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TMI Blog2017 (3) TMI 1521X X X X Extracts X X X X X X X X Extracts X X X X ..... inutes of resolutions authorizing the applications, copies of balance sheets, profit and loss accounts for the year under consideration and even bank statements showing the source of payments made by the companies to the assessee as well as their master debt with ROC particulars. The AO strangely failed to conduct any scrutiny of documents and rested content by placing reliance merely on a report of the Investigation Wing. This reveals spectacular disregard to an AO’s duties in the remand proceedings which the Revenue seeks to inflict upon the assessee in this case. No substantial question of law X X X X Extracts X X X X X X X X Extracts X X X X ..... n the share capital of a company must be firmly excoriated by the revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a public issue. the Company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The Company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer take such repudiation at face value and construe it, without more, against the assessee. (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation. iii) CIT vs. Value Capital Services Ltd. (2008) 307 ITR 334 (DeI.) - Hon'ble Delhi High Court has held as under:- "5. While setting aside the order of the Commissioner of Income-tax (Appeals), the Tribunal relied upon two decisions of this court, namely CIT v. Stellar Investment Ltd. [1991J 192 ITR 287 and a Full Bench decision in CIT v. Sophia Finance Ltd [1994] 205 ITR 98. Several other decisions have been rendered by this Court following the above two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008] 216 CTR 195 considered the question as to whether the share application money can be regarded as undisclosed income under Section 68 of the Income Tax Act, 1961. The Supreme Court dismissing the SLP observed that if the share money is received by the assessee company from alleged bogus shareholders whose names are given to the Assessing Officer, then the Department is free to proceed to assess them individually in accordance with law. The Supreme Court did not find any infirmity with the impugned judgment of the High Court which was a common order along with the decision in CIT v. Divine Leasing & Finance Ltd. [2008) 299 ITR 268 (Delhi). Since the Commissioner of Income-tax (A) has not only found that the identity of each of the shareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction after receiving the evidences (in the remand proceedings in terms of Rule 46A(3) of the Income-tax Rules,1962) which had been produced by the assessee in support of its claim it was very much open to the A.O. to do his independent enquiry and verification, This has not been done by the A.O. Though, the share-applicants could not be examined by the AO, since they were existing on the file of the Income Tax Department and their income-tax details were made available to the AO, it was equally the duty of the AO to have taken steps to verify their assessment records and if necessary to also have them examined by the respective AOs having jurisdiction over them (share-applicants), which has not been done by him. 5.5 The AO has also gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on the decision of the jurisdictional High Court, i.e. Delhi High Court in CIT v. Pradeep' Kumar Gupta and- Vijay Gupta (2008) 303 ITR 95 (Del) wherein it was held that reopening of assessment is not permissible on mere adverse statements from others. Such statement by itself does not constitute information. unless the Assessing Officer has made enquiries thereon and inferred understatement or Income. 1am therefore inclined to agree with the submissions made on behalf of the appellant to the effect that the information ,if any, gathered behind the back of the assessee without being subjected to crossexamination cannot be fully admitted as evidence against the assessee. 5.6 Under the facts and circumstances of the case stated abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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