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Issues Involved:
1. Validity of proceedings initiated under Section 147 read with Section 148. 2. Applicability of Section 68 regarding the credit of Rs. 1 crore in the name of M/s Mahadev Industries Ltd. 3. Justification of the addition of Rs. 1 crore made by the Assessing Officer (AO). Detailed Analysis: 1. Validity of Proceedings Initiated Under Section 147 Read with Section 148: The AO initiated proceedings under Section 147 read with Section 148 based on information from the Deputy Director of IT (Investigation), Varanasi, regarding dummy entries in the assessee's books. The AO issued a notice under Section 148, and the assessee objected, claiming the notice was issued without application of mind. The CIT(A) held the notice invalid, but the Tribunal disagreed, stating: - The AO had definite information from the Deputy Director of IT (Investigation), Varanasi. - The information indicated dummy entries and was sufficient for forming a belief that income had escaped assessment. - The AO was justified in presuming the information correct and forming a reasonable belief. - The Tribunal cited the Supreme Court's decisions in *Phool Chand Bajrang Lal & Anr.* and *Raymond Woollen Mills Ltd.*, emphasizing that the adequacy of reasons for forming the belief is not for the court to judge. Therefore, the Tribunal concluded that the CIT(A) was not justified in holding the notice under Section 148 invalid. 2. Applicability of Section 68 Regarding the Credit of Rs. 1 Crore in the Name of M/s Mahadev Industries Ltd.: The AO treated the credit of Rs. 1 crore as undisclosed income under Section 68, as the assessee failed to provide confirmation and PAN details of M/s Mahadev Industries Ltd. The CIT(A) deleted the addition, stating the amount was share application money, and Section 68 was not applicable. However, the Tribunal noted: - The credit entry was not in the name of a shareholder, as the shares were issued in the financial year 2000-01, while the credit was in the year under appeal. - The authorized capital at the time was only Rs. 50 lakhs, and the shares were allotted two years later. - The Tribunal referenced the Supreme Court's decision in *CIT vs. P. Mohanakala & Ors.*, emphasizing the need for proper, reasonable, and acceptable explanations for sums credited in the books. The Tribunal concluded that the evidence furnished by the assessee was insufficient to discharge the onus, especially when the AO found no company existed at the given address. 3. Justification of the Addition of Rs. 1 Crore Made by the AO: The AO added Rs. 1 crore to the assessee's income, treating it as undisclosed income. The CIT(A) deleted this addition, but the Tribunal found: - The assessee failed to provide sufficient evidence to establish the genuineness of the credit. - The creditor company, M/s Mahadev Industries Ltd., was not found at the given address, and no confirmation was provided. - The Tribunal emphasized that the burden of proof lies with the assessee to establish the genuineness of the credit. The Tribunal decided to give the assessee a final opportunity to discharge the burden of proof regarding the credit of Rs. 1 crore. The AO was directed to decide the issue afresh, giving the assessee a reasonable opportunity to produce necessary evidence. If the assessee fails to establish the genuineness of the credit, the AO would be justified in making the addition under Section 68. Conclusion: The Tribunal set aside the CIT(A)'s decision regarding the invalidity of the notice under Section 148 and the deletion of the addition of Rs. 1 crore. The case was remanded to the AO for a fresh decision, giving the assessee a final opportunity to provide necessary evidence regarding the credit of Rs. 1 crore. The appeal of the Revenue was allowed for statistical purposes.
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