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TMI Blog2013 (11) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. In this case - Except asking the assessee to produce the directors 8 days prior to framing the assessment no inquiry what-so-ever has been initiated by assessing officer - Neither any summons u/s 131, notice u/s 133(6) or any cross inquiry of the investors whose entire income-tax record was furnished by the assessee was ever conducted by the assessing officer - There is no reference to any issuance of summons u/s 131 or notice u/s 133(6). In the absence of any inquiry or any adverse report based thereof, the plethora evidence furnished by the assessee cannot be brushed aside in a summary manner – Decided against Revenue. - ITA No. 5656/Del/2012 - - - Dated:- 31-10-2013 - R P Tolani And T S Kapoor, JJ. For the Appellant : Shri Satpal Singh Sr. DR For the Respondent : Shri Kapil Goel Adv. ORDER:- PER : R P Tolani This is Revenue s appeal against CIT(A) s order dated 2-8-2012 relating to A.Y. 2004-05. Sole effective ground raised is as under: 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.40,00,000/- made u/s 68 of the Act in respect of alleged share application money. 2. Brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant enquiries. 6.4. With regard to the various evidences submitted by the appellant during the course of assessment proceedings, A.O. disregarded the said evidence and has emphasized that identity and creditworthiness was not proved and held that the amount of Rs.40 Lacs received as share application money from the said investor companies cannot be treated as genuine and are only an accommodation entries. 6.5. The AO in his order has not brought any material on records, to show that the confirmation filed by the investor companies were not genuine. It is also seen that no enquiry was conducted to examine the contents of the information filed by the appellant. 6.6. The appellant has cited various case laws also in its submissions wherein it has been held that the Share Capital issued cannot be treated as undisclosed income of the appellant and cannot be added under Section 68 of the Income Tax Act. The facts of the cases cited by the appellant are identical with that of the instant case. Further, the reliance is also placed on the decision of Apex Court in the case of Divine Leasing and Finance Ltd. 299 ITR 268 (SC). 6.7. The appellant in its submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of CIT vs. Pradeep Gupta 207 CTR 115, which has also been relied upon by the Delhi ITAT in the recent judgment in the case of Babita Gupta ITA No.2897/06, wherein it is held that in the facts of the case before us it may be seen that from the very beginning ld. AO had shifted entire burden upon the assessee and no material was brought by him to prove his allegation that the impugned amount represented assessee company's undisclosed income. Therefore, on this ground alone the entire addition deserves to be deleted and may kindly be held so. 6.12. In view of the factual position as well as the judicial pronouncement on the subject, 'discussed above, I am of the considered view that the appellant has discharged the initial onus of establishing the bona-fides of the transactions and the AO was not justified in ignoring various evidences provided to him by the appellant. Nothing adverse has been brought on record by the AO to establish that the amount of share application money of Rs. 40,00,000 received by the appellant from the said parties represents its own undisclosed income. If there was doubt about the source of investment of the said company, then addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the absence of these inquiries and non-verification of the details at the time of assessment proceedings, the factual findings recorded by the Assessing Officer were incomplete and sparse. The impugned order passed cannot be treated and regarded as perverse. The appeal is dismissed as no substantial question of law arises . 6.14. In the light of the above discussion and in view of the recent decision of jurisdictional High Court in the case of Goel Sons Golden Estate (supra), I am inclined to agree with the arguments and evidences provided by the appellant to substantiate that the transaction regarding Share Application Money received by it was genuine transactions and the same was not an accommodation entry. I also do not find any evidence collected by the AD which could prove otherwise. Accordingly, the AO was not justified in treating the amount of share application money received by the appellant as its undisclosed income. In view of our aforesaid discussion, I delete the addition of Rs. 40,00,000, made by the AO under Section 68 of the Income Tax Act, 1961. Aggrieved, revenue is before us. 3. Ld. DR contends that: (i) When the assessing officer asked the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors, without appreciating that they were being called within 8 days after a gap of about 8 years from the receipt of share application money. 4.2. Ld. Counsel took us through the assessment order page 2 which is referred by ld. DR, it is contended that in the entire page only theoretical and general observations about accommodation entries system is mentioned. Neither any specific allegation/ evidence has been brought against the assessee nor the veracity of evidence filed by the assessee has been rebutted. 4.3. Assessing officer did not initiate any inquiry whatsoever and at the fag end of assessment on 8-11-2011 asked the assessee to produce the directors after eight years of the said investment. On 16-12-2011 the assessment was framed making the above addition, no comment whatsoever has been offered about the voluminous and relevant documents filed by the assessee for discharge of primary onus u/s 68. Assessee then relied on the following cases laws: (i) CIT Vs. Oasis Hospitality P. Ltd. 333 ITR 119 holding as under: When the money is received by cheque and is transmitted through banking or other indisputable channels, the genuineness of the transaction would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the assessing officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of Section 68. 7. Having regard to the entirety of facts and circumstances, the Court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (supra). 8. The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (supra). Where the assessee adduces evidence in support of the share application monies, it is open to the assessing officer to examine it and reject it on tenable grounds. In case he wishes to rely on the report of the investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between the assessee and the allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vement 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 material showing that the share subscriptions were collected as part of a pre- meditated plan-a smokescreen - conceived and executed with the connivance or involvement of the assessee excludes the applicability of the ratio. In our understanding, the ratio is attracted to a case where it is a Simple question of whether the assessee has discharged the burden placed upon him under sec.68 to' prove and establish the identity and creditworthiness of the share applicant and the genuineness of the transaction. In such a case, the Assessing Officer cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. The case before us does not fall under this category and it would be a travesty of truth and justice to express a view to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue 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 officer once the assessee had furnished all the material which we have already referred to above. In such an eventuality no addition can be made under section 68 of the Act. Consequently, the question is answered in the negative. The decision of the Tribunal is correct in law. 4.4. Ld. Counsel thus contends that in this case no inquiry has been made by the assessing officer as indicated by the Hon ble Delhi High Court in the cases of Fair Finvest Ltd. (supra) and Gangeshwari Metal Pvt. Ltd. (supra). Therefore, the ratio of decision in the case of Nova Promoters (supra), cited by the ld. DR will not be applicable to this case as the facts are totally distinguishable. In the case of Nova Promoters the assessing officer refuted the evidence filed by the assessee with cogent reasons. In this case, except asking the assessee to produce the directors 8 days prior to framing the assessment no inquiry what-so-ever has been initiated by assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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