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TMI Blog2013 (11) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... -03 2003-04 respectively. Both the appeals are heard together and disposed of by a consolidated order for the sake of convenience. 2. One common ground raised pertains to deletion of addition of Rs. 10 lacs for A.Y. 2002-03 and Rs. 15 lacs for A.Y. 2003-04 u/s 68 of the I.T. Act in respect of sale of shares by the assessee held to be unexplained cash credits by the assessing officer. 2.1. The other two grounds for A.Y. 2003-04 are as under: "2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 22,500/- made by the AO on account of commission paid to entry operator. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 4,970/- out of total addition of Rs. 8,970/- made by the AO on account of expense u/s 14A of the Income-tax Act." 3. Brief facts apropos the deletion of addition u/s 68 are: The assessee is a non banking finance company and also engaged in the business of purchase and sale of equity shares as a trader. During the regular trading activity of sale of shares by the assessee it sold shares to following two firms: (i) M/s S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve information may be a sufficient ground to initiate reassessment proceedings of a case, but to make an addition the AO has to establish the fact of fraudulent nature of such transaction. Purely on surmises and conjectures no transaction can be held as bogus unless the same is proved on the basis of sound reasoning and evidence on the part of the AO before making the addition. When the assessee has furnished all necessary proof in support of its claim, it is all the more necessary to rebut such evidence with cogent and credible evidence on the part of AO before making the addition. It is also seen that the Assessing Officer could not point out any discrepancy in the evidences relied upon by the assessee. He has neither brought out any direct or inferential evidence to contradict the contention of the assessee. It is further observed that even though A.O. has vast powers U/S 131 and 133(6) of the Act, he has not used any of his powers to verify the genuineness of the claim of the assessee by verifying the documents furnished by it. If A.O. had doubted the impugned transaction after receiving the evidences which had been produced by the assessee in support of its claim it was very m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e could not produce some of the documents insisted by the assessing officer, it has been summarily held that the documents filed by the assessee have no value without appreciating the facts properly. By citing some inapplicable case laws, the assessing officer has made the additions. (iv) Ld. CIT(A), on the other hand, has categorically held that the onus cast on the assessee is primary one and stands discharged by filing the necessary evidence. The onus can be casted on the assessee when it is refuted by assessing officer on cogent reasons. (v) The genuineness of the transactions is proved by the fact that the shares were sold out of available trading stock which is not disputed by assessing officer and corroborated by suitable accounting entries. The payment was through account payee cheques which demonstrate the genuineness of the transactions and identity of the purchasers. As far as the sale of shares is concerned, assessee has no obligation to ask the purchasers as to from where he is bringing the moneys as long as the payment is made through a/c payee cheques. Thus assessee discharged its primary onus cast u/s 68. CIT(A) has not rightly relied on the judgments as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (Appeals). Further, the assessee had produced a copy of the ledger account in the case of M/s Ramesh Chand Industries Ltd. in the books of M/s Silver Streaks Trading Pvt. Ltd. before the Assessing Officer in remand proceedings. Further more, it was noticed by the Tribunal that the sale of shares to M/s Silver Streaks Trading Pvt. Ltd. was reflected in the books of the assessee and that these amounts were also shown as advance in the balance sheet of the assessee company and a s a credit in the balance of M/s Silver Streaks Trading Pvt. Ltd. as on the 31st March, 2003. Concerning the payment made by M/s Silver Streaks Trading Pvt. Ltd. it was found that the same was made in October November, 2003 by Account payee cheques and a certificate from Corporate Bank in this regard was produced before the Assessing Officer in the remand proceedings, which was forwarded to the Commissioner of Income Tax (Appeals). By the Assessing Officer . Therefore, the Tribunal came to the conclusion that it was clear that t he assessee company had been holding the shares which were sold by it during the year and that it was on this basis that the learned Commissioner of Income Tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not having investment in shares to the extent of Rs.l,57,70,OOOI- as on 31.3.2002 which has been reduced to Rs.33,00,0001- as at the end of the current year during which shares of Rs.91,25,000/- have been sold. The total shares sold during the year are ofRs.l,24,70,0001- (i.e. Rs.l,57,70,0001- as on 31.3.2002 - Rs.33,00,0001- as on 31.3.2003) and this amount ofRs.l,24,70,000/- has been accounted for in the books of account out of which a sum of Rs.91,25,OOO/- was received from the aforesaid two parties. The aforesaid two parties had also con finned the above transactions by furnishing confirmation letters and their bank statements. The CIT(A) has also recorded a finding that he found a letter dated 16.12.2008 received by the Assessing Officer from M/s . B. Finlease India Pvt. Ltd. whereby M/s. B. Finlease India Pvt. Ltd. furnished confirmation of account for the period from 1.4.2002 to 31.3.2003 confirming transactions amounting to Rs.39,25,0001- made with the assessee and also furnished its PAN as well as present address. The learned CIT(A) also found that M/s . B. Finlease India Pvt. Ltd. also furnished copy of income-tax return for the Assessment Year 2004-05 showing the exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. (supra) for the same assessment year the ITAT, under same facts and circumstances, has held the sale of shares to these concerns to be genuine. Relying on ITAT order in the case of M/s Akshay Portfolio (P) Ltd. (supra) and Hon'ble Delhi High Court judgment in the case of Medshave Health Care Ltd(supra), we see no infirmity in the order of CIT(A) on the issue in question. Accordingly, order of CIT(A) on the issue for the assessment years in question is upheld. 6.1. Coming to the issue of addition on account of commission paid to entry operator, raised in A.Y. 2003-04, since we have upheld the order of CIT(A), deleting the addition made on account of accommodation entry, the issue of payment of possible commission does not survive. Accordingly, we uphold the order of CIT(A) on the issue in question in deleting the addition. 6.2. As regards the issue of addition on account of expenses u/s 14A raised for A.Y. 2003-04, the ld. CIT(A) after taking into consideration various case laws; facts and circumstances of the case, restricted the proportionate disallowance u/s 14A of the Act to Rs. 5,000/-. In our view the reasons given by the CIT(A) in allowing part relief are justified, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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