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TMI Blog2012 (5) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... side of the Revenue, ld. DR Mr. S.K. Gupta has informed that the impugned appeal has been filed by the assessee belatedly before the first appellate authority. Ld. DR has informed that an assessment order was passed on 15/04/1999. This appeal was filed on 23/06/2005. The delay was about six years. A condonation for the said delay was moved before the ld. CIT(A). The delay was condoned and the appeal was admitted for hearing by the first appellate authority. Since the admission of the appeal which was filed beyond the prescribed limit was the very root of the matter, therefore, this additional ground should be admitted and considered. Relied the case law on National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC). 3.1 On the other hand, from the side of the respondent-assessee ld. AR Mr. Tushar Hemani appeared and objected the admission of this additional ground of the Revenue. He has informed that the Revenue has filed the appeal in the year-2005 and thereafter on number of occasions in last few years this appeal was posted for hearing. In the past, Revenue has never thought it proper to file an additional ground and now almost after the lapse of four years filing this addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of Rs. 31,39,650/-, as against that assessment was framed on the income of Rs. 2,72,07,340/-. Ld. DR has informed that the admitted factual position was that the assessee has not deposited the self-assessment tax. Due to the said default, though an appeal was filed by the assessee against that assessment order, but that appeal of the assessee was dismissed by ld. CIT(A)-V, Ahmedabad vide an order dated 21.12.99. That appeal was treated as non est and noted as to be "filed" by the CIT(A). A copy of the order has been placed before us. The assessee thereafter has filed an appeal before the Tribunal and that appeal was withdrawn by the assessee vide ITAT Ahmedabad Bench "A" in Ankush Finstock Ltd. v. Jt. CIT [IT Appeal No. 631 (Ahd.) of 2000, dated 11-11-2005]. The main contention is that when an appeal was pending before the Respected ITAT meanwhile how an another appeal was filed before ld. CIT(A). ld. DR has informed that the impugned order of ld. CIT(A), now under appeal is dated 27/10/2005, however, the order of the Tribunal is dated 11/11/2005. Meaning thereby that the assessee has infringed the law by simultaneously filing two appeals for the same assessment year. His ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of Rs. 31,39,650/- was declared. The tax liability on the said declared income was at Rs. 14,44,239/-. Against the said tax liability a TDS of Rs.3,47,830/- was deducted. The assessee could not pay the balance amount of tax at that time owing to severe financial crunch due to collapse of stock market. The assessment was completed u/s.143(3) of the Act on 16/03/1999 and thereupon the assessee has filed an appeal before CIT(A) on 15/04/1999. Ld. AR has agreed that indeed there was a default of non-payment of self-assessment tax u/s.140A of the Act, but later on after realizing the error the same was rectified by making a payment of huge amount. There was a severe financial problem and the break-up of the financial position was duly explained to ld. CIT(A) and for ready reference, he has drawn our attention on the following chart:- Financial position as on Available cash and bank balances Other receivables Total current assets Profits/ (Losses) (1) (2) (3) (2)+(3) = (4) (5) 31.03.1999 25452 767276 792728 (495784) 31.03.2000 35302 1424730 1460032 45862 31.03.2001 44304 717222 761526 (351301) 31.03.2002 98775 971490 1070265 (172091) 31.03.2003 30227 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate authority had held that the liquidity crunch was a reasonable cause, then ordinarily such discretionary power should not be disturbed. We may also like to add that section 249(3) of the Act prescribes that CIT(A) may admit an appeal after the expiration of the said period if he satisfied that the appellant had sufficient cause for not presenting the appeal within the prescribed period. There is an another sub-section in that Chapter prescribing the conditions for the admission of an appeal. As per section 249(4) of the Act no appeal before CIT(A) should be admitted unless at the time of filing of the appeal, where a return has been filed by the assessee, tax due on the income returned has been paid. In this sub-section, there is a clause (b) which is in respect of a condition where no return at all has been filed by the assessee. A Proviso underneath the section also prescribes that the cases falling under the said clause (b), ld. CIT(A) can grant exemption from the operation of the said clause. An inference can be drawn on combined reading of both the sub-clauses of sub-section (4) of section 249 that in case of default of non-payment of tax an appeal is not to be admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ota, it was found by the AO that a sum of Rs. 1,68,25,000/- was acceptable and in this regard the AO has commented as follows:- "2.3 In spite of repeated apportunities given to produce the above, the assessee company was able to furnish confirmation letter for share application money alongwith PAN/Assessing Officer in respect of the following parties only: Name Amount Samir P. Shah Rs. 18,20,000 50,000 Bharat M. Shah Rs. 1, 46,05,000 ... Bharat Shah Rs. 3,50,000 Rs. 1,68,25,000" 10.1 For rest of the amount, show-cause was issued as to why the same be not treated as unexplained cash credit in terms of section 68 of I.T. Act. The AO has quoted CIT v. Sophia Finance Ltd. [1994] 205 ITR 98/[1993] 70 Taxman 69 (Delhi). In view of AO, the confirmation letters and the application forms furnished by the assessee in respect of those investors was not complete. According to him, addresses were not properly filled and in some of the cases signatures were not proper. He has also commented that though it was claimed that all the amount was received in cheque but the details of the bank accounts were not furnished. Final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. I also find that decisions relied upon by the applicant in the course of appellate proceedings are squarely applicable to the facts of the case as Assessing Officer has not exercised his powers u/s. 131 or u/s. 133(6) inspite of availability of the relevant information such names and addresses of the shareholders in the Form No. 2 and also the bank statement of the appellant indicating credit of cheques through clearing. I also find that my predecessor while dealing with the appeal for levy of penalty u/s. 271(1)(c) had observed in para 3.3 as below: "I have gone through the penalty order passed by the Assessing Officer and after giving a careful consideration to the facts of the case and submissions putforth, before me alongwith decisions of different courts cited on the point by the Authorised Representative. I find that during the course of assessment proceeding copies of share application of all the applicants and copies of Form No. 2 (Returns of allotment) were filed before the Assessing Officer by the appellant. It is also seen that share application money in all the cases was paid by the account payee cheuqes and bank statement of the appellant company was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cants, then addition of share application money was justified. 14. From the side of the respondent, ld. AR Mr. Tushar Hemani appeared and informed that the full details of addresses, cheque numbers, amount invested their respective bank details were very much before the A.O. He has also pleaded that those very details were also furnished to an another Authority, i.e. R.O.C. alongwith the details of number of equity shares allotted. Now through a consolidated chart, ld. AR has demonstrated the names, addresses, number of shares allotted, amount received, details of cheque number, etc. have been furnished. He has also informed that subsequent to the allotment of the said shares the assessee had come out with a public issue and then also made the complete disclosure. At that time also, the Auditors' report and prospectus was duly veted by the Registrar of Companies. Certain other authorities, such as, Merchant Banks, SEBI, Stock Exchange authorities where the shares were listed, etc. have not raised any objection. In support, case laws cited are CIT v. Lovely Exports (P.) Ltd. [Application No. 11993 of 2007, dated 11-1-2008] and Modern Cements Ltd. [IT Appeal No. 2506 (Ahd.) of 2006, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation about the share allottees was very much available to the A.O., hence if he has chosen not to investigate those persons, then merely on presumption, the assessee could not be treated in default. 16. Next, Full Bench of Delhi High Court was constituted and vide an order dated 27/08/1993 in the case of Sophia Finance Ltd. (supra), the aforecited decision of Steller Investment Ltd. (supra) was reversed. There was a petition before the Hon'ble Delhi High Court u/s. 256(2) which has been referred to the Full Bench because the correctness of the observations in the judgment of a Division Bench in the case of Steller Investment Ltd. (supra) was doubted. The crux of this decision of the Full Bench was that if the shareholders are identified and it is established that they have invested money in the purchase of shares, then the amount received by the company would be regarded as a capital receipt and to that extent the observation in Steller Investment Ltd. (supra) was held as correct. The Hon'ble Full Bench has further said that if the subscribers to the capital were not genuine, then under no circumstances the amount of share capital be regarded as disclosed income of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer to treat such a sum as income of the assessee which is liable to be taxed in the previous year in which the entry is made in the books of account of the assessee." The Hon'ble Full Bench has also made clear that it was not their intention to decide as to what extent the onus is when an amount is credited in the books of account in share capital and when does that onus stand discharged because that will depend on the facts of each case. Thus Full Bench decision has made clear that if the assessee offers no explanation or the explanation offered is not satisfactory, then section 68 has to be invoked, being a substantive section and empowers the ITO to treat such amount as the income of the assessee, liable to be taxed in the previous year in which the entry is made in the book of account. Since in the said cited appeal, facts have revealed that no explanation was offered and the notices could not be served then the provisions of section 68 were invoked to assess the impugned amount in the hands of the assessee. 16.1 Thereafter, the aforesaid decision of Steller Investment Ltd. (supra) has reached before the Hon'ble Supreme Court and vide an order dated 20/07/2000 ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharged the onus cast upon him. Thereafter, it is for the Assessing Officer to scrutinise the same and in case he nurtures any doubt about the veracity of these documents, to probe the matter further. However, to discredit the documents produced by the assessee on the aspects, there have to be some cogent reasons and materials for the Assessing Officer and he cannot go into the realm of suspicion. The Assessing Officer noticed that the assessee had received share application money of Rs. 3 lakhs each from six private limited companies during the year relevant to the assessment year 2004-05. Notice under section 148 was issued in respect of the assessment year 2003-04 and reassessment done. The Assessing Officer made addition of Rs. 18 lakhs to the income of the assessee on protective basis in the assessment year 2004-05. On appeal : H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of which finding of fact was arrived at that neither their identity was established nor their capacity to invest this kind of money was proved. They were all agriculturists and had not produced a single document to support their version. The assessee had not been able to discharge the onus and the addition was rightly made. This was a case where the assessee could not discharge the onus but it could not be said that it was the case of concealment of income. The Tribunal rightly deleted the penalty. " 17.1 The salient feature of these decisions are that the assessee has to discharge the primary onus by placing on record the basic information about the investors. This initial burden can be said to be discharged if the names and addresses of the investors are placed on record. Further, initial burden can also be said to be discharged if the mode of payment is also placed on record. The initial burden or the primary onus can also be said to be discharged if the genuineness of the transaction, i.e. share applications are also placed on record. As far as the facts of the present appeal is concerned, it is evident that all those basic informations were very much on record. Compila ..... 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