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TMI Blog2019 (6) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... the investment received as Share Application Money and Share Premium thereon" 2.The appellant craves leave to add to amend or withdraw the aforesaid grounds of appeal. 4. As per the facts of the present case are that the assessee is a private company engaged in the business of builders and developers. The return of income had e-filed on 30.09.2012 declaring total loss of Rs. (-) 29,40,946/-. Subsequently, the case was selected for scrutiny and after serving statutory notices and seeking reply of the assessee, order of assessment was completed u/s 143(3) of the Act by the AO on 30.03.15 thereby determining the total income at Rs. 1,49,92,950/- under the normal provisions of the I.T. Act. 5. Aggrieved by the order of the AO, the assessee preferred appeal before Ld.CIT(A) and Ld. CIT(A) after appreciating the facts of the present case, had allowed the appeal of the assessee. 6. Now before us, the revenue as well as assessee have preferred their respective appeal/ cross objection. Firstly we are dealing with the appeal filed by the revenue. 7. The solitary ground raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the addition of Rs. 2.25 crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon. Apex Court in the case of Lovely Exports (P) Ltd. (2008) 216CTR 195 (SC) that if share application money is received by the appellant company from alleged bogus shareholders, whose names are given to the Assessing Officer, then the department is free to proceed to reopen their individual assessments in accordance with law but this amount of share money can not be regarded as undisclosed income u/s 68 of the appellant company. Respectfully following the Hon. Apex Court decision in the case of Lovely Exports (P) Ltd. (2008) 216 CTR 195 (SC) and also Hon'ble ITAT decision in the case of Green Infra Ltd., I direct the AO to delete the addition made of Rs. 2,25,00,000/-. 9. After having gone through the facts of the present case as well as considering the orders passed by revenue authorities and submissions made by both the parties, we find from the records that AO had made the additions after considering the entire facts of the case and found that the companies who had invested in the assessee are bogus and the transactions made by these companies are mere accommodation entries. The detailed reasoning given by the AO is at page no. 12 to 19 of its order. After carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditworthiness of the companies and the genuineness of the transactions. From the order of Ld. CIT(A), we found that there is not even an iota of discussion on the creditworthiness of the companies and the genuineness of the transactions. 11. Since, all the notices issued u/s 133(6) issued by the AO were returned by the postal authorities with remark 'not known /left' and none of the directors of the said companies appeared before the AO, thus AO could not get opportunity to confront the documentary evidences with the parties. The AO had recorded the categorical findings that five companies had not filed any return, thus the question of establishment of gneuiness of the transaction or the creditworthiness of the directors could not be proved. For the year under consideration, we notice that the two companies named at serial no. (E) had not even filed their return of income and in respect of the companies, who have filed their return of income, then the investment in shares is not being reflected in the balance sheet and the total application of fund is below / equal to the investment made in the assessee company. It was categorically pointed that Mr. Pradeep Prajapati, the direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "substantial question of law", if any arising. As would be seen from the discussion that follows, the obligation to make proper inquiry and reach finding on facts does not end with the AO. This obligation moves upwards to CIT (Appeals), and also ITAT, should it come to their notice that there has been default in such respect on the part of the AO. In such event, it is they who are duty bound to either themselves properly inquire or cause such inquiry to be completed. If this were not to be done, the power under Section 148 would be rendered prone to abuse. 38. The provision of appeal, before the CIT (Appeals) and then before the ITAT, is made more as a check on the abuse of power and authority by the AO. Whilst it is true that it is the obligation of the AO to conduct proper scrutiny of the material, given the fact that the two appellate authorities above are also forums for fact-finding, in the event of AO failing to discharge his functions properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of the said appellate authority. For such purposes, we only need to point out one step in the procedure in appeal as prescribed in Section 250 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) is also at liberty to carry out any further investigation or verifications, if so required. 17. Before parting, we may make it clear that our decision to restore the matter back to the file of Ld. CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the Ld. CIT(A) independently in accordance with law. With these directions, this ground of appeal raised by the revenue is partly allowed for statistical purposes. 18. In the net result, the appeal filed by the revenue stands partly allowed for statistical purposes. C.O. No. 310/Mum/2017 for AY 2012-13 19. Now we take up C.O. No. 310/Mum/2017 for AY 201213 filed by the assessee. Since we have already decided the similar ground of appeal in ITA No. 2926/Mum/2016 for AY 2012-13 on merits. Therefore, following our own decision in ITA No. 2926/Mum/16, we apply the same findings in the present appeal in order to maintain judicial consistency which is applicable mutatis mutandis. 20. Consequently, the CO filed by the assessee also stands allowed for statistical purposes. 21. In the net result, the appeal filed by the revenue and C.O. filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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