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TMI Blog2012 (11) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs.80,00,000/- made u/s 68 on account of income from undisclosed sources being the amount shown received as share application money from the three parties viz. M/s. Hub Services P. Ltd. (Rs.25,00,000/-); M/s. R.S. Associates P. Ltd. (Rs.30,00,000/-) M/s. Transaction India P. Ltd. (Rs.25,00,000/-). 2. That on the facts and circumstances of the case and in law the Ld. CIT(A) erred in holding that the A.O. has not been able to bring on record any material evidence to disprove the claim of the assessee. 3. That on the facts and circumstances of the case and in law the Ld. CIT(A) has failed to appreciate the entire facts discussed in detail the remand report about the discrepancies in the Bank Statements of the said parties as obtained u/s 131 and as furnished by the assessee before CIT(A). 4. That on the facts and circumstances of the case and in law the Ld. CIT(A) in relying upon the decision given in the case of Lovely Exports (P) Ltd. 216 CTR 199 (SC). In the case of Lovely Exports P. Ltd., the A.O. did not ask the assessee to produce any of the investor shareholders. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter, the case was adjourned to 21.11.2009 which was again adjourned to 24.12.2009 on request made telephonically. On 24.12.2009 the learned AR of the assessee attended but failed to file requisite details and also the latest addresses of the three companies. However, he filed a letter dated 24th December, 2009 stating therein that all other details relating to share application money were already filed. All the three share applicants were existing entities and had filed their necessary returns with ROC. The assessee filed necessary communication with ROC for Assessment Year 2007-08 by all the three companies. Since all the three applicants were existing and assessed with the Income-tax Department, it was pleaded that the share applicants were genuine. However the assessee failed to provide bank statements for F.Y. 2006-07 of the aforesaid three companies. 5. The assessing officer from the details of pay orders submitted by the assessee found that all the three pay orders were obtained from Mahamedha Urban Cooperative Bank Ltd., Noida. The AO therefore, sent summons to Mahameda Urban Cooperative Bank Ltd., Noida requiring it to send the bank statements of the three compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e if there is other material discrediting the deponents. The affidavit can also be rejected if the assessee had failed to produce other supporting evidence when called upon to do so. The AO therefore, rejected the affidavits as self-serving evidences. The AO therefore, made the addition of Rs.80,00,000/-. 7. On appeal before the learned CIT(A) it was submitted by the assessee that the AO had not doubted the identity of the shareholders from whom share application money was received by the assessee. The AO had not pointed out any discrepancy in the income-tax particulars of the shareholders filed by the assessee giving their PAN numbers, complete addresses, as also copies of their acknowledgements. The AO had also not pointed out any discrepancy in the facts that all the shareholders were assessed to income-tax in Delhi and in spite of these facts no material has been brought on record by him to disprove the claim of the assessee that these three companies had invested in the share capital of the assessee. The assessee had filed confirmations from all the three companies. The assessee relied on several decisions including the decision of Hon ble Supreme Court in the case of Lovel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition cannot be made in the hands of the assessee under sec. 68 of the Act. Moreover, Revenue has failed to prove that it was a case of accommodation entry. The learned AR of the assessee therefore, supported the order of the CIT(A). 10. We have heard both the parties and gone through the material available on record. During the course of hearing the assessee filed photo copies of share applications containing Pay Order numbers, Photo copies of undated confirmations, photocopies of undated affidavits of the companies from whom share application money claimed to have been received, photo copy of undated resolution, photo copy of Memorandum Article of Association and copies of acknowledgement of returns for Assessment Year 2005-06 in the cases of all the three parties. The assessee by filing these evidences has claimed that initial onus has been discharged. Since the identity of the share applicants has been established, the contention of the assessee is that no addition can be made in the hands of the assessee. The AO had conducted enquiry from Mahamedha Urban Cooperative Bank Ltd., Noida. We have gone through the information obtained from the bank. It is seen that the bank acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.S. Accessories P. Ltd. and M/s. Transaction India P. Ltd. are located at 5/7B, Pusa Road, New Delhi. It is not mere co-incidence that all the three parties located at two different places in Delhi went to the same Bank on the same day at the same time and got the Pay Orders for requisite amounts in the same series. It will not be possible in the ordinary course of business that all the three persons would go to Noida for purchase of pay orders from the same bank at the same time and with the same running serial numbers. M/s. Hub Services P. Ltd. is located at Laxmi Nagar, New Delhi. There is no dearth of banks in Laxmi Nagar or Pusa Road Delhi. It has to be understood as to why anyone would go for purchase of pay orders from a bank located at long distance in Noida. When the AO confronted the assessee vide order-sheet entry dated 24.12.2009 by issuing show cause notice as to why the amount of Rs.80,00,000/- claimed to have been received by the assessee as share application money from three companies, should not be treated as income of the assessee u/s 68 of the Act, the assessee vide letter dated 29.12.2009 filed reply reiterating that the identity of all the three applicants was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided the present address of the parties nor the directors of the share applicant companies were produced. The pay orders were purchased on same date by the parties located at two different places in Delhi from a bank located about 15 to 25 Kms. away. In two cases the payment has not come from the bank accounts of the parties. In other case the cash of Rs.25,04,000/- was deposited out of which pay order of Rs.25,03,125/- was issued. Therefore, the creditworthiness of the creditors and genuineness of transactions are not proved. Further it is not a case where the AO had not conducted any enquiry and had made addition without verification. The assessee had not cooperated with the assessing officer by not producing the directors of the companies but reiterated the same story that all the parties have been filing returns before the Registrar of the Companies or they were assessed to tax. The learned CIT(A) had completely ignored these facts and had deleted the addition merely on the ground that the assessee had proved the identity of the persons and therefore, no addition can be made in the hands of the assessee. Since the creditworthiness and genuineness of the transaction have not ..... 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