TMI Blog2021 (3) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case, both the nature source of the share application and premium received by it was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed before the AO - assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, thereafter the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified - no addition was warranted under Section 68 - Decided in favour of assessee. - I.T.A. No. 166/Kol/2020 - - - Dated:- 3-3-2021 - Shri J. Sudhakar Reddy, AM And Shri A. T. Varkey, JM For the Appellant : Shri Miraj D. Shah, AR For the Respondent : Smt. Ranu Biswas, Addl. CIT ORDER PER SHRI A. T. VARKEY, JM: This is an appeal preferred by the assessee against the order of Ld. CIT(A)-5, Kolkata dated 07.08.2019 for AY 2012-13. 2. The sole issue that has been raised by the assessee is against the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) are corporate entities. According to the Ld. AR, an amount of ₹ 30,00,000/- collected from the three (3) individuals have been accepted by the AO, however, the AO did not accept the identity, creditworthiness and genuinity of the share capital and premium collected from two (2) corporate entities viz., M/s. Quest Financial Services Ltd. and M/s. Anurodh Infrastructure Ltd. to the tune of ₹ 1.80 cr. (total). According to the Ld. AR, M/s. Quest Financial Services Ltd. had transferred through banking channels of ₹ 1,00,00,000/- (₹ 1 crore) and M/s. Anurodh Infrastructure Ltd. had transferred ₹ 80,00,000/- to the assessee company for subscribing share capital and premium had duly discharged the onus casted upon it for proving the identity, creditworthiness and genuinity of the share transaction and the AO erred in fastening the addition merely because directors of these companies did not appear before him. According to the Ld. AR, the Ld. CIT(A) erred in confirming the action of the AO only on the ground that there was no response by the two (2) subscribing companies u/s. 131/133(6) notice and according to him, the Ld. CIT(A) erred in relying on the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok it is discerned that this is the 32nd Annual Report i.e. for AY 2012-13, which is seen placed from pages 29 to 59 of the paper book, thus the fact of incorporation of this company 32 years back is corroborated. The Ld. AR drew our attention to the following facts i.e. M/s. Quest Financial Services Ltd. s PAN is AAACQ0461C and at page 27 of the paper book, the ITR acknowledgment of M/s. Quest Financial Services Ltd. has been found kept and from a perusal it is noted that the said company is under the territorial jurisdiction of ITO, Ward-4(4), Kolkata. Thereafter, the Ld. AR drew our attention to page 60 of paper book which is the reply by M/s. Quest Financial Services Ltd. to the summons u/s. 131 of the Act is found placed. And from a perusal of this reply it is noted that M/s. Quest Financial Services Ltd. have informed the AO that its directors were out of station and they would be back within a month and they enclosed following documents along with their reply to substantiate their identity, creditworthiness and genuineness: i) They confirmed that they (M/s. Quest Financial Services Ltd.) have invested in 20000 equity shares of ₹ 10/- each in the assessee company (M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infrastructure Ltd.] had confirmed that it had invested in 16000 equity shares of face value of ₹ 10/- each of the assessee company (M/s. Fizan Commotrade Pvt. Ltd.) which was allotted at a premium of ₹ 490/- per share. From the reply letter it is noted that the said company had enclosed/furnished the following documents to substantiate their identity, creditworthiness and genuineness : i) M/s. Anurag Infrastructure Ltd. confirmed directly to the AO pursuant to the notice u/s. 131 of the Act that they (M/s. Quest Financial Services Ltd.) have invested in 16000 equity shares of ₹ 10/- each in the assessee company (M/s. Fizan Commotrade Private Limited) allotted at a premium of ₹ 490/- per share. ii) PAN Card copy (refer page 87 of paper book). iii) Copy of income-tax return for P L Account and Balance Sheet (refer page 68 75 of paper book. iv) copy of share application Form (refer pages 88-89 of paper book) v) Photo copy of the bank statement is enclosed (refer pages 90-92 of paper book) vi) Certificate of source of fund (refer page 93 of paper book) 7. The Ld. AR drew our attention to page 87 of the paper book a perusal of which shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as share subscribing company failed to appear before the AO which resulted in the AO disbelieving the genuineness of the transaction and made the addition. According to her, the Ld. CIT(A) rightly relied on the decision of the Hon ble Apex Court in PCIT Vs. NRA Iron Steel Pvt. Ltd. (supra) to confirm the addition and according to her, the assessee by merely filing documents will not discharge the burden casted upon it and, therefore, the addition made should not be disturbed and prayed that we should not interfere in the impugned order passed by the Ld. CIT(A). 9. We have heard the rival submissions and gone through the facts and circumstances of the case. We note that the assessee company in this assessment year has received ₹ 2.10 cr. as share capital and premium from five (5) persons which includes three (3) individuals and two (2) corporate entities. The AO has accepted the identity, creditworthiness and genuineness of the share subscribed by the individuals to the tune of ₹ 30 lacs. However, according to the AO, since the directors of assessee company/share subscribing two (2) corporate entities did not appear before him, he drew adverse inference and made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid decision of Hon'ble Gujarat High Court the special leave petition filed by the Revenue has also been dismissed by the Hon'ble Apex Court. 12. The main plank on which the AO made the addition was because the directors of the share subscribers did not turn up before him. In such a case the Hon'ble Apex Court in the case of Orissa Corpn. (P) Ltd. (supra) 159 ITR 78 and the Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360 /[2003] 127 Taxman 523 , has held that onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, the Assessing Officer is dissatisfied about the source of cash deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). In arriving at this conclusion, the Hon'ble Court has further stressed the presence of word may in section 68. Relevant observations at pages 369 and 370 of this report are reproduced hereunder:- Merely because summons issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein below:- While interpreting the meaning and scope of section 68, one has to bear in mind that normally, interpretation of a statute shall be general, in nature, subject only to such exceptions as may be logically permitted by the statute itself or by some other law connected therewith or relevant thereto. Keeping in view these fundamentals of interpretation of statutes, when we read carefully the provisions of section 68, we notice nothing in section 68 to show that the scope of the inquiry under section 68 by the Revenue Department shall remain confined to the transactions, which have taken place between the assessee and the creditor nor does the wording of section 68 indicate that section 68 does not authorize the Revenue Department to make inquiry into the source(s) of the credit and/or sub-creditor. The language employed by section 68 cannot be read to impose such limitations on the powers of the Assessing Officer. The logical conclusion, therefore, has to be, and we hold that an inquiry under section 68 need not necessarily be kept confined by the Assessing Officer within the transactions, which took place between the assessee and his creditor, but that the same may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the genuineness of the transactions between his creditor and sub-creditors nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been. eventually, received by the assessee. It, therefore, further logically follows that the creditor's creditworthiness has to be Judged vis-a-vis the transactions, which have taken place between the assessee and the creditor, and it is not the business of the assessee to find out the source of money of his creditor or of the genuineness of the transactions, which took between the creditor and sub-creditor and/or creditworthiness of the sub- creditors, for, these aspects may not be within the special knowledge of the assessee. ********** ... If a creditor has, by any undisclosed source, a particular amount of money in the bank, there is no limitation under the law on the part of the assessee to obtain such amount of money or part thereof from the creditor, by way of cheque in the form of loan and in such a case, if the creditor fails to satisfy as to how he had actually received the said amount and happened to keep the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said amounts by way of cheques was not in dispute. Once the assessee had established that he had received the said amounts from the creditors aforementioned by way of cheques, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter the burden had shifted to the Assessing Officer to prove the contrary. On mere failure on the part of the creditors to show that their sub-creditors had creditworthiness to advance the said loan amounts to the assessee, such failure, as a corollary, could not have been and ought not to have been, under the law, treated as the income from the undisclosed sources of the assessee himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. Viewed from this angle, we have no hesitation in holding that in the case at hand, the Assessing Officer had failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. In the absence of any such evidence on record, the Assessing Officer could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitial burden and those materials disclosed by the assessee prompted the Assessing Officer to enquire through the Inspector to verify the statements. 16. In a case where the issue was whether the assessee availed cash credit as against future sale of product, the AO issued summons to the creditors who did not turn up before him, so AO disbelieved the existence of creditors and saddled the addition, which was overturned by Ld. CIT(A). However, the Tribunal reversed the decision of the Ld. CIT(A) and upheld the AO s decision, which action of Tribunal was challenged by the Hon'ble High Court, Calcutta in the case of Crystal Networks (P.) Ltd. v. Commissioner of Income-tax 353 ITR 171 wherein the Tribunal s decision was overturned and decision of Ld. CIT(A) upheld and the Hon ble High Court has held that when the basic evidences are on record the mere failure of the creditor to appear cannot be basis to make addition. The court held as follows: 8. Assailing the said judgment of the learned Tribunal learned counsel for the appellant submits that Income-tax Officer did not consider the material evidence showing the creditworthiness and also other documents, viz., confirmator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income-tax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this -fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 464, the Supreme Court has observed as follows: The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act; it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. 11. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntity of the creditor and the genuineness of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well-accepted principle which are required to be followed in considering the effect of Section 68 of the Act and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities. 18. Our attention was also drawn to the decision of the Hon'ble Supreme Court while dismissing SLP in the case of Lovely Exports as has been reported as judgment delivered by the CTR at 216 CTR 295: Can the amount of share money be regarded as undisclosed income under section 68 of the Income tax Act, 1961? We find no merit in this special leave petition for the simple reason that if the share application money is received by the assessee- company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment. 19. Our attention was also drawn to the decision of the Hon'ble Calcutta H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Hon'ble High Court, Calcutta in the case of Commissioner Of Income Tax vs M/s. Nishan Indo Commerce Ltd dated 2 December, 2013 in INCOME TAX APPEAL NO.52 OF 2001 wherein the Court held as follows: The Assessing Officer was of the view that the increase in share capital by ₹ 52,03,500/- was nothing but the introduction of the assessee's own undisclosed funds/income into the books of accounts of the assessee company. The Assessing Officer accordingly treated the investment as unexplained credit under Section 68 of the Income Tax Act and added the same to the income of the assessee. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) being the First Appellate Authority and contended that the Assessing Officer had no material to show that the share capital was the income of the assessee company and as such the addition made by the Assessing Officer under Section 68 of the Act was wrong. The learned Commissioner of Income Tax (Appeals) after hearing the department and the Assessee Company deleted the addition of ₹ 52, 03,500/- to the income of the assessee company during the Assessment Year in qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of this Court held that when Section 68 is resorted to, it is incumbent on the assessee company to prove and establish the identity of the subscribers, their credit worthiness and the genuineness of the transaction. The aforesaid judgment was rendered in the context of the factual background of the aforesaid case where, despite several opportunities being given to the assessee, nothing was disclosed about the identity of the shareholders. In the instant case, the assessee disclosed the identity and address and particulars of share allocation of the shareholders. It was also found on the facts that all the shareholders were in existence. Only nine shareholders subscribing to about 900 shares out of 6, 12,000 shares were not found available at their addresses, and that too, in course of assessment proceedings in the year 1994, i.e., almost 3 years after the allotment. By an order dated 2nd May, 2001, this Court admitted the appeal on three questions which essentially centre around the question of whether the Appellate Commissioner erred in law in deleting the addition of ₹ 52, 03, 500/- to the income of the assessee as made by the Assessing Officer. We are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer has not adopted either of the aforesaid courses but has simply blamed the assessee for not producing those share applicants. In our view, in the case before us so long the Assessing Officer was unable to arrive at a finding that the particulars given by the assessee were false, there was no scope of adding those money under section 68 of the Income- tax Act and the Tribunal below rightly held that the onus was validly discharged. We, thus, find that both the authorities below, on consideration of the materials on record, rightly applied the correct law which are required to be applied in the facts of the present case and, thus, we do not find any reason to interfere with the concurrent findings of fact based on materials on record. The appeal is, thus, devoid of any substance and is dismissed summarily as it does not involve any substantial question of law. 22. In the light of the aforesaid decision of the Hon ble Apex court and jurisdictional High Court and other High Courts let us examine the present case in hand. We will examine each share subscribers totaling two (2). The Ld. AR took us through the relevant facts in respect of each share subscr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plus of ₹ 87 lacs and ₹ 42.14 cr. on 31.03.2012 respectively and as on 31.03.2011 it had its own funds of ₹ 40 cr. (opening balance for AY 2012-13) (refer page 75 of paper book). The copy of the bank statement of the company is available in the paper book at pages 90 to 92 (Corporation Bank) and on examination of the bank statement, it is taken note that there is no deposit of cash. The details of source of funds from which this company has made the share application are also available from a perusal of the bank statement and the documents filed at page 93 of the paper book. 24. From the details as aforesaid, which emerges from the paper book filed before us as well as before the lower authorities it is revealed that both the two corporate share applicants are (a) income tax assessees, (b) they have filed their return of income, (c) the share application form is available on record, (d) share application money was made through banking channel, (e) the details of the bank account belonging to the share applicants are placed on record, (f) in none of the transactions, the AO found deposit of cash before issuing cheques to the assessee company, (g) the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponse to the notice u/s 133(6) of the Act and have also confirmed the payments which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. 25. We also note that recently the ITAT Kolkata in several cases has deleted the addition on account of share application in similar circumstances. The relevant portion of the decisions are as follows: (a) The Ld ITAT Kolkata. in DC IT Vs Global Mercantiles Pvt.Ltd in ITA No. 1669/Kol/2009 dated 13-01-2016. In this the decision the Ld. Tribunal held as follows: 3.4. We have heard the rival submissions and perused the materials available on record including the detailed paper book filed by the assessee. The facts stated hereinabove remain undisputed are not reiterated herein for the sake of brevity. We find that the assessee had given the complete details about the share applicants clearly establishing their identity, creditworthiness and genuineness of transaction proved beyond doubt and had duly discharged its onus in full. Nothing prevented the Learned AO to make enquiries from the assessing officers of the concerned share applicants for which every details were very much m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 20 individuals in the earlier year which were kept in share application money account. During the asst year under appeal, the assessee allotted shares to these 20 individuals out of transferring the monies from share application money account to share capital account. The details of 20 individuals are reflected in page 6 7 of the Learned CIT(A) order. The Learned AO asked the assessee to produce the shareholders before him. He found that the assessee did not do so but furnished copies of pay orders used for payments to the assessee company and also furnished income tax particulars and balance sheets of all the shareholders. The Learned AO on analyzing all the balance sheets observed that the shareholders have paltry income and small savings and none of them have any bank account and huge cash balances were shown in their hands out of which Pay orders were obtained. Based on this, the Learned AO concluded that these shareholders do not have creditworthiness to invest in the assessee company and brought the entire sum of ₹ 57,00,000/- to tax as unexplained cash credit u/s 68 of the Act. 4.2. On first appeal, the Learned CIT(A) observed that entire share application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable on record that the share application monies from 20 individuals in the sum of ₹ 57,00,000/- has been received by the assessee during the financial year 2004-05 relevant to Asst Year 2005-06 and only the shares were allotted to them during the asst year under appeal. Admittedly no monies were received during the asst year under appeal and hence there is no scope for invoking the provisions of section 68 of the Act. Hence we hold that the order passed by the Learned CITA in this regard does not require any interference. Accordingly the ground no. 3 raised by the Revenue is dismissed. (b) The ITAT Kolkata in R.B Horticulture Animal Projects Co. Ltd, ITA No. 632/Koll2011 dated 13-01-2016. In this the decision the Ld. Tribunal held as follows: 6. We have heard the Learned DR and when the case was called on for hearing , none was present on behalf of the assessee. However, we find from the file that the assessee had filed a detailed paper book and written submissions. Hence the case is disposed off based on the arguments of the Learned DR and written submissions and paper book already available on record. The facts stated in the Learned CIT(A) were not controverte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer required the assessee to produce all these persons. While accepting the explanation and ITA No. 632/KoI12011--C-AM M/s. R.B Horticulture 6 Animal Proj. Co. Ltd the statements given by three persons the Assessing Officer found that the response from the others was either not available or was inadequate and added an amount of ₹ 46 lakhs pertaining to 30 persons to the income of the assessee. The Commissioner (Appeals) upheld the decision of the Assessing Officer. On appeal, the Tribunal set aside the order of the Commissioner (Appeals) and deleted the additions. On further appeal: Held, dismissing the appeal, that the additional burden was on the department to show that even if the share applicants did not have the means to make the investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. No substantial question of law arose. 6.3. We find that the argument of the Learned DR to set aside this issue to the file of the Learned AO for verification of share subscribers would not serve any purpose as the ratio decided in the above cases is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong. The letters might have been received at their old addresses because in case of change in the address, people instruct the incumbents at old addresses not to refuse the receipt of letters and receive the same. Just because, a letter was received at the old address instead of present address, it cannot be said that the identity of the applicant has not been verified. All of these companies had duly replied to notice u/s. 133(6) and confirmed the transaction with all the evidences. The AO has not raised any objection on any of the information furnished before him. The AO has not asked the respective Company applicants also to explain the alleged discrepancy in the address. The AO has not brought any material on account of record to disbelief the evidences furnished with him and treat the transaction as not genuine. The assessee submitted the following material at the time of assessment. a) Copy of share applications from the share applicants (copies enclosed) b) Copy of Form 2 filed with Registrar of Companies, West Bengal (copy enclosed) c) Copy of Form 18 about the Registered Office of the applicants for change of address subsequent to the date of allotment, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money by holding that the appellant company has failed to prove the identity, and creditworthiness of The creditors as well as the genuineness of transactions. It is observed that all the three share applicant companies i.e. M/s. Shree Shyam Trexim Pvt. Ltd., M/s Navalco Commodities Pvt. Ltd. and M/s. Jewellock Trexim Pvt. Ltd. had filed their confirmations wherein each of them confirmed that they had applied for shares of the appellant -company. All the three companies provided- the cheque number, copy of bank statements and their PAN. It is observed that these companies also filed, copies of their return of income and financial statements for as well as copy of their assessment order u/s. 143(3) of the I. T Act for AY 2005-06. In the case of M/s. Jewellock Trexim Pvt. Ltd. the assessment for AY 2005-06 was completed by the ITO Ward 9(3), Kolkata and the assessments in the case of M/s. Navalco Commodities Pvt. Ltd. and M/s. Shree Shyam Trexim Pvt. Ltd. for A. Y.2005-06 and AY.2004- 05 respectively were completed by the I TO, Ward 9(4), Kolkata. Under the circumstances, I am of the opinion that the AO was not justified in holding that the share applicant companies were not in exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition which is not disputed by the Revenue, it cannot be said that the identity of the share applicants remained not proved by the assessee. The decision of the Hon'ble Allahabad High Court as well as ITA T Kolkata Bench on which reliance was placed by the learned counsel for the assessee also supports the view that for non production of directors of the investor company for examination by the AO it cannot be held that the identity of a limited company has not been established. For the reasons given above we uphold the order of CIT(A) and dismiss the appeal of the Revenue. 26. Reliance in this regard is also placed on the decision of the Delhi High Court in the case of CIT Vs Gangeshwari Metal (P) Ltd (ITA No. 597 of 2012) dated 21.01.2012. In this case the assessee had received share application money of ₹ 55.50 lacs during the year in question. The assessee filed the complete names, addresses of the share applicants, confirmatory letters from them, copies of bank statements of both the company as well as the share applicants and copies of share application forms. In spite of the aforesaid documentary evidences the AO held the explanation to be unacceptable and tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that the issue in hands was on the lines of the decision of the Supreme Court in the case of CIT Vs Lovely Exports Pvt Ltd (319 ITR 5). Accordingly the addition made under Section 68 on account of share application was deleted. 27. We would like to reproduce the Hon'ble High Court order in CIT vs. Gangeshwari Metal P. Ltd. in ITA no. 597/2012 judgement dated 21.1.2013, the Hon'ble High Court after considering the decisions in the case of Nova Promoters and Finlease Pvt. Ltd. 342 ITR 169 and judgement in the case of CIT vs. Lovely Exports 319 ITR (Sat 5)(5. C) held as follows:- As can be seen from the above extract, two types of cases have been indicated. One in which the Assessing Officer carries out the exercise which is required in law and the other in which the Assessing Officer 'sits back with folded hands' till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in the latter category. Here the Assessing Officer after noting the facts, merely rejected the same. This would be apparent from the observations of the Assessing Officer in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ategory where there is lack of enquiry on the part of the A. O. as in the case of Ganjeshwari Metals (supra). b) In the case of Finlease Pvt Ltd. 342 ITR 169 (supra) in ITA 232/2012 judgement dt. 22.11.2012 at para 6 to 8/ it was held as follows. 6. This Court has considered the submissions of the parties. In this case the discussion by the Commissioner of Income Tax (Appeals) would reveal that the assessee has filed documents including certified copies issued by the ROC in relation to the share application affidavits of the directors, form 2 filed with the ROC by such applicants confirmations by the applicant for company's shares, certificates by auditors etc. Unfortunately, the Assessing Officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr. Mahes Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the Assessing Officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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