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TMI Blog2006 (6) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... dgement slip and balance-sheet. 4.Mode and date of payment. The Assessing Officer perused the details filed in response to the letter and seen that the entire amount has been shown to have been received from 10 different individuals residing in different and distant rural parts of Maharashtra and M.P. The occupations of the share applicants were shown as agriculture. The entire payment has been received by way of D.D./pay order. The Assessing Officer issued letters under section 133(6) calling for information to all the ten cash creditors on the addresses furnished by the assessee in the course of hearing. All of them were requested to personally appear before him to file the following details and explanation: 1.Copy of bank account, through which payment has been made. 2.I.T. acknowledgement slip and balance-sheet if they are income-tax payees. 3.Source of investment. Out of ten letters, six letters came back unserved with the remark not known not traceable . In the case of remaining four persons, none appeared before the Assessing Officer. Written submissions were filed by them stating that they have invested the amount but neither source of the said investment no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... match. The Assessing Officer also noted that creditworthiness of the creditors is in doubt and as such assessee has failed to prove three conditions, namely, identity of the creditors, creditworthiness of the creditors and genuineness of the transactions. The Assessing Officer, accordingly, made addition of Rs. 9,28,000 under section 68 of the I.T. Act. The additions were challenged before the CIT(A) and written submissions were filed in which assessee had filed voluminous details to support the genuineness of the share application money received, identity, creditworthiness and genuineness of the share applicants. It was also submitted that Ramesh Chandra Shukla, one of the share applicants was examined by the Assessing Officer. It was further submitted before the CIT(A) that the decision of the Delhi High Court in the case of CIT v. Sophia Finance Ltd. [1994] 205 ITR 98 1 (FB) is applicable and it was submitted that tests under section 68 are not strictly applicable in the case of share application money. During the course of appeal, assessee has placed on record affidavits of the share applicants confirming the fact that amounts have been deposited by the share applicants wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hospital (P.) Ltd. [2004] 267 ITR 439 and decision of Rajasthan High Court in the case of Barkha Synthetics Ltd. v. Asstt. CIT [2005] 197 CTR (Raj.) 432. 7. We have considered rival submissions and material available on record. Hon ble Delhi High Court (FB) in the case of Sophia Finance Ltd. ( supra ) considered its earlier decision in the case of Steller Investment Ltd. s case ( supra ) and held that under section 68 of the I.T. Act, ITO has jurisdiction to make enquiries with regard to nature and source of sum credited in the books of account of the assessee and it is immaterial as to whether the amount so credited is given the colour of loan or a sum representing sale proceeds or even receipt of share application money. The use of the words any sum found credited in the books in section 68 in case that section is very widely worded and the ITO is not precluded from making an enquiry as to the true nature and source of a sum credited in the account books even if it is credited on receipt of share application money. It was further held that if the shareholder exists then possibly, no further enquiry need be made. But if the ITO found that the alleged shareholders d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( supra ), the Nagpur Bench of the Tribunal considered that CIT(A) rightly considered the case of the assessee that Assessing Officer did not have any clinching evidence to show that the shareholders exist on the share- holders list of the company was not genuine. 9. Considering the above decisions, it is clear that burden of proof was upon the assessee to prove identity of the creditors and also to prove that creditors, in fact, exist and made the investment in the purchase of share capital. However, in the present case, the Assessing Officer has specifically noted that out of ten creditors, the letters issued to six creditors returned with the remark not-known and not traceable . The Assessing Officer wanted to examine four of the creditors who have filed their replies in order to find out the genuineness of the transactions because of the fact that certain material was collected against the assessee from State Bank of Indore. The Assessing Officer wanted to examine as to why Drafts have been purchased from Indore, though none of the creditors is residing at Indore. Those facts coupled with fact that only four creditors replied before the Assessing Officer were sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence or document or to cross-examine the witness produced by the appellant, or ( b )to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer under clause ( a ) of sub-section (1) of section 251 or the imposition of penalty under section 271." Considering the above rule 46A, the Commissioner (Appeals) should have given opportunity to the Assessing Officer to verify the facts stated in the affidavits. The CIT(A), however, only called for the comments of the Assessing Officer and even no order is passed while admitting the evidence in the shape of the affidavit at the appellate stage. The CIT(A) has, therefore, violated rule 46A of the I.T. Rules in this case. The finding of the CIT(A) shows that CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for statistical purposes. ITA No. 31/Ind./2000 11. The assessee challenged the disallowance of Rs. 23,108 out of telephone expenses and disallowance of car running and maintenance expenses of Rs. 49,560. 12. Ld. counsel for the assessee submitted that assessee is a company and no reasons whatsoever have been given by the Assessing Officer for making disallowance. The Assessing Officer merely mentioned that assessee has not maintained details of the calls, therefore, calls are made for non-business purposes and similarly vehicles are used by the Directors for non-business purposes. Ld. counsel for the assessee accordingly submitted that since status of the assessee is company, therefore, no personal user of these facilities are possible. In support of his contention, he has relied upon the order of ITAT, Ahmedabad Bench C in the case of Gujarat Filament Ltd. ( supra ), copy of which is filed. 13. Ld. DR. However, relied upon the orders of the authorities below. 14. On consideration of the above facts and considering the decision of ITAT, Ahmedabad Bench C in the case of Gujarat Filament Ltd. ( supra ), we are of the view that assessee being a limited co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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