9911796707
TMI Blog1990 (11) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... share amount was received in subsequent year. 4. The company filed a return of income on 22nd July, 1986 for this assessment year declaring a loss of Rs. 983. However, it filed a revised return on 31st March, 1987 declaring an income of Rs. 12,49,017. This revised return was filed under the Amnesty Scheme of the Department and in this return the assessee had offered Rs. 12,50,000, being 50per cent of the public issue as income. In its letter dt. 31st March, 1987 to the CIT, Bombay City-IV, the company had stated that the disclosure of Rs. 12.5 lakhs was being made under the head "Other sources" for this assessment year notwithstanding the fact that it did not have any fictitious shareholders. The tax on this amount had also been duly paid. 5. The Assessing Officer proceeded to ascertain whether the disclosure made under the Amnesty Scheme by the assessee was full and true. So he required it to furnish two lists of shareholders, one indicating the names of those whose contribution was treated as income at this hands and another showing the names of genuine shareholders. The required lists were not furnished by the assessee. The Assessing Officer had issued notices under ss. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otor of the assessee-company. Shri Mehra had also stated that Shri R.L. Gupta is also one of the main promotors of the assessee company. The Assessing Officer had issued notices to Shri Sudhir Gupta and Shri R.L. Gupta. Both of them had appeared before the Assessing Officer and denied to have any interest in the assessee company directly or indirectly. However Shri Sudhir Gupta had stated that he had received certain deposits from the assessee company and that he was negotiating with the assessee to enter into a business understanding. The examination of Shri Sudhir Gupta revealed that the funds acquired by way of share capital by the assessee company were invested in various firms in which Shri Sudhir Gupta was interested. No interest was paid to the assessee company for the use of such funds. On the date of the assessment, the balance lying with the concerns in which Shri Sudhir Gupta was interested was found to be over Rs. 16 lakhs. 8. The Assessing Officer also noticed that proper books of account have not been maintained. Shri Mehra had stated that he has no information as to where the books of account are lying. Some discrepancies in the books of account in respect of loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be accepted as complete and true. He however, held that since during the year in question only a sum of Rs. 20,22,500 has been received by the assessee and the balance out of Rs. 40 lakhs was collected in the subsequent year, the addition in the year in question can be restricted to the actual amount collected by the assessee on or before 31st March, 1986. Thus the addition was restricted by him to Rs. 20,22,200 only. Not satisfied by his order the assessee is in appeal before the Tribunal. 11. The learned counsel for the assessee has argued that the Assessing Officer should have accepted the disclosure made by the assessee. According to him the disclosure was made in accordance with the Circular of the CBDT and all the conditions thereof had been fulfilled and in the circumstances, the Assessing Officer was not justified in not accepting the disclosure. According to the assessee's counsel the disclosure was genuine, true and complete and was made to buy peace and to avoid litigation. It has also been argued that the subscription paid by the shareholders cannot be treated as income of the assessee. According to the assessee's counsel the provisions of s. 68 of the IT Act, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT a copy of which is available at page 90 of the assessee's compilation. This letter states that the disclosure is notwithstanding the fact that the company do not have any fictitious shareholders as per its knowledge and it is difficult at this stage to scrutinise and locate them and, therefore a comprehensive list given to the concerned Assessing Officer. It was thus contended that the assessee has never admitted that there were fictitious sharesholders, and in case the Assessing Officer had any suspicion, he should have made necessary enquiries by summoning the shareholders or atleast some of them. In the alternative, it was contended that in case the assessee's disclosure is not covered by the Amnesty Scheme then the amount received by the assessee as subscription towards share cannot be considered as its income. According to the assessee's counsel, the original shareholders are still in existence except some nominal transfers. The learned counsel for the assessee has also submitted that the complete list of shareholders had been submitted to the Assessing Officer. According to him, the share money was contributed by the shareholders and it was not for the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce thereof and the assessee had failed to prove the same. If was further submitted that the disclosure by itself goes to suggest that there were shareholders which were not genuine and the existence of such shareholders which were not genuine and the existence of such shareholders was impliedly admitted by the assessee in its letter dt. 10th March, 1987 and again in its letter dt. 16th March, 1989, wherein it was stated that it is difficult to scrutinise and locate fictitious shareholders and so the requirement to furnish list of such shareholders, may be waived. 17. It was also argued that the decisions relied on by the assessee are distinguishable on facts and the assessee fails to get any support from those decisions. 18. Reference was also made to the statements of Shri Mehra as also to the statement of Shri Sudhir Gupta and it was argued that in fact no genuine company came into existence, and the entire share money deserves to be treated as the income of the assessee. 19. We have considered the rival submissions and the materials brought on record. We are in agreement with submissions of the learned Departmental Representative that the assessee fails to draw any sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiry from the assessee about the source of investment of its shareholders in the share of the assessee was unwarranted and uncalled for in the assessment of the assessee. In the case of Padmanabh Investments Co. Ltd., the Assessing Officer had reason that the contribution has been made by the directors and not by those who are shown as shareholders in some cases. It followed therefore, that the amounts so contributed does not form part of the assessee's income since the contribution has been made by others. In the case in hand the authorities below have proceeded on the findings that the shareholders are not genuine and the assessee has failed to prove the genuineness of the deposits which are entered in its books. It has been held time and again that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the IT Act. In the absence of such proof, the ITO is entitled to treat it as taxable income. In the given circumstances, the above cited decisions do not provide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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