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TMI Blog2016 (7) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Act. Since the assets were put to use for the period of more than180 days, therefore, the assessee is entitled to depreciation for full year. - Decided in favour of assessee Addition U/s 68 - investment in shares and unsecured loans received by the assessee company - Held that:- Once the identity of the creditor has been established and there is no doubt about the genuineness of the transaction, therefore, the source of the source cannot be enquired by the Assessing Officer prior to 2003 amendment under section 68. Accordingly, the addition made with respect to Smt. Premlata Madhok is hereby directed to be deleted. Once the shares have been allotted to Shri Satish Kumar Bhayana and the address has been given then the Assessing Officer is duty bound to conduct the necessary inquiry U/s 131 of the Act to establish or disprove the identity of the person. Since the assessee has discharged the initial onus of disclosing the identity and address of the person, therefore, in our view the ingredients of Section 68 are met and the addition is required to be deleted. Accordingly, we delete the addition in respect of Shri Satish Kumar Bhayana. The identity of the person has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it had started bottling of liquor. The assessee filed its return of income for the year under consideration declaring a loss of ₹ 53,78,560/- on 18/11/1997.Thereafter a notice U/s 143(2) of the Income Tax Act, 1961 (in short the Act) was issued on 28/8/1998. However, the notice was returned back with a remark that concerned person was not available . Thereafter a letter was received from the assessee company seeking adjournment. Thereafter the case was fixed for 18/8/1999. However, on that date, no one attended the proceedings. Ultimately, a notice U/s 142(1) of the Act alongwith query letter was issued on 12/8/1999. The AR of the assessee appeared and the case was discussed with the Assessing Officer. It was noticed that during the year under reference, the assessee company allotted 635100 shares of ₹ 10 each and also having unsecured loans to the extent of ₹ 69,92,981/-. The ld Assessing Officer made observation to the extent of concluding that the assessee have not explained the investment made in the shares of the company. Therefore, the ld Assessing Officer has discussed in details about the individual share applications as alleged made by the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for full year is restricted to three fourth. 3. Being aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the ld CIT(A), who had restricted the claim of depreciation from 3/4th to 1/2 . The findings of the ld CIT(A) is as under:- 4.2 The AR contended that further we have to submit that the assessee company has started production on 28/09/1996 since there is no dispute on this order. For this purpose, he has verified the excise records. Once it has been verified that Plant and Machineries forming part of block has been used during the year for more than 182 days there is no choice available with him to allow depreciation on proportionate or estimate basis. He has to allow depreciation for full year. It is therefore submitted that necessary directions may be passed to the A.O. allowing full depreciation instead of 3/4th. 4.3 I have gone through the assessment order as well as submission of the assessee and also enhanced notice there is no force in the submission of the AR as production started after 31st September, 1996 as no evidence has been filed before me that production had been started on 28/09/1996. The depreciation is allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mons were not served, (on page-10) (xxi) Sunil Tyagi: The balances shown by the creditor and company were not matching. The AO made an addition of ₹ 2,50,000/-. (on page-12). (xxii) Umesh: No confirmation filed, (on page-12). The assessee has not filed any evidence before me except written reply. The position is same. He only relied upon case laws as referred above which are not squarely applicable in this case. The Hon ble Calcutta High Court in case of CIT Vs. Rubbi Traders and Exporters Ltd. (2004) 263 ITR 300 and Rajasthan High Court in case of CIT Vs. First Point Finance Ltd. (2006) 286 ITR 477 and Hon ble Delhi HC in case of CIT Vs. Divine Leasing and Finance Ltd. (2008) 299 ITR 268 has held that identity of the person, creditworthiness and genuineness of the transaction has to be established by the assessee in case of shares and loans u/s. 68 of the IT Act. Therefore, addition of ₹ 34,23,712/- is confirmed. The appeal on this ground is dismissed. ISSUE NO. 1 5. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the plant and machinery were purchased during the assessment year and was put to use pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has further submitted that the additions in respect of share applicable was made for an amount of ₹ 15,24,162/- for 16 cases and the addition of ₹ 18,99,550/- was made for unsecured loans for six cases, thus a total addition of ₹ 34,23,712/- was made. 9. The ld AR of the assessee has submitted before us that the assessee has given complete details of identity of the persons, creditworthiness and genuineness of the transactions and therefore he submitted that the addition made by the ld Assessing Officer and sustained ld CIT(A) are required to be set aside. For the purposes of share application, the ld AR has relied upon the following decisions: (i) Barkha Synthetics Ltd. v/s ACIT 197 CTR 432 (Raj) vide order dated 02.08.2005 (ii) CIT v/s Winstral Petrochemicals (P) Ltd. (2010) 41 DTR 139 (Del). (iii) Bhav Shakti Steel Mines (P) ltd v/s CIT 18 DTR 194(Del) (2009) Held Source need not be proved. (iv) CIT v/s Samir Bio- Tech (P) Ltd 17 DTR 224(Del) (2009) Held All necessary details filed no addition call for. (v) M/s Anu Industries v/s ACIT 19 DTR 465 (Del). (vi) Auatech International Ltd. v/s ITO 13 DTR 382(Del). (vii) Smart Capital Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Assessing Officer was not satisfied with the source of income, therefore, the addition made was. In our view, once the identity of the creditor has been established and there is no doubt about the genuineness of the transaction, therefore, the source of the source cannot be enquired by the Assessing Officer prior to 2003 amendment under section 68. Accordingly, the addition made with respect to Smt. Premlata Madhok for a sum of ₹ 25,000/- is hereby directed to be deleted. 11.2 Shri Satish Kumar Bhayana:- In this regard, Shri Satish Kumar Bhayana was allotted 4000 shares by the assessee company and the assessee has provided address of the allottee to the Assessing Officer as has been mentioned by the Assessing Officer in the order. However, no investigation was made by the Assessing Officer and therefore, the Assessing Officer has added a sum of ₹ 40,000/- on the pretext that the assessee has failed to give confirmation from the said Shri Satish Kumar Bhayana, in our view, once the shares have been allotted to Shri Satish Kumar Bhayana and the address has been given then the Assessing Officer is duty bound to conduct the necessary inquiry U/s 131 of the Act to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. We have gone through the arguments made by both the parties as well as records placed before us, in our view neither the address have been given in respect of these share applicants nor these applicants were found on enquiry by the Inspector nor the confirmations were given by these share allottees. In our view, the assessee has failed to discharge its initial onus to prove the identity of the person, genuineness of the transaction and creditworthiness, therefore, the additions in respect of Shri Sardar Singh, Saroj Madan, Pankaj Madan, M/s Sarna Intl. (P) Ltd.Mr. Azad, Mrs. Azad, Mr. Azad and Miss Prerna totaling to ₹ 5,25,000/- for all these persons are hereby confirmed. V.J.S. Chawla and Chinki Chawla 11.5 The ld AR has submitted in respect of V.J.S. Chawla and Chinki Chawla that the shares have been allotted to them. The PANs were given by the assessee in respect of these two persons. The ld DR has submitted that the confirmation in respect of these two persons were not made by the assessee. We have gone through the submissions of both the parties and records placed on record. The ld Assessing Officer in the order has mentioned that the VJS Chawla is an Army Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving 20 acres of vast agricultural land. Payments received by way of banking methods only, filing income tax returns regularly. He has not denied any part of investments as shown by the company to his credit. Onus is to explain the sources of credit and not sources of the source. Action is required to be taken in the hands of lender not in the hands of Assessee Company. On the other hand, the ld DR has admitted that neither the address has been given nor the confirmation have been submitted by the assessee in this share application, therefore, the addition is required to be sustained. In our view, once the identity of the creditor has been established and there is no doubt about the genuineness of the transaction, therefore, the source of source cannot be enquired by the Assessing Officer. Accordingly, the addition made with respect to Shri Ashok Solanki for a sum of ₹ 7,44,162/- is hereby directed to be deleted. Unsecured loan 12. Now we shall be dealing with the cash creditors/ unsecured loan . The names, addresses and amount of the cash creditors is reproduced as under:- S.N. Name Address Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction required to be added back to the income of the assessee. 14. We have heard the rival contentions of both the parties and perused the material available on the record. We shall be dealing with each creditor separately. (i) Essaar Investment:- The assessee has not provided the address and confirmation of the Essaar Investment, therefore, the case of the assessee that the loan was taken, in our view, was not correct. In our view, the ld Assessing Officer and ld CIT(A) was right in confirming the addition, therefore, we uphold the order of the ld CIT(A) in the case of Essaar Investment. (ii) Shekhar :- Though the payment was received by cheque by the assessee, however, when the letter was written by the assessee as well as by the ld Assessing Officer,The letter returned back with remarks unclaimed. Thereafter the enquiries were made by sending the Inspector at the residence of Shri Shekhar. On perusal of the balance sheet, we notice that Shri Shekhar was merely a salaried employee and there no loan was given by him to the assessee company, as per balance sheet . In view thereof, we have no hesitation to confirm the order passed by the ld CIT(A). At bar also, during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings in response to the summons issued and further the assessee was not able to get the summons served upon them . In view thereof, the lower authorities have confirmed the addition. We have gone through the orders passed by the lower authorities, in our view, the assessee has failed to prove the identity, creditworthiness and genuineness of the transaction, therefore, the addition of ₹ 3.50 lacs has rightly be confirmed by the ld CIT(A), therefore, we also confirm the order of the ld CIT(A) in the case of Shri R.P. Tyagi. Shri Sunil Tyagi:- The assessee has submitted that the payment was received by account payee cheque was repaid by banking channel. The confirmation was also issued by Sh Sunil Tyagi on 17/12/1999. The ld Assessing Officer has added the income of Shri Sunil Tyagi to the extent of ₹ 1.50 lacs. We have gone through the records, in our view, the order of the ld Assessing Officer was passed on assumption and surmises. Once the identity has been established, the confirmation has been given and the money was received through the banking channel. There was no reason for the Assessing Officer to make addition of ₹ 2.50 lacs, accordingly, in ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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