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TMI Blog2024 (6) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... personal presence. Assessee, on the other hand, has explained that the observation of the Assessing Officer that there was very high premium received by the assessee as compared to the market value of the shares was wrong. He has submitted that the book value on the date of issue of shares was Rs. 191/- per each share and the shares were sold at Rs. 200/- each and therefore, the observation of the Assessing Officer simply on the basis of assumptions and presumptions was not justified. AO has not pointed out any specific doubt about the identity and creditworthiness of any of the share subscribers. Also further submitted that the assessee was having share subscription from the said subscribers for the last 10 years and all the details were furnished before the Assessing Officer. That it was beyond the control of the assessee to produce all the shareholders/directors of the corporate entities before the AO. The Assessee in this case, as noted above, explained about the identity, creditworthiness and financials etc. of each of the share subscriber company. AO, in our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessment order passed was in violation of principals of natural justice and hence the entire proceeding was bad in law and thus the assessment order be cancelled / quashed. 3) For that the order passed by the learned CIT (Appeals) is bad in law and therefore the same be reversed. 4) For that the learned CIT (Appeals) erred in confirming the interest u/s 234 A/B/C the same was unjustified and hence the same be deleted. 5) The appellant craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. 6) The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal." 3. A perusal of the above grounds of appeal would reveal that the assessee has agitated against the addition of Rs. 3,58,00,000/- made by the Assessing Officer treating share capital and share premium received by the assessee as unexplained income of the assessee u/s 68 of the Act. 4. At the outset, the ld. counsel for the assessee has invited our attention to the impugned assessment order to submit that the only observation made by the Assessing Officer in the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the assessment order would reveal that the Assessing Officer did not bother to examine a single document furnished by the assessee. He, without examining and pointing out any error or infirmity in the said documents for forming the belief that the assessee had introduced unaccounted money in the form of share capital, simply by way of a cryptic order, made the impugned additions. The relevant part of the order of the Assessing Officer is reproduced as under: "The assessee company is a closely held company in which public are not substantially interested. Keeping this in consideration, notice under section 131 were issued and sent to the assessee requiring it to appear personally along with all the Principal Officers, Directors of all the investor companies and/or individual investors as the case may be for the purpose to primarily verify the identity and credit worthiness of the shareholders and genuineness of the transaction made by them in the assessee company, as well as analysis of various entries in bank statements, cash book, ledger etc. for ascertainment of primary sources reasons for raising capital , rationality of reasons for investment by the investors procedure a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the assessee, on the other hand, has explained that the observation of the Assessing Officer that there was very high premium received by the assessee as compared to the market value of the shares was wrong. He has submitted that the book value on the date of issue of shares was Rs. 191/- per each share and the shares were sold at Rs. 200/- each and therefore, the observation of the Assessing Officer simply on the basis of assumptions and presumptions was not justified. He has further explained that the share capital was raised by the assessee for its business requirements for further investing the said amount in the group company of the assessee i.e. CNG Agrocare Pvt. Ltd which was engaged in the business of manufacturing of organic fertilizers. That the assessee continues to hold shares of CNG Agrocare Pvt. Ltd. even on date. That the share capital was raised from 9 corporate entitites and 27 individual shareholders, details of which were duly furnished before the Assessing Officer. The Assessing Officer has not pointed out any specific doubt about the identity and creditworthiness of any of the share subscribers. The ld. counsel has further submitted that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding." 7. So far as the reliance of the Ld. DR on the decision of the hon'ble Supreme Court in the case of "PCIT v/s NRA Iron & Steel (P) Ltd." (supra) is concerned, we note that the Hon'ble Supreme Court in the said case has taken note of the observations made by the Supreme Court in the "the land mark case of Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) laid down that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with the same to the assessee. In view of this, even applying the ratio laid down by the e Hon'ble Supreme Court in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd., impugned additions are not warranted in this case. 8. It has to be further noted that though powers of the ld. CIT(A) are co-terminus with the AO and the ld. CIT(A) had all the plenary powers as that of the AO. The Hon'ble Delhi High Court in the case of Commissioner of Income-tax vs. Manish Build Well (P.) Ltd. reported in [2011] 16 taxmann.com 27 (Delhi) has held that the CIT(A) is statutory first appellate authority and has independent power of calling for information and examination of evidences and possesses co-terminus power of assessment apart from appellate powers. However, a perusal of the impugned order of the ld. CIT(A) shows that the ld. CIT(A) has not discussed anything about the material facts of the case. He has not pointed out any defect and discrepancy in the evidences and details furnished by the assessee but simply upheld the order of the Assessing Officer in mechanical manner. The order of the ld. CIT(A) is a non- speaking order. The same is not sustainable as per law. 9. In view of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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