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TMI Blog2013 (11) TMI 1690X X X X Extracts X X X X X X X X Extracts X X X X ..... see is a private limited company and it was its first year of business. Since this year was the first year of incorporation, share capital of ₹ 42,17,250 was shown by the assessee, out of which 5 directors, who have brought the money amounting to ₹ 25,00,000. The AO asked the assessee to furnish confirmation of all the share application money and to produce the persons for verification. The assessee produced some persons for examination, statements of whose were recorded. Summons under s. 131 of the IT Act, 1961 (hereinafter referred to as 'the Act' in short) were issued at the address given, but most of those returned back with the remark of postal authorities that incomplete address/refused/receiver not found at the given address etc. The AO considered the share application money of ₹ 14,16,350 as unexplained investment in shares by the assessee and added the same to the total income under s. 68 of the Act. 4. Being aggrieved, the assessee carried the matter to the learned CIT(A) and submitted that the AO accepted the share capital to the extent of ₹ 25,00,000 being contribution made by the directors. It was further stated that complete names an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, confirmation filed by the assessee was not subject to verification. Remand report of the AO was forwarded to the assessee for counter comments. In response, the assessee submitted that the said company was assessed to tax at Jaipur having PAN AACCP5185E, the assessee received 2 cheques from the said company and the director of the company had issued confirmation letter at the time of original assessment. Therefore, the transactions executed during 2000-01 were fully verifiable from the bank account of the assessee and cross-verifiable from the confirmation of the director of M/s Pankaj Stones (P) Ltd. It was contended that the AO had not made any independent enquiry before furnishing the remand report. 7. Learned CIT(A) after considering the submissions of the assessee observed that the AO in his remand report himself accepted the B genuineness of the transaction in the case of Smt. Pushpa Devi Kothari and had not conducted any independent enquiry in the case of M/s Pankaj Stones (P.) Ltd., in spite of the fact that the assessee furnished complete details to AO i.e. bank account, PAN etc. He, therefore, deleted the addition to the extent of Rs, 7,50,000 (Rs. 5,00,000 + &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment of the income of the assessee never doubted the genuineness and bona fides of the transaction so entered between the seller and purchaser. The assessee explained the nature of the land, which was originally purchased by M/s Manjushree Minerals Ltd., Calcutta. The said company sold the land to M/s Ritu Industrial Minerals (P) Ltd., who sold it to the assessee. It was further stated that the vendor had installed marble sawing units on the said land in 1983 which remained inoperative since 1991 and the board of directors of the vendor-company by its resolution dt. 24th March, 2000 had approved sale of the land to the purchaser for consideration of ₹ 5,00,000. It was also stated that in respect of the said land, stamp worth ₹ 50,000 was borne out by the seller and ₹ 5,110 being registry expenses was borne by the assessee, but the Registrar charged additional stamp duty of ₹ 20,000 plus ₹ 3,12,530. It was stated that the assessee duly disclosed the name and address of the seller, which was also mentioned in the registry documents and the seller obtained necessary clearance certificate under s. 230A of the Act from the IT Department. It was stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ritu Minerals Industries (P) Ltd. for ₹ 10,00,000 on 10th April, 2000. The assessee operated the machinery and carried out the activities till September, 2004, after that, it was lying closed and the plant and machinery had been given on contract in the year 2006 as the assessee could not afford to run on its own. Learned CIT(A) observed that as far as valuation of the land and machinery is concerned, short payment of stamp duty of ₹ 6,39,020 to the Registrar did not amount to understating the value of the land and machinery as the payment of short stamp duty of both the land and machinery had been paid through demand draft and shown in the books of accounts He further observed that the provisions of s. 50C of the Act had come into force from 1st April, 2003 and the same was not applicable to the case of the assessee as the assessment year under consideration is 2001-02. Learned CIT(A) was of the view that the burden of evidence was on the Revenue to show that the assessee paid more consideration than the amount disclosed in the sale deed, but no such evidence was placed on record by the AO. Learned CIT(A) pointed out that the written down value (WDV) of the machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Merely on the basis of the fair market value no addition can be made under s. 69B of the IT Act, 1961, but on the basis of sufficient material on record some reasonable inference can be drawn that the assessee has invested more than the amount shown in the account books and an addition can be made under s. 69B. 16. In the present case also the AO made the addition merely on the basis of value taken by the Registrar for stamp duty purposes, but nothing was brought on record to substantiate that the assessee had invested more than the amount shown in the books of accounts. Therefore, addition made by the AO was not justified. 17. On a similar issue, the Hon'ble jurisdictional High Court in the case of Krishna Kumar Rawat (supra) has held as under : The market rates for the purpose of registration of an immovable property as notified by the Sub-Registrar can also have no application for determining the market value under Chapter XX-C of the Act. It is limited only for payment of the stamp duty. 18. We, therefore, considering the totality of the facts and in view of the ratio laid down by the Hon'ble jurisdictional High Court in the aforesaid referred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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