2014 (11) TMI 475

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... through post was received from this company by the Assessing Officer, directly from M/s VIP Leasing and Finance (Pvt.) Ltd., enclosing therewith a confirmation letter of having invested in shares at a premium and also enclosing a copy of its balance sheet. The Assessing Officer examined the financial statement of the company "M/s VIP Leasing and Finance (Pvt.) Ltd." and came to a conclusion that they have negligible profits and are not doing any real business. He came to a conclusion that the company in question is engaged in providing accommodation entries. At para 3 the Assessing Officer concluded as follows: "3. Since the assessee had not produced the above person for verification, the credit worthiness and genuineness of this credit is not proved. Accordingly, I am left with no other alternative but to add this amount of Rs. 50,00,000/- to the total income of the assessee u/s 68." 4. Aggrieved the assessee carried the matter in appeal before the first appellate authority. The assessee made various submissions before the first appellate authority who dismissed the appeal of the assessee by observing that the assessee fail to substantiate its claim that the share applicati....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he complete identity including the income tax particulars and credit worthiness of the share applicant as well as the genuineness of the transaction. c) That the Ld. CIT (A) has erred in failing to appreciate the fact that the allegation of accommodation entries made by the Assessing Officer is wholly wrong and not borne out of any material on record and that the share applicant had directly corresponded with the Assessing Officer and has confirmed the fact of having made the payment of share application money to the assessee company and had also filed the copy of his bank account, income tax return for the instant year as well as its audited accounts before the Assessing Officer. d) That the Ld. CIT (A) has erred in holding that the director of the appellant company could not explain the circumstances in which the transaction of Rs. 50,00,000/- had taken place and that he admitted that he did not know the directors or any other person in VIP Leasing & Finance Pvt. Ltd. That the aforesaid finding of the Ld. CIT (A) is wholly wrong, arbitrary and contrary to the material on record. 2. That the appellant craves the right to amend, append, delete any or all grounds of appeal.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... hand. She also relied on the various decisions cited by the CIT (A) in his order and argued that the issue is covered in favour of the Revenue. 11. We have heard the rival contentions. On careful consideration in the facts and circumstances of the case and on a perusal of the papers on record and the orders of the authorities below, as well as case laws cited, we hold as follows: 11.1. This is a case where the Assessing Officer, nor the CIT(A), attempted to conduct any enquiry or investigation to negate the claim of the assessee. No summon was sent to the investor address. The assessee request to summon the investor was ignored, though the address was given. They merely rejected various evidences filed by the assessee. In our view, the assessee had discharged the initial burden of proof that lay on it. The investor company M/s VIP Leasing & Finance Pvt. Ltd. directly sent a confirmation letter to the Assessing Officer, along with its balance sheet. The Assessing Officer had the PAN No. and complete address of the investor company. Hence this is a case where the assessee produced all the documents and evidences which he could and whereas, the revenue failed in conducting any ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....essee produces the names, addresses, PAN details of the share holders then the onus on the assessee to prove the source of share application money stand discharged. If the Assessing Authority to verify the same in the hands of the shareholders concerned. The Tribunal has relied upon an order of the Supreme Court in the case of Devine Leasing Company reported in 207 CTR 38 (2007)." " In view of the decision of the Supreme Court, we dismiss the appeals returning the question in favour of the assessee." (d) In the case of CIT vs. Gangeshwari Metal P.Ltd. in ITA no.597/2012 judgement dt. 21.1.2013, the Hon'ble High Court after considering the decisions in the case of Nova Promoters and Finlease Pvt.Ltd. 342 ITR 169 and jdugement in the case of CIT vs. Lovely Exports 319 ITR (Sat.5)(S.C.) held as follows. "As can be seen from the above extract, two types of cases have been indicated. One in which the Assessing Officer carries out the exercise which is required in law and the other in which the Assessing Officer 'sits back with folded hands' till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumpti....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ncome Tax Act, 1961. Consequently, the question is answered in the negative. The decision of the Tribunal is correct in law." e) In the case of Finlease Pvt.Ltd. 342 ITR 169 (supra) in ITA 232/2012 judgement dt. 22.11.2012 at para 6 to 8, it is held as follows. "6. This Court has considered the submissions of the parties. In this case the discussion by the Commissioner of Income Tax (Appeals) would reveal that the assessee has filed documents including certified copies issued by the ROC in relation to the share application, affidavits fo the directors, form 2 filed with the ROC by such applicants confirmations by the applicant for company's shares, certificates by auditors etc. Unfortunately, the Assessing Officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr.Mahes Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the Assessing Officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 su....