TMI Blog2021 (1) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER Assessee by: Shri P. F. Jain, AR. Revenue by: Shri Vinod Tanwani, Sr. DR ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The appeal has been filed by the assesse for A.Y. 2012-13which is arising from the order of the CIT(A)-1,Ahmedabad dated 29.02.2016, in the proceedings under Section 143(3)of the Income Tax Act, 1961 for A.Y. 2012- 13 (in short the Act ). 2. The only issued raised by the assessee is that the Learned CIT-A erred in confirming the disallowances of ₹ 70 lakh made by the AO under Section 68 of the Act. 3. Brief facts of the case are that the assessee is a public limited company and engaged in the business of manufacturing of Iron and Steel Roll. During the year under consideration the assessee issued 70000 fresh shares having face value of ₹ 10 each and premium of ₹ 190 per share. Thus, the assessee received share capital of ₹ 1.4 crore (70000 x 200) in the year under consideration. 4. However, the AO found that some of the shareholders/investors have declared income between 1.5 lakh to 2 lakh in their respective returns of income whereas they have inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Nemi Chand Kothari vs. CIT reported in 264 ITR 254. 9. However, the Learned CIT(A) confirmed the order of the AO by observing as under: 2.6 After going through the facts of the case, it is seen that the depositors (table supra) at Sr. No. 1 to 7 are filing the return of income with meager total income. It is difficult to apprehend as how the persons who have disclosed total income of ₹ 1,50,000/- to ₹ 2,00,000/- could investment such a huge amount of ₹ 5,00,000/- to ₹ 10,00,000/- in the appellant company on a hefty premium. The appellant has failed to produce any evidence to prove the creditworthiness and genuineness of the transactions of the investors mentioned at Sr. No. 1 to 7. Regarding Sr. No. 8 to 12, it is seen that the assessee has not furnished the identity of the persons before AO who stated to have invested in shares of the assessee company. The same were submitted at the time of appeal proceedings, but these do not prove the creditworthiness and genuineness of the transactions. It is a well settled law-that once an amount is found credited in the accounts of the assessee; it is the assessee who has to prove that identity, source an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration was filed before the AO as well as before the Learned CIT (A) in their respective proceedings. There was no doubt on the genuineness of the details filed by it during the respective proceedings. However, these details were rejected by the authorities below without any proper verification. 12. On the other hand, the Learned DR submitted that all the necessary details filed by the assessee need to be verified by the AO. Accordingly the matter should be set aside to the file of the AO for necessary verification. The Learned DR vehemently supported the order of the authorities below. 13. The Learned AR in his rejoinder submitted that the Revenue should not be given a fresh innings by providing another opportunity. The Learned AR opposed to set aside the proceedings to the file of the AO. 14. We have heard the rival contentions of both the parties and perused the materials available on record. The dispute in the instant case relates to the share capital received by the assessee in the year under consideration from certain parties amounting to ₹ 70,00,000/-which was treated as unexplained cash credit under Section 68 of the Act. The initial onus is upon the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharged on the part of the assessee respondent was duly done. Not only the identity of the persons concerned but also the PAN numbers were before the Assessing Officer. In the event of any further inquiry, it was open to the Assessing Officer to make inquiry under Section 133(6) of the Act. On its choosing not to exercise such powers, it was erroneous on the part of the Assessing Officer to make addition of a sum of ₹ 23,00,000/-, despite such cogent evidences having been put-forth by the assessee. Both the authorities have concurrently held the issue in favour of the assessee and moreover, the entire issue is essentially in the realm of facts. No question of law, therefore, arises and hence this issue deserves no further consideration. 15.2 In CIT v. Orissa Corp. (P.) Ltd. [1986] 159 ITR 78/25 Taxman 80 (SC), the Supreme Court held that where the assessee had given the names and addresses of the alleged creditors and it was in the knowledge of the Revenue that the said creditors were income-tax assessee. The Revenue, apart from issuing notices under Section 131 at the instance of the assessee, did not pursue the matter further and did not examine the source of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the Assessing Officer to make further inquiries. The Assessing Officer cannot perfunctorily reject the evidence produced and has to state cogent reasons for such rejection. 17. Admittedly, the assessee filed part of the documents during assessment proceedings and part of the documents during appellate proceedings in support of share capital received by it in the year under consideration. But undisputedly, neither the AO nor the LearnedCIT(A) carried out any verification from the respective parties despite having all the necessary details in their possession. The question arises whether the matter needs to be set aside to the AO for fresh verification and adjudication, as requested by the Learned DR for the Revenue, as the assessee has filed the necessary documents before the Learned CIT(A). To our mind, the assessee cannot be penalized for the inaction of the Revenue. 18. The Learned CIT (A) possesses coterminous power with that of the Income Tax Officer. The Learned CIT (A) can do what the Income Tax Officer can do and also direct AO to do what he/she failed to do. Thus, the Learned CIT-A neither called any remand report from the AO on the additional documents filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of CIT Vs. Durga Prasad [1971] 82 ITR 540 (SC). According to the Hon ble Delhi High Court basically there are two sets of judgments. In one set of case, the assessee produced necessary documents/evidence to show and establish identity of the share-holder and bank account from which payment was made. The fact that payment was received through bank channels, filed necessary affidavit of the shareholders or confirmations of the directors of the shareholder company. But thereafter no further inquiry was made by the AO. 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. 9. Let us take into consideration observations made by the Hon ble Delhi High Court in the case of Softline Creations P.Ltd. (supra) while taking note of judgment of Hon ble Delhi High court in the case of CIT Vs. Fair Finvest Ltd., 357 ITR 146 (Delhi). Hon ble Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ription of section 68. Having regard to the entirety of facts and circumstances, the court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (supra) 10. We also deem it appropriate to take note of some of observations of the Hon ble Delhi High Court from the decision of Fair Finvest Ltd. (supra). The Hon ble Court has noticed proposition laid down by the Hon ble Delhi High Court in the case of CIT Vs. Victor Electrodes Ltd., 329 ITR 271 (Delhi) regarding non-production of share applicants before the AO. The following observations are worth to note In this connection the observation of the jurisdictional High Court in case of Dwarkadhish Investment (Supra) are quite relevant where the court has observed that it is the revenue which has all the power and wherewithal to trace any person. Further in the case of CIT vs. Victor Electrodes Ltd. 329 ITR 271 it has been held that there is no legal obligation on the assessee to produce some Director or other representative of the Director or other representative of the applicant companies before the A.O. Therefore failure on part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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