TMI Blog2021 (1) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... hat rule of natural justice are applicable equally to both the parties. CIT appeals had committed an error in not giving the assessing officer proper opportunity to go through the additional evidences and offer his comments. After accepting the additional evidences, the CIT appeals has summarily held that from the examination thereof he finds that the share applicant company has sufficient profit and there is confirmation on record. In this regard, there is no reference to the detailed financials of the company in the order of the learned CIT appeals. It is not at all clear that the CIT appeal has examined the sources of fund of the assessee company properly. There is nothing on record to rule out that the amount of share premium granted to the company having a very poor financial record was not out of circuitous route of rotation of share capital with premium. It is also not the case that the CIT appeals had himself examined the issue that assessing officer is doubting the very identity of the company when there was no service of notice u/s.133(6) at the given address. There is no detail as to what was the authorized capital. Whether the assessee company was authorized to ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.01.2017, can be considered sufficient, and if not, whether the order needs to be set aside to meet the substantial cause of justice. 3. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of ₹ 3,75,00,000/- made u/s. 68 of I. T. Act, 1961 without appreciating the fact that the assessee failed to discharge primary onus cast upon it u/s. 68 during the course of assessment proceedings and the facts could not be investigated in appellate proceedings. 4. Whether on the facts and in the circumstances of the case and in law, other subscribers such as B. Seenaiah Co. and Kanwaldeep Investment Co. P. Ltd. being found acceptable as genuine by the A.O. has nay relevance to the genuineness of subscription of shares by M/s. KMC Construction Ltd. 5. The appellant prays that the order of the ld. CIT(A) on the grounds be set aside and that of the Assessing Officer be restored. 3. Brief facts of the case are that the return of income was filed on 30.09.2009, showing total income at Rs. Nil and claiming carrying forward loss of ₹ 2,00,21,489/-. The return of income was processed u/s,143(l) of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is clearly inferred that the whole transaction is a pre-structured transaction and a colourable device used by the assessee only for the purpose of introducing huge amount of undisclosed income of the assessee company under the grab of share application money. Applicability of Section 68 of the Income-tax Income Tax Act, 1961, 1961: 5.10 After establishing that the assessee s claim of receipt of share capital, share premium and CCPS ₹ 3,75,00,000/- from KMC Constructions Limited is a sham claim and that this transaction was not a genuine transaction, the issue which remain to be decided is about the nature of this receipt of ₹ 3,75,00,000/- which the assessee has received during the relevant previous year and its taxability in the hands of the assessee. 5.11 The law is well settled, that the onus of proving the source of a sum of money found to have been received by an assessee is on him. Where the nature and source of a receipt, whether it be of money or other property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that this in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of banking transaction but that itself has no evidence. The Apex Court also held that Section 68 of the Act itself provides where any sum is found creciited in the books of the assessee in any previous year the same may be charged to income-tax as the income of the assessee of the previous year if the explanation offered by the asses; ee about the nature and source of such sums found credited in the books of the assessee is in the opinion of the assessing officer not satisfactory. Such opinion formed itself constitutes a prima facie evidence against the assessee viz receipt of money and if the assessee fails to rebut the said evidence the same can be used against the assessee by holding that it was a receipt of income in nature. 5.15 Reliance in this regard is placed on the recent judgment of the jurisdictional Bombay High Court dated Feb., 22, 2012 in the case of Major Metals Ltd. Vs UOI {writ Petition No.397 of 2011.} In this case after discussing judgments in the case of M/s Lovely Exports, CIT v Oasis Hospitalities Pvt, Ltd. Etc. relied upon by the assessee, it was held that the amount shown to have received as share application money has to be taxed as income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me are dismissed. 8. As regards the merits of the addition, the ld. CIT(A) noted the assessee challenges that proper opportunity was not provided by the A.O. The assessee also filed additional evidence under Rule 46(1)(A) comprising bank statement, annual report of KMC Construction Ltd and confirmation from it. 9. The ld. CIT(A) noted that the additional evidences were forwarded to the A.O. for verification and comment vide his letter dated 03.06.2016 calling for report by 17.06.2016. The ld. CIT(A) noted that in response the A.O. merely sated that in the assessment proceedings the assessee was confronted with the fact that notice u/s.133(6) could not be served on M/s. KMC Construction Limited at the address given by the assessee and assessee was asked to prove the identity, genuineness and creditworthiness of party. It was then stated that as per rule 46A of the I.T. Rules 1962 provides that the Appellant shall not be entitled to produce before the CIT(A), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the A.O. The ld. CIT(A) noted that there was no verification and comments on merits of the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the transaction is established. Hence, the ld. CIT(A) held that the addition u/s. 68 of ₹ 375,00,000/- is deleted. 12. Against the above order, the Revenue is in appeal before us. 13. We have heard both the parties and perused the records. Learned departmental representative submitted that ld. CIT(A) has not at all provided adequate opportunity to the assessing officer. He submitted that assessee has accepted huge amount of share premium without any justification. He submitted that no detail about the financials or confirmation from the share applicant was submitted before the assessing officer. In fact, there was no response to the assessing officers notice u/s.133(6) by the above said party, as postal authorities returned the notice unserved. The ld. DR submitted that the identity genuineness creditworthiness of the said share applicant was not at all before the assessing officer. He submitted that ld. CIT(A) has admitted additional evidences. That he has not considered the adverse remark of the assessing officer. That he has not given adequate opportunity to the assessing officer. He further submitted that ld. CIT(A) have totally erred in referring that since s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ld. CIT(A), which was said to have been remanded to the A.O. for comments, there is only mention of bank statement, annual report of KMC and confirmation from it. However, in his order, the ld. CIT(A) has also referred and relied that the copy of share subscription agreement between KMC Constructions Ltd. B. Seenaiah Coo., Kanwaldeep Investment Co. P. Ltd. and appellant company and promoters dated 14.2.2008 has been filed. From this, he opined that this sets out the plans of the Appellant company, the milestones for allotment of shares, the plan to go for an IPO at a later stage, and conversion schedule in various scenarios. This agreement was not remanded to the A.O. as evident from the order of ld. CIT(A). Hence, clearly the ld. CIT(A) has erred in admitting that said document in violation of Rule 46A. It is settled law that rule of natural justice are applicable equally to both the parties. Learned CIT appeals had committed an error in not giving the assessing officer proper opportunity to go through the additional evidences and offer his comments. After accepting the additional evidences, the learned CIT appeals has summarily held that from the examination thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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