profit and loss account of these parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Share Application Money received by the appellant represented its own undisclosed income. Hence, this addition is not justified in the facts & circumstances of the instant case. In holding this, I am fortified by the law propounded by Hon'ble Apex Court in CIT vs. Divine Leasing & Finance Ltd. (CC 375/2008) dated 21.01.2008; Apex Court in the case of Lovely exports Pvt Ltd 216 CTR 195, Hon'ble Bombay High Court in the cases of Creative World Telefilms Ltd, 333 ITR 100 (Bom), Decision of Delhi High Court in the case of Kamdhenu Steels and alloys Ltd 361 ITR 220, Mumbai Tribunal in the case of Provid Trade Impex Pvt Ltd 2219/Mum 2009, AIM Proprieties and Investment Pvt Ltd 2219/Mum 2009, AIM Proprieties and Investment Pvt Ltd ITA 7426/Mum/2012, Saimangal Investment Ltd 3924/Mum/2009, Uttam Chand Jain that upheld the decision of Spl, Bench of ITAT, Mumbai apart from latest clinching decision of Hon'ble ITAT (DELHI-E Bench) dt. 1.4. 2015 in ITA No. 2821/ Del/2009 in the case of ITO, Ward 13(2), New Delhi vs. Neelkanth, Finbuild Ltd., New Delhi. As discussed above, undoubtedly the issue has been settled by the Hon'ble ITAT, "J" Bench, Mumbai vide: Saimangal Investment Ltd 3924/Mum/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the First Appellate Authority is analyzed, it is noted that the Ld. Commissioner of Income Tax (Appeal) has duly considered the basis of addition made by the Ld. Assessing Officer, wherein, the creditworthiness of the parties were suspected. The Ld. First Appellate Authority relied upon the decision from the Hon'ble Delhi High Court in the case of Kamdhenu Steels and Alloy Ltd. 361 ITR 220 ((Supra)) and duly found from the bank statement of these parties that they were having sufficient bank balances and concluded that the creditworthiness of the parties stands proved. The share application money received by the assessee from these parties were found to be genuine and the capacity of the investing parties was also proved. The parties also confirmed the transactions and if the Ld. Assessing Officer was still apprehensive of their creditworthiness, nothing prevented him to issue summons under section 131 of the Act. It is also noted that these parties/investing parties were assessed by the Department under section 143(3) r.w.s 153A of the Act and this fact has been mentioned in the assessment order itself. Nothing adverse has been brought on record by the Ld. Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchant Pvt. Ltd. (ITA No.4868/Mum/2015):- "This appeal filed by the revenue is directed against the order of the CIT(A)-16, Mumbai dated 10-06-2015 and it pertains to AY 2018-19. The revenue has raised the following grounds of appeal:- i) "Whether on the facts and in the circumstances of the case,the Ld. CIT(A) erred in deleting the addition of Rs. 1,10,00,000 made u/s 68 of the I.T.Act despite of the facts that the appellant failed to prove creditworthiness of the creditors and their identity & genuineness of transaction as the creditors were accommodation entry providers?" ii) Whether on the facts and in the circumstances of the case the Ld. CIT(A) erred in not relying on investigation carried out by DIT Delhi and without calling remand report from the AO the additions has been deleted it has co terminus power of the Assessing Officer." iii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 5,25,000/- on account of commission paid @2.75% to obtain alleged entry to the tune of Rs. 1,10,000 iv) 2. The brief facts of the case are that the assessee company is engaged in the business of trading i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish Garg for arranging accommodation entries through companies controlled by Shri SK Jain, 3. Aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee has challenged reopening of assessment Q:1 the ground that the AO has formed reasonable belief of escapement of income on the basis of information received from Investigation Wing without independently applying his mind to ascertain whether there being any escapement of income. The assessee has filed elaborate written submissions on the issue which has been reproduced by the Ld.CIT(A) at para 3.3 on pages 4 to 9 of his order. The assessee also challenged addition made by the AO towards unexplained credit u/s 68 of the LT. Act, 1961 and filed elaborate written submissions along with certain judicial precedents to argue that when enormous details are filed to prove identity, genuineness of transactions and creditworthin5 of the parties, the AO was erred in making addition towards share application money received from companies controlled by Shri S.K. Jain only on the basis of his statement without providing an opportunity to cross examine the witness and also to verify th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of recoding his reasons to believe about escapement at the stage of-re-opening, irrespective of the fact whether, the AO confirms the suggested ,escapement or not at the end of the scrutiny & finalization of assessment proceedings. Hence, I don't concur with views of Ld. AR that it was a 'reason to suspect" only & not a "reason to believe" within the meaning of' Sec. 147 of the I.T. Act, 1961 5. Insofar as addition made u/s 68 towards share application money received from five companies, the Ld.CIT(A) held that there is no dispute that the parties have confirmed the payment of share application money along with their return of income balance-sheet and copy of bank statement. The Ld. CIT(A) further observed that the assessee also proved the creditworthiness of the parties by filing their financial statements, as per which, the share application money received by the assessee is sufficiently explained as out of share capital and reserves and surplus. Therefore, there is no reason for the AO to make addition when assessee has filed complete details in respect of five companies to prove identity, creditworthiness of the parties and genuineness of transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch addition appears to have been made on the basis of vague information received. 4.8 The AO has doubted creditworthiness of the parties M/s Finange Leasing and Finance Pvt Ltd. on the ground that the turnover of the company was meagre and Net current assets of the company as on 31.3.2007 to a negative figure of 17.78 crores. He has not observed that actually the Net Current Assets is a positive figure of Rs. 1,72,950/- as on 31.3.2008 and the net worth of the company also was for 14,57 Comes. Similar is the case of Singhal Securities Pvt Ltd, M/s ShaliniHolidngs Ltd and Brite Industrial Resource Limited where the AO has not given thought to the net worth ef Ks.20,00,000/- each. The reason given for rejecting their creditworthinessfor Vogue Leasing and Finance Ltd are very vague and the AO has not given thought to the huge net worth of 17.61 crores as on 31.3.2008. Whereas this party also has paid the share application money for Rs. 20,00,000/- only. Thereforeon one of the parties can be held lacking in their creditworthiness as wrongly presumed by the AO. The Identify of these parties was never in doubt as the details of their PAN was provided to the AO by the appellant during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been brought on record by the AO to establish that the Share Application Money received by the appellant represented its own undisclosed income. Hence, this addition too, is not justified in the facts & circumstances of the instant case. In holding this & these additions, I am fortified by the law propounded by Hon'ble Apex Court in C1T vs Divine Leasing & Finance ,Ltd (CC 375/2008) dated 21.04.2008; Apex Court in the case of Lovely Exports Pvt Ltd 216 CTR [95,Hon'ble Bombay High Court in the cases of Creative World Telefilms Ltd, 333 ITR 100 (Bom), Decision of Delhi High Court in the case of Kamdhenu Steels and alloys Ltd 361 ITR 220, Mumbai Tribunal in the case of' Provid Trade Impex Pvt Ltd 2219/Mum 2009, AIM Proprieties and InvestmentPv Ltd ITA 7426/Mum/2012, Saimangal Investment Ltd 3924/Mum/2009, Uttam Chand Jain that upheld that decision of Sp. Bench of ITAT, Mumbai apart from latest clinching decision of Hon'ble ITAT (DELHI-E) Bench) dt. 1.4.2015 in ITA No. 2821/Del/2009 in the case of ITO, Ward 13(2), New Delhi vs. Neelkanth, Finbuild Ltd., New Delhi. As discussed above, undoubtedly the issue has been settled by the Hon'ble ITAT, "J" Bench, Mumbai, (Saimang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistration of tax laws." 4.11 Obviously, the Commissioner of Income-tax (Appeals) not only committed judicial impropriety but also erred in law in refusing to follow the order of the Appellate Tribunal. Even where he may have some reservations about the correctness of the decision of the Tribunal, he had to follow the order. He Could and should have left it to the Department to take the matter in further appeal to the Tribunal and get the mistake, if any rectified. "Therefore the total addition of Rs. 1,10,000/- is deleted in view of above discussion. (Relief: Rs. 1,10,00,0007-) 4.12 Ground 11 4. 12.1 1 have gone through the contents of the impugned assessment order and the submission of the appellant on this issue. I Find that this is a notional addition made by the AO consequent to the presumption that appellant has taken entries only and as a matter of general perception he might have paid 1.75% commission for obtaining the alleged entry to the tune of 1,10,00,000/- 4.12.2 Since I have already held that Rs. 10,00,000/- was never received by the appellant and Rs. 1,00,00,000/- was received on account of share application money and not by the way of entry alone and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the witness, but the AO has turned down the request of the assessee and made addition only on the basis of information received from Investigation Wing in respect of share application money received from five companies, even through the assessee has filed completed details of companies, which subscribed to share application money. In this regard, he relied upon the decision of Hon'ble Supreme Court in the case of CIT vs SunitaDhadda in SLP (C) No.9002 of 2018 reported in 403 ITR 309 (SC). The assessee also relied upon the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries vs Commissioner of Central Excise 52 GST 355 (SC). 8. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. There is no dispute with regard to the fact that the assessee has filed enormous details in respectof five companies from which share application money has been received. Theassessee has filed complete names and addresses of the subscribers, PAN, bank statements and also financial statements for the relevant financial year in order to prove identity, genuineness of transactions and creditworthiness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the assessee to cross examine witnesses nor furnished statement which was used against the assessee to make addition towards share application money. Therefore, we are of the considered view that the AO has violated principles of natural justice during the course of assessment proceedings while making addition towards share application money u/s 68 of the Income-tax Act, 1961. 9. Coming to the issue on merit, the Ld.CIT(A) categorically stated in his order that the assessee has filed enormous details to prove identity and also filed financial statements of subscribers and bank statement to prove creditworthiness of the parties and genuineness of transactions. The Ld.CIT(A) further observed that the subscribers to the share capital are having capacityto explain share application money given to the assessee which is evident from the fact that they are having huge net worth in the form of share capital and reserves. The AO neither pointed out any cash deposits or any other credits in the bank statements of the subscribers immediately preceding the day on which the amount has been transferred to the assessee. It is also not a case of the AO that the companies are not having eno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd commodities on ready or forward basis, commission agents, buying and selling agents, etc. During the year, the assessee has shown income from house property and income from business and the return of income for the year under consideration was filed on 28.09.12 declaring total income of Rs. 4,00,323/-. Subsequently the case was selected for scrutiny and after serving statutory notices and providing opportunity of hearing, assessment order u/s 143(3) of the I.T. Act was passed assessing income of Rs. 5,76,48,940/- thereby making additions on account of unaccounted cash credit and disallowance made u/s 14A of the I.T Act. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties, partly allowed the appeal of the assessee. Now before us, the revenue has preferred the present appeal by raising the above grounds. Ground No. 1 to 3 3. These grounds raised by the revenue are inter connected and inter related and relates to challenging the order of Ld. CIT(A) in deleting the addition made by AO, when the assessee had failed to discharge its onus, therefore we thought it fit to dispose of the same by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. Commissioner of Income-tax*[2014] 51 taxmann.com 387 (SC) by dismissing the SLP filed by the appellant. 4.11. In the remand report called the assessing officer was clearly given a free hand to bring in any evidence that specifically linked the appellant company receiving share capital money in lieu of cash. No specific person was specified and it was stated as a general proposition that for any statement to be used against the appellant, an opportunity of cross examination must be provided. The assessing officer has made efforts to bring in Shri Praveen Jam, but has not obtained any statement incriminating the appellant. The statement recorded of Shri Praveen Jain on 9.1.2017 does appear to be meandering and too short for the three hours for which Shri Jain attended. Not a single question relating to the investors in this case was asked. It is also noted that there is nothing asked nor confirmed to link the investor companies in this case to Shri Praveen Jam, much, less link it to the appellant company. 4.12. A perusal of the assessment order shows that though the conclusions of the investigation wing has been referred to in the assessment order, there are no specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led. 4.14. It can be seen from the observation of the Assessing Officer that he has only referred to the information related to the outcome of search in the case of Shri Pravin Kumar Jain Group who were providing accommodation entries but the Ld.Assessing Officer has failed to demonstrate any such evidence that the appellant has in reality obtained any accommodation entries. There is no direct specific mention of the appellant by the director or key persons of the investor company. There is no evidence of cash deposits linked to the investors. The assessing officer did not bring specific incriminating evidence linking the investor to the appellant. The only link is that the investors have invested in appellant company. That the appellant has given cash to the investors in lieu of entry is merely alleged but not demonstrated. Opportunity for cross examination was provided to the appellant in the remand proceedings but Shri Praveen Jain did not confirm that any accommodation entries were provided. Papers/evidence found in the search action raises presumption but the same is available in the case of person, searched but not in the case of third parties unless proved and corroborated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they are creditworthy. There was no effort made to pursue the socalled alleged creditors. In those circumstances, the respondent could not do anything furtheyn the premises, if the Tribunal came to the conclusion that th.ne Respondent had discharged the burden that lay on it, then, it could not be said that such a conclusion was unreasonable or perverse or based on no evidence". Reliance is also placed on the following decisions: i. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Value Capital Services P.Ltd. (2008) 307 ITR 334 (Delhi). ii. Hon'ble Punjab and Haryana High Court in the case of Commissioner of Income Tax v/s. GP International Ltd. (2010) 325 ITR 25 (P&H). iii. Hon'ble Madras High Court in the case of Commissioner of Income Tax v/s. Electro Polychem Ltd (2007)294 ITR 661 (Mad). iv. Hon'ble Rajasthan High Court in case of Commissioner of Income Tax v/s. AKJ Granites P.Lt4. (2008)301 ITR 298 (Raj.) V. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Oasis Hospitalities Pvt.) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd confirmed by the lower authorities here also. The above decision of ITAT also related to Mr.MukeshChoksi's case of investment in share application money. On perusal of above case it is clear that if a bogus shareholder has invested the money and if appellant receives such money as share application money and appellant during assessment proceedings provides the details like name &address of the corporate entity, PAN No., ROC No., then ITAT held that this may be referred to the concerned A. 0. or proceeding against such bogus shareholders instead of adding -,amount u/s 68 of the IT Act in the name of the company" The appellant has referred to the decision of the Hon'ble Bombay High Court in the case of M/s Green Infra Ltd. ITA 1162 of 2014. I however find that the facts in that case were somewhat different, though the question regarding high premium at which shares were issued was raised by the department. 4.16. It is noted that no specific incriminating material linking investor to the appellant or showing the investment to be bogus is provided. Also opportunity for cross examination did not advance the case of the assessing officer. The assessing officer has not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir returns of income. The notices u/s 133(6) were complied with by the parties and copy of bank statement, ledger account, share application form, board resolution authorizing investments, income tax return and audited accounts of the investor companies were filed before the assessing officer and Ld. CIT(A). We also considered the investment and the corresponding source of funds of investor as seen from the copy of their audited accounts for FY 2006- 07, which are tabulated in para no. 4.13 of Ld. CIT(A) and the same is reproduced below. Sr. No. Name of the Shareholder Total amount invested Share Capital and reserves Profit as P & L account 1 M/s. Kavya Share 86 Securities Pvt. Ltd. 30,00,000 2,24,81,101 3,86,824 2 M/s.Dev Share Trading Pvt. Ltd. 30,00,000 2,46,10,675 5,00,568 3 M/s. Prajan Trading Pvt. Ltd. 30,00,000 3,03,55,461 5,20,299 4 M/s. Arawalli Stock Broking Pvt ltd 30,00,000 1,63,90,103 4,87,875 5 M/s. Colourunion International Pvt. Ltd. 50,00,000 2,30,51,700 3,43,358 6 M/s.Ramdev Shares & Securities Pvt. Ltd. Now known as Koina Trading P. Ltd 1,00,00,000 2,97,72,514 21,69,240 7 M/s. Jasol Maa Share Trading 1,00,00,000 4,11,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, that there was no dispute that the assessee had given the details of names and addresses of the shareholders, their PAN/ GIR numbers and had also given the cheque numbers, name of the bankers. The Assessing Officer ought to have found out their details through PAN cards, bank reholders. Thus, the view taken by the Tribunal could not be faulted. 9. The Hon'ble Supreme Court of India in the case of CIT vs. Orissa Corporation reported in 159 ITR 78 (SC) has held as under: "That in this case the respondent 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 assessee's. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notice under section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they are creditworthy. There was no effort made to pursue the socalled alleged creditors. In those circumstances, the respondent could not do anything furtheyn the premises, if the Tribunal came to the conclusion that th.ne Respondent had disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 & 5. 13. These grounds raised by the revenue are general in nature, thus requires no specific adjudication. 14. In the net result, the appeal filed by the revenue stands dismissed with no order as to cost. " 4.3. The Ld. DR relied upon the decision from Hon'ble Delhi High Court in the case of Pr. CIT vs NDR Promoters Pvt. Ltd. (ITA NO.49/2018) order dated 17/01/2019, which is also reproduced hereunder:- "This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 („Act‟, for short), in the case of NDR Promoters Pvt. Ltd. relates to Assessment Year 2008-09 and arises from the order dated 3rd March, 2019 passed by the Income Tax Appellate Tribunal („Tribunal‟, for short). 2. The appeal was admitted for hearing vide order dated 17th January, 2018 on the following substantial question of law:- "Whether the ITAT fell into error in upholding the deletion directed by the CIT (A) in respect of the amount of Rs. 1,51,50,000/- brought to tax under Section 68 of the Income Tax Act, 1961, in the circumstances of the case ?" 3. It is an undisputed position that during the Assessment Year 2008-09, the respondent-assessee had received mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had incurred expenses amounting to Rs. 12.17 lakhs and „Nil‟ in the year ending 31st March, 2008 and 31st March, 2007, respectively. (iv) share capital/share premium of Rs. 168 lakhs was after deposit shown as investment partly as advance for land and as advance to S.M. Udyog and Guruji Industries. FDR of Rs. 80 lakhs was obtained from Oriental Bank of Commerce. 6. Respondent-assessee was also asked to produce all papers relating to issue of shares; state, how the dealings had started with the shareholder companies; if directly, state the year/date since when they were known to each other; if indirectly, give the name of the introducer and state that since when the introducer was known including years of relationship; state, whether the applications for allotment of shares were received in one lot or on different dates and whether they were received by hand or post. If acknowledgement was issued, supporting evidence should be given; provide the proof if any offer letter was received or issued; whether stamp duty was paid on allotment of shares; whether the share certificates were delivered by hand or post. If by hand, details of the person who had delivered the certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was up to him to reach the shareholders. This burden could not be passed on to the assessee, merely on the ground that the summons issued to the shareholders were returned. Assessing Officer had issued notice Section 133 (6) of the Act and in response had received replies confirming the investment. The shareholder companies were incorporated and had invested money through banking channels, which was reflected in the books. Investment was proved by the bank statements that disclosed sufficient balance before cheques were issued. Accordingly, the three requirements i.e. identity of the investor, creditworthiness of the investors and genuineness of the transactions were satisfied. 10. Appeal preferred by the Revenue against the said deletion has been dismissed by the impugned order passed by the Tribunal, which records as under:- "4. In view of above citations, when we go through the orders of the authorities below, we find that there is no dispute that the assessees in support of genuineness of their claims regarding receipt of share application moneys from different parties had furnished their confirmatory letters, PAN details, copies of Income Tax Returns as well as share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were the Income Tax Returns and the PAN card details of the eight companies. Even if the Directors of these companies did not respond to the summons issued by the AO, it was not impossible for the AO to make proper enquiries to ascertain the genuineness of these entities and satisfy himself of their creditworthiness. As pointed out by the CIT(A), the AO failed to make any effort in that direction. He did not take to the logical end the halfhearted attempt at getting the Directors to appear before him. He did not even seek the assistance of the AOs of the concerned companies whose ITRs and PAN card copies had been produced. 14. The view taken by the CIT(A) that the AO failed to come up with the material to disprove what had been produced by the Assessee is certainly a plausible view in the facts and circumstances of the case. Likewise, the view taken by the ITAT concurring with the CIT(A) on facts cannot be said to be perverse. " CIT Vs. Victor Electrodes : "There was no legal obligation on the assessee to produce same Director or other representative of the applicant companies before the Assessing Officer. Therefore, failure of assessee to produce then could not by itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the bank accounts prior to issue of cheque/pay orders etc. would only raise suspicion and, it was for the Assessing Officer to conduct further investigation, but it did not follow that the money belonged to the assessee and was their unaccounted money, which had been channelized. 13. As we perceive, there are two sets of judgments and cases, but these judgments and cases proceed on their own facts. In one set of cases, the assessee produced necessary documents/evidence to show and establish identity of the shareholders, bank account from which payment was made, the fact that payments were received thorough banking channels, filed necessary affidavits of the shareholders or confirmations of the directors of the shareholder companies, but thereafter no further inquiries were conducted. The second set of cases are those where there was evidence and material to show that the shareholder company was only a paper company having no source of income, but had made substantial and huge investments in the form of share application money. The assessing officer has referred to the bank statement, financial position of the recipient and beneficiary assessee and surrounding circumstances. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as received by the assessee. In A. Govindarajulu Mudaliar v CIT, (1958) 34 ITR 807, this argument advanced by the assessee was rejected by the Supreme Court. Venkatarama Iyer, J., speaking for the court observed as under (@ page 810): - "Now the contention of the appellant is that assuming that he had failed to establish the case put forward by him, it does not follow as a matter of law that the amounts in question were income received or accrued during the previous year, that it was the duty of the Department to adduce evidence to show from what source the income was derived and why it should be treated as concealed income. In the absence of such evidence, it is argued, the finding is erroneous. We are unable to agree. Whether a receipt is to be treated as income or not, must depend very largely on the facts and circumstances of each case. In the present case the receipts are shown in the account books of a firm of which the appellant and Govindaswamy Mudaliar were partners. When he was called upon to give explanation he put forward two explanations, one being a gift of Rs. 80,000 and the other being receipt of Rs. 42,000 from business of which he claimed to be the real owner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inference." 12. The present case would clearly fall in the category where the Assessing Officer had not kept quiet and had made inquiries and queried the respondent-assessee to examine the issue of genuineness of the transactions. The Tribunal unfortunately did not examine the said aspect and has ignored the following factual position:- (a) The shareholder companies, 5 in number, were all located at a common address i.e. 13/34, WEA, Fourth Floor, Main Arya Samaj Road, Karol Bagh, New Delhi. (b) The total investment made by these companies was Rs. 1,51,00,000/-, which was a substantial amount. (c) Evidence and material on bogus transactions found during the course of search of Tarun Goyal. Evidence and material that the companies were providing accommodation entries to beneficiaries was not considered. (d) The findings recorded as mentioned in the assessment order, which read as under:- "1. From the finding of search, it is evident and undeniable that all the companies including the alleged shareholders companies belong to Sh. Tarun Goyal. This is enforced even more from the following:- i. All the companies are operated from the-office premises of Sh. Tarun Goya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch, 2008. The respondent-assessee had not incurred any expenditure in the year ending 31st March, 2007 and had incurred expenditure of Rs. 12.17 lakhs in the year ending 31st March, 2008. (f) Shares of face value of Rs. 10/- each were issued at a premium of Rs. 40/- (total Rs. 50/-). (g) The respondent-assessee had failed to produce Directors of the companies, though they had filed confirmations, and therefore, were in touch with the respondent-assessee. The respondent-assessee had also failed to produce the details and particulars with regard to issue of shares, notices etc. to the shareholders of AGM/EGM etc. 13. In view of the aforesaid factual position, we have no hesitation in holding that the transactions in question were clearly sham and make-believe with excellent paper work to camouflage their bogus nature. Accordingly, the order passed by the Tribunal is clearly superficial and adopts a perfunctory approach and ignores evidence and material referred to in the assessment order. The reasoning given is contrary to human probabilities, for in the normal course of conduct, no one will make investment of such huge amounts without being concerned about the return and safe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the light of this background, now we shall analyze the provisions of section 68 of the Act, so that we can reach to a fair conclusion, which is reproduced hereunder for ready reference and analysis:- "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee must establish the genuineness of the transaction as well as the creditworthiness of the creditors. In CIT vs Korlay Trading Company Ltd. 232 ITR 820 (Cal.), it was held that mere mention of file number of creditor will not suffice and each entry has to be explained separately by the assessee (CIT vs R.S. Rathaore) 212 ITR 390 (Raj.). The Hon'ble Guwahati High Court in Nemi Chandra Kothari vs CIT (264 ITR 254)(Gau) held that transaction by cheques may not be always sacrosanct. However, once the onus cast upon the assessee is discharged, it shifts to the Revenue to prove otherwise. In the present appeal, the assessee has duly established the identity, genuineness and creditworthiness, therefore, now it is up to the Revenue to bring on record any adverse material. Merely on the basis of statement, no addition can be made unless and until, it is corroborated with cogent material. It is also noted that even the persons (Jain Brothers) who tendered their statements before the Department, nowhere specifically named the assessee and the statement is general in nature, such type of general statement cannot be the basis for making the addition unless and until it is corrobora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Jain Group, we note that while deliberating upon the issue in hand in the appeal of the assessee, we have made an elaborate discussion, therefore, the same is not being repeated for the sake brevity and may be read as part and parcel of this ground, therefore, on the basis of same reasoning and the judicial pronouncement, discussed therein, we find no infirmity in the order of the Ld. Commissioner of Income Tax (Appeal), in deleting the impugned addition, therefore, this ground of the Revenue is dismissed. 7. The next ground raised by the Revenue is with respect to confirming the addition made under section 69C of the Act on account of commission expenses to the tune of Rs. 2,51,000/- as against the addition of Rs. 20,11,000/- is concerned, we note that while deliberating upon the issue in the appeal of the assessee, we have deleted the addition by an elaborate discussion, therefore, this ground of the Revenue also fails as the part addition sustained by the Ld. Commissioner of Income Tax (Appeal) has been deleted by the Tribunal. Thus, there is no merit in the impugned ground raised by the Revenue. 8. The next ground pertains to deleting the disallowance of Rs. 2,57,349/- ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
