TaxTMI 
TaxTMI 
2009 (12) TMI 957
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....the Act). 3. Facts of the case, in brief, are that the assessee company is engaged in the business of manufacturing of jewellery. The Assessing Officer during the course of assessment proceedings observed from the Balance Sheet as on 3.3.206 that the assessee has shown to have received an amount of Rs. 2,26,72,557 as "share application money received pending allotment". The Assessing Officer asked the assessee to provide the details of persons from whom share application money has been received along with the copy of Balance Sheet to prove their existence, creditworthiness and genuineness of such transaction. In response to the same the assessee submitted the following details: "1. Letter from Saphir Product SA, 846 Rule de Gene....
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....ly the Assessing Officer issued a show-cause notice to the assessee to the effect that failure to produce the Balance Sheet will result into share application money being treated as income of the assessee u/s. 68 of the Act. In response to the same it was informed by the Vice President of the assessee company that the Board of Directors of SPSA have taken an in principle decision of not to provide the Balance Sheet due to business secrecy. 5. The Assessing Officer observed that the assessee, who claims to have got funds of Rs. 2.27 crores from the company which has contributed almost 98% of share capital i.e. Rs. 2.27 crores out of share capital of Rs. 2.31 crores could not obtain the copy of the Balance Sheet of the alleged investor des....
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....n the case of CIT vs. Durga Prasad More reported in 82 ITR 540 he made an addition of Rs. 2,26,72,557 u/s. 68 of the Act. 6. Before CIT(A) it was submitted that M/s. SPSA is a tax payer in Switzerland holding identification, has been in existence since 1979 and has contributed money through regular banking channels with the knowledge of RBI. It was submitted that SPSA expressed its inability to furnish its Balance Sheet in view of its business secrecy. The evidence being certificate from the auditor of SPSA and letter from SPSA expressing its inability to part with its Balance Sheet were furnished before the Assessing Officer. The assessee also filed certain additional evidences before the CIT(A). 7. The CIT(A) called for a remand rep....
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....s filed by the assessee go to prove the creditworthiness of the shareholder. He accordingly held that since the creditworthiness of M/s. SPSA has not been proved the Assessing Officer was well within his right to make the addition of Rs. 2,26,72,557 u/s. 68 of the Act. Aggrieved with such order of the CIT(A), the assessee is in appeal before us. 8. The learned counsel for the assessee referring to various pages of the Paper Book submitted that the assessee has proved the capacity of the parties to the best of its ability. The share capital money has come from the joint venture partner of the assessee who belongs to the well known Swiss group. The amount has come through normal banking channels with the approval and permission from the RB....
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....ancial year 2007 placed at Paper Book pages 8 to 33. Referring to the correspondence between the counsel and Mr. Jerome Burrier of SPSA he submitted that after much persuasion M/s. SPSA has provided the copies of the Balance Sheet as on 31st March, 2006 and 31st March, 2007 to Shri Pinakin Desai, CA and counsel of the assessee with a rider that the same could be produced before the tax department only and should be kept confidential. He submitted that though these documents were given by SPSA to its counsel on the aforesaid condition they have not been made available to the assessee. He accordingly submitted that the aforesaid documents which are being filed as additional evidences before the Tribunal for the first time may be admitted as i....
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....urse of assessment proceedings has furnished all details relating to the receipt of share application money except the Balance Sheet of SPSA for which the Assessing Officer disbelieved the creditworthiness of the said party and relying on a host of decisions made the addition u/s. 68 of the Act. We find the assessee has expressed its inability to produce the Balance Sheet of M/s. SPSA before the Assessing Officer on the ground that the Swiss partner was not ready to part with its Balance Sheet on the ground of trade secrecy and confidentiality. When the Assessing Officer was informed of all this, we find the Assessing Officer has not taken any steps by writing to the Swiss partner or its nominees in the board of directors of the assessee co....