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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 ..... e for the year under consideration declaring a loss of Rs. 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 Rs. 10 each and also having unsecured loans to the extent of Rs. 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 thereafter the ld Assessing Officer has invoked the provisions of law and made additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 allowable 1/2. Therefore, A.O. is directed to recalculate 1/2 depreciation and allow the same. On this ground of appeal the addition is enhanced." 4. Similarly, the ld CIT(A) after detailed discussions have sustained the addition of Rs. 34,23,715/- U/s 68 of the Act for cash credit of shares and loans. The finding of the ld CIT(A) is reproduced as under:- "5.3. I have gone through the assessment order as well as submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 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 Rs. 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 prior to 30th September, 1996 as the assets became part of the block of assets. Therefore, the assessee is entitled to depreciation on the written down value as per Section 32 of the Act for the entire period. 6. On the other hand, the ld DR has submitted that the assets were not put to use prior to 30/09/1996 and it was a shame transaction. It was further pointed out that during the subsequent months, there was no production as is clear from the chart given in the assessment order, therefore, it was submitted that the assessee is not entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Services Ltd V/S JCIT 10 DTR 593(Del). (viii) Meera Engineering & Commercial Industries Co. P. Ltd. v/s ACIT 58 TTJ 527(Jab). (ix) Allen Bradley India Ltd. v/s DCIT (2002) 80 ITD 43 (Del). (x) Uma Polymers Pvt. Ltd. v/s DCIT (2006) 101 TTJ 124 (JD) (TM) (xi) Progressive Ltd. v/s ITO (1991) 40 TTJ 595 (Cal) (xii) CIT v/s Gangour Investment Ltd. (2009) 18 DTR 242 (Del) - Held subscription forms of investors, PAN & addresses filed. TT Ltd had share capital of Rs. 3.4 Crore. (xiii) M/s Bharti Syntex Ltd. v/s DCIT (2011) 137 TTJ 82 (JP) (xiv) ITO v/s Superline Construction Pvt. Ltd. ITA No. 3645 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 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. 11.3 Smt. Bhagyawati and Mr. Rakesh Malhotra:- In both the cases, the shares were allotted by the assessee company and the assessee has provided address of the allottee of the shares namely C-88, Vikash Puri, New Delhi. However, the Inspector doubted the transcation and has given report , stating therein that As per Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby 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 and posted at Mumbai. However, the contact could not have been established as the phone was being picked up by the P.A.. In our view, the more enquiry was required to be made by the Assessing Officer. In absence of thorough and proper enquiry, the addition cannot be made by the ld Assessing Officer. The assessee, in our view, was able to discharge his primary onus of proving the identity of the persons and genuineness of the transactions. Since VJS Chawla was working in the Army, therefore, the creditworthiness of the government official cannot be doubted. Accordingly, in our view, the addition of Rs. 50,000/- in respect of V.J.S. Chawla and Chinki Chawla is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 1 Essaar Investment No address provided(AO pg. 8) 200000/- 2 Shekhar WZ-505, Basidarapur, N.D. 300000/- 3 H.R. Tyagi WZ-105, Basidarapur, N.D. 649550/- 4 R.P. Tyagi WZ-505, Basidarapur, N.D. 350000/- 5 Sunil Tyagi WZ-505, Basidarapur, N.D. 250000/- 6 Umesh Tyagi WZ- 13, Vikas Puri New delhi 150000/- The ld AR of the assessee has submitted that the assessee has received amount through cheques and repaid the amount through cheques, therefore, the ld Assessing Officer and ld CIT(A) has wrongly confirmed the addition of Rs. 18,99,000/-. It was also submitted that the amount appears in the ledger of the assessee and also in the ledger of the creditors. It is also the case that the loan amount of Shri Umesh Tyagi at sl. No. 22 had been rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar also, during the course of argument, the ld AR has failed to rebut the conclusion drawn by the ld Assessing Officer, therefore, the order of the ld CIT(A) is required to be upheld and we uphold the order of the ld CIT(A) in the case of Shri Shekhar. (iii) H.R. Tyagi, R.P. Tyagi and Sunil Tyagi:- The Assessing Officer have examined the balance sheet of Shri H.R. Tyagi as well as the company, it was noticed by the ld Assessing Officer that there was a major difference in their accounts of both i.e. assessee as well as Shri H.R. Tyagi. We have gone through the record in our view there is major difference in the accounts/ balance sheet of H R Tyagi and assessee which the assessee has not been able to explain the during the course of argument hence the assessee has failed to prove the identity, creditworthiness and genuineness of the transaction, therefore, the addition of Rs. 6,49,550 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 H.R. Tyagi. Shri R.P. Tyagi, In respect of Shri R.P. Tyagi, though the confirmation was received on 17/12/1999 but however, when the Inspector was directed to verify from Shri R.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) to the extent of Rs. 2.50 lacs is required to be deleted. Accordingly, we delete the addition of Rs. 2.50 lacs in the case of Shri Sunil Tyagi. (iv) Shri Umesh Tyagi:- The ld AR of the assessee has submitted that a payment was received through account payee cheque and repaid by account payee cheque. The confirmation was also given by the assessee on 17/12/1999. It is the case of the assessee that despite the confirmation received in the office of the Assessing Officer by way of record of ROC, the additions were made. On the other hand, the ld DR has relied on the order of the ld CIT(A). We have gone through the submissions of both the parties and material available on the record. The assessee has categorically mentioned that Shri Umesh Tyagi on the visit of Inspector to his premises has sought time of 3-4 days to file reply. However, no reply was filed and thus the amount of Rs. 1.50 lacs was added U/s 68 of the Act in the income of the assessee. During the course of argument, the ld AR failed to contradict the categorical findings recorded by the ld Assessing Officer by way of cogent evidence. Accordingly, we have no hesitation to confirm the addition of Rs. 1.50 lacs. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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