2018 (12) TMI 1411 - AT - Income Tax

Reopening of assessment - share application money received by the assessee as its own concealed income introduced in the garb of share application money - Held that - There is no dispute that the information received from the office of the DIT INV , New Delhi triggered the proceedings and the Assessing Officer, taking a leaf out of the said INV report, proceeded to verify the transactions entered into by the assessee with the five companies mentioned elsewhere. There is also no dispute that all the transactions have been done through banking channel, duly recorded in the books of account of the assessee. When the assessee was asked to furnish details of share application money, the assessee not only filed confirmations but also copy of bank statement, report of income and copy of bank statement in which money was received. It is not the case of the Revenue that cash was found to be deposited in the accounts of five companies prior to subscribing the shares of the appellant company. It is also not the case of the Revenue that the assessee has produced cheques from the five companies by giving cash. No doubt there is a contradiction in the statement of Shri Waseem Gupta, but that alone cannot be a deciding factor once the corroborative evidences in the form of bank statements have been filed by the assessee. The Assessing Officer did not make any effort to examine the bank statement furnished by the assessee. - decided against revenue

Issues Involved:
1. Whether the share application money received by the assessee should be treated as its own concealed income.
2. Adequacy of evidence provided by the assessee to discharge the onus under Section 68 of the Income-tax Act, 1961.
3. Validity of the Assessing Officer's reliance on the information from the DIT (INV) and statements during search/survey/assessment proceedings.
4. Decision on whether to remand the case back to the Assessing Officer for reconsideration.

Issue-wise Detailed Analysis:

1. Concealed Income Allegation:
The Revenue's primary contention was that the share application money received by the assessee was its own concealed income, introduced under the guise of share application money. The assessment was reopened based on information from the DIT (INV), New Delhi, indicating that the assessee was the beneficiary of accommodation entries during the financial year 2005-06. The Assessing Officer (AO) issued a show-cause notice to the assessee, requesting details and confirmations of the share application money received.

2. Evidence Provided by the Assessee:
The assessee provided several documents to support the legitimacy of the share application money, including bank statements, confirmations, income tax returns, audited balance sheets, and annual returns. The CIT(A) observed that these documents sufficiently established the identity of the subscribers, the genuineness of the transactions, and the capacity of the investors. The CIT(A) also noted that the assessee had produced the directors of the companies involved, who denied providing accommodation entries and claimed genuine transactions.

3. Reliance on DIT (INV) Information and Statements:
The AO relied heavily on the information from the DIT (INV) and the statements of Shri Aseem Gupta, who had previously admitted to providing accommodation entries. However, during the assessment proceedings, Gupta and other directors denied these allegations. The AO dismissed their statements as tutored and made an addition of ?90 lakhs under Section 68, concluding that the share application money was unaccounted money of the assessee. The CIT(A) disagreed, noting that the assessee had discharged its initial onus and that there was no evidence of cash deposits in the accounts of the five companies before subscribing to the shares.

4. Remanding the Case for Reconsideration:
The Revenue argued that the documents relied upon by the CIT(A) were not mentioned in the assessment order and requested the matter be sent back to the AO. The tribunal, however, found no merit in this argument, citing judicial precedents that discourage giving a "second innings" to the AO when sufficient material was already available. The tribunal referenced the Hon'ble Gujarat High Court's decision in Rajesh Babubhai Damania vs. CIT, which emphasized that appeals should not be decided merely to provide another opportunity to the AO.

Conclusion:
The tribunal concluded that the assessee had successfully discharged its onus under Section 68 by providing adequate documentary evidence. The AO failed to bring any cogent material evidence to counter the assessee's claims. The tribunal upheld the CIT(A)'s decision to delete the addition and dismissed the Revenue's appeal. The order was pronounced in the open court on 12.12.2018.

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