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TMI Blog2012 (12) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... order u/s. 143(3) r.w.s. 250 of the Act was passed on 28.3.2002, once again treating the amount of ₹ 38.4 lakhs received as share capital from 23 persons as unexplained credit. 4. Thereafter, vide his order No. 630/ITO. 2(1)/CIT(A)-III/02- 03 dated 30.12.2001, the CIT(A)-III, Hyderabad partly allowed the appeal. Out of the aforementioned addition, ₹ 17,00,000/- was allowed in view of the evidence submitted but balance of ₹ 21,40,000/- was not allowed. Finally, the assessee appealed to the ITAT, Hyderabad and in their order in ITA No. 256/Hyd/03 dated 8.6.2007, the appeal was set aside to the file of the Assessing Officer with the directions to decide the issue afresh in accordance with law. The Assessing Officer completed the assessment u/s. 143(3) r.w.s. 254 of the Act by determining the total income at ₹ 38,40,000/-. On further appeal to the CIT(A), the CIT(A) allowed appeal of the assessee against which the Revenue is in appeal before us. 5. The learned DR submitted that most of the investors are petty agriculturists owning 3 to 5 acres of land. Their income would be in the range of ₹ 40,000 to 70,000 per annum and it is unbelievable, after meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the reason that the company is in inception stage and it would not have earned this amount of income from unexplained sources. He relied on the judgement in the case of Bharat Engineering & Construction Co. (supra). In our opinion,, the reasons advanced by the CIT(A) for deletion of the addition made u/s. 68 are not correct. The decision in the case of CIT v. Bharat Engineering & Construction Co. (83 ITR 187) (SC) on which reliance was placed by the CIT(A) is a case under Indian Income-tax Act, 1922. It was held in that case that a large amount of cash appearing on the very first day of the accounting year was not assessable in that year as it was not possible for the assessee to make such a huge income on the very same day on which the assessee started its business for that year. Whereas, u/s. 68 of the Income-tax Act,1961, even in a case where an amount is credited on the very first day of the accounting year and the explanation offered by the assessee is not accepted by the Assessing Officer, such amount may be assessed as income of the assessee for the accounting year for which the books are maintained. Being so, we are not inclined to appreciate the finding given by the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... butions. It is interesting to notice that the decision of Hon'ble Delhi High Court (supra) was explained by the Full Bench of Hon'ble Delhi High Court in the case of CIT vs. Sophia Finance Ltd. (205 ITR 98) and observed at page 105 as under: "In the case of Stellar Investments Ltd. (1991) 192 ITR 287 (Delhi), the Income-tax Officer had accepted the increased subscribed share capital. Section 68 of the Act was not referred to and the observations in the said judgement cannot mean that the Income-tax Officer cannot or should not go into the question as to whether the alleged shareholders actually existed or not. If the shareholders are identified and it is established that they have invested money in the purchase of shares then the amount received by the company would be regarded as a capital receipt and to that extent the observations in the case of Stellar Investments Ltd. (1991) 192 ITR 287 (Delhi) are correct but if, on the other hand, the assessee offers no explanation at all or the explanation offered is not satisfactory then, the provisions of section 68 may be invoked. In the latter case section 68, being a substantive section, empowers the Income-tax Officer to treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of other documentary evidence in the form of ration card, etc. which had neither been controverted nor disapproved by the Assessing Officer no interference was called for. The Tribunal was justified in deleting the addition. The Assessing Officer proceeded to make the impugned addition on the ground that in some case some summons issued were returned unserved and in some case summon though served but there was no compliance. In this connection, it may be mentioned that in the case of CIT v. Orissa Corporation P. Ltd. [1986]159 ITR 78 (SC), the Hon'ble court has held that when the assessee borrows the loan and if an assessee gives names and addresses of the creditors. Who are assessed to tax and full particulars is furnished then the assessee has discharged the duty. If the Revenue merely issues summons under section 131 and does not pursue the matter further, the assessee does not become responsible for the same even if the creditors do not appear. Addition cannot be made under section 68." No question of law, far less any substantial question of law arises for our consideration. We may, however, briefly reflect upon a submission made by learned counsel for the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not able to establish that the entire amount received as share subscription is the own money of the assessee company. But he has reached a dead end/enquiry and the burden has shifted on to the assessee. If we see the facts of the case in the light of the judgement of Delhi High Court in the case of Lovely Exports Pvt. Ltd. (supra), then it will be noticed that the assessee has given the identity of the subscribers but genuineness of the transaction and creditworthiness of the transaction is not established. Being so, In our opinion, the deletion of addition by the CIT(A) is not justified. 10. In our opinion, in spite of opportunities given, the assessee having failed to prove the genuineness and creditworthiness of the parties, the addition is to be sustained. We place reliance on the judgement of Delhi High Court Full Bench in the case of CIT vs. Sophia Finance Ltd. (204 ITR 98) and also on the order of the Delhi Bench in the case of Ekta Agro-Industries Ltd. v. ITO (8 DTR 239) (Delhi). Accordingly, the order of the CIT(A) is reversed and that of the Assessing Officer is restored. 11. In the result, appeal of the Revenue is allowed. Order pronounced in the open court on 20th D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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