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TMI Blog2019 (5) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) which are also provided to the AO to verify the same. AO was duty bound to invoke the necessary enquiry by way of issuance of summons u/s 131 of the Act or by way of deputing an Inspector which he fails to do so. Investors are regularly assessed to income tax and investments are not disputed and as such investments made by them are not disputed in their respective cases. The addition so made by the AO is not sustainable as rightly deleted by the ld. CIT(A), following the decision of CIT vs. Venkateshwar Ispat P. Ltd. [ 2009 (5) TMI 290 - CHHATTISGARH HIGH COURT] Unexplained cash deposits in bank account - CIT(A) has stated that the assessee has filed copy of banks statements, cash books, audited balance sheet with the relevant schedule for the relevant periods to establish the opening cash balances as an additional evidence on which the AO again did not issue any enquiries and hence ld. CIT(A) has admitted the same as an additional evidence under Rule 46A of the Rules after affording due opportunity to the AO. CIT(A) has observed that the cash deposits have been made out of the cash balance available with the assessee as on the date of deposits. CIT(A) has made spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business premises of the assessee and consequently, the assessment was completed u/s 143(3) r.w.s. 153A of the Act. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has made investment in fixed assets and NABARD Bonds amounting to ₹ 21,00,000/- and ₹ 49,87,500/- respectively during the accounting period under consideration. The Assessing Officer further noticed that the assessee has shown credit of an aggregate amount of ₹ 56,00,000/- as share application money/share premium in the Balance Sheet as on 31.03.2009. The Assessing Officer required the assesse to explain the sources of investments in share application money, fixed assets and cash deposits in the bank. The Assessing Officer being not satisfied with the explanation offered by the assessee regarding for cash deposits appearing in the bank account and receipts of share application money and, accordingly, he made an addition of ₹ 56,00,000/- as unexplained share application money and ₹ 24,00,000/- as unexplained cash deposits. 5. On appeal by the assessee, the CIT(A) has allowed relief to the assessee by admitting an additional evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4.3 I have gone through the observations of the A.O. and submissions of the appellant. The appellant has filed copies of bank statement, copy of cash book for the relevant periods, audited balance sheet with relevant schedule, to establish the opening cash balances, as additional evidences. The A.O. did not issue any query in this regard. Therefore, the same are admitted as additional evidences u/r.46A after affording opportunity to the A.O. Perusal of the cash book shows that the deposits were made out of cash balance available with the appellant as on the date of deposit. In fact the appellant has received ₹ 3,00,000/- on 01.08.2005 against the issue of shares from four investors and filed the confirmations of the concerned persons. Thus, the immediate source of the cash deposit of ₹ 1,25,000/- is verifiable from the cash book. Similarly, the cash deposits of ₹ 24,00,000/- (₹ 15,00,000/- on 16.03.2009 ₹ 9,00,000/- on 17.03.2009) is covered by the cash balance available with the appellant before the date of deposit at ₹ 25,18,938/-. It is also a fact that the appellant had withdrawn ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nhancement in returned income mainly relates to additions made u/s. 68 on account of Share Premium/Capital treated as Unexplained cash credit. GROUND NO. 1 AO s observations: (Para-4) Aggregate share application money of ₹ 54,50,000/-, ₹ 16,00,000/-, ₹ 56,00,000/- were found credited respectively in above assessment years and assessee failed to satisfactorily explain the same. In Remand report, AO contended that assessee was allowed several opportunities but he did not comply. Additional evidences can be admitted only if conditions stipulated in Rule 46 A are fulfilled, hence he objected. CIT(A) s findings (Para 3.3) Assessee filed additional evidences, which are Copies of acknowledgement of ITRs, Confirmation of Account, etc of the Investors. Though particulars of investors were filed before AO, the documents could not be filed for non-cooperation of investors who happened to be outsiders. Under such circumstances non-supply of requisite information by outside parties has to be held as sufficient cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erious doubts about the transactions. The Id. CIT(A) has rightly allowed relevant ground of appeal considering the facts and circumstances of the case and the legal position settled in this case including decision of Hon ble Jurisdictional High Court in the case of CIT vs Venkateshwar Ispat P. Ltd. (2009) 319 ITR 0393(Chattisgarh), which holds field till date. GROUND NO. 2: (A.Yr. 2006-07 2009-10) AO s observations: Cash deposit of ₹ 1,25,000/- and ₹ 24,00,000/- was made respectively in A.Yrs. 2006-07 2009-10 and assessee failed to satisfactorily explain the same. Hence he added CIT(A) s findings (Para 4.1) Assessee filed copies of bank statements, cash book for relevant period, relevant schedules of Audit Report to establish opening balances as additional evidences. A.O. did not issue any query hence, these evidences are admitted u/s.46A. The immediate source of deposit is covered by available cash balance and no adverse inference could be possible. Assessee s Submissions The Ld. A.O. d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) contending that the circumstances of the case beyond the control of the assessee resulted in non-supply of requisite information by outside party was rightly held as sufficient cause for non-furnishing evidence during the assessment proceedings by the ld. CIT(A) and accordingly, he has admitted the additional evidences under Rule 46A in the interest of justice. The said additional evidences established the identity and creditworthiness of the creditors and genuineness of the transactions. The Assessing Officer without conducting enquiries to establish otherwise, made the addition for noncompliance in technical manner cannot be sustained in the interest of justice. Over and above, most of the investors are assessed to the income tax at the same place where the Assessing Officer could have very easily invoked such enquiry, if he had any serious doubts about the genuineness of transactions. This could have been done either by the summons u/s 131 of the Act or even by deputing Inspector, which was not done. These facts have not been controverted by the ld. DR. The contention of the ld. DR that no details have been filed before the Assessing Officer in respect of sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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