TaxTMI 
TaxTMI 
2013 (5) TMI 476
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....tially the unsecured loan received from Mr Alok Aggarwal. In so far as the loans and advances received from Smt Sadhna Aggarwal to the extent of Rs. 1,90,000/- (Rs. 1,50,000 plus Rs. 40,000/-) was concerned, the Commissioner of Income-tax concurred with the Assessing Officer that the same had not been explained. Therefore, to that extent (i.e., to the extent of Rs. 1,90,000/-) the Commissioner of Income-tax (Appeals) confirmed the addition. However, with regard to the amount advanced by Mr Alok Aggarwal, to the extent of Rs. 35,85,465/-, the Commissioner of Income-tax (Appeals) deleted the same. 4. The Commissioner of Income-tax (Appeals) also deleted the addition of Rs. 30,41,000/- on account of share application money by holding that the assessee had discharged its burden to establish the identify and creditworthiness of the share applicants as also the genuineness of the transactions. The Income Tax Appellate Tribunal concurred with the views of the Commissioner of Income-tax (Appeals). 5. In so far as the addition on account of unexplained investment was concerned, the Commissioner of Income-tax (Appeals) had directed the Assessing Officer to submit a remand report. The d....
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.... to the extent of the advances given by the said Mr Alok Aggarwal. However, with regard to the amounts received from Smt Sadhna Aggarwal, since, she had not disclosed any capital gains or availability of funds during the years in question, the Commissioner of Income-tax (Appeals) concluded that the said amount of Rs. 1.9 lacs remained unexplained and, therefore, the addition made by the Assessing Officer, to that extent, was upheld. It may also be pointed out at this juncture that inasmuch as the amount received from Mr Alok Aggarwal were in cash and were otherwise, than by way of account payee cheques/drafts, the Assessing Officer was directed to initiate penalty proceedings under section 271D and 271E of the said Act for the alleged violation of sections 269SS and 269TT. 8. The Income Tax Appellate Tribunal examined the order passed by the Commissioner of Income-tax (Appeals) and concurred with the views taken by him. We also find no reason to take a different view. In any event, no substantial question of law arises for our consideration in so far as the addition, on account of unexplained investment is concerned. 9. With regard to the addition made on account of share app....
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....who had issued notice to the assessee to produce the principal officers of the subscribing companies. As is well known, in the case of private limited companies, it cannot be denied that there is a continuing contact and relationship with the share holders and if the assessee was serious enough to establish its case, it ought to have produced the principal officers of the subscribing companies before the AO so that they can explain the sources from which the share subscription was made. That would also have taken care of the difficulty of the assessee in proving the creditworthiness of the subscriber companies. It was, therefore, in the assessee's own interest to have actively participated and cooperated in the assessment proceedings and complied with the direction of the AO to produce the principal officers of the subscribing companies. Instead, the assessee took an adamant, if we may use that expression, attitude and failed to comply with the direction of the AO; not only that, it challenged the AO's finding that the summons sent to the companies came back unserved with the remark "no such company", which was also supported by the report of the inspector who made a visit to the a....
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....f the creditor/share holder for the purpose of Section 68. In an appropriate case, if the facts and circumstances justify, it would be open to the AO to seek information from the assessee as to the creditworthiness of the creditor/share subscriber which may include information as to the sources of the creditor/share subscriber. If proving the creditworthiness of the creditor/subscriber is now judicially accepted as one of the ingredients of the onus cast on the assessee under Section 68, we do not see how proof of the resources of the creditor/share subscriber can be completely excluded from the sweep of the burden. It may not be required of the assessee to give in-depth particulars and details about the resources of the creditor or the share subscriber, but the minimum required of him would be, in our opinion, information that will prima face satisfy the AO about the creditworthiness. Mere furnishing of the bank statements of the share subscribers without any explanation for the deposits in the accounts may not meet the requirements of Section 68. It may be necessary to know the business activities of the share-subscribers in order to ascertain whether they are financially sound a....