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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 ..... tion of the directors by issue of summons has not been taken to the logical end as after the failure of the directors to attend in response to the summons issued to them no further steps were taken. Relying upon CIT vs Fair Finvest Ltd [2012 (12) TMI 170 - DELHI HIGH COURT] - the AO has not been able to bring on record any valid material or evidence to discredit the evidences and the explanation given by the assessee company - the only evidence which has been referred by the AO is statement of third parties recorded by the Investigation Wing - these statements were not recorded by the AO but were recorded by the Investigation Wing at the back of the assessee - The AO has not even referred to the relevant portion of such statement so as to establish the collusive arrangement the assessee company had with these persons – thus, the order of the CIT(A) is upheld in deleting the addition – Decided against revenue. - ITA No. 2821/Del/2011 - - - Dated:- 16-10-2014 - B. C. Meena, AM And C. M. Garg, JM,JJ. For the Petitioner : Shri Ved Jain, CA For the Respondent : Shri Manoj Kumar Chopra, Sr. DR ORDER Per B. C. Meena, Accountant Member : This appeal filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roof the genuineness of the persons who gave the share application money or their creditworthiness. A perusal of the bank account of the above mentioned companies reveal as well as prove that they are mere conduits utilized by the entry operators for providing bogus accommodation entries to interested parties. The balances in their bank accounts are very low on a given date after which substantial amounts are deposited either by cheques or by cash to increase the balance but invariable within a day or two the same is withdrawn or transferred to some other account bringing the balance down. The process is repeated over and over again many times although the P L A/c of the assessee reveals no business activity worthy of mention. It is further seen from the table give above that in respect of all the above mentioned share applicants, no interest has been charged on loans and advances and also no interest has been received by these companies. The Directors of these companies do not put in any work. It is not possible that these companies work for no gain/income. These share applicants in this case do not have any source of income of the stature that would enable them to give large a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of information received from the Investigation Wing which was at the back of the appellant and due to non-production of the Directors of the above companies. Further, it is argued that opportunity of cross examination was not provided to the appellant. It is also argued that even in the event of the investor companies being bogus, as alleged, no addition can be made u/s 68 in the hands of the appellant company. The Id. AR has accordingly argued that the said addition of ₹ 60,00,000/- u/s 68 made by the AO in the hands of the appellant company is illegal. The ld. AR has relied upon a plethora of case laws in support of his claim. On careful consideration of the matter, I find that the above contention of the ld. AR cannot be rejected on merit. The AO has also not been able to bring on record any valid material evidence to disprove the claim of the appellant in this regard. 5.2. Further, I find that the established legal position on the subject under consideration as adopted in a large number of case laws is as follows:- 5.2.1. As held in the case of R.B. Mittal v. CIT 246 ITR 283 (AP) in an enquiry u/s 68, the rule of audi alteram parterm has to be observed and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble P H High Court in ITA no. 808 of 2008) and in the case of Brij Pal Sharma (order dated 17.02.2009 in ITA no. 685 of 2008 of Hon'ble P H High Court) it' was held that where the assessee provides identity and details pertaining to the lenders/creditors and is unable to produce them and requests the AO to issue summons u/s 131 for their attendance, it is the duty of the AO to issue such summons, failing which the addition would get deleted. It is also held in CIT v. Orissa Corporation Pvt. Ltd. 158 ITR 78 (SC) and Anis Ahmed 297 ITR 441 (SC) that mere nonproduction of the lender/shareholder cannot be a ground for making addition u/s 68. 5.2.5. Similarly as held in the case of CIT v. Metachem Industries (2000) 245 ITR 160 (MP) where a credit is shown to have come from a person other than the assessee, there is no further responsibility of the assessee to show that it has come from accounted source of the lender, as long as the fact that he had made the advance and was capable of making the advance are established. It was held by the Hon'ble Madras High Court in Hastimal (S) v. CIT (1963) 49 ITR 273 that after a lapse of decade, the assessee should not be plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturned back with an endorsement 'not tenable'. In our considered view, the assessing officer ought to have found out their details through PAN Card, Bank Account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the assessing officer. In the above circumstances, the view taken by the Tribunal cannot be faulted. No substantial question of law is involved in the appeal. In the result, the appeal is dismissed in liminni with no order as to costs. Similar decision has also been taken by the Hon'ble Chhattisgarh High Court in ACIT v Venkateshwar Ispat Pvt. Ltd. (2009) 319 ITR 393. 5.2.7. Further, the Hon'ble Delhi High Court relying on the judgement of the Apex Court in Lovely Exports Pvt. Ltd. (supra) has dismissed the department s appeals in limine vide its recent orders in the case of CIT v. Dwarkadhish Investment Pvt. Ltd. and Dwarkadhish Capital Pvt. Ltd (ITA nos. 911/2010 and 913/2010 order dated 02.08.2010), CIT v. Green Tech Tower Builders Pvt. Ltd. (ITA no. 1113/2010 order dated 12.08.2010) and CIT v. Ultratech Finance Investment Ltd. (ITA no. 1122/2010 or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irection to the Revenue to be more careful before filing appeals in a routine manner. In our view, appeal should not be filed in matters where either no question of law arises or the issue of law is a settled one. We give this direction because the judicial capital in terms of manpower and resources is extremely limited. 13. Registry is directed to communicate copies of this order to all the Chief Commissioners of Income Tax in Delhi for necessary action. With the aforesaid direction, the present appeals are dismissed in limine but without any order as to costs. 3. Now, revenue is in appeal by taking the following revised grounds of appeal which read as under:- 1. That on the facts and circumstances of the case and in law whether the ld. CIT(A) was justified in the eyes of law in passing the impugned order deleting the addition of ₹ 60,00,000/- in the light of the Hon'ble Supreme Court decision in the case of CIT Vs. Lovely Exports (216 CTR 195/SC) and High Court decision in the case of CIT Vs. Dwarkashish Capital P.Ltd. when the facts of this case are distinguishable from the above case. 2. That on the facts and circumstances of the case and in law whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 Form 18, copy of Form 32 of Companies, Copy of balance sheet of shareholders, certificate of incorporation and also copy of master data as available on the site of Ministry Corporate Affairs, etc. The AO did not get satisfied with the explanation of the assessee and added the entire amount of ₹ 60 lacs as unexplained credit under section 68 of the Income-tax Act, 1961. 9. Aggrieved by the order of the AO the assessee carried the matter in appeal before the CIT(A). The CIT(A) deleted the addition by holding that assessee company has filed all the necessary details which include copies of share application form, copies of bank statements, copies of income tax returns copies of PAN cards, balance sheet, copy of Certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 contended that the CIT(A) has examined all these issues and was justified in deleting the above said addition. 13. We have heard both the parties. The only issue here is the addition of ₹ 60 lacs made by the Assessing Officer as unexplained credit on account of the share application money. On going through the facts of the case, we notice that assessee has filed the relevant details which it could have filed in support of its contention of having received the share application money from each of these shareholder companies. 14. The Assessing Officer has issued summons to the directors of these shareholder companies. In response there to, the directors have not attended. Assessing Officer has not conducted any furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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