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TMI Blog2021 (7) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... ten (10) are located at New Delhi. According to Ld. A.R., though the AO acknowledges that notice u/s. 133(6) has been complied with by the investor companies, the AO found fault with them by taking note of few trivial spelling mistakes and was of the opinion that the replies were stereo types and gives an impression that it was all made by one person and, therefore, he cannot act upon it. According to Ld. AR, the AO accepted in his assessment order that the assessee has furnished the following relevant documents to prove the identity, creditworthiness and the genuineness of the share transaction by furnishing the investor companies (i) copies of confirmations that they have all subscribed to the share capital/premium, (ii) their respective financial statements, (iii) bank statement to prove that investments were made in assessee company was through banking channel and that there was no cash deposit (iv) their respective ITR's etc. But despite that according to AO, the assessee has failed to prove the creditworthiness and genuineness of sixteen (16) investor companies. The main reason for drawing adverse inference against the assessee, according to AO, was the failure of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment proceedings. According to Ld. AR, due to the reasons given in the affidavit, the assessee did not get proper opportunity for producing the directors of investment companies before the AO, so given an opportunity assessee undertakes to produce the directors of investor companies before the AO to his satisfaction and for which cited the decision of the Hon'ble Supreme Court in the case of Tin Box Company vs. CIT reported in (2001) 249 ITR 216 (SC) and prayed that the assessee may be given an opportunity to produce the directors before the AO. 3. Per contra, the Ld. CIT, DR Shri Manish Kanojia opposed the plea of the assessee and contended that the AO has carried out enquiries and has recorded all the facts which he collected against the assessee and has passed a detailed order against the assessee company. According to Ld. CITDR enough opportunity was given to the assessee, however, for reasons best known to the assessee it did not prefer to produce the directors of the sixteen (16) investor companies before the AO. According to Ld. CITDR merely by filing ITRs, confirmations and financials could not discharge the burden casted upon the assessee u/s. 68 of the Act. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. were dummy directors and were common directors in so many shell companies operated by Shri Subash Agarwal. Further, the AO notes that in respect of Delhi based investor companies he had issued notice u/s. 133(6) of the Act to ten (10) companies and he acknowledges that replies were received from most of the companies. However, according to him, none of the companies furnished the date of confirmations in their respective confirmations. According to him, the copy of confirmation were similar as that filed by the assessee dated 27.05.2016 and found the letter heads of them this time to be different from the one filed earlier. Thereafter he discussed the financials of this investor companies and after acknowledging that directors of two investor companies appeared in his office, whose statements were recorded [and the AO have reproduced these statements in the assessment order]. But AO was not convinced about the nature and source of the share capital and premium collected by the assessee. The main fault according to AO was that the assessee's failure to produce the directors of investor companies despite summons and [after pointing out certain discrepancies in the docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d about the non-service of notice of Kolkata investor entities and commission report and inspector report as well as noting that one investor company was indulging in entry operator, he disbelieved the transaction. However, the main deficiency pointed out by the AO was that the assessee has failed to produce the directors of the sixteen (16) corporate entities before him to satisfy identity, creditworthiness and genuineness of the transaction though he admits that two directors have appeared before him, which also according to AO did not inspire confidence. However, the AO has finally concluded as under: "8.2 Once the assessee files the basic details such as confirmations, ITRs & bank statements, the initial onus gets discharged. Since the revenue has doubted the creditworthiness of the investors & genuineness of share transactions by citing above discussed reasons, the onus shifts back to the assessee company to offer an explanation to the satisfaction of the AO as contemplated under section 68 of the I.T. Act. In the present case assessee could have discharged its onus by producing the share subscribers before the undersigned, so that the truth behind smokescreen could have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies made him conclude that assessee did not discharge their burden of proof u/s. 68 of the Act, so for the reason stated in the affidavit filed by the director of assessee company in the interest of justice and fair play we are inclined to allow the assessee an opportunity to produce the directors of the investor companies before the AO. For that we rely on the decision of Hon'ble Supreme Court in Tin Box Co. (supra) wherein it was held as under: "1. It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus: "We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard." 2. That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of selling out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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