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2014 (8) TMI 310 - AT - Income TaxAdditions u/s 68 - cash credit - share applicatio nmoney - Admission of additional evidence under Rule 46A Held that - The moot question is whether the time allowed to the assessee to produce the evidence in support of share application and share premium can be said to be sufficient time as envisaged by Rule 46A(1)(d) - The time of only five days cannot be said to be a sufficient time to produce necessary evidence - within those short period of five days, the assessee furnished the details/evidences which were available with him - If the AO was not satisfied with those details/evidences produced by the assessee, he should have allowed further opportunity to the assessee to produce further evidence in this regard but no further opportunity was allowed by the AO - CIT(A) rightly admitted the additional evidence Decided against Revenue. Addition of unexplained credit - Whether the assessee has been able to discharge the onus of proving the credit in the form of share capital/share premium Held that - The assessee has produced the copy of share application form submitted by those companies before the AO - Copy of the share application form shows the name and address of the company who applied for shares, number of shares applied, amount, date and cheque number by which payment is made, name of the bank on which cheque was drawn and the permanent account number of the company - No discrepancy in any of these details is pointed out - all the shareholder companies are assessed to income tax and the acknowledgements of filing of their income tax returns by those companies were furnished - the creditworthiness of these companies cannot be disputed - each company is assessed to income tax and the shares were allotted to each company on the basis of the share application form - the genuineness of the transaction is also duly established - The AO doubted the creditworthiness or the genuineness of the transaction on the basis of mere presumption and suspicion without properly appreciating the evidences on record Relying upon CIT, Orissa Vs. Orissa Corporation P. Ltd. - 1986 (3) TMI 3 - SUPREME Court Decided against Revenue.
Issues Involved:
1. Deletion of the addition of Rs. 2.50 crores made by the Assessing Officer (AO) on account of unexplained credit. 2. Admission of additional evidence by the Commissioner of Income Tax (Appeals) [CIT(A)]. 3. Jurisdiction of proceedings initiated under Section 153A. 4. Validity of the search leading to the proceedings under Section 153A. 5. The necessity of incriminating material for reassessment under Section 153A. Issue-Wise Detailed Analysis: 1. Deletion of the Addition of Rs. 2.50 Crores: The Revenue appealed against the CIT(A)'s decision to delete the Rs. 2.50 crores addition made by the AO for unexplained credit. The AO had concluded that the six companies from which the assessee received the share capital and share premium were not conducting real business but were providing accommodation entries. However, the CIT(A) found that these companies were registered with the Registrar of Companies, regularly filed income tax returns, and had substantial capital. The Tribunal upheld the CIT(A)'s decision, noting that the AO's conclusions were based on presumption and suspicion without concrete evidence. The Tribunal emphasized that the identity, creditworthiness, and genuineness of the transactions were established by the assessee through various documents, including share application forms, income tax returns, bank statements, and balance sheets. 2. Admission of Additional Evidence: The Revenue contended that the CIT(A) erred in admitting additional evidence. The Tribunal examined Rule 46A, which allows the CIT(A) to admit additional evidence under specific circumstances, such as when the AO has not given sufficient opportunity to the appellant. The Tribunal found that the AO had given the assessee only five days to furnish evidence, which was insufficient. The CIT(A) admitted the additional evidence, considering the short time allowed by the AO. The Tribunal upheld this decision, noting that the additional evidence was necessary for a fair assessment. 3. Jurisdiction of Proceedings Initiated Under Section 153A: The assessee argued that the proceedings under Section 153A were without jurisdiction. However, since the only addition made in the assessment order was deleted by the CIT(A) and upheld by the Tribunal, the cross-objection on this ground was rendered infructuous. 4. Validity of the Search Leading to Proceedings Under Section 153A: The assessee contended that the search leading to the proceedings under Section 153A was unlawful. The Tribunal did not find it necessary to address this issue in detail, as the primary addition of Rs. 2.50 crores was already deleted, rendering the cross-objection infructuous. 5. Necessity of Incriminating Material for Reassessment Under Section 153A: The assessee argued that the reassessment under Section 153A should be confined to incriminating material found during the search. The Tribunal noted that the addition of Rs. 2.50 crores was not based on any incriminating material found during the search. Since the primary addition was deleted, the cross-objection on this ground was also rendered infructuous. Conclusion: The Tribunal dismissed the Revenue's appeal and the assessee's cross-objection. It upheld the CIT(A)'s decision to delete the Rs. 2.50 crores addition and the admission of additional evidence. The Tribunal found that the assessee had adequately discharged the onus of proving the identity, creditworthiness, and genuineness of the transactions. The cross-objections raised by the assessee were rendered infructuous as the primary addition was deleted. The decision was pronounced in the open court on 25th July 2014.
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