9911796707
TMI Blog2018 (3) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 68 of the Income Tax Act, 1961. 2. The assessee in the present case is a company. In the assessment originally completed under section 143(3)/147 vide an order dated 18.05.2010, its total income for the year under consideration was determined by the A.O. at Rs. 68,410/-. The said assessment was subsequently set aside by the Ld. CIT(A) vide an order passed under section 263 on 26.03.2013 with the direction to the A.O. to make the assessment fresh as per the following directions: "The A.O. is directed to: i. Examine the genuineness and source of share capital, not on a test check basis, but in respect of each and every shareholder by conducting independent enquiry not through the assessee. The bank account for the entire period sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee on account of fresh said capital introduced during the year under consideration for the following reasons given in the assessment order dated 31.03.2014 passed under section 147/143(3)/263/143(3) of the Act: "The fact is that the share capital of the company raised in the F.Y. 2007- 08. Only the then directors can explain and establish the genuineness of fresh share applicants. But there was no compliance by any of them till passing of this order. Due to their non-compliance with summons issued to them u/s 131 to appear before the undersigned, their statement could not be recorded to establish genuineness of the claim that they had raised the share capital in question in their capacity as the then directors of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from undisclosed source of the relevant previous year and the same had been introduced in the company as share capital. Hence, the amount shown as fresh share capital introduced Rs. 36,43,50,000/- is added to asessee's total income." 4. Against the order passed by under section 147/143(3)/263/143(3), an appeal was preferred by the assessee before the Ld. CIT(A) challenging the addition of Rs. 36,43,50,000/- made under section 68 by treating the fresh share capital introduced as unexplained cash credit. During the course of appellate proceedings before the Ld. CIT(A), a detailed submission was filed by the assessee wherein, besides challenging the addition made by the A.O. under section 68 on merit, a preliminary issue was raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeared and made the necessary compliance. The directors continuously appeared before the A.O. but he never recorded their appearance and grossly erred in concluding that the directors never appeared. Further, the directors states on oath that he appeared but his statement was not recorded. The Ld. A.O. without making any effort to examine the accounts of the share holders has concluded that because the erstwhile directors have not appeared, the genuinity of the transactions was not proved beyond doubt. 2.5 The only reasons making addition was that the directors of the assessee company did not appear so the impugned fresh capital of Rs. 36,43,50,000/- could not be verified and remain unverified / unexplained. The very premise of making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directors of the assessee company had not appeared before the A.O. in response to his summon issued u/s 131 and the assessee also failed to produce them before the A.O. The presence of the persons working as directors of the assessee company when the alleged share application money was raised was of immense importance to understand the modus-operandi of the business and to establish the genuineness of the transactions and creditworthiness of the subscribing companies. The assessee, therefore, failed to prove the identity and capacity of the so-called share-holders along with the genuineness of the transactions. This being the issues and also considering the pernicious practice of conversion of unaccounted money through masquerade of invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by them in response to the said notices in the form of statement of source of fund, copies of relevant bank statements, copies of allotment letters, copies of IT returns and audited balance sheet etc. was not taken into consideration by the A.O. while deciding the issue under section 68 and this position clearly evident from the assessment order is not disputed even by the learned DR. 7. Moreover, a perusal of the assessment order passed by the Assessing Officer also shows that the reason for non-compliance to the notices issued under section 131 on the part of Mr. M.K. Kedia and Mrs. Sarita Devi Kedia, the then two directors of the assessee company was explained by them as due to change in address and a further opportunity was also sou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
