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TMI Blog2024 (12) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... not find any justification in observations made by the Assessing Officer that the aforesaid two companies provided accommodation entries to the assessee company. It is also admitted facts that the AO has not brought on record any contrary evidences that negates the legal evidences adduced by the assessee company. AO appears to have simply dismissed the evidences provided without assigning any valid reasons, other than the statement recorded by the Department in some other case, the contents of which were also not provided to the assessee company. In view of the above fact, the action of the AO is found to be untenable. It is also admitted facts that during the course of assessment proceedings. the assessee company s counsel had requested the Department to supply copies of the statement and other material based on which the Department had taken an adverse view against the assessee company. We find that the Department has neither provided nor had granted opportunity to cross examination. Whereas, the Assessing Officer on basis of statement of one unrelated person, proceeded to made addition to income of the assessee as unexplained cash credit under section 68 of the Act. It was incum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A)-2, Nagpur erred in not appreciating the larger vicious cycle wherein larger network created to provide accommodation entries. 3. Any other ground which may be raised during the course of hearing. 3. Fact in Brief :- In the present case, the assessee was engaged in the business of construction, filed its return of income on 11/10/2010 for the year under consideration. The case was re opened on the basis of information received from DCIT, Central Circle-1(1), Ahmedabad, that the assessee had obtained accommodation entries worth ₹ 1,50,00,000, from M/s. Pravhav Industries Ltd. and ₹ 65,00,000, from Avance Technologic Ltd. Notice under section 148 of the Income Tax Act, 1961 ( the Act ) was issued on 16/03/2016, in response to which the assessee submitted copies of Audited Balance Sheet, PAN details, Memorandum and Articles and Association and agreement of sale along with other details which were called by the Assessing Officer from time to time. During the previous year relevant to the assessment year 2010-11, the assessee had received advance against booking of property through proper banking channels as per agreement of sale and no share premium were received and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The appellant encloses herewith copy of notice U/s. 148 and reply, which is on Page-17 17A of the Paper Book. Since it was mandatory to e-file the return of income in response to notice U/s. 148 the appellant has again e-filed the return of income on 28/06/2016 declaring total income at Rs. NIL. Notice U/s. 142(1) has also been issued to the appellant on 15/07/2016 alongwith reasons for re-opening of case. In response to notice the appellant has submitted the reply and raised objection for issuing of notice U/s. 148. The appellant encloses herewith copy of notice U/s. 148 and reasons alongwith objection reply, which is on Page-18 To 21A of the Paper Book. In the reasons for reopening the assessing officer has stated that the basis of information received from DCIT, Central Circle-1(1), Ahmedbad that the appellant has obtained accommodation entries worth of Rs. 1,50,00,000/- from M/s. Prabhav Industries Ltd. A search and survey action was carried out at the residence and office premises of Shri Shirish Chandrakant Shah at Mumbai, who is engaged in providing accommodation entries of shares premium from various clients and against this cash provides these accommodation entries. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in position to return booking advance after deduction of interest due to the both company, since the appellant had already invested the aforesaid sum in its project. In order to avoid any further litigation in the matter it was amicably decided between appellant and directors of M/s. Prabhav Industries Ltd. and M/s. Avance Technologies Limited that appellant will allot equity shares of the appellant company to M/s. Prabhav Industries Ltd. and M/s. Avance Technologies Limited. In respect of said transaction both the parties entered in to modification agreement on 16/12/2012. The appellant submitted herewith copy modification agreement of M/s. Prabhav Industries Ltd., which is on Page-98 to 100 and M/s. Avance Technologies Limited, which is on Page-162 To 164 of the Paper Book. Thereafter the appellant has allotted the equity shares by applying formalities for issuing of equity shares. 5.1 The appellant had submitted all the details with respect of aforesaid transaction during the course of assessment proceedings before the assessing officer, and has made the following submission A) With respect to Prabhav Industries Limited the appellant submits the following: i. The Prabhav In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nologies Limited the appellant submits the following : i. The Avance Technologies Limited is assessed to tax vide PAN AAECA5763B. The appellant submitted the copy of PAN card of Avance Technologies Limited, which is on Page-104 of the Paper Book. The appellant has also submitted the postal address of company is #505, Midas Chambers, Off.Link road, Andheri West, Mumbai 400053. The jurisdictional assessing officer of company Avance Technologies Limited is Income Tax Officer, Circle 8(1) during the course of assessment proceedings. ii. The appellant has also submitted the copy of Memorandum of association and Article of association of Avance Technologies Limited alongwith copy of certificate of incorporation during the course of assessment proceeding, which is on Page-105 To 150 of the Paper Book. iii. So far as transfer of fund the appellant has submitted bank statement of Avance Technologies Limited during the course of assessment proceedings, which is clearly showing amount transferred through proper banking channel, the appellant encloses herewith the copy of Bank Statement of Avance Technologies Limited alongwith Copy of account of Avance Technologies Limited, which is on Page-15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant for proper adjudication of the matter. As per details stated in the notice there are no incrementing documents found in respect of the appellant company. Therefore allegations made in the notice are totally denied. c. Shri Shirish C. Shah in his statement he stated and accepted that companies named M/s. Prabhav Industries Ltd and M/s. Avance Technologies Limited from whom appellant received share premium were being managed and controlled by Shri Shirish Shah and were used for providing accommodation entries of share capital/premium, share application, unsecured loan etc. but The department has not provided the copies of statement recorded of Mr. Shirish C. Shah during the course of search for proper adjudication of the matter nor Shri Shirish C. Shah have stated to whom he has provided the accommodation entries. d. The appellant also specifically denied all the allegation made by Shri Shirish Shah. The appellant once again request that all the statement were recorded behind the back of the appellant. The appellant not aware of any statement even appellant do not know to Shri Shirish Chandrakant Shah. The appellant once again request that summons U/s. 131 may kindly be iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross examine, even though the appellant has submitted the all the details of company during the course of assessment proceedings. The learned assessing officer has failed to grant opportunity being cross examine the directors and has also failed to verify the documents submitted by appellant are genuine or not and made addition on assumption and presumption basis. When all transactions were made through proper banking channel as well as duly reflected in the books of account as well as shown in audited balance sheet of the appellant. The assessing officer has also not been found any defect in the books of account as well as documents submitted by the appellant during the course of assessment proceedings. The appellant also draws attention to the following points on the basis of which appeal filed by the appellant may kindly be allowed 1. The appellant has received advance against booking of property (Showroom) for the sum of Rs. 1,50,00,000/- from Prabhav Industries Ltd and sum of Rs. 65,00,000/- from Avance technologies Limited and the same were duly shown in the books of accounts of the appellant as well as in Audited Balance Sheet of the appellant as Advance received from Bookin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the alleged investor received invested the money, then it cannot be termed as bogus. The issue is covered by the judgment in case of CIT Vs.- Creative World Telefilms Ltd. (2011) 333 ITR 100 (Bom). In such circumstances there is no justification in addition making the under section 68 of the Income Tax Act, 1961. 9. There is no evidence that the entire transaction was sham and bogus transaction. The appellant has submitted that appellant company has established identity and creditworthiness of the entities as well as proved the bonafides and genuineness of transaction beyond doubt. On the above mentioned preposition appellant placed reliance on following judgments 1) Judgment of Income Tax Appellate Tribunal, C Bench, Mumbai dated 07/02/2014 vide ITA no.1867/Mum/2012 in case of M/s. Orchid Industries Pvt. Ltd. Vs.- DCIT, CC-22, Mumbai 2) Judgment of High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction dated 20/03/2017 vide ITA No. 1613 of 2014 in case of Commissioner of Income Tax-1 Vs.- M/s. Gagandeep Infrastructure Pvt. Ltd. 3. (2011) 60 DTR 0018 (HC Gujrat) Hindustan Inks Resins Ltd. Vs.- Deputy Commissioner of Income Tax 4. (2011) 333 ITR 0269 (MP HC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference can only be drawn from the statement of A to the effect that the transaction between him, and the appellant were bogus. Therefore, it was mandatory for the Revenue to produce A for cross-examination by the appellant on their specific demand in this regard. There may well be instances where the reopening may pass muster in light of some facts, but those facts by themselves may turn out to be insufficient to preserve the assessment itself. Once ss. 147 and 148 are resorted to, the AO must first discharge the burden of showing that income has escaped assessment. It is only thereafter that the appellant has to provide all the answers. There is no reason why the initial burden of proof should not rest on the AO even whether the assessment has gone through under s. 143(1). The Tribunal has, therefore, arrived at the correct conclusion. 3. (2001) 247 ITR 0274 (SC) Prakash Chand Nahta Vs.- Union of India Ors. High Court having wrongly proceeded to dispose of the reference upon the basis that the questions challenging the validity of assessment arose upon an order passed by Tribunal in a rectification application, the impugned order is set aside and reference is restored to the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he means to make the investment and that such investment actually emanated from the coffers of the appellant company, addition was rightly deleted by the Tribunal; no substantial question law arises. 14. (2014) 368 ITR 0001 (Bom. H.C.) Vodafone India Services Pvt. Ltd. Vs.- Addl. CIT Provision of chapter X are not applicable to international transaction of issuance of equity share by resident company to its non-resident holding company at certain value, since neither capital receipts received by resident company on issuance of equity shares to its non-resident holding company nor short-fall between the fair market price of its equity shares and the issue price of the equity shares can be considered as income within the meaning of the expression as defined under the Act. On the above facts and circumstances appellant humbly request that transaction made by the appellant are genuine transaction and details submitted by the appellant true and correct. In view of the above appellant humbly request that addition made by the assessing officer may kindly be deleted and appeal filed by the appellant may kindly be allowed. 5.2 During the course of appellate proceedings, the counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic are substantially interested), and the sum of credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such appellant-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory; Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10] The appellant draw attention that section 68 is not applicable in the case of the appellant 1. The appellant has received an amount from the parties through proper banking channel; 2. The aforesaid amounts were received by the appellant against booking of property showroom for the sum of Rs. 65,00,000/- from Avance Technologies Ltd. and Rs. 1,50,00,000/- from Prabhav Inustries Ltd. the same were d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant and the same were not binding on the appellant; The learned assessing officer while passing the assessment order has placed reliance on following judgments. The judgments cited by the assessing officer in the assessment order are totally difference as compared to case of the appellant. The appellant contradict judgment, which are as under 1) (2012) 342 ITR 0169 Commissioner of Income Tax Vs.- Nova Promoters Finlease (P) Ltd. In the aforesaid case share applicant companies which are said to have subscribed to the share capital of the appellant company were found to be non-existent at all the address given to the department and the appellant failed to produce any of the directors or employees of these share applicants, and therefore, there identity is not proved and the onus cast upon it by s. 68 has not been discharged by the appellant and, therefore, addition under s. 68 in respect of share application money was justified; mere submission of share application form, PAN, names and address and RoC registration, etc. was not sufficient in view of the fact that these companies were found to be non-existent. But in the case of the appellant has proved the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, which is on Page-98 To 100 162 To 164 of the Paper Book. The appellant has submitted the PAN, addresses, Memorandum of Articles alongwith incorporation certificate, copy of return alongwith audit reports of the both companies. The appellant has also submitted the bank statement of the both companies, in which transaction were duly reflected and the transaction of the appellant were against the advance received by the appellant towards sale of property. In the case of the appellant both the companies have also confirmed the transaction by submitting the reply. In view of the aforesaid judgment cited by the assessing officer is not applicable in the case of the appellant. 3) (2008) 306 ITR 0414 (P H HC) Som Nath Maini Vs.- Commissioner of Income Tax The aforesaid case is with respect of the short term capital gain from sale of shares in view of astronomical difference between the share price of a company with a short span of 6-7 months and made addition to the income of the appellant. But in the case of appellant, the appellant has received the amounts towards booking advance against the sale of property and not received towards share application money. The appellant has alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into Agreement to Sell dated 31/03/2010 with M/s. Avance Technology Limited through its director M/s. Deepak Satyaprakash Goyal and decided to sell Showroom No. 22 admeasuring about 6835 sq.ft. situated on ground floor in Shopping Mall cum Multiplex Complex constructed by appellant, for a total consideration of Rs. 5,50,00,000/- and received a sum of Rs. 65,00,000/- towards booking advance. The appellant has duly recorded amount its books of account. Copy of the Agreement to Sell entered with M/s. Avance Technologies Limited is placed in the paper book at pages-155 to 161. Both these agreements are legal evidence and cannot be brushed aside 6.1 It is a matter of recorded that there arose disputes between the appellant and M/s. Prabhav Industries Ltd. and M/s. Avance Technologies Limited since as per terms and condition of agreement to sale, these entities had failed to make payment of balance agreed amounts within the stipulated time limit, as also the interest due thereon. The appellant having already invested the aforesaid sums in its project, was also not in the position to return the booking advance, after deduction of interest due to both the companies. Therefore, in orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The statement of Shri Shirish Chandrakant Shah was recorded behind the back of the appellant and no copy of the statement of Shri Shirish Chandrakant Shah was provided to the appellant before using it as evidence. No opportunity was granted to the appellant to cross examine Shri Shirish Chandrakant Shah. No copies of material found in search were provided to the appellant for controverting the same. It is also seen that the statement was recorded of Shri Jayesh Thakkar, the Director of M/s. Prabhav Industries behind the back of the appellant neither the copy nor any opportunity to cross examine him was provided to the appellant by the A.O. It is the case of the appellant that it did not know Shri Shirish C. Shah who is a third party. No credence can be given to the statements which were not provided to the appellant for cross examination nor can any adverse view can be taken from this statements. 6.4 The appellant has discharged its onus by filing confirmation, PAN, IT Return, addresses, Memorandum of Association, Certificate of incorporation, Auditor report, Balance sheet to prove the identity and creditworthiness of the parties. The appellant also filed the copies of agreement to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same to the appellant s income as unexplained cash credit. (iii) CIT V. Goa Sponge and Power Ltd. (Tax Appeal 16 of 2012) (Bombay High Court) wherein it has been held as under Once the authorities have got all the details, including the names and addresses of the shareholders, their PAN/GIR number, so also the name of the Bank from which the alleged Investor received money as share application, then it cannot be termed as bogus . The controversy is covered by the judgments rendered by the Hon ble Supreme Court in the case of Lovely Exports Pvt. Ltd. Vs. CIT (2008) 216 CTR (SC) 195, as also by this Court in CIT Vs. Creative World Telefilms Ltd., (2011) 333 ITR 100 (Bom.). In such circumstances, we are of the view that the Tribunal s finding that there is no justification in the addition made under Section 68 of the Income Tax Act, 1961 neither suffers from any perversity nor gives rise to any substantial question of law. The above case laws have been referred only for the proposition that if the shareholders are found to be not having adequate means, the addition can be made in the hands of the shareholders only and not the appellant company. Though, it is noted that in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned transactions cannot be treated as non-genuine merely because some of the applicants did not respond to the notice issued by the AO under s. 133(6) and, therefore, addition was not sustainable. 5. Commissioner of Income Tax Vs.- Lovely Exports (P) Ltd. (2008) 216 CTR 0195 (SC) If the share application money is received by the appellant company from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their individual assessment in accordance with law, but it cannot be regarded as undisclosed income of Appellant company. 6. Green Infra Ltd. Vs.- Income Tax Officer (2014) 98 DTR 0187 (Mum. ITAT) Expenditure and receipts directly relating to share capital of a company are of capital in nature and therefore cannot be taxed u/s. 56(1)-Share premium realized from issue of shares is of capital in nature and forms part of share capital of company and therefore cannot be taxed as a Revenue receipt-As per Section 68, initial onus was upon appellant to establish identity, genuineness of transaction and capacity of lender or depositor-Confirmation of transaction had been received by AO by issuing notice U/s. 133(6), therefore, ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only thereafter that the appellant has to provide all the answers. There is no reason why the initial burden of proof should not rest on the AO even whether the assessment has gone through under s. 143(1). The Tribunal has, therefore, arrived at the correct conclusion. 8. Commissioner of Income Tax Vs.- Steller Investment Ltd. (1991) 192 ITR 0287 (Del. HC) Notwithstanding that Assessing Officer failed to enquire into genuineness of shareholders, assessment of company could not be revised to assess the amount of share capital in the hands of company. 9. Commissioner of Income Tax Vs.- Dwarkadhish Investment (P) Ltd. (2011) 330 ITR 0298 (Del. HC) Tribunal having confirmed the order of the CIT(A) deleting the impugned addition under s. 68 holding that the appellant has been able to prove the identity of the share applicants and the share application money has been received by way of account payee cheques, no question of law arises. 10. Commissioner of Income Tax Vs.- Value Capital Services (P) Ltd. (2008) 307 ITR 0334 (Del. HC) CIT(A) having accepted the existence of the share applicants and the Revenue having not shown that the applicants did not have the means to make the invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no cross examination was allowed to the appellant on basis of whose statement the said addition was made. 6.9 I have considered the submission made by the learned counsel with respect of providing of opportunity to cross examination to the appellant, since the addition was made on the basis of statement recorded during the course of search and seizure action in a difference case and also behind the back of the appellant. I find that the AO has not issued summon u/s. 131 to the person whose statement was used against the appellant, as requested, and opportunity to cross examine was not provided to the appellant before making the impugned addition. I also find that the AO rather than made independent enquires as the assessing authority has in turn asked the appellant to produce the Directors of the two companies before the AO! Therefore, the AO expected the appellant to produce in person the Directors of the companies that had advanced monies. In fact, the AO failed to make any effort in that direction. He did not take to the logical end the half-hearted attempt at getting the Directors to appeal before him. He did not even seek the assistance of the AOs of the concerned companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or of Shri Jayesh Thakkar even though the appellant repeatedly requested the AO for cross examination of Shri Shirish Chandrakant Shah and Shri Jayesh Thakkar. If some depositor or any other person with whose evidence cash credit in question can be proved, does not cooperate in the assessment proceedings with the appellant concerned, then the appellant can also take assistance of Section 131 of the Act wherein ample powers have been given to the A.O. for compelling the attendance of witnesses. 6.11 The advances for purchase of showroom which was later converted to allotment of shares in FY 11-12, were paid by the companies by account payee cheques and copy of the bank statements have been filed on record. The entries of advances paid to the appellant are appearing in the statement of accounts of the two companies. The PAN and TAN of the companies have been intimated to the AO. The appellant also submitted the Share allotment forms issued in FY 11-12 (AY 2012-13), Balance sheet in which the said allotment is duly recorded, in respect of share allotted to the two companies. The AO has not carried out any enquiries that disproves the above transactions. 6.12 I have carefully verifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emorandum of Articles alongwith Certificate of incorporation, copy of return alongwith audit reports of the both companies. The appellant has also submitted the bank statement of the both, in which transaction were duly reflected and the transaction of the appellant were against the advance received by the appellant towards sale of property. In the case of the appellant, both the companies have also submitted the reply in response to notice u/s 133(6) issued by the AO and confirmed the transaction, which is evident from the assessment order. All these facts have not been denied or disproved by the AO. The AO has simply brushed aside all the evidences, and relied on the statement given by one of the Directors of Prabhav Industries, before the investigation wing, which is any case makes no mention whatsoever of the appellant company or any dealings of the purported nature with the appellant company. It is my view that the statement of which the AO has based the finding of unexplained cash credit in the hands of the appellant was a general statement, of the modus operandi followed by one Shri Shirish Shah, and had no bearing on the business transactions with appellant company. Unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O had any adverse information or suspicions regarding the investor companies, he could have obtained all the information about the companies if he wished so. However, I find that no corroborative documents, other than a statement of an unconnected person was used against the appellant and the AO has held that the identity was not proved. Therefore the stand of the AO in this regard is not justified. 6.15 On perusal of the documents and submission pertaining to the said share allotment transactions, it is found that the appellant has discharged its onus of establishing the identity of the purchaser/investor and genuineness of the transaction. Taking into consideration of all the above, I find merit in the argument of the counsel for the appellant that the primary burden cast on the appellant was duly discharged. The issue of primary onus is to be weighed on the scale of evidence available on the record and the discharge of burden by the appellant and facts and circumstances of the case and on that basis a reasonable view is to be taken as to whether the appellant has discharged the primary onus of establishing the identity of share applicant, its creditwor thiness and genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the creditor/subscriber fails or neglects to respond to its notices: (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the appellant nor should the Assessing Officer take repudiation at face value and construe it, without more, against the appellant, (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation: 6.16 The preceding enumeration of the circumstances of the case show that the appellant had furnished all relevant data before the AO, which, however, were not inquired into by the AO. Instead he obdurately adhered to his initial understanding that the entire transaction was neither creditworthy nor genuine. The appellant has relied upon the documents to prove that the monies had been received through banking channel from all the investor related companies; it had produced copy of bank statement, copy of Form 2 filed before ROC etc. for the year 2012-13 and the confirmation given by the remitters towards remittance of share capital etc. It could not be expected to prove the negative that the moni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of the ROC as well as their returns but failed to submit explanation regarding transaction. The assessing officer has issued summons/notices to the companies, which were returned back. In the said case appellant did not comply with the directions of the bench regarding production of any of the directors or employees of the share applicant. The appellant companies has also not been explained the nature and source of the receipt. In the present case, the appellant has cried hoarse explaining the genesis of the advance receipts and the same is backed by documents. These advances were later converted as allotment of share after about a year and half, due to specific reasons of failure to make full payment towards purchase of showrooms. 3) Som Nath Maini vs. CIT (2008) 306 ITR 0414 (P H HC) The aforesaid case is with respect of the short term capital gain from sale of shares in view of astronomical difference between the share price of a company within a short span of 6-7 months and addition was made to the income of the appellant as the genuineness of transactions were not proved. In the present case, the appellant has provided all possible documents to prove the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer under section 68 of the Act. 7. The learned Departmental Representative, Shri Vikash Agrawal, appearing for the Revenue strongly relied on order of the Assessing Officer as well as placed reliance on the following case laws: (i) Agrawal Coal Corporation (P) Ltd v/s ACIT, [2011] 63 DTR 201 (Indore ITAT) (ii) CIT v/s Nova Promoters Finlease (P) Ltd. [2012] 342 ITR 169 (Del. HC) (iii) Som Nath Maini v/s CIT, [2008] 306 ITR 414 (P H HC). 8. Per contra, at the very outset, the learned Counsel for the assessee submitted that the case laws relied upon by the learned Departmental Representative are not applicable to the facts of the present case of the assessee which are also distinguishable on facts. Further, the learned Counsel for the assessee reiterated the submissions made before the learned CIT(A) and prayed that the order passed by the learned CIT(A) is just and was passed in accordance with law. He thus submitted that the order passed by the learned CIT(A) be upheld. 9. We have heard the rival contention of both the parties, perused material placed on record and duly considered the facts of the case in the light of settled legal position and the case laws relied upon by both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payments made to assessee company and the same are placed on record. All the transactions are through proper banking channel and reflected in the books of account of the assessee company as well as aforesaid two companies. 12. It is also admitted fact that the assessee company has filed original return of income declaring ₹ nil income. It is also admitted fact the reasons for issue of notice under section 148 of the Act was for ₹ 1,50,00,000, copy of notice under section 148 was placed at Page-21A of the Paper Book. While passing the assessment order, the assessing officer has made addition of ₹ 2,15,00,000, which is contrary to the contents of the notice under section 148 of the Act served by the Assessing Officer. 13. It is also admitted fact that all the parties have confirmed their transactions stating the fact that the amounts were paid as advance against property and their confirmation which are placed at Paper Book Page 1 to 44 Paper Book Part-II. Both the companies are assessed to tax and both the parties have submitted Memorandum and Articles of companies along with acknowledgment of return of income, Audit Report with Schedule, copies of Bank Statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sunita Dhadda and others 8. Judgment of Hon ble Income Tax Appellate Tribunal, Jaipur bench A Jaipur dated 30/12/2011 vide ITA No. 751 852/JP/2011 in case of Smt. Sunita Dhadda Vs.- Deputy Commissioner of Income Tax, Central Circle-2, Jaipur 9. Hindustan Inks Resins Ltd. Vs.- Deputy Commissioner of Income Tax (2011) 60 DTR 0018 (HC Gujrat) Appellant having established identity of shareholders, addition under s. 68 could not be made on the ground that appellant failed to explain the source of credit; Department was free to proceed against shareholders in accordance with law. 10. Commissioner of Income Tax Vs.- STL Extrusion (P) Ltd. (2011) 333 ITR 0269 (MP HC) Appellant having duty furnished the name, aged, address, date of filing the application of shares, number of shares of each subscriber, there was no justification for the AO for making the addition under s. 68. 11. Commissioner of Income Tax Vs.- Orbital Communication (P) Ltd. (2010) 327 ITR 0560 (Delhi HC) Tribunal upheld the order of CIT(A) deleting addition made by the AO on account of share application money following the decision of the Hon ble Supreme Court in the case of CIT vs Lovely Exports (P) Ltd. 2008) 219 CTR (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs.- Pradeep Kumar Gupta (2008) 303 ITR 0095 (Del. HC) Reassessment-Validity-Reopening on the basis of third Party s statement-Appellant showing agriculture income-Deposition by A that he was involved in bogus transaction with the appellant and provided accommodation entries in the form of agriculture receipts-Same would constitute reason to believe that income chargeable to tax had escaped assessment-However, it was mandatory for the Revenue to produce A for cross-examination by the appellants on their specific demand in this regard-AO must first discharge the burden of showing that income has escaped assessment-Opportunity to cross-examine A denied to appellant-Reopening of assessment not therefore valid. Failure of the Revenue to produce A for cross-examination, by the appellant, assumes fatal consequences. It is true that the appellants failure to produce K had the consequence of not providing that the said person was tilling the land on their behalf. This failure cannot inexorably lead to the conclusion that no agriculture income had been generated by the appellants. Such on inference can only be drawn from the statement of A to the effect that the transaction between him, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using it as evidence. No opportunity was granted to the assessee company to cross examination Shri Shirish Chandrakant Shah. No copies of material found in search were provided to the assessee company for controverting the same. It is also seen that the statement was recorded of Shri Jayesh Thakkar, Director of M/s. Prabhav Industries, behind the back of the assessee company, Neither the copy nor any opportunity to cross examine him was provided to the assessee company by the Assessing Officer. It is the case of the assessee company that it did not know Shri Shirish C. Shah, who is a third party. No credence can be given to the statements which were not provided to the assessee company for cross examination nor can any adverse view be taken from these statements. 16. It is a matter of record that there arose disputes between the assessee company and M/s. Prabhav Industries Ltd. and M/s. Avance Technologies Ltd. Since as per terms and condition of agreement to sale, these entities failed to make payment of balance agreed amounts within the stipulated time limit, and also the interest due thereon. The assessee company has already invested the aforesaid sums in its project, and was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided to the assessee company. In view of the above fact, the action of the Assessing Officer is found to be untenable. 18. It is also admitted facts that during the course of assessment proceedings. the assessee company s counsel had requested the Department to supply copies of the statement and other material based on which the Department had taken an adverse view against the assessee company. We find that the Department has neither provided nor had granted opportunity to cross examination. Whereas, the Assessing Officer on basis of statement of one unrelated person, proceeded to made addition to income of the assessee as unexplained cash credit under section 68 of the Act. It was incumbent on the Assessing Officer to afford the assessee an opportunity of cross-examination and in the absence of such opportunity, the impugned addition is not justified. Reliance in this regard is placed on the decision of Delhi High Court in rendered in CIT v/s Ashwani Gupta [2010] 322 ITR 396, CIT v/s SMC Share Brokers Ltd. [2007] 288 ITR 345 (Del.) and D CIT v/s GVS Investments (P) Ltd. [2005] 146 Taxman 36 (Del.) where the addition made has been deleted, as the Assessing Officer passed the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the assessee company that the primary burden cast on the assessee company was duly discharged. The issue of primary onus is to be weighed on the scale of evidence available on the record and the discharge of burden by the assessee company and facts and circumstances of the case and on that basis, a reasonable view is to be taken as to whether the assessee company has discharged the primary onus of establishing the identity of share applicant, its creditworthiness and genuineness of the transaction. In this regard, reliance is placed on the judgment of the the Hon ble Delhi High Court in CIT v/s Divine Leasing Finance Ltd., [2008] 299 ITR 268 (Del.) had held as under: 13. There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the appellant it should not be harassed by the Revenue s insistence that it should prove the negative. In the case of a public issue, the Company concerned cannot be expected to know ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into by the Assessing Officer. Instead, the Assessing Officer obdurately adhered to his initial understanding that the entire transaction was neither creditworthy nor genuine. The assessee company relied upon the documents to prove that the monies had been received through banking channel from all the investor related companies, it had produced copy of Bank statement, copy of Form 2 filed before ROC, etc., for the year 2012-13 and the confirmation given by the remitters towards remittance of share capital, etc. It could not be expected to prove the negative that the monies received by it were suspicious or not genuine infusion of capital, etc. The assessee company had discharged its burden of proof in terms of the settled dicta in Divine Leasing Finance Ltd. (supra). It is only logical to expect that it the AO was not convinced about the genuineness of the said documents. He would have inquired into their veracity from the bank(s) to ascertain the truth of the assessee company s claims. Having not done so, the Assessing Officer was not justified in disregarding the assessee company s contentions that the infusion of advance/capital into its accounts was legitimate. Where the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplaining the genesis of the advance receipts and the same is backed by documents. These advances were later converted as allotment of share after about a year and half, due to specific reasons of failure to make full payment towards purchase of showrooms. 3) Som Nath Maini v/s CIT, [2008] 306 ITR 414 (P H HC) The aforesaid case is with respect of the short term capital gain from sale of shares in view of astronomical difference between the share price of a company within a short span of 6-7 months and addition was made to the income of the appellant as the genuineness of transactions were not proved. In the present case, the assessee company has provided all possible documents to prove the genuineness of transactions and booking advance. The assessee has also fulfilled its burden, but not a single document has been proven false and the onus was on the Assessing Officer to disprove the transactions which he has failed miserably. 23. Keeping in view the above ratios laid down by the judicial forums, the case laws relied upon by the Assessing Officer are on different facts, which are not comparable with the facts of the present case. In fact, these decisions go to show how the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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