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TMI Blog2016 (10) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has filed this appeal challenging the order dated 12.12.2011 passed by Ld CIT(A)-8, Mumbai for assessment year 2008-09, wherein the Ld CIT(A) has confirmed the addition of Share Application money of ₹ 96.00 lakhs made by the AO u/s 68 of the Act. 2. The assessee received share application money aggregating to ₹ 96.00 lakhs during the year under consideration from the following persons:- a. M/s Spider Web Solutions Ltd Rs.24.00 lakhs b. M/s Saragossa Investment & Finance Rs.24.00 lakhs c. M/s Komal Commercial Ltd Rs.24.00 lakhs d. M/s Larite Industries Ltd Rs.24.00 lakhs The assessing officer made enquiries about the Share application money receipts, referred above, in terms of sec. 68 of the Act and the same has been narrated as under by Ld CIT(A):- "2.3 The appellant had filed the confirmations from the above mentioned parties during the course of assessment proceedings. The A.O. found on perusal of the confirmations furnished on record that the confirmation letters were on similar type of printed paper and on a similar letter head, contents and the font of all the four confirmation letters were same. This led to the suspicion of the A.O that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor. Even the address given in the affidavits were not correct and therefore the parties could not be located by the inspector. Thereafter the summons were issued and sent through posts which were returned back unserved. Information was also collected from the banks in which these four companies had their bank accounts and through which the cheques were given to the appellant." The assessing officer also collected account copies of share applicants from their respective bank accounts and noticed that some accounts were closed subsequently. Further the closing balance available in those accounts were small amounts, even though there was deposits and withdrawals of huge amounts. 3. In view of the above, the AO finally concluded as under:- "From the above discussion, it is held as under:- (i) Most of the addresses given of these companies appear to be fake. (ii) The business of all the four companies appears to be providing accommodation entries. (iii) The frequency and quantum of deposits and withdrawals in their bank accounts without generation of any substantial income further strengthens this belief. (iv) Two bank accounts namely M/s. Spider Web Solutions and M/s. Sar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quiet for a long time and they have made investments in several other companies, besides the assessee. He submitted that the assessee has furnished the copies of their incorporation certificate, PAN details, the Annual report and income tax returns. He submitted that the share application money was given by the applicants by following proper procedure through banking channels. He submitted that the assessee could not prevail upon the share applicants and their directors to co-operate with the assessing officer and their non-cooperation should not have been considered to take adverse view against the assessee. He submitted that the assessee has fully discharged the initial burden of proof placed upon it u/s 68 of the Act and accordingly submitted that the impugned addition is liable to deleted. 6. On the contrary, the ld D.R submitted that the assessee did not offer proper explanation for non-appearance of share applicants and their respective directors. He submitted that the notices issued by the AO were returned back unserved and in some cases, the parties did not respond. Further, the Inspector could not locate the addresses of some of the directors also. He submitted that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how that they have made impugned investments out of their own funds only. The following table clarifies this position:- Name of Share Applicant Investment Own Funds a. M/s Spider Web Solutions Ltd Rs.24.00 lakhs 200 lakhs b. M/s Saragossa Investment & Finance Rs.24.00 lakhs 250 lakhs c. M/s Komal Commercial Ltd Rs.24.00 lakhs 406 lakhs d. M/s Larite Industries Ltd Rs.24.00 lakhs 248 lakhs All the share applicants are also regularly filing return of income and the assessee has furnished copies of returns of income filed by them. It is seen that these companies have made other investments also. Thus, we notice that the assessee has discharged the initial onus placed upon it u/s 68 of the Act. 10. The tax authorities have made the addition only for the reason that the directors of share applicant companies did not respond to the notices/summons issued to them and the non-compliance has been interpreted by them as cases of providing accommodation entries. In this regard, the Ld D.R also placed reliance on the decision rendered by Hon'ble Delhi High Court in the case of Nova Promoters & Finlease (P) Ltd (supra). We have noticed that the facts prevailing in each cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther cases fall under the category of Orissa Corporation (P) Ltd. (supra). However, in the case of Oasis Hospitalities (P.) Ltd., there is reference to information received by the Assessing Officer from the investigation wing of the revenue on the basis of which it was found that six investors belong to one Mahesh Garg Group who were not carrying oil real business activity and were engaged in the business of providing accommodation entries. They were entry operators and the assessee in that case was alleged to be a beneficiary. While disposing of these appeals, this court observed: - "The Assessees filed copies of PAN, acknowledgement of filing 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 not produced in spite of specific direction of the AO instead of taking opportunities in this behalf. Since the so-called Directors of these companies were not produced on this ground coupled with the outcome of the detailed inquiry made by the Investigating Wing of the Department the AO made the addition. This addition could not be sustained as the primary onus was discharged b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Incorporation a. M/s Spider Web Solutions Ltd 14-07-1992 b. M/s Saragossa Investment & Finance 20-07-1992 c. M/s Komal Commercial Ltd 26-12-1997 d. M/s Larite Industries Ltd 28-03-1985 In our view, these companies cannot be considered to be the types of flight by night operators, since they have been incorporated long back. Further, it is an undisputed fact that these companies are regularly filing their income tax returns and Company returns. Hence we are of the view that the tax authorities have only entertained presumption that they have provided accommodation entries. We have seen that the assessee has discharged the onus placed upon it and hence, as held by the Hon'ble Supreme Court in the case of CIT Vs. Orissa Corporation (P) Ltd (159 ITR 78) and the Hon'ble Delhi High Court in the case of Hospitalities (P) Ltd (supra), the assessee cannot be penalized for the failure of the AO to discharge the burden shifted upon him. Accordingly we are of the view that the Ld CIT(A) was not justified in confirming the addition. Accordingly we set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned addition. 13. In the result, the appeal filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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