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TMI Blog2014 (12) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... 500750 697367 30-Jul-02 Chanakya Finvest P. Ltd. CORPN KB 3675 500750 26-Sep-02 Royal Credits P.Ltd. SBP DG 50078 Further it was also noticed during the assessment proceedings that the assessee had also received share application money from M/s Team Plus Securities Ltd, M/s MPN Fincap Pvt. Ltd, M/s Neelkant Shares P. Ltd, M/s Ashian Needles P. Ltd, M/s Paras Fincap P. Ltd and M/s KVF Securities P. Ltd, who are also mentioned in the said report as entry providers. In order to prove the genuineness of the credit of Rs. 60 lacs as share application money, the assessee was vide order sheet entry dated 15/12/2010 asked to produce the Directors of the above mentioned companies from which share application money has been received. The assessee filed reply dated 22/12/2010, and nobody was produced. The assessee in support of the share capital of Rs. 60,00,000/-, vide letter dated 22.12.2010 filed copy of ITRs Share application forms etc and affidavit of the Directors of these companies. Summons were issued to the Directors of these companies for 28.12.2010. However none attended. Although the receipts of share application money of Rs. 60 Lacs was through banking ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned share application money of Rs. 60,00,000/- had been received from 8 companies, viz. M/s Team Plus Securities Ltd. (Rs.500000/-), M/s. Chanakya Finvest Pvt. Ltd. (Rs.500000/-), M/s. MPN Fincap Pvt. Ltd. (Rs.1150000/-), M/s. Neelkant Shares P Ltd. (Rs.350000/-), M/s. Ashian Needles P. Ltd. (Rs.1000000/-), M/s. Paras Fincap P. Ltd. (Rs.1000000/-), M/s. Royal Credit Pvt. Ltd. (Rs.500000/-) and M/s KVF Securities P Ltd.(Rs.1000000/-). All the above amounts have been paid by account payee cheques. The appellant had filed copies of confirmation I affidavit from the said companies confirming the payment of the above amount as share application money, copies of bank statements, copies of Income-tax returns, copy of PAN cards, copies of Demand drafts, Balance Sheets, copy of Certificates of Incorporation and Memorandum and Articles of Association, copy of ROC details showing the status of the companies as "active", copy of share application forms etc. of the respective investor companies before the AO in support of its claim. It is argued by the Id. AR that the appellant has discharged its initial onus with regard to the above transactions. It is argued that the addition has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected on mere surmises. Further, it was held in Khandelwal Constructions v. CIT (1997) 227 ITR 900 (Gau.) that since the satisfaction of the AO is the basis for invocation of the powers u/s 68, such satisfaction must be derived from relevant factors on the basis of proper inquiry by the AO and such inquiry must be reasonable and just. 5.2.3. It is also settled law that it is mandatory for the AO to confront the assessee with any material collected by the AO at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc. will be rendered on unreliable and additions made on the basis of such material/statement etc. shall be rendered illegal. Reference in this regard can be made to the decisions in the case of R.B. Shreeram Durga Prasad 176 ITR 169 (SC), 125 ITR 713 (SC), Jindal Vegetable (order of Hon'ble Delhi High Court in ITA no.428 of 2007, 174 Taxmann 440 (Raj.) and Laxman Bhai Patel (order of Hon'ble Gujarat High Court dated 22.07.2008 in ITR no. 41/1997). 5.2.4. Further, in the case of N.P. Garodia (order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court of Delhi). Following the aforesaid decision of the Apex Court in CIT v. Lovely Exports (P) Ltd. (supra), the Hon'ble Mumbai High Court in the recent judgement in the case of CIT v Creative World Telifilms Ltd. (order dated 12.10.2009 in ITA(L) no.2182 of 2009) has held as under: "The question sought to be raised in the appeal was also raised before the Tribunal and the Tribunal was pleased to follow the judgement of the Apex Court in the case of CIT vs. Lovely Exports (P) Ltd. reported in (2008) 216 CTR 195 (SC) wherein the Apex Court observed that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the assessing officer, then the department can always proceed against them and if necessary reopen their individual assessments. In the case in hand, it is not disputed that the assessee has given the details of name and address of the shareholders, their PANIGIR number and had also given the cheque number, name of the bank. It was expected on the part of the assessing officer to make proper investigation and reach the shareholders. The assessing officer did nothing except issuing summons which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the assessee need not to prove the "source of source". ..... 10. We are also informed that a Special Leave Petition against the aforesaid Division Bench judgment in the case of the respondent- assessee has been dismissed by the Supreme Court. Accordingly, we are of the opinion that no question of law arises in the present cases as the matter is fully covered by the judgment of the Supreme Court in Lovely Exports (P) Ltd. (supra) as well as the Division Bench judgment of this Court in the case of the respondent-assessee itself. 11. Consequently, we are of the view that the present appeals amount to relitigation. The Supreme Court in KK Modi Vs. KN. Modi and Ors., (1998) 3 SCC 573 has held, "It is an abuse of the process of the court and contrary to justice and public policy for a party to relitigate the same issue which has already been tried and decided earlier against him. The reagitation mayor may not be barred as res judicata. But if the same issue is sought to be re agitated, it also amounts to an abuse of the process of the court ....." 12. Though we were initially inclined to impose costs yet we are of the opinion that ends of justice would be met by giving a direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare capital received by the assessee-company during the year under consideration. 5. Notice under section 148 of the Act was issued on the basis of the information received from the Investigation Wing that the assessee company has received accommodation entries by way of share application money from the following companies:- (i) Chanakya Finvest Pvt. Ltd. Rs.5,00,750 (ii) Royal Credits P. Ltd. Rs.5,00,750 6. The Assessing Officer during the course of the assessment noticed that the assessee has also received share application money from following companies as well:- (i) Team Plus Securities Ltd Rs. 5,00,000 (ii) MPN Fincap Pvt. Ltd. Rs.11,50,000 (iii) Neelkant Shares P. Ltd. Rs. 3,50,000 (iv) Ashian Needles P. Ltd. Rs.10,00,000 (v) Pars Fincap P. Ltd. Rs.10,00,000 (vi) KVF Securities P. Ltd. Rs.10,00,000 7. The AO asked the assessee company to prove the genuineness of the share application money received by it. 8. In response thereto the assessee company filed details in the form of share application form, PAN card details, affidavits of the directors of the shareholder companies, copy of income tax return, confirmation, bank statement, copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors attended in response to the summons issued by the AO. The AO having issued the summons it was for him to take the same to the logical conclusion. No field enquiry was made by the AO so as to demonstrate that these companies are not in existence. As against this, the assessee company has provided all the best possible evidences. The observations made by the AO are very casual and it clearly shows that he has completed the assessment with a preconceived notion by indulging into surmises and conjecture. The AO being an adjudicating officer is supposed to examine all the materials and carry out the investigation to the logical end. In the present case, as is evident from the assessment order, he has not even looked at the statement of the person on the basis of which allegation is being levied against the assessee company. Despite the assessee filing voluminous documents supporting its contention in respect of each of the shareholder, the Assessing Officer has made no effort to examine these documents and made even cross verification from the concerned Assessing Officer of these shareholder companies. He has made sweeping remarks in the assessment order on its own. It was contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of the parties. In this case the discussion by the CIT(Appeals) would reveal that the assessee has filed documents including certified copies issued by the Registrar of Companies in relation to the share application, affidavits of the Directors, Form 2 filed with the ROC by such applicants confirmations by the applicant for company's shares, certificates by auditors etc. Unfortunately, the assessing officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr. Mahesh Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the assessing officer 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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