TaxTMI 
TaxTMI 
1993 (3) TMI 360
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....eir ward/circle/range, etc. On 23rd Aug., 1990, assessed furnished information as required by the Assessing Officer. It seems, on the basis of search and seizure operations in the case of Calcutta office of the assessed-company and at premises of some other companies of this group, the Assessing Officer got suspicious about the genuineness of the shareholders. The result of the search operations had revealed that the directors of the company either through them or their family members of through various trusted employees had floated a chain of investment companies. The shares of such 9 companies were found in the premises of one D. K. I. Ltd. In the same premises blank share transfer paper of M/s. Majestic Trading & Services Ltd. duly signed were also found and seized. It seems that as a result of this information, the Assessing Officer subjected the investment made by the two companies of deep scrutiny. On 10th Feb., 1992, the representative of the assessed was asked to produce principal officers of Debikay Technologies Ltd. and Majestic Trading & Services P. Ltd. along with their books, balance-sheet, list of their shareholders indicating their postal addresses so as to verify th....
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.... Assessing Officer, the assessed companys money had been brought into the books of the company by using the other two companies as a conduit. According to the Assessing Officer once the shareholders are found to be bogus and the identities of the intermediaries, paper concerns, are proved to be none other than the persons connected with the management of the assessed-company, the corporate veil will not come in the way of invoking S. 68 of the IT Act, 1961. Assessing Officer further observed that one could understand if the third parties were genuine concerns and if any undisclosed income relating to them is noticed elsewhere, the addition could be made in the respective hands. But that principle according to Assessing Officer is inapplicable to the facts of this case. The addition of Rs. 1,64,70,000 was thus accordingly made. 3. assessed appealed to the CIT(A) and sought to furnish additional evidence to dispel the inference drawn by the Assessing Officer in the assessment order. The learned CIT(A) refused to admit the evidence as according to him conditions under r. 46A were not satisfied and has accordingly confirmed the addition of Rs. 1,64,70,000. 4. Before us, an applic....
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....ties is already on record of the Assessing Officer in penalty proceedings and the same has been admitted. Since assessed was prevented by sufficient cause in not furnishing the evidence before the Assessing Officer, the CIT(A) was not justified in refusing to entertain the same. Learned counsel further placed reliance on the decision of the Kerala High Court in the case of State of Kerala vs. V. K. Ramunni Panicker & Ors. (1977) 108 ITR 120 (Ker) and Punjab & Haryana High Court in the case of CIT vs. Jay Textile Mills (1981) 128 ITR 480 (P&H) in support of the contention that CIT(A) was not justified in refusing to entertain the evidence. The learned counsel for the assessed further contended that assessed having discharged its onus in relation to establishing the identity of the shareholders the payment but for Rs. 20,000 having been received by cheques, the shareholders being assessed to tax, the Assessing Officer was not justified in drawing the inference that the amount received from the shareholders was the income of the assessed from undisclosed sources. It was further contended that bank pass books had been furnished by the Debikay Technologies Ltd. before the Assessing Offi....
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....Bench as to why the order sheet entry should be taken into consideration being an additional evidence produced for the first time before the Tribunal that too without permission, Shri Bajpai contended that he was merely relying on the order sheet entries, etc. which form record of the proceedings and that such evidence was not additional evidence for the purpose of r. 29 of the ITAT Rules. According to Shri Bajpai the duty of the assessed was to establish the identity of the shareholders, their creditworthiness and the genuineness of the transactions. Since Assessing Officer was prevented from making further enquiries that could have resulted as a consequence of furnishing of information by the assessed, assessed should suffer the consequences. According to the learned Departmental Representative, the powers of the Tribunal under r. 29 can be exercised only when the evidence sought to be produced is clinching and decisive. In this connection, reliance was placed on the decision of the Allahabad High Court in the case of Jagannath Prasad Kanhaiya Lal vs. CIT (1988) 171 ITR 596 (All). Shri Bajpai contended that the information was within the knowledge of the assessed and it was under....
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.... ought to have been admitted; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer; or (c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal; or (d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2).......... (3).......... (4)..........." As per the facts on record it is not a case where the Assessing Officer has refused to admit evidence which he ought to have admitted. Therefore, sub-r. (a) of r. 46A is inapplicable. Sub-r. (b) speaks of assessed being prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer. We have to consider the applicability of this sub-rule. Sub-r. (c) speaks of appellant being prevented by sufficient cause from producing before the Assessing Officer any evidence relevant to any ground of appeal notwithstanding the fact ....
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....quired the representative of M/s. Debikay Technologies Ltd. to furnish further information. As per the noting of the Assessing Officer in the order sheet compliance to notice under S. 131 was made partially. On 20th March, 1992, assessed was directed to pursue the filing of further information required from M/s. Debikay Technologies Ltd. and M/s. Majestic Trading & Services Ltd. The two companies as well as the assessed failed to furnish the requisite information as a result of which Assessing Officer treated the money received from the two companies as bogus and made the additions. There are two aspects of the matter in hand. One is the obligation of the assessed to support the return of income and the other is the power of the Assessing Officer to make enquiries and collect material. The relevant provision of law is S. 143. Whereas assessed is required to support the return, Assessing Officer is empowered to make enquiries, collect material and frame the assessment on the basis of the material so gathered. It, therefore, becomes relevant to see if the assessed had discharged its duty in supporting the return. assessed has furnished the following information during the course of a....
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....ng Officer was justified and in fact duty bound to probe the source of the moneys received from shareholders. As we have already pointed out the Assessing Officer as per the entries made in the order sheet, has started to act in this direction only from February, 1992 i.e., towards the fag end of the year. assessed was called upon to furnish information which under ordinary circumstances could not have been available with the assessed itself. The information was sought in respect of shareholders and the assessed was entitled to request the Assessing Officer to enforce attendance by issuing notices under S. 131. Assessing Officer considering the request of the assessed as legitimate has issued summons under S. 131 to the two companies in response to which one of the companies made compliance in part. In respect of another company, it seems that the Assessing Officer was unable to serve the notice under S. 131 upon the assessed. The Assessing Officer being empowered to enforce the attendance of the witnesses as also enforcing the furnishing of information by the witnesses assessed cannot be totally blamed for not having furnished the information before the Assessing Officer within th....
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....ee months of the passing of the assessment order. The CIT(A) has also passed the order on 7th Aug., 1992 and we are deciding the appeal before the close of the financial year 1992-93. Since much time had not passed from the time of seeking the information till the same was sought to be produced, in our view, therefore, the interest of justice will not suffer if the evidence sought to be produced is admitted, considered and the issue decided on merits. The evidence and material sought for admission cannot, on the face of it, be said to be irrelevant not material. 11. We, therefore, in exercise of our powers under S. 256 r/w r. 29 of the ITAT Rules admit the evidence produced by the assessed, which is listed hereunder, and restore the issue to the file of the Assessing Officer to be decided afresh in accordance with law and after giving reasonable opportunity of being heard to the assessed : LIST OF EVIDENCES : A. Regarding subscription of shares by DTL Page Nos. of P.B. - List of shareholders as on 31st May, 1992 - Audited Accounts 1st April, 1989 to 31st March, 1990 149-158 - Audited Accounts 1st April, 1990 to 31st March, 1991 159-17....