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TMI Blog2013 (2) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and 142(1) of the Income Tax Act, 1961 (for short the Act) along with questionnaire were served on the assessee. The Assessing Officer observed that the promoters of the assessee company contributed only ₹ 1 lakh towards share capital and ₹ 50 lakh were contributed by seven private limited companies situated at Delhi. In the course of assessment proceedings notices u/s 133(6) of the Act were issued to all seven companies. Out of these, four notices were received back unserved by the postal authorities and none of the three companies on which notices were served replied in response to the notices. The Assessing Officer confronted the assessee and the assessee submitted the confirmation from all the seven companies. The Assessing Officer noted that the letterheads, on which replies have been submitted, do not contain any telephone number, email id and the Assessing Officer again asked the assessee through notice u/s 142(1) of the Act to submit the status of the shares as on date, the basis of the contract with the companies/persons who have invested huge amount in the company, complete name and addresses of the persons/consultants/brokers through which the investment de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the share capital was filed before the AO and the AO has not given any basis for his observation regarding accommodation entries. Moreover the decisions in the cases CIT vs. Stellar Investment Ltd. 251 ITR 263 (SC) and CIT vs. Value Capital Services Pvt. Ltd 307 ITR 334 (Delhi) are squarely applicable in this case. The onus is on the department to show that the share capital is represented by undisclosed income of the appellant. The AO has not brought any material on record to show that the share capital has been invested by the appellant. The AO is not justified in adding the share capital of ₹ 50 lacs u/s 68 of the I.T.Act. The adidtion of ₹ 50 lacs is ordered to be deleted. Now, the aggrieved revenue is before this Tribunal with this second appeal. 5. We have heard rival arguments of both the parties and carefully perused the records and case laws citations placed before us. Ld. DR submitted that the Assessing Officer rightly held that the assessee company has raised share capital from the seven companies situated at Delhi by way of accommodation entries and also the assessee company has failed to give satisfactory explanation in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order, we are unable to see any action from the Assessing Officer which shows that the Assessing Officer ever tried to verify the details, documents and evidence submitted by the assessee except an act of issuance of the notices u/s 133(6) of the Act. 8. In the case of C.I.T. vs Fair Invest Ltd. (supra), the Hon ble Jurisdictional High Court of Delhi has held as under:- 6. This Court has considered the submissions of the parties. In this case the discussion by the CIT(Appeals) would reveal that the assessee has filed documents including certified copies issued by the Registrar of Companies in relation to the share application, affidavits of the Directors, Form 2 filed with the ROC by such applicants confirmations by the applicant for company s shares, certificates by auditors etc. Unfortunately, the assessing officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr. Mahesh Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court has observed, in the context of Lovely Exports (P) Ltd. (supra), as under: - The ratio of a decision is to be understood and appreciated in thebackground of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec.68 and the remedy open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed accommodation entry providers , whose business it is to help assessees bring into their books of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of the assessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was ₹ 55,50,000/- and not ₹ 1,11,50,000/- as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is found correct. As such the unexplained amount is to be taken at ₹ 55,50,000/-. The assessee has further tried to explain the source of this amount of ₹ 55,50,000/- by furnishing copies of share application money, balance sheet, etc. of the parties mentioned above and asserted that the question of addition in the income of the assessee does not arise. This explanation of the assessee has been duly considered and found not acceptable. This entry remains unexplained in the hands of the assessee as has been arrived by the Investigation wing of the Department. As such entries of ₹ 55,50,000/- received by the assessee are treated as an unexplained cash credit in the hands of the assessee and added to its income. Since I am satisfied that the assessee has furnished inaccurate particulars of its income, penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from the assessee and the assessee company submitted written confirmations including PAN No., bank statement and other details to establish the genuineness of the transaction. We also observe that the DR has not disputed the point that the share application money was received by the assessee through banking channels. 12. In view of above, we hold that the Assessing Officer did not bother to verify or examine the evidence, documents and details submitted by the assessee in support of his contention and the same remained unverified. The Assessing Officer proceeded to reject the submissions and other details and evidence of the assessee without any verification and made an addition of ₹ 50 lakh u/s 68 of the Act. In this situation, we are inclined to hold that the action of the Assessing Officer was not sustainable in the light of recent judgment of Hon ble Jurisdictional High Court of Delhi in the case of Commissioner of Income Tax vs Gangeshwari Metal Pvt. Ltd. (supra) and the Commissioner of Income Tax(A) rightly held that the Assessing Officer has not given any basis for his observation regarding so-called accommodation entries. The Commissioner of Income Tax(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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