TaxTMI 
TaxTMI 
2013 (1) TMI 624
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....impugned order dated 19.12.2011 fell into error in upholding the order of the appellate commissioner which directed deletion of Rs. 55,50,000/- added on account of unexplained share application, added by the Assessing Officer in the case of the assessee under Section 68 of the Act?" The learned counsel for the revenue/ appellant submitted that the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal were both wrong in deleting the addition of Rs. 55.5 lakhs on account of unexplained share application money under section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act‟). The present case pertains to the assessment year 2004-05. The assessment proceedings were completed by the assessi....
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....ssee preferred an appeal before the Commissioner Income Tax (Appeals) who held in favour of the respondent/ assessee by virtue of his order dated 31.03.2011. The CIT (Appeals) held that the documents/ details submitted by the respondent/ assessee indicated that the identity of the share applicants stood established beyond any doubt. Particularly so, because each of the share applicants was an income tax assessee. The CIT (Appeals) held as under: - "The genuineness of the transactions are established as the transactions are routed through banking channels. It is seen that the share application money was received through a/c payee cheques, detail of which had been filed by the appellant by filing the copy of the bank a/c of the share....
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.... assessments in accordance with law. The CIT ultimately held as under: - "Relying on the various documents placed on record and the principle laid down by the Hon'ble Supreme Court in the case of M/s Lovely Export Pvt. Ltd. which is directly on the issue of share capital and in view of the decisions cited above the addition on account of share capital cannot be sustained. The AO has no where proved that documents in support of the identity of the party have not been placed on record or they were forged documents. The AO also has not brought any evidence on record regarding the facts that the share applicants were not creditworthy or genuine, despite the fact that their PAN and confirmatory affidavit and the details of the AO....
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....es as unexplained liable to be taxed in the hands of the assessee. However, neither the AO nor the ld. DR before us has been able to prove and establish that the various documents and evidences filed by the assessee are in any manner false and fabricated, and assessee has not been able to discharge its initiation onus. Therefore, in the light of the detailed discussions made by the CIT(A) in his order and for the reasons given by him, we are in full agreement with him in deleting the addition of Rs. 55,50,000/- made by the AO after giving a finding by him that the AO has nowhere been able to prove that the document in support of the identity of the parties have not been placed on record or otherwise there were forged documents, and further ....
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....t 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 account their unaccounted monies through the medium of share subscription, and the assessee. The ratio is inapplicable to a case, again such as the present one, where t....
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....ee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in the latter category. Here the assessing officer, after noting the facts, merely rejected the same. This would be apparent from the observations of the assessing officer in the assessment order to the following effect: - "Investigation made by the Investigation Wing of the Department clearly showed that this was nothing but a sham transaction of accommodation entry. The assessee was asked to explain as to why the said amount of Rs. 1,11,50,000/- may not be added to its income. In response, the assessee has submitted that there is no such credit in the books of the assessee. Rather....