TaxTMI 
TaxTMI 
2004 (6) TMI 280
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....O had clearly established that the above creditor was a benami company of Shri KC Hazarika; (ii) despite the fact that Shri KC Hazarika had admitted in his statement before the IT authorities that he was the real controller of the above company, that he only provided the above entries on commission basis to the assessee, that advance given by the above company was a bogus and sham transaction, and that the above company acted as a conduit to plough back the money of the assessee-company in the garb of advances; (iii) despite the fact that the statement of Shri KC Hazarika constituted a clinching evidence against the assessee." 2. The assessee is a company which derives income from the business of purchase and sale of shares and interest ....
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.... The AO who was in possession of the above information called upon the assessee to show cause as to why the amount of Rs. 1 lakh invested as share capital by M/s SBPPL be not treated as assessee's income under the provisions of the s. 68 of the IT Act. In response, the plea of the assessee before the AO was that M/s SBPPL is a company which has been duly incorporated under the Companies Act and that on such incorporation, it is considered to be a person in the eye of law. It was also contended that the identity of the creditor having been established by the assessee, no addition can be made under s. 68. The assessee in this regard relied on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sofia Financial Ltd. (1993) 113 C....
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..... Thereafter, the AO referred to several judicial decisions rendered under s. 68 of the IT Act and finally concluded that the assessee failed to establish the identity of the shareholder, capacity of the shareholder and genuineness of the transaction. 5. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A). The contentions of the assessee before the CIT(A) were as follows: (a) That the AO relied upon the statement of Shri Hazarika which was recorded in some other case. It was also contended that neither the directors of SBPPL nor its shareholders were examined by the AO before coming to a conclusion that the company M/s SBPPL is benami of Hazarika. (b) It was also contended that without confronting the sta....
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.... the fact as to who are the real beneficiaries of SBPPL or the SBPPL was the Benami of Hazarika. Aggrieved by the order of the CIT(A), the Revenue is in appeal before us. We have heard the submissions of the learned Departmental Representative as well as learned counsel for the assessee. The learned Departmental Representative drew our attention to the order of the assessment and submitted that in the light of clear statement of the Hazarika in the course of search it was evident that SBPPL was the benami of Hazarika. Further, statement of Hazarika that whatever transactions done by benami company were not genuine transactions and that they were the transactions done by Hazarika for a commission/brokerage and the fact that cash was taken pr....
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....ed the rival submissions. It is not in dispute that the assessee-company in discharge of its onus to prove the genuineness of the credit found recorded in its books of account, filed confirmation from the shareholder, viz., SBPPL. The assessee also filed a copy of the assessment order for the asst. yr. 1993-94 of M/s SBPPL. There was a search in the case of Hazarika group of concerns and in the course of such search a statement was given by Shri KC Hazarika, the details of which we have referred to earlier. The AO merely informed through notice under s. 143(2) about the statement in the case of Shri Hazarika group and called upon the assessee to show cause as to why an addition under s. 68 of the IT Act should not be made. The plea of the a....