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TMI Blog2013 (9) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... cer is barred by limitation therefore, the same is void and illegal. 2. On the facts and in the circumstance soft case Ld. CIT(A) has erred in not adjudicating on the Ground no. 4 of the assessee that "It is contended that the action of Ld. Assessing officer u/s 148 is bad in law since the Ld. Assessing officer has no jurisdiction to frame the assessment u/s 143(3) read with section 148 in as much as the impugned assessment was framed on the basis of mere internal official note, without recording reasons as envisaged under section 148 of the I.T. Act 1961." 4. Brief facts are: The assessee's original return was accepted on the declared income of Rs. 3180/-. Thereafter assessing officer received information from DIT(Inv.) alleging that the assessee had received accommodation entries from the companies mentioned at page 2 of the assessment order amounting to Rs. 71 lacs. On this reason the assessee's assessment was reopened. During the course of assessment, assessee was asked to prove the identity, genuineness and creditworthiness, the companies from whom the share application money was received. The assessee replied that all the share application moneys were received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch accommodation transactions amounting to Rs. 1,42,000/-. 4.3. Aggrieved, assessee preferred first appeal, where following submissions were made: (i) The allegation of the assessing officer that some of the summons came back unserved, the assessee was never confronted with any such correspondence. (ii) Assessee had discharged the preliminary burden in terms of Sec. 68 for the existence of the creditors - The parties from whom it has received share application money by filing copy of application for subscription of shares,confirmations, copy of Company Master Data from the office of ROC. Acknowledgment of Filing of Income Tax Return with Permanent Account Number etc. (iii) The credit worthiness of the parties to pay such Share Application Money to the Appellant Company has been established on the basis of copy of Annual Accounts of the subscriber Companies, copy of Bank Statements etc., filed during assessment proceedings. (iv) The genuineness of the transaction i. e. the nature of receipts by the Assessee Company by way of Share Application Money is established by the fact that the amounts were received through banking chann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and (v) other information which the assessee knows or possesses, then it can be said that initial burden on the assessee can be said to have been discharged. Once the identity of the shareholders was established it also stands established that the shareholders have invested money in the purchase of shares and hence the onus, on the part of the assessee company, is discharged and there can not be any addition in the hands of the assessee company on account of share application money. Reliance is placed on the following decisions of the Apex Court and the jurisdictional High Court of De1hi:- i) CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195. ii) CIT vs. Divine Leasing & Finance Ltd. (2007) 299 ITR 268 (Del.). iii) CIT vs. Value Capital Services Ltd. (2008) 307 ITR 334 (Del.). iv) CIT vs. TDI Marketing Pvt. Ltd. (2009) 26 DTR (Del.) 358. In the present case the assessee can be said to have discharged its onus under section 68 of the Act. The appellant has given all the necessary details in order to establish t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Nova Promoters & Finlease (P) Ltd. (2012) 342 ITR 169 (Del.); and CIT Vs. N.R. Portfolio P. Ltd. (ITA no. 134/2012 order dated 21- 12-2012 -Hon'ble Delhi High Court). Order of Assessing officer is relied on. 6. Ld. Counsel for the assessee on the other hand contends that the fact that all the supporting evidence, bank accounts, ROC documents were supplied to the assessing officer, has neither been disputed nor any adverse inference has been drawn by the assessing officer on the contents thereof. The only adverse inference which has been drawn is on the fact that assessing officer issued "some summons u/s 131, some of which were returned unserved and in respect of others none appeared". Ld. Assessing officer has no where mentioned or confronted with the assessee as to on whom they were sent, summons came back unserved and in which case nobody appeared. Reference is made to the order-sheet of the proceedings. The assessment has been finalized on 26-12-2008. The reassessment proceedings were commenced on 18-4-2007. As per the order sheet entries, for the first time the assessee was asked to produce the director for verification on 27-11-2008. For the first time the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessing officer drawing the adverse inference is on wrong premise i.e. without conducting any inquiry, verification of income-tax record and without any confrontation to the assessee. In the absence of any exercise what so ever by assessing officer, the assessee's primary burden cannot be held to have been rebutted by assessing officer. 6.2. No statement or any incriminating material collected or recovered from the alleged accommodation entry provider was ever confronted to the assessee, which indicates that there was no material against the assessee on record except initial information of Investigation Wing. 6.3. Apropos the case of Nova Promoters & Finlease (P) Ltd. (supra), relied on by the ld. DR it is pleaded that the facts of that case were peculiar inasmuch as - (i) There was material before assessing officer which was confronted to the assessee showing the link between the entry provider and assessee; The statement of "M&R" i.e. alleged accommodation entry providers were confronted to the assessee and assessing officer had on his own initiated full fledged inquiry. (ii) In contradiction, in assessee's case neither any material showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under sec.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 assessees bring into their books of account their unaccounted monies through the medium or share subscription, and the assessee. The ratio is inapplicable to a case, again such as the present one, where the involvement of the assessee 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 such "entry providers". The existence with the Assessing Officer of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther tried to explain the source of this amount of Rs.55,50,000/- by furnishing copies of share application money, balance sheet, etc. of the parties mentioned above and asserted that the question of addition in the income of the assessee does not arise. This explanation of the assessee has been duly considered and found not acceptable. This entry remains unexplained in the hands of the assessee as has been arrived by the Investigation wing of the Department. As such entries of Rs. 55,50, 000/- received by the assessee are treat ed as an unexplained cash credit in the hands of the assessee and added to its income. Since I am satisfied that the assessee has furnished inaccurate particulars of its income, penalty proceedings under section 271(1)(c) are being initiated separately." 10. The facts of Nova Promoters and Finlease (P) Ltd. (supra) fall in the former category and that is why this Court decided in favour of the revenue in that case. However, the facts of the present case are clearly distinguishable and fall in the second category and are more in line with facts of Lovely Exports (P) Ltd. (supra). There was a clear lack of inquiry on the part of the assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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