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TMI Blog2016 (1) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... -filing of evidence before the AO. The AO ought to have scrutinized the evidence and in case, he nurtures any doubt about the veracity of the documents, the discretion is upon him to probe the matter further, which has not been done in the case in hand. He could not have discredited the documents, without giving any cogent reasons and material. Therefore, in view of the material filed by the assessee, we find that that the assessee has discharged the onus cast upon him. Addition u/s 69 - Held that:- The books of accounts of the assessee had been audited and entry reflected in the return of income and the balance sheet has been duly audited by a qualified chartered accountant. We find force in the submissions of the ld. AR that even if the AO could not have the opportunity to peruse the books of accounts of the assessee, during the assessment stage because, according to assessee, it was all with CBI and the fact of the matter is that even at the remand stage, the matter could have been looked into by the AO, which has not been done. So, in the light of the transactions through banking channel and audited books of account, it cannot be said that the investments were not reflected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /purchase of plots and development of commercial properties at Gurgaon. The assessee filed e-return declaring income of ₹ 2,06,146/- on 07.09.2009 and the same was processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter the Act ). The assessee s case was selected for scrutiny and in response to the statutory notices, the AR of the assessee attended the proceedings and filed the details / documents. The assessment was completed u/s 143(3) of the Act on 21.12.2009 at a total taxable income at ₹ 2,34,57,779/- by making various additions/disallowances. 3. Aggrieved, the assessee preferred an appeal to the first appellate authority and the CIT (A) allowed the appeal of the assessee by deleting the additions/disallowances. 4. The revenue, being aggrieved, is in appeal before us by taking the following grounds of appeal :- 1. The Ld. CIT(A) has erred on facts and in law in deleting addition of ₹ 92,95,000/- made u/s 68 of the Income Tax Act, 1961, on account of share application money. The case law relied on by Ld. CIT(A) are distinguishable from the present case as the identity of the contributor is not established here. The AO made detailed investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to the identity, creditworthiness and genuineness of the transactions were filed. The AO referred the matter to the CBI vide letter dated 05.11.2009 but no reply was received from them. Accordingly, the AO proceeded to make an addition of ₹ 92,95,000/-. 7. The ld. CIT (A) deleted the addition by observing as under :- 5. The matter was remanded to the Ld. AO, vide my letter no. 252 dated 24.11.2010. This reference was under Rule 46A (1). The AO has replied vide letter no.635 dated 07.01.2011, wherein he requested for a month's time. This was granted vide my letter no. 309 dated 12.01.2011. Eventually, the remand report was received vide letter no. 1204 dated 24/1/2011. The Ld. AO has made a reference to Rule 46A (1) and has mentioned that since the application of the assessee contained the words that the documents had been acquired from different sources, the assessee could have obtained the same during the assessment proceedings itself. On the other hand, the assessee kept insisting that the documents were with the CBI. In short, the Ld. AO has opposed any adducement of additional evidence, as prayed by the assessee. 6. Copy of the remand report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been provided the copies of the document filed by the assessee in support of its claim of services rendered by the commission agent. For convenience the provisions of Rule 46A (1) (2) (3) are extracted below:- 46A.(1) The appellant shall not be entitled to produce before the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the [Assessing Officer], except in the following circumstances, namely:- (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the [Assessing Officer): or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal, or (d) where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file evidence which was not filed before the original authority. In other words the appellate authority is required to examine the circumstances 'de novo on whatever evidence that may be put before the appellate Court'. In the instant case it cannot be disputed that under the provisions of sub-so (4) of s. 92CA the AO is required to compute the total income of the assessee in conformity with the ALP determined by the TPO. Against the order of the AO, an appeal is maintainable under S. 246A of the Act. While the CIT(A) under sub-so (4) of S. 250 in disposing of any appeal before it is empowered to make further inquiry either himself or by directing the AO to do so and receive the result of the same, the assessee cannot file any fresh evidence except in accordance with the provisions of r. 46A. The r. 46A inter alia permits an assessee to adduce additional evidence only if he is able to establish that he falls under one of the following situations envisaged under the said rule: (i) Where an AO has either refused to admit evidence which he ought to have admitted; or (ii) Where the appellant was prevented by sufficient cause from producing the evidence which he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments at the time of assessment proceedings. In other words, the additional documents as requested for are allowed to be brought on record for the purpose of disposal of the appeal. 12. From the details filed by the assessee, it is observed that the assessee had filed documents relating to share application of Smt. Indu Kumar and Shri Avinav Kumar, both of whom are promoters of the company. They have filed confirmation of investment in equity shares, copy of acknowledgement of ITR, copy of bank account statement, copy of PAN card, copy of passport and the election card. Also filed are similar documents relating to Sh. Praveen Mehta, Smt. Savitri Devi, Sh. Radhey Shyam Mehto. MIs Gold Stone Financial Services Pvt. Ltd. M/s Marudhar Building Pvt. Ltd., M/s Uppercon Marketing Pvt. Ltd., M/s Super Sadiq Enterprises Pvt. Ltd., M/s Megatronix System Pvt. Ltd., M/s U.P. Electricalsl.td., M/s Sharda India Pvt. Ltd and M/s Udhav Fashion Apparels Pvt. Ltd. If the PAN for some reason has not been given, the ITR or assessments/intimation issued by the Department has been submitted. Only in the case of Smt. Savitri Devi, no PAN card or income-tax details have been given, but copy of ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that when the money is received by cheque and is transmitted through banking or other indisputable channels, genuineness of transaction would be proved. Other documents showing the genuineness of transaction could be the copies of the shareholders register, share application forms, share transfer register, etc. 14. As far as creditworthiness or financial strength of the credit/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. This judgement further holds that once these documents are produced, the assessee would have satisfactorily discharge the onus cast upon him. Thereafter, it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of these documents to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the AO and he cannot go into the realm of suspicion. 15. Based on the decision of the Delhi High Court in Oasis Hospitalities (supra), we have to dissect wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egards share application money, the AO failed to observe that out of the amount of ₹ 92,95,000/-, the amount of ₹ 41,00,000/- was not even related to the year under consideration and was received in AY 2006-07. He submitted that the assessee vide its letter dated 16.11.2009 had filed the names, addresses, PAN, payment details etc. of all the share applicants before the AO. He further submitted that despite having full particulars of share applicants, the AO did not enquire any further about the veracity of the details of the share-holders during assessment proceedings and the fact was that all documents were seized by the CBI; and further documents were submitted under Rule 46A(1) which contained copy of Form No.2 filed with ROC, copy of share application money, copy of PAN of applicants, copy of master data from ROC, copy of election card, confirmation of share applicants, copy of financial statements .of share applicants, copy of bank statements of share applicants and copies of ITR acknowledgement of the share applicants. Ld. AR further submitted that the assessee was an artificial juridical person and it could not have its own unaccounted cash. He submitted that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to CBI authorities for copies of documents, which did not invoke any response from CBI. The assessee vide letter dated 16.11.2009 had furnished the name, PAN, addresses, payment details to the AO. When there was CBI enquiry in assessee s case, the notice of the AO did not invoke any response from share-applicants is plausible, however that cannot be the sole ground to justify the addition unless the AO is able to show that details furnished by the assessee in respect to the identity of the share-holders are bogus, their PAN details are false, addresses are wrong and payment details are false. The AO ought to have verified the facts during assessment proceedings or even he could have done when the ld. CIT (A) has forwarded all the details filed before him under Rule 46A, which he did not after seeking one month s time and took three months to sent the remand report which was granted by CIT (A). So, we find that there was sufficient cause for non-filing of evidence before the AO. The AO ought to have scrutinized the evidence and in case, he nurtures any doubt about the veracity of the documents, the discretion is upon him to probe the matter further, which has not been done in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has given details with regard to loans of M/s Uppercon Marketing Pvt. Ltd. in terms of confirmation, TDS certificates, bank statement and assessment particulars. In the case of loans from Smug Pharma Pvt. Ltd., Deeas Computrade Pvt. Ltd., Marudhar Builders Pvt. Ltd., M/s Inderjeet Trade Links Pvt. Ltd., similar details have been filed. As and where intimations regarding 143(1) have not been issued or are not available, the permanent account number has been submitted. In each of the cases, the payment was made vide cheque. 19. We have already discussed the decision of the Delhi High Court in Oasis Hospitalities (supra) above. At this stage, it would be gainful to refer to the Supreme Court decision in CIT Vs. Orissa Corporation (P) Ltd. [1986] 159 ITR 78 (SC) which dealt with unsecured creditors. In that case, the assessee, at the relevant time, was a private limited company and maintained accounts according to the calendar year. For the accounting year ending on 31st Dec., 1961, corresponding to the asstt. Year 1962-63, the ITO did not accept the assessee's accounts showing cash credits of ₹ 1,50,000. Three amounts were shown to have been received by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Thus, I am deleting the addition made to the extent of ₹ 52,48,820/-. The assessee succeeds in Ground of Appeal No.3. 14. Ld. DR relied on the order of the AO and submitted that the case law relied on by Ld. CIT(A) are distinguishable from the present case as the identity of the contributor is not established here. The AO made detailed investigation by sending notice u/s 133(6) to the providers of unsecured loan and no confirmation was received during the assessment proceedings. He pleaded to set aside the order of the ld. CIT (A) and uphold the AO on this issue. 15. The ld. AR for the assessee submitted that during the course of the assessment proceedings, the AO observed that there was an increase of ₹ 52,48,820/- on account of unsecured loan and the AO required the assessee to explain the same. He submitted that vide letter dated 04.09.2009, the assessee gave a list of persons from whom unsecured loan had been obtained and further vide letter dated 18.09.2009, the assessee filed a letter containing the name and addresses of persons who had given unsecured loan. He further submitted that the assessee had also filed confirmation letter from these parties, P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Pvt. Ltd., Deeas Computrade Pvt. Ltd., Marudhar Builders Pvt. Ltd. and M/s Inderjeet Trade Links Pvt. Ltd., similar details have been filed. If the AO nurtured any doubt about the veracity of the aforesaid documents, then the AO had enough powers to call for the information, to satisfy himself, however, nothing has been done by the AO. It is not the case of the revenue that additional evidences filed during the appellate proceedings were not forwarded to the AO under Rule 46A. The CIT (A) not only forwarded the additional evidences but also granted on month s time sought by the AO to verify the veracity of the documents and the AO sent the remand report after three months. We take note that AO in his remand report has not adversely commented upon the additional documents which was in front of him for three month s time when he could have easily cross-checked about the veracity of it. As stated earlier, the basic details were with AO at the assessment stage itself, but he preferred not to make enquiries, and made the addition which was rightly deleted by the ld. CIT (A). Therefore, in view of the above, we find that the assessee had discharged the onus cast upon him. In the backgr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. 24. In the case in hand, the investment in the plot and construction thereon was made by the assessee. While, it may be true, that the Ld. AO could not have the opportunity to peruse the books of accounts of the assessee, during the assessment stage, the fact of the matter is that even at the remand stage, the matter could have been looked into. AO could have requested for permission to enquire u/s 250(4) which has not been done. I am afraid that the same has not been done. When the bank account is disclosed, through which the cheques have been issued in each of the cases, the investment in the said plot and the construction thereon cannot be taken as not recorded in the books of accounts of the assessee. Circumstantial evidence suggests ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque. The books of accounts of the assessee were also audited by R.A. Kila Co. Thus, we concur with the ld. CIT (A) that the books of accounts of the assessee had been audited and entry reflected in the return of income and the balance sheet has been duly audited by a qualified chartered accountant. We find force in the submissions of the ld. AR that even if the AO could not have the opportunity to peruse the books of accounts of the assessee, during the assessment stage because, according to assessee, it was all with CBI and the fact of the matter is that even at the remand stage, the matter could have been looked into by the AO, which has not been done. So, in the light of the transactions through banking channel and audited books of account, it cannot be said that the investments were not reflected in the books of account when there is a clear finding of the CIT (A) that the investments in building WIP was duly accounted for in the books of account and the balance sheet has been duly audited by a qualified chartered accountant. Thus, in our opinion, when the bank account is disclosed, through which the cheques have been issued in each of the cases, the investment in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been submitted at Pages 331 332 and details of the demand drafts have also been furnished which were paid through A/c No.590011000518, ING Vyasa bank, Vasant Vihar, New Delhi. Accordingly, the ld. AR wants us not to interfere with the order of the ld. CIT (A). 28. We have heard both the sides and perused the material on record. We find that the addition in dispute has been made because of the inability of the assessee to produce the books of accounts of the assessee because all documents had been in the custody of CBI. We take note that the investments were installments for plots which were made to HUDA, a Government Agency and made through Demand Drafts and have passed through banking channels and the fact is that the books of the assessee was duly audited as per the statute and reflected in the balance sheet. The verification of the books ought to have been done by the AO during the remand proceedings which took three month s time but he has not made any attempt to do so and the addition was based on conjectures and surmises. Since the installments for the plot have been paid through DD to a Government agency and the books of the assessee are statutorily audited as stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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