TMI Blog2023 (8) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... T] wherein it was held that there is no presumption that a witness appearing for an assessee come forward to give false evidence to oblige an assessee. Similarly provisions of section 277A (For third party) provides that if any person willfully helps another person for falsification of books of accounts then such person would be punishable with imprisonment and fine. Therefore discarding the 3rd party confirmation without bringing any material on record is arbitrary. Further, non service of summons by inspector or the presumption that investor companies are not in existence, without refuting the documentary evidences, alone cannot be a ground to make addition under section 68 - Decided against revenue. - SH. C. M. GARG, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER For the Appellant : Sh. P. C. Yadav, Adv. For the Respondent : Sh. Kanv Bali, Sr. DR ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by Revenue against the order of the ld CIT(A)-2, New Delhi dated 31.08.2017. 2. The Revenue has raised the following grounds of appeal: 1. Whether on the facts and in the circumstances of the case and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income Tax Act, 1961. 4. The matter travelled to ld. CIT(A). 5. Before the ld. CIT(A), the assessee filed the ITRs, company master data, Form 23AC, Audit Report, Form No.AOC4, copy of the registry of shareholders. The ld. CIT(A) forwarded the additional evidence to the AO who offered no new comments . Further, the AO vide report dated 04.01.2017 submitted that summons have been issued u/s 131 of the Income Tax Act, 1961 dated 13.12.2016 and 23.03.2016 to all the seven share applicants out of which two notices issued to Vasudev Enterprises and Skand International Pvt. Ltd. have been returned and the remaining five notices were served. However, the AO submitted that none of the persons appeared before the AO. The AO further submitted that the case of the assessee do not fulfill in the provisions of Rule 46A(1)(a) to 46A(1)(d). After considering the remand report, the ld. CIT(A) held that the assessee has duly discharged their burden of proving the sources and deleted the addition. For the sake of ready reference, the operative part of the ld. CIT(A) order is reproduced as under: 3.5.1 I have found that appellant has furnished requisite details of the transactions to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances. For instance, in the case of M/s. Nova Promoters and Finlease Pvt. Ltd. 18 Taxman.com 217, the Assessing Officer was in receipt of information from the Investigation Wing that the assessee had obtained accommodation entries in the garb of share application money, which is not the case in the instant appeal. Hence the judgments relied upon by the A.O. cannot be applied in the case of the appellant, looking into the aspect that there are contrary pronouncements, by the Hon ble jurisdictional Delhi High Court, on this issue, subsequent to the judgments upon which the AO has placed reliance. 3.5.4 Before proceeding to make addition with regard to sec. 68, the AO was required to discharge his burden as laid upon him under the law by bringing sufficient material on record to disbelieve the claim of the appellant. However, the AO has failed to bring any material on record that the amount of Rs. 2,30,00,000/- is the appellant s own unaccounted money which was routed through the seven companies. As far as non production of directors of investor companies is concerned, reliance is placed on the recent judgment of Hon ble Bombay High Court in the case of The Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction under Section 153A of the Act qua the assessee herein was not justified in law. (Para 39) Turning to the additions under Section 68 of the Act made on merits for three of the AYs. A perusal of the common impugned order of the ITAT reveals that a very detailed discussion has been undertaken after analyzing the seized material. (Para 40) PRINCIPAL COMMISSIONER OF INCOME TAX ORS. vs. BEST INFRASTRUCTURE (INDIA) PVT. LTD. ORS. (2017) 99 CCH 0163 Del (HC) 3.5.6 Thus the action of the AO clearly establishes that there is no adverse material with him and the addition has been made contrary to his own findings and facts and circumstances of the case and against the settled proposition of law and thus the addition of Rs. 2,30,00,000/- is deleted. 3.5.7 My above view is fortified by the following decisions:- Where appellant had furnished income-tax returns, balance sheets, ROC particulars and bank account statements of shareholders, source of share application money had been satisfactorily explained. Section 68 of the Income-tax Act, 1961 - Cash credits (Share application money) - Assessment Year 2000-01 - Assessee received share application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from said company in assessee's taxable income under section 68 - Commissioner (Appeals) found that lenders were regular income-tax assessee and their PANs were on record - Further, amount had been advanced through account payee cheques and before issuing cheques, lenders had got balance in their accounts - Amount of loan had also been repaid through account payee cheques - In aforesaid circumstances, Commissioner (Appeals) opined that identity and creditworthiness of lenders had duly been proved - Accordingly, addition made by Assessing Officer was deleted - Tribunal confirmed order of Commissioner (Appeals) - Whether on facts, impugned order passed by appellate authorities did not suffer from any infirmity and, thus, revenue's appeal was to be dismissed - Held, yes [Para 6] [In favour of assessee] 5.12 In an identical case before High Court of Gujarat in the matter related to CIT vs. Apex Therm Packaging (P.) Ltd. [2014] 42 taxmann.com 473 (Gujarat) it has been held that when full particulars, inclusive of confirmations with names, addresses and PAN Numbers, copies of income tax returns, balance sheets, profit and loss accounts and computations of total income in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of Hon ble Allahabad High Court in the case of Sheo Narian Duli Chand reported in 72 ITR 766(AII) wherein it was held that there is no presumption that a witness appearing for an assessee come forward to give false evidence to oblige an assessee. Similarly provisions of section 277A (For third party) provides that if any person willfully helps another person for falsification of books of accounts then such person would be punishable with imprisonment and fine. Therefore discarding the 3rd party confirmation without bringing any material on record is arbitrary. Further, non service of summons by inspector or the presumption that investor companies are not in existence, without refuting the documentary evidences, alone cannot be a ground to make addition under section 68 of the Act. In this regard judgment of Hon ble Delhi High Court in the case of Kamdhenu steels reported in 361 ITR 220 (Del) is relevant where it has been observed as under:- 34. No doubt, what the AO observed may make him suspicious about such companies, either their existence, which may be only on papers and/or genuineness of the transactions, when he found that investing companies are not available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the suspicion nurtured by the AO. Further, if the returns were filed and scrutiny thereof reveals that such returns were for namesake, this could yet another be contributing factor in the direction AO wanted to go. Likewise, when the bank statements were filed, the AO could find out the address given by those applicant companies in the bank, who opened the bank accounts and are the signatories, who introduced those bank accounts and the manner in which transactions were carried out and the bank accounts operated. This kind of inquiry would have given some more material to the AO to find out as to whether the assessee can be convicted with the transactions which were allegedly bogus and/or companies were also bogus and were treated for namesake. We say so with more emphasis because of the reason that normally such kind of presumption against the assessee cannot be made as per the law laid down in various judgments noted above. Just because of the creditors/share applicants could not be found at the address given it would not give the Revenue a right to invoke s. 68 of the Act without any additional material to support such a move. We are reminding ourselves of the following ..... 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