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TMI Blog2013 (11) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to establish the identity, creditworthiness of the share applicants and the genuineness of the transaction - The surrounding circumstances and inquiries made by the Assessing Officer were significant but the said finding have been ignored by the Tribunal - It has failed to take holistic view - Decided in favour of Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,00,000 M/s. Bhawani Engineering Pvt. Ltd. 6,50,000 34,50,000 9. The Assessee requested for and was provided the photocopies of the extracts of the bank statements which were filed by the Assessee during the course of original assessment proceedings. The Assessee was provided with the bank statements of M/s. Landmark Communication Pvt. Ltd. and M/s. Jai Baba Traders Pvt. Ltd. that had been filed by the Assessee during the original assessment proceedings. 10. On 24.12.2007, a request for adjournment was made on behalf of the Assessee to 27.12.2007. However, on 27.12.2007, none appeared for the Assessee, so the assessment was made on the basis of details filed by the Assessee, inquiries made by the AO and details available in the original assessment records. 11. The Assessing Officer noticed that the extracts of bank accounts submitted by the Assessee during the original assessment proceedings had been fabricated. The Assessing Officer had requisitioned the bank statements from the banks which established that immediately before the issuance of cheques for the purpose of making pay order or demand draft, there was a deposit of cash. The Assessing Officer noticed that the entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that the Assessee had adopted unfair practice by adducing false evidence to get undue advantage of giving colour of genuineness to bogus entries through fabricated bank accounts. 13. The Assessing Officer found that the deposits were mostly by cash or transfer entries from the same bank of the entry providers. The AO held that there were facilitating accounts which showed transfer entries from one account to another to avoid direct reflection of deposits/withdrawal of cash. Further that the Assessee had received accommodation entries to launder unaccounted money in the shape of subscription to its share capital. With regard to the share subscribed by M/s. Bhawani Engineering Pvt. Ltd. and M/s. SJ Hosiery Pvt. Ltd., the Assessing Officer found that the pay order/DDs in respect of both the companies were made out of the bank account of M/s. Bhawani Engineering Pvt. Ltd. The transactions in the bank accounts showed that there was a corresponding withdrawal of the amount in cash on the very same day of the crediting of cheques and there was immediate issuance of cheques/DDs on deposit of cash and simultaneously, they were facilitating accounts which showed transfer entries from o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share applicants i.e. M/s. Landmark Communication Pvt. Ltd. and M/s. Jai Baba Traders Pvt. Ltd. The CIT (Appeals) held that the Assessee could not be penalized for the mistakes/faults committed by the share applicants and that the AO had not found any discrepancy in the bank accounts maintained by the Assessee. The CIT (Appeals) directed the AO to reopen the assessment of the said two share applicants to bring to tax the deposits made in their respective bank accounts. The CIT (Appeals) accordingly deleted the addition made of Rs.34,50,000/-. 19. The appeal filed by the Revenue against the order of the CIT (Appeals) has been dismissed by the ITAT vide the impugned order dated 24.08.2009. The ITAT, relying on the decision of the Supreme Court in the case of CIT vs. Lovely Exports P. Ltd. 216 CTR 195 (SC), has held that since in the present case details of all persons from whom the share application money was received were furnished alongwith PANs, account details, share application forms and also confirmation letters and bank accounts, the addition could not be made in the hands of the Assessee by invoking provisions of Section 68 of the Act. The ITAT confirmed the findings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledgement of Income Tax Returns of the entry providers, bank account statement is not sufficient to discharge the onus on the Assessee. 26. We have further held that the Court or Tribunal should be convinced about the identity, creditworthiness and genuineness of the transactions. The onus to prove the three factum is on the Assessee as the facts are within the personal knowledge of the Assessee. Mere production of incorporation details, PAN Numbers or income tax returns may not be sufficient when surrounding and attending facts predicate a cover up. The production of incorporation details, PAN numbers or income tax details may indicate towards completion of paper work or documentation but genuineness, creditworthiness and identity of investment and the investors are deeper and obtrusive than mere completion of paper work or documentation. 27. As we have held that PAN Numbers are allotted on the basis of applications without actual de facto verification of the identity or ascertainment of the active nature of business activity. PAN Number is allotted as a facility to revenue to keep track of transactions. The PAN Number cannot be blindly and without consideration of surroundi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of cheques/DDs on deposit of cash. 30. The Judgment in the case of M/S GANGESHWARI METALS PVT. LTD. (SUPRA), does not advance the case of the respondent inasmuch as in the said judgment it has been held that tehre are two types of cases. One in which the assessing officer carries out the exercise which is required in law and the other in which the assessing officer 'sits back with folded hands' till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The High Court held that case to be falling in the second category. In the present case the asessing officer has not sat back with folded hands but has conducted the enquiry. He has requisitioned and examined the bank accounts and found discrepancy in the bank statement filed by the Assessee at the time of the orignal assessment and the ones requisitioned. The said judgment is clearly not applicable in the facts of the present case. 31. We are of the considered opinion that the Assessee has not been able to discharge the initial onus and has not been able to establish the identity, creditworthiness of the share applicants and the genuineness of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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