TaxTMI 
TaxTMI 
2015 (1) TMI 1054
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....ved from Investigation Wing of the Department the AO initiated proceeding u/s 147 of the Income Tax Act, 1961 (for short 'the Act'). The AO noticed that the assessee has received an amount of Rs. 30 lac from various four entities. The assessee submitted explanation alongwith PAN Nos., copies of the ITR, audit reports and affidavits of the director of the alleged investor companies. The AO rejected the explanation of the assessee company and made an addition of Rs. 30 lac u/s 68 of the Act with following conclusion: "All the submissions made by the assessee have been considered carefully, but not found acceptable. First of all, we should consider the fact that the facts and circumstances of a case may vary with the other one. It cannot be said that all the facts of case are similar to the referred cases:- Further, we should not ignore the facts emerged from the survey/search operation conducted on various companies / individuals etc. by the Investigation Wing of the department. It was found during these operations and post enquiries that many Companies / Individuals and other entities are involved in giving or taking accommodation entries. The purpose of taking / givin....
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....re genuineness of transactions are not proved. Opportunities were allowed to the assessee to prove the genuineness / creditworthiness of the person, but it has failed in every respect to discharge its onus. It is, therefore, not only the amount of Rs. 15,00,000/- as referred in show cause but the entire amount of Rs. 30,00,000/- remained unexplained. Hence, it cannot be proved that the amount of Rs. 30,00,000/- credited in its books of account / bank accounts are not unaccounted money of the assessee company. In view of the above, the sum of Rs. 30,00,000/- is added in the income of the assessee being unexplained credits u/s 68 of the I.T. Act. " 4. The aggrieved assessee preferred an appeal before CIT(A) which was allowed with following observations and findings: "8.13 In view of the factual position as well as the judicial pronouncement on the subject, discussed above, I am of the considered view that the appellant has discharged the initial onus of establishing the bona fides of the transactions and the AO was not justified in ignoring various evidences provided to him by the appellant. Nothing adverse has been brought on record by the AO to establish that the amount of....
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....the bank statements etc. were filed. In case the Assessing Officer had conducted the said enquiries and investigation probably the challenge made by the Revenue would be justified. In the absence of these inquiries and nonverification of the details at the time of assessment proceedings, the factual findings recorded by the Assessing Officer were incomplete and sparse. The impugned order passed cannot be treated and regarded as perverse. The appeal is dismissed as no substantial question of law arises........." 8.16 In the light of the above discussion and in view of the decision of jurisdictional High Court in the case of Goel Sons Golden Estate (Supra), I am inclined to agree with the arguments and evidences provided by the appellant to substantiate that the transaction regarding Share Application Money received by it was genuine transactions and the same was not accommodation entry. I also do not find any evidence collected by the AO which could prove otherwise. Accordingly, the AO was not justified in treating the amount of share application money received by the appellant as its undisclosed income. In view of our aforesaid discussion, I delete the addition of Rs. 30,00,0....
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....ssee submitted all details regarding alleged investor company such as Names, Addresses, PAN Nos, copies of the Income Tax Returns, Audit Reports and Affidavits of the Directors of the respective investor companies. But the AO without making any further verification or enquiries about the said details and explanation of the assessee simply relied on the information of the Investigation Wing and accepted the same as gospel truth for making impugned addition u/s 68 of the Act. 9. Coming to the consideration of the ratio of the decisions as relied by both the parties we note that the ld. DR has placed reliance on the decision of Hon'ble Jurisdictional High Court of Delhi in the case of CIT vs. Nova Promoters and Finlease P. Ltd. (2012) 342 ITR 169 and on the other hand the ld. AR has placed reliance on the decisions of Hon'ble Supreme Court in the case of Divine Leasing (Supra), the decisions of Hon'ble High Court of Delhi in the cases of CIT vs. Goel Sons (Supra) and CIT vs. Gangeshwari Metal (P.) Ltd. (2013) 30 Taxman.com 328 (Delhi). We further observe that the Hon'ble High Court of Delhi in the case of Gangeshwari Metal (Supra) wherein after considering the ratio....
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....ivance or involvement of the assessee excludes the applicability of the ratio. In our understanding, the ratio is attracted to a case where it is a simple question of whether the assessee has discharged the burden placed upon him under sec.68 to prove and establish the identity and creditworthiness of the share applicant and the genuineness of the transaction. In such a case, the Assessing Officer cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. The case before us does not fall under this category and it would be a travesty of truth and justice to express a view to the contrary. (underlining added) 9. 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 presumptions.....
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....t. Consequently, the question is answered in the negative. The decision of the Tribunal is correct in law." 10. On vigilant perusal of the above decision of Hon'ble High Court in the case of Gangeshwari Metal (Supra) we note that there are two types of cases, first, the cases in which the AO carries out the exercise of further verification and examination of details and evidence furnished by the assessee to support and substantiate the truthfulness and genuineness of the impugned transactions and secondly, the cases in which the AO sits over the details, evidence and explanation offered by the assessee and without making any further enquiry or verification of the details, evidence and explanation proceeds to reject and dismiss the case and explanation of the assessee and to make addition u/s 68 of the Act. Their Lordship speaking for the Hon'ble High Court of Delhi further held that in the case of second category wherein the AO make addition without any further verification and examination of the evidence and explanation of the assessee, the additions so made by the AO not sustainable as in that case as there was clear lack of enquiry on the part of the AO and in such si....