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TMI Blog2015 (1) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... al by the Revenue has been directed against the order of ld. CIT(A)-XV, New Delhi, vide dated 01.08.2012 in appeal No.305/11-12 for Assessment Year 2004-05. 2. The Revenue has raised following grounds in this appeal:- 1. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the addition of ₹ 30,00,000/- made by the AO u/s 68 of the I.T. Act being unexplained credits. 2. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the addition of ₹ 30,00,000/- ignoring the facts and findings that the investors are mere entry operators. 3. Briefly stated the facts giving rise to Revenue's appeal are that on the information received from Investigation Wing of the Department the AO initiated proceeding u/s 147 of the Income Tax Act, 1961 (for short 'the Act'). The AO noticed that the assessee has received an amount of ₹ 30 lac from various four entities. The assessee submitted explanation alongwith PAN Nos., copies of the ITR, audit reports and affidavits of the director of the alleged investor companies. The AO rejected the expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to prove its contentions. The facts and findings of the Investigation Wing of the department have already been narrated above in the reasons recorded and made available to the assessee. There is no doubt that the assessee was one of the company involved in such activities of taking accommodation entries to route through its own unaccounted money into business without giving any taxes. The supporting documents furnished by the assessee cannot prove the creditworthiness of investors. I honour the judgments / decisions of various Hon'ble Courts, but here in this case how can one digest the fact that parties are investing its hard earned money in a company who was / is not doing any business activity and even it was not filing its Income Tax Returns. It is, therefore genuineness of transactions are not proved. Opportunities were allowed to the assessee to prove the genuineness / creditworthiness of the person, but it has failed in every respect to discharge its onus. It is, therefore, not only the amount of ₹ 15,00,000/- as referred in show cause but the entire amount of ₹ 30,00,000/- remained unexplained. Hence, it cannot be proved that the amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lden Estate Pvt. Ltd (ITA 212/2012) dated 11th April, 2012 have deleted the addition made by holding in Para 3 of their order as under: We have examined the said contention and find that the assessee during the course of assessment proceedings has filed confirmation letters from the companies, their PAN No., copy of bank statements, affidavits and balance sheet. Thereafter the Assessing Officer had asked the assessee to produce the said Directors / parties. Assessee expressed its inability to produce them. The Assessing Officer did not consequent thereto conduct any inquiry and closed the proceedings. This is a case where the Assessing Officer has failed to conduct necessary inquiry, verification and deal with the matter in depth specially after the affidavit / confirmation along with the bank statements etc. were filed. In case the Assessing Officer had conducted the said enquiries and investigation probably the challenge made by the Revenue would be justified. In the absence of these inquiries and nonverification 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nquiries and verification and simply relying on the report of the Investigation Wing of the Department made addition u/s 68 of the Act. Placing reliance on the decision of Hon'ble Supreme Court in case of CIT vs. Divine Leasing and Finance Ltd. in CO No. 375/2008 dated 21/01/2008 and decision of Hon'ble Delhi High Court in the case of CIT vs. Goel Sons Golden Estate Pvt. Ltd. in ITA No.212/2012 dated 11/04/2012 and submitted that in absence of any further enquiries and non-verification of the details of evidence submitted by the assessee, the AO was not justified in the making addition u/s 68 of the Act. 8. On careful consideration of the above submissions, contentions and ratio of the decisions relied by both the parties we note that the AO issued notice u/s 148 of the Act and the assessee submitted all details regarding alleged investor company such as Names, Addresses, PAN Nos, copies of the Income Tax Returns, Audit Reports and Affidavits of the Directors of the respective investor companies. But the AO without making any further verification or enquiries about the said details and explanation of the assessee simply relied on the information of the Investigation Wing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaches the particulars furnished by the assessee and also establishes the link between self-confessed accommodation entry providers , whose business it is to help assessees bring into their books of account their unaccounted monies through the medium of share subscription, and the assessee. The ratio is inapplicable to a case, again such as the present one, where the involvement 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated as an unexplained cash credit in the hands of the assessee and added to its income. Since I am satisfied that the assessee has furnished inaccurate particulars of its income, penalty proceedings under section 271(1)(c) are being initiated separately. 10. The facts of Nova Promoters and Finlease (P) Ltd. (supra) fall in the former category and that is why this Court decided in favour of the revenue 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. 10. On vigilant perusal of the above decision of Hon'ble High Court in the case of Gangeshwari Metal (Supra) we note that there are two types of cases, first, the cases in which the AO carries out the exercise of further verification and examination of detail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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