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TMI Blog2012 (7) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... MR. JUSTICE S. RAVINDRA BHAT, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. N. P. Sahni, Sr. Standing Counsel. For Respondent: Mr. M. P. Rastogi, Advocate. R.V. EASWAR, J.: 1. This is an appeal by the Revenue filed before this Court under Section 260A of the Income Tax Act, 1961 ("Act‟ for short). It is directed against the order of the Income Tax Appellate Tribunal ("Tribunal‟ for short) dated 11.03.2010 passed in ITA No.470/Del/2009. 2. The following substantial question of law is framed: - Whether the Tribunal is right in law in remitting the issue relating to the addition of Rs.2,20,00,000/- made on account of unexplained share application money to the Assessing Officer with directions to verify the source of money of the shareholders and make additions in the hands of persons who provided the monies? 3. The assessee is a private limited company. It is engaged in the business of production of TV Programmes. The original assessment was completed on 23.02.2005 in respect of the return filed on 01.11.2004 for the assessment year 2004-05. Subsequently notice reopening the assessment was issued under Section 148 of the Act. The assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee furnished the PAN number of the companies, share application forms, board resolutions, copy of bank statement, pay orders, confirmation from subscribers, their income tax returns, copies of their balance sheets, etc. and contended that the share application monies were genuine. 6. The Assessing Officer examined the papers filed by the assessee and disputed the assessee‟s claim that the confirmations from the subscribers were filed. He moreover held that the documents adduced by the assessee did not prove the identity and creditworthiness of the subscribers or the genuineness of the transactions. He also noticed that the share application monies were received through banker‟s cheques which were issued immediately after credits in the accounts of the subscriber-companies and that before and after the issue of cheques there was hardly any balance in the bank accounts. Ultimately the Assessing Officer held as follows: - 12. Moreover, the arguments put forth by the assessee are not acceptable because it has been admitted by the person involved in giving entries, during the course of statement by Investigation Wing, that the assessee has accepted the adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xports Pvt. Ltd., (2008) 216 CTR 195 affirming the judgment of this Court in CIT v. Lovely Exports Pvt. Ltd., (2009) 319 ITR (St.) 5 (HC), the CIT (Appeals) deleted the addition of Rs.2,20,00,000/- and consequently also deleted the addition of the commission payment of Rs.4,40,000/-. The assessee‟s appeal was thus partly allowed. 9. The Revenue carried the matter in appeal before the Tribunal in ITA No.470/Del/2009. The Tribunal by and large summarised the findings of the CIT (Appeals) and held that since none of these findings have been controverted by the Revenue, it can be said that the assessee has discharged its onus to prove the receipt of share application monies and therefore no addition can be made in its assessment. 10. The Tribunal, however, did not stop there. It appears to have felt disturbed by the report of the Investigation Wing which was relied upon by the Assessing Officer. It rightly observed that the investigation report available to the Assessing Officer cannot be ignored. Having said so, the Tribunal proceeded to observe that a duty is cast on the Assessing Officer to verify the correctness of the statements wherein certain persons have allegedly sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of such money having been come to these alleged bogus shareholders and after establishing the fact of money having been come from the coffers of such persons, the addition may be considered in the hands of such persons who had provided money to such bogus company for investing the same as share capital. We direct accordingly. 11. The Revenue is aggrieved by the aforesaid order of the Tribunal and has filed the present appeal. We are unable to uphold the view of the Tribunal that it is incumbent upon the Assessing Officer, on the facts and circumstances of the case, to establish with the help of material on record that the share monies had come or emanated from the assessee‟s coffers. Section 68 of the Act casts no such burden upon the Assessing Officer. This aspect has been considered more than 50 years back by the Supreme Court in the case of A. Govindarajulu Mudaliar v. CIT, (1958) 34 ITR 807 where precisely the same argument was advanced before the Supreme Court on behalf assessee. The argument was rejected by the Court. Venkatarama Iyer, J. speaking for the Court observed as under (page 810 of the report): - Now the contention of the appellant is that assuming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have sought cross-examination of those persons but that opportunity was not given by the Assessing Officer as found by the Tribunal, a position not disputed before us on behalf of the Revenue. However, in the fresh round of proceedings it will be open to the Assessing Officer to make the addition in the hands of the assessee-company in case it appears to him, after complying with the directions of the Tribunal, that the explanation adduced by the assessee with regard to the identity and creditworthiness of the subscriber-companies and the genuineness of the transactions is not acceptable for valid reasons which must be clearly spelt out. He will not, however, be under any duty to further show or establish that the monies emanated from the coffers of the assessee company. To place such a burden on him, an impossible one at that, would be quite contrary to the judgments of the Supreme Court cited above. We may only state that the Assessing Officer shall act in accordance with law. The directions of the Tribunal, quoted above are modified to this extent. 13. In the result the substantial question of law is answered in the negative, in favour of the Revenue and against the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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