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TMI Blog2012 (9) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... ments. Thus, there was a clear violation of mandatory requirements of Rule 46A. Further we find that the confirmations filed by various share applicants are all undated and these confirmations have been given mostly by one person on behalf of various entities except in one or two cases. Under such circumstances, unless the directors were produced before the AO, he could not carry out further investigations. Since CIT(A) has taken into consideration fresh evidence, which was not confronted to the AO and by not producing the directors assessee installed all further enquiry into the matter, it would be in the interest of justice that the mater be restored back to AO for denovo considerations. X X X X Extracts X X X X X X X X Extracts X X X X ..... y amounting to Rs. 3,35,35,000/- from different entities. On examination of the details filed, the AO noticed that all the entities who had provided funds to the assessee in the shape of share application money, shared the same address as that of the directors of the assessee company, Shri Rajiv Kumar, S/o Shri Ganda Ram Sharma and Sh. S.C. Jain, S/o Lt. Sh. Hemraj Jain i.e. 1510/11 Shiv Ashram, 2nd Floor, Room No. 1,S.V. Mukerji Marg, New Delhi. From these details, the AO concluded that all such entities were basically of the same group and controlled by same set of individuals. From page 2 to page 5 AO has given details of amounts received from various entities in order to demonstrate that they were of the same group, as they shared two common addresses viz.: 1. 1510/11, Shiv Ashram, Second Floor, Room No-1, S.P. Mukherjee Marg, New Delhi - 110006. 2. 302, IIIrd Floor, Vardhman North-Ex Plaza, Netaji Subhash Place, Pitampura, New Delhi. 5. The AO further noticed that from the bank statements of these entities, it transpired that debit entries were mostly same as credit entry and they were mostly in round figures. He observed that this was practically not always possible in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -08 and had held that the allotment was genuine. Ld. CIT(A) deleted the addition for the following reasons: - i) the various documents relating to the PAN Number, scrutiny assessment of various parties, bank account etc. of various parties from whom the share application money had been received had not been controverted by the AO. ii) all the parties were regular corporate entities and were registered with the Registrar of the Companies. iii) apart from general suspicion with reference to addresses of various companies and figures in the bank statements, the AO could not brought any material on the record to dispute the contentions of the AR of the assessee that the various amounts received from the parties were backed by the adequate proof of the identity as well as details of PAN, Income Tax assessment orders, bank statements etc. iv) merely because the directors of various entities were not produced, no adverse inference against the assessee could be drawn. In this regard he relied on the decisions of Hon'ble Delhi High Court in the case of CIT vs. Winstrel Petrochemical Pvt. Ltd. and CIT vs. Victor Electronics Ltd., wherein it was held that AO was not justified in adding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts, ld. DR referred to page 20 of CIT(A)'s order to demonstrate that ld. CIT(A) accepted the evidence in the form of various orders passed by the ITO/CIT(A)/ITAT as noted at pages 21 to 23 of ld. CIT(A)'s order and after considering the same deleted the addition. He submitted that no comments were asked for from the AO. He submitted that Rule 46A mandates a specific procedure which should have been followed by the ld. CIT(A). He further pointed out that ld. CIT(A) had not even himself examined these details by calling for the records. He referred to Rule 46A(3) and submitted that the same is mandatory. In support of his contention he relied on the following decisions: - i) CIT vs. Ranjit Kumar Choudhury [2007] 288 ITR 179 ii) Haji Lal Mohd. Biri Words vs. CIT [2005] 275 ITR 496 iii) CIT vs. Shree Kangra Steel Pvt. Ltd. [2010] 320 ITR 691 iv) JCIT vs. Venus Financial Services Ltd. [2012] (Del.) 10. With reference to aforementioned decisions, ld. DR submitted that ld. CIT(A) did not record any reason for admitting evidence and thus, violated Rule 46A(2). In support of his contentions he relied on the following decisions: - 288 ITR 179 "Documentary Evidence not tendered befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Assessment Records. He submitted that on the basis of this very fact, the order of CIT(A) deserves to be set aside as bad in law. Thirdly, reliance of the CIT(A) on the ratio laid down by the Hon'ble Supreme Court in the case of Lovely Exports (P) Ltd. (216 CTR 195), is also misplaced. The judgment of the Apex Court in case of Lovely Export was delivered while adjudicating an SLP and not in Civil appeal. Therefore, this decision does not partake the character of law laid down by the Hon'ble Supreme Court and it cannot be inferred as binding precedent under Article 141 of the Constitution of India, as held by Tribunal in ITA No. 2927/Del/2009, (M/s Dhingra Global Credence P. Ltd. (As Yr: 05-06) dtd. 31.12.09. Fourthly, reliance by CIT(A), on the ratio laid down by the jurisdictional High Court in cases of CIT vs. Winstrel Petrochemical P. Ltd. and CIT vs.Victor Electronics Ltd. in ITA No. 5/2010 and586/2010 dt. 12.5.10, is also misplaced. He submitted that in order to treat a case as covered matter, CIT(A) ought to have ensured that facts in the instant case were also on all fours same with the facts of the cases being relied upon. In the instant case, the fact regarding fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were produced rather the assessee tried to stall the assessment proceedings by giving misleading facts and incorrect addresses. Even as per the preponderance of probabilities, all facts go against the assessee and the ratio laid down by the Hon'ble Apex Court in the case of Sumati Dayal [1995] 214 ITR 801 (SC) goes against the assessee. The Hon'ble Calcutta High Court in the case of CIT vs. Nivedan Vanijya Niyojan Ltd. [2003] 263 ITR 623 (Cal.); 182 CTR (Cal.) 605 held as under: "After the initial onus was discharged by the assessee, the Income-tax authorities have made enquiries and had communicated the result of the enquiry to the assessee and required the assessee to produce the subscribers who provided such credit, in order to establish its case. But the assessee did not do so. On this basis addition made by the Assessing Officer u/s 68 of the Income-tax Act was confirmed." 15. Ld. DR, in sum and substance, submitted that mere fact that certain legal formalities were fulfilled, it does not absolve the assessee of its onus to substantiate its claim. Ld. DR submitted that even before the Bench the assessee has not produced the share applicants. 16. Ld. Counsel submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- Confirmation, bank Statement, copy of ITR, Balance sheet & P&L Account Including PAN 294-307 12. PP Buildmart P. Ltd. H-69, Ground Floor, DDA Flats, Ashok Vihar, New Delhi- 110052 AADCP663Q 250,000/- Confirmation, bank Statement, copy of ITR, Balance sheet & P&L Account Including PAN 308-307 13. Rishi Credit & Industries Ltd., 13, Bonafield lane, 6th Floor, Kolkata-700001 AABCR2777B 250,000/- Confirmation, bank Statement, copy of ITR, Balance sheet & P&L Account Including PAN 328-337 14. Rishikesh Buildcom Pvt. Ltd., H-69, Ground Floor, DDA Flats, Ashok Vihar, New Delhi-110052 AADCR0902N 3,300,000/- Confirmation, bank Statement, copy of ITR, Balance sheet & P&L Account Including PAN 338-359 15. Rishikesh Properties Pvt. Ltd., H-69, Ground Floor, DDA Flats, Ashok Vihar, New Delhi- 110052 AADCR0527R 1,000,000/- Confirmation, bank Statement, copy of ITR, Balance sheet & P&L Account Including PAN 360-379 16. Rupa Merchants P. Ltd. H-69, Ground Floor, DDA Flats, Ashok Vihar, New Delhi-110052 AADCR0528A 510,000/- Confirmation, bank Statement, copy of ITR, Balance sheet & P&L Account Including PAN 380-393 17. Rupa Promoters P. Ltd., H-69, Ground Flo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication forms and shareholders' register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company u/s 68 and the remedy open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed "accommodation entry providers", whose business it is to help assesses bring into their books of account their unaccounted monies through the medium of share subscription, and the assessee. The ratio is inapplicable to a case, again such as the present one, where the involvement of the assesse in such modus operandi is clearly indicated by valid material made available to the Assessing Officer as a result of investigations carried out by the revenue authorities into the activities of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) also did not even call for a remand report from the AO in respect of these documents. Thus, there was a clear violation of mandatory requirements of Rule 46A. Further in facts and circumstances of the case, we find that para 38 of Nova Promoters & Finlease P. Ltd. (supra) reproduced earlier relied upon by the ld. Counsel for the assessee, is of no assistance. It is only when assessee has effectively complied with all the enquiries made by AO and, thereafter, AO does not make further enquiries that the assessee can take shelter of the observations of Hon'ble Delhi High Court in the case of Nova Promoters (supra) cited above. But here AO required production of Directors only for verification of documents furnished by assessee. 23. Further we find that the confirmations filed by various share applicants contained at pages 217, 229, 240, 256, 272, 294, 308, 328, 360, 380, 394 & 417 are all undated. Further these confirmations have been given mostly by one person on behalf of various entities except in one or two cases. Under such circumstances, unless the directors were produced before the AO, he could not carry out further investigations. Thus, by not producing the directors asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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