9911796707
TMI Blog2002 (12) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 3,28,380 surrendering the investment of Rs. 2.50 lacs in SBI public issues and IFCI public issue. The amount of Rs. 2,50,000 invested in application money of the aforesaid public issues was surrendered after detailed discussion and assurance given by the ADIT to purchase peace. The letter written to the ADIT is placed at PB 20 to 22. After detailed discussion with the ADIT the assessee came forward with clean hands and as per advice and assurance of the ADIT, a total amount of Rs. 9.41 lacs on account of investment in public issues of SBI & IFCI was offered for taxation in the hands of himself and his family members: 1. Shri Vijendra Mamodia 2.50 Lacs 2. Smt. Sushila Mamodia 1.50 Lacs 3. Shri Ritesh Mamodia 2.30 Lacs 4. Shri Rakesh Gutpa 1.21 Lacs 5. Shri Prahalad Kumar Sharma 1.90 Lacs 9.41 Lacs Accordingly returns of income were furnished by the abovenoted person offering total amount of Rs. 9.41 lacs as per detail given below: S. No. Name Asst. yr. Date of filing of return Name of ITO & Ward Income returned Tax deposited P.B. 1. Vijendra Mamodia 94-95 31-8-95 2(5), JPR * * - 2. Sushila Mamodia 94-95 05-9-96 2(5), JPR ** ** (23-30) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge. The learned AO has taken the undisclosed investment in application moneys at Rs. 13,14,509 without mentioning any details regarding names of persons, amount, their relationship with the assessee, etc. It is not understood that how the figure of Rs. 13,14,500 has been worked out. The learned AO has referred to and placed reliance on the alleged conclusion of ADIT that whole of investment in SBI/IFCI public issues was made by the assessee. The AO included the investments made by the above referred investors in the hands of assessee for the following reasons given in the assessment order. 1. The assessment order of the learned AO is based on some report of ADI. 2. The addresses given by the various investors were connected with the assessee. 3. The assessee was asked to explain the sources of investments made by the various investors which he did not do. Now coming to the merits of the above reasons given by the learned AO for making additions in the hands of the assessee. 1. The learned AO was not justified in referring to and placing reliance on the alleged report of the ADI without providing the copies of the ADI's report. Such a report if any, deserves to be ignored an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to prove lies on a person who asserts. It was the duty of AO to prove beyond doubt by cogent evidence that the funds flowed from the assessee and that the other investors were benami of the assessee. In this case the question to be considered is whether all the investors namely Smt. Sushila Mamodia, Sh. Ritesh Mamodia, Sh. Rakesh Gupta and Sh. Prahlad Kumar Sharma are the benamis of the assessee, so that the investments made by them could be considered as income of the assessee. It is by now well settled that burden of proof that a particular person is benamidar of another lies on the person who alleges as such. In the present case the stand of the Department is that the abovenoted persons are benamidars of the assessee. Therefore, the burden lies on the Department to prove by material or evidence that these persons are benamidars of the assessee. Hence, the Department has to prove the following as per the tests laid down by various Courts. (i) That the investments made by the various persons were contributed by the assessee. (ii) That overall control of the investment made in the application money was in the hands of the assessee. (iii) That the possession of assets and docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only rental income to the tune of Rs. 3,03,240 and in respect of Shri Ritesh Mamodia, Shri Rakesh Gutpa and Shri Prahlad Kumar Sharma, there is no income at all apart from the one disclosed on account of investment in the shares. From the fact there is no other income in the returns of these three persons, it is seen that the persons in whose name investments were made do not have financial capacity to make such investments. In addition to this fact, it is also a matter of record that the proceedings under s. 131 before the ADIT was represented by Shri Vijendra Kumar Mamodia on behalf of the other 4 persons. In fact Shri Vijendra Kumar Mamodia alone has made surrender of the investment on account of all these persons. The vital fact cannot be ignored that disclosure in the hands of these 4 persons instead of one person i.e., the assessee could reduce substantial burden of taxation. All these facts when put together, make a clear-cut basis on which the AO relied during the course of (sic) However, during then course of assessment proceedings, the AO has given various opportunities to the assessee. The dates are as under: Dates: 20-9-1998, 3-12-1998, 4-12-1998, 11-12-1998, 30- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FCI and SBI was found to have been made from common address where the assessee resides. The Addl. DIT (Investigation) issued summons to the assessee asking about the investment made in public issue on the address which belongs to him. The assessee emphatically denied the liability for explaining the investment on account of application made by various persons as they were other persons like brother, uncle and the relative who are separate and the investment made by them or another persons from his address cannot be treated his investment. The copy of such reply was also filed before ADIT and enclosed with his written submission before the AO. The proceedings were initiated under s. 148 of the Act in the assessee's case on the basis of ADIT report. The assessee has himself accepted that an amount of Rs. 2,50,000 investment in share application money was in his name which he disclosed in the return filed by him and also paid due tax thereon. The total investment alleged in assessee's name as well as various other names is for Rs. 13,14,500. The assessee having disclosed Rs. 2.50 lacs as his, the balance amount that could have been considered after ADIT's report is only Rs. 10,64,500. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed this. The returns of such persons were got filed with their respective AO and tax thereon were also duly paid. All returns have been accepted by the respective AOs except in the case of Shri Ritesh Mamodia son of the assessee whose assessment was completed on protective basis. The investment by this person is Rs. 2,30,000. The assessee has filed copies of these returns. The AO did not call for the record of these persons and even without examining these persons he proceeded in holding that these persons were not having definite source of income nor they were regular assessees. Such conclusion appear to have been made by the AO merely on the basis of allegation in the ADIT report and there has been no application of mind to the facts of the case. The AO also did not make any independent inquiry or from any of these persons or otherwise. No material was there to come to the conclusion that this was the investment of the assessee. Investment has also not been treated or proved as benami. It is well established principle of law that for treating any investment as benami, the burden is on the person who alleges. Such a burden has not been discharged by the Revenue and without dischar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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