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TMI Blog2011 (10) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... come out with any advertisement about issue of share capital. It failed to explain as to how then it was able to allegedly receive such a huge amount of capital, including premium in a very short span of period, from so many parties. c) all the share which were allegedly allotted to outside parties were bought back by the Directors and their family member at a huge discount after very short span of time. d) the dictum given by the Hon'ble Supreme Court in CIT Vs Durga Prasad More 82 ITR 540 & Sumati Dayal V s CIT 214 ITR 801 in which Apex Court has laid down the proposition that the Courts & Tribunals should see the preponderance of probabilities while considering the evidence furnished by the assessee. e) that in the case of ITa Ward 6(3) Vs Mayank Containers P. Ltd in ITA No. 2283/Del/09/ dated 11.08.2009 the Hon'ble IT AT while referring to the decisions of Lovely Exports (Supra) and Divine Leasing & Finance (Supra) has held that "In our view, Hon'ble Delhi High Court and Hon'ble Supreme Court while rendering judgments in the above case were not dealing with the case of Hawala Operators and bogus Entry Providers...." f) that the A.O. is duty bound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare capital of Rs. 4,35,00,000/- during the year which include an amount of Rs. 92,00,000/- received from the four Directors / their family members, and the balance amount of Rs. 3,43,00,000/- was received from other than directors of the assessee company. 3.1.2 The Assessing Officer also issued summons u/s 131 to the following parties through Inspector of the Ward in order to verify the genuineness of the transactions but none of the parties was found available at the addresses given by the assessee:- 1. Shri Santosh Kumar Choudhry 2. Smt. Simla Devi 3. Shri Chetan Parkash 4. Shri Suresh Parkash 5. Shri Vasudev 6. Shri Jagdish Pd. Gupta 7. Shri Vinodi Lal 8. Shri Shyam Lal 3.1.3 The ld. AO therefore asked the AR of the assessee company to produce these parties but on the date fixed for hearing, AR of the assessee appeared and expressed that it was not possible for them to produce the above parties. As the assessee could not produced the parties and the parties were also not found at the given addresses, the ld. AO did not believe the evidences filed by the assessee to substantiate the share capital received and made the addition u/s 68 of the Act, relying on the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught on record to establish that the documents field by the assessee were false or the transactions entered not by the assessee were sham transactions. The Assessing Officer has not made any effort to call Shri Mahesh Garg to record his statement to verify the facts as to what he stated before the Investigation Wing was correct and applicable in the assessee's case. Ld. Commissioner of Income Tax (Appeals) observed that no cross examination was granted by the Assessing Officer to the assessee before making the additions. He further observed that nothing has been brought on record to establish that the entries appearing in the assessee's books resulted from the assessee's own cash and were thus accommodation entries. Ld. Commissioner of Income Tax (Appeals) proceeded to hold that Assessing Officer was not justified in making the addition of Rs. 3,43,00,000/- u/s 68 of the IT Act. Ld. Commissioner of Income Tax (Appeals). Ld. Commissioner of Income Tax (Appeals) further noted that since the addition of Rs. 3,43,00,000/- u/s 68 has been deleted, there remains no basis for sustaining the addition of Rs. 6,86,000/- u/s 69C. He therefore, directed the same be deleted. 5. Against the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his judgement of Hon'ble Delhi High Court i.e. para No. 6, 7 & 8 are reproduced herein below:- "6. In our opinion, as section 68 of the Act, 1961 has been interpreted as recently as 2008 by a Division Bench of this Court in Divine Leasing and Finance Ltd. (Supra) after considering all the relevant judgements, we do not have to reconsider all the judgements referred to by Mr. Sahni which are prior in date and time to the aforesaid judgement. In fact, a Special Leave Petition filed against the said Division Bench Judgement was dismissed by the Supreme Court by way of speaking order in C.I.T. vs. Lovely Exports (P) Ltd. 216 CTR 195 (SC). The Supreme Court in Lovely Exports Pvt. Ltd. (Supra) has held as under:- "Can the amount of share money be regarded as undisclosed income under section 68 of the Income Tax Act, 1961. We find no merit in this Special Leave Petition for the simple reason 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 is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account either in his name or in the name of relative/ friends or other person hired by him for the purposes of opening the bank account. After the deposit of cash when there is sufficient balance, the entry operator issues demand draft, postal orders, cheques in the name of beneficiary. Most of these concerns / individuals also have obtained PAN from the department and are filing income tax returns, but what is shown in the return is not actual state of affairs. 28. The appellant filed copies of PAN, acknowledgement of filing of income tax returns of the companies, their bank account statements for the relevant period, i.e. for the period when the cheques were cleared. However, the parties were not produced in spite of specific direction of the Assessing Officer instead of taking opportunities in this behalf. Since the socalled Directors of these companies were not produced on this ground coupled with the outcome of the detailed inquiry made by the investigation wing of the department, the Assessing Officer made the addition. This addition could not be sustained as the primary onus was discharged by the appellant by producing PAN number, bank account, copies of income tax re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer that the two companies are umbrella companies or have any relationship with each other." 30. We are, therefore, of the opinion, that there is no merit in these two appeals, which are accordingly dismissed at the admission stage itself." 7. In the background of the aforesaid discussion and precedents, we uphold the order of the Ld. Commissioner of Income Tax (Appeals) directing that the addition of Rs. 3,43,00,000/- is liable to be deleted. Since the addition of Rs. 3,43,00,000/- u/s. 68 has been deleted, we agree that the there is no basis for sustaining the addition of Rs. 6,86,000/- u/s 69C, the same is also directed to be deleted. Hence, we uphold the order of the Ld. Commissioner of Income Tax (Appeals) and decide the issue in favour of the assessee. Hence, the Revenue's appeal stands dismissed. Assessee's Cross Objection No. (317) 8. In the cross objection the assessee has challenged the reassessment proceeding and appealed that reopening is bad in law and beyond the jurisdiction of the Assessing Officer. 9. We find that we have already decided the issue on merits and upheld the order of the Ld. Commissioner of Income Tax (Appeals), therefore, the is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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