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TMI Blog2007 (10) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... y. - merely by filing a confirmation letter the burden could not be discharged when the enquiries revealed that the company was not existent nor any books of accounts or directors were traceable.– ITAT order quashed – Decided in favor of revenue - IT Appeal No. 63 of 2004 - - - Dated:- 11-10-2007 - S.K. Kulshrestha and Manjusha P. Namjoshi, JJ R. L. Jain with Veena Mandlik for the Appellant S.M. Sanyal for the Respondent ORDER The Revenue has filed this appeal under s. 260A of the IT Act, 1961 against the order of the Tribunal dt. 17th March, 2004 in Appeal No. ITA-825/Ind/2003 for the asst. yr. 2000-01, by which the Tribunal has deleted the addition of Rs. 15,00,000 made by the AO and affirmed by the CIT(A). 2. The respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot shown. In further appeal to the Tribunal, the Tribunal has allowed the appeal of the assessee by the impugned order and set aside the addition made by the AO. It is in these premises that this appeal has been filed which has been admitted on the following two substantial questions of law : "(1) Whether the Tribunal was justified in holding that additions made by the AO amounting to Rs. 15,00,000 are not sustainable on facts and in law? (2) Whether the material brought on record was adequate to hold that the three alleged companies were existing/running so as to give genuineness of the transactions of investment of money by way of share application money to the extent of Rs. 15,00,000 ?" 5. The learned counsel for the Revenue has pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt containing confirmatory letters from the parties in whose names credit was shown and, therefore, there was no ground to doubt the genuineness or the transaction or the parties or their creditworthiness. In view of the above questions of law and the rival submissions of the learned counsel for the parties, the question that arises for consideration in this appeal is as to whether the assessee has been able to discharge his burden to show the genuineness of the entries made in the books of account indicating the credits received from Flag Synthetics, Palasiya Leasing and Investment (P) Ltd. and Patni Industries Ltd. 8. Sec. 68 of the IT Act reads as follows : "68. Where any sum is found credited in the books of an assessee maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuineness and existence of the Flag Synthetics Ltd., the AO observed that by simply filing the confirmation letter, the assessee could not be said to have discharged the burden and the enquiries had revealed that the company was not in existence at the premises stated by the assessee nor any books of accounts, nor the directors were traceable. 11. In the case of Palasiya Leasing and Investment (P) Ltd., the entry was not accepted on the ground that merely by filing a confirmation letter the burden could not be discharged when the enquiries revealed that the company was not existent nor any books of accounts or directors were traceable. Similar was the result of the enquiry in regard to M/s Patni Industries Ltd. 12. Not only that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the account and simultaneously issued the cheque. The case in Antarctica Investment (supra), therefore, does not further the case of the respondent. 14. In the appellate order dt. 24th July, 2003, the CIT(A) has referred to the findings of the AO and observing that as soon as the confirmations were filed, enquiries were conducted and the assessee was duly confronted with the adverse findings. It was further observed that it was incumbent upon the assessee, in view of the adverse findings, to cooperate and prove the genuineness of the shareholders. The assessee however, did not throw any light on the matter despite awareness. This strengthened the views that they were merely name lenders. It was in this backdrop that the CIT(A) had main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion about the nature and source of the sum found credited in his books and if the explanation was not satisfactory, the amount can be credited and charged to income-tax as income of the assessee. Since the assessee, though tried to explain the genuineness of the credit on the basis of letters of confirmation, it could not be explained as to how the transaction was materialised when the companies were not in existence and the amount was paid by cheque only on the date on which the amount was credited to the account of the company. It was for the assessee to discharge this burden. We, therefore, find that insofar as the question No. (2) is concerned, the assessee failed to discharge the burden with regard to the credit in its books and the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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