TaxTMI 
TaxTMI 
2015 (11) TMI 292
X X X X Extracts X X X X
X X X X Extracts X X X X
....0/- on account of commission payments to the providers of accommodation entries by not deciding entirely on merits, the contentions of the AO in the assessment order and by ignoring that: (i) The creditworthiness of the share applicants to advance the share application money has not been satisfactorily established either during the assessment proceedings or during the appellate proceedings. (ii) Summons u/s 131 sent to the share applicants did not evoke any response in most of the cases even though the summons were sent at their addresses as furnished by the assessee company. (iii) Statements recorded by the AO in cases of share applicants where the assessee was able to produce the individual share applicants or p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hare application money was taken at Rs. 20,75,000/-) disbelieving the share application money/share capital of Rs. 20,75,000/-. The Assessing Officer had without providing any opportunity to cross examine the alleged entry operator made the assessment u/s 143(3) /147 of the Act. That the ld. Assessing Officer has grossly erred in making an addition of Rs. 4,77,500/- [which was reduced to Rs. 2,07,500/- vide order dated 24/01/2011 passed u/s 154/143(3)] u/s 68 being the alleged 10% commission assumed to have been paid for obtaining the accommodation entries on conjectures and surmises and without any basis or justification." 3. The ld. CIT(A) deleted the addition made by the AO on the ground that the assessee had provide....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6. The legal position enunciated by the Jurisdictional High Court is as follows. a) 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s been arrived by the Investigation wing of the department. As such entries of Rs. 55, 50, 000/- received by the assessee are treated as an unexplained cash credit in the hands of the assessee and added to its income. Since I am satisfied that the assessee has furnished inaccurate particulars of its income, penalty proceedings under Section 271(1)(c) are being initiated separately. " The facts of Nova Promoters and Finlease (P) Ltd. (supra) fall in the former category and that is why this Court decided in favour of the revenue in that case. However, the facts of the present case are clearly distinguishable and fall in the second category and are more in line with facts of Lovely Exports (P) Ltd. (supra). There was a clear lack of inquiry....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce of any such finding that the material disclosed was untrustworthy or lacked credibility the Assessing Officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of S. 68 of the Income Tax Act, 1961. 7. Having regard to the entirety of facts and circumstances, the Court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (supra). 8. The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (supra). Where the assessee adduces evidence in support of the share application m....