TaxTMI 
TaxTMI 
2016 (1) TMI 1124
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....s. The assessment was completed u/s 143(3) of the Act on 21.12.2009 at a total taxable income at Rs. 2,34,57,779/- by making various additions/disallowances. 3. Aggrieved, the assessee preferred an appeal to the first appellate authority and the CIT (A) allowed the appeal of the assessee by deleting the additions/disallowances. 4. The revenue, being aggrieved, is in appeal before us by taking the following grounds of appeal :- "1. The Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 92,95,000/- made u/s 68 of the Income Tax Act, 1961, on account of share application money. The case law relied on by Ld. CIT(A) are distinguishable from the present case as the identity of the contributor is not established here. The AO made detailed investigation by sending notice u/s 133(6) to the contributor of share applicant. No confirmation was received during the assessment proceedings. 2. The Ld. CIT (A) has erred on facts and in law in deleting addition of Rs. 52,48,820/- made u/s 68 of the Income Tax Act, 1961, on account of unsecured loans. The case law relied on by Ld.CIT(A) are distinguishable from the present case as the identity of the contribu....
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....10. This reference was under Rule 46A (1). The AO has replied vide letter no.635 dated 07.01.2011, wherein he requested for a month's time. This was granted vide my letter no. 309 dated 12.01.2011. Eventually, the remand report was received vide letter no. 1204 dated 24/1/2011. The Ld. AO has made a reference to Rule 46A (1) and has mentioned that since the application of the assessee contained the words that the documents had been acquired from different sources, the assessee could have obtained the same during the assessment proceedings itself. On the other hand, the assessee kept insisting that the documents were with the CBI. In short, the Ld. AO has opposed any adducement of additional evidence, as prayed by the assessee. 6. Copy of the remand report was handed over to the assessee to file a rejoinder. The assessee filed a rejoinder on 17/2/2011, wherein he stated that all the documents were not additional evidences. Further, it was stated that all the documents were seized by the CBI. This led the management of the appellant to be under tremendous stress and enormous pressure. Due to CBI enquiries, even the third parties from whom documents could be obtained now ....
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....other than the evidence produced by him during the course of proceedings before the [Assessing Officer], except in the following circumstances, namely:- (a) where the [Assessing Officer] has refused to admit evidence which 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) No evidence shall be admitted under sub-rule (1) unless the [Deputy Commissioner (Appeals)] [or as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission . (3) The [Deputy Commissioner(Appeals)] [or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the [Assessing Officer] has been allowe....
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.... in conformity with the ALP determined by the TPO. Against the order of the AO, an appeal is maintainable under S. 246A of the Act. While the CIT(A) under sub-so (4) of S. 250 in disposing of any appeal before it is empowered to make further inquiry either himself or by directing the AO to do so and receive the result of the same, the assessee cannot file any fresh evidence except in accordance with the provisions of r. 46A. The r. 46A inter alia permits an assessee to adduce additional evidence only if he is able to establish that he falls under one of the following situations envisaged under the said rule: (i) Where an AO has either refused to admit evidence which he ought to have admitted; or (ii) Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO: or (iii) Where the appellant was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal. (iv) Where the AO has made the order appealed against without giving sufficient opportunity to adduce evidence relevant to any ground of appeal. 16. It is evident upon ....
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....umar, both of whom are promoters of the company. They have filed confirmation of investment in equity shares, copy of acknowledgement of ITR, copy of bank account statement, copy of PAN card, copy of passport and the election card. Also filed are similar documents relating to Sh. Praveen Mehta, Smt. Savitri Devi, Sh. Radhey Shyam Mehto. MIs Gold Stone Financial Services Pvt. Ltd. M/s Marudhar Building Pvt. Ltd., M/s Uppercon Marketing Pvt. Ltd., M/s Super Sadiq Enterprises Pvt. Ltd., M/s Megatronix System Pvt. Ltd., M/s U.P. Electricalsl.td., M/s Sharda India Pvt. Ltd and M/s Udhav Fashion Apparels Pvt. Ltd. If the PAN for some reason has not been given, the ITR or assessments/intimation issued by the Department has been submitted. Only in the case of Smt. Savitri Devi, no PAN card or income-tax details have been given, but copy of election card and copy of her bank statement has been provided by the assessee. The share application was given by cheque and through banking channels. In the case of Smt. Savitri Devi, her husband is an agriculturist as evident from the confirmation filed by her and even she has made the payment for 10,000 shares by cheque. 13. Be that as it ma....
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.... 14. As far as creditworthiness or financial strength of the credit/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. This judgement further holds that once these documents are produced, the assessee would have satisfactorily discharge the onus cast upon him. Thereafter, it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of these documents to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the AO and he cannot go into the realm of suspicion." 15. Based on the decision of the Delhi High Court in Oasis Hospitalities (supra), we have to dissect whether the assessee has proved the identity of shareholders, genuineness of transaction and creditworthiness of the shareholders. In the case of the individuals, but for one case, the assessee has produced the PAN card of the person. Copy of the Election Card, bank statement and confirmations have also been filed. In....
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....ayment details etc. of all the share applicants before the AO. He further submitted that despite having full particulars of share applicants, the AO did not enquire any further about the veracity of the details of the share-holders during assessment proceedings and the fact was that all documents were seized by the CBI; and further documents were submitted under Rule 46A(1) which contained copy of Form No.2 filed with ROC, copy of share application money, copy of PAN of applicants, copy of master data from ROC, copy of election card, confirmation of share applicants, copy of financial statements .of share applicants, copy of bank statements of share applicants and copies of ITR acknowledgement of the share applicants. Ld. AR further submitted that the assessee was an artificial juridical person and it could not have its own unaccounted cash. He submitted that all the payments for share applications were received by the assessee by account payee cheques through banking channels which has not been rebutted by the AO. The ld. AR of the assessee relied on the decisions, which were relied upon before the ld. CIT (A), i.e. CIT Vs. Divine Leasing & Finance Ltd. [2008] -TIOL-118-SC-IT, CIT....
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....sible, however that cannot be the sole ground to justify the addition unless the AO is able to show that details furnished by the assessee in respect to the identity of the share-holders are bogus, their PAN details are false, addresses are wrong and payment details are false. The AO ought to have verified the facts during assessment proceedings or even he could have done when the ld. CIT (A) has forwarded all the details filed before him under Rule 46A, which he did not after seeking one month's time and took three months to sent the remand report which was granted by CIT (A). So, we find that there was sufficient cause for non-filing of evidence before the AO. The AO ought to have scrutinized the evidence and in case, he nurtures any doubt about the veracity of the documents, the discretion is upon him to probe the matter further, which has not been done in the case in hand. He could not have discredited the documents, without giving any cogent reasons and material. Therefore, in view of the material filed by the assessee, we find that that the assessee has discharged the onus cast upon him. In the background of the aforesaid discussions and respectfully following the precedent, ....
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....s have been filed. As and where intimations regarding 143(1) have not been issued or are not available, the permanent account number has been submitted. In each of the cases, the payment was made vide cheque. 19. We have already discussed the decision of the Delhi High Court in Oasis Hospitalities (supra) above. At this stage, it would be gainful to refer to the Supreme Court decision in CIT Vs. Orissa Corporation (P) Ltd. [1986] 159 ITR 78 (SC) which dealt with unsecured creditors. In that case, the assessee, at the relevant time, was a private limited company and maintained accounts according to the calendar year. For the accounting year ending on 31st Dec., 1961, corresponding to the asstt. Year 1962-63, the ITO did not accept the assessee's accounts showing cash credits of Rs. 1,50,000. Three amounts were shown to have been received by way of loans from three individual creditors of Calcutta under hundis. The assessee produced before the ITO, the letters of confirmation, the discharged hundis and particulars of the different creditors whose general index numbers were with the IT Department. Attempts had been made to bring those creditors before the ITO by issue of ....
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.... made detailed investigation by sending notice u/s 133(6) to the providers of unsecured loan and no confirmation was received during the assessment proceedings. He pleaded to set aside the order of the ld. CIT (A) and uphold the AO on this issue. 15. The ld. AR for the assessee submitted that during the course of the assessment proceedings, the AO observed that there was an increase of Rs. 52,48,820/- on account of unsecured loan and the AO required the assessee to explain the same. He submitted that vide letter dated 04.09.2009, the assessee gave a list of persons from whom unsecured loan had been obtained and further vide letter dated 18.09.2009, the assessee filed a letter containing the name and addresses of persons who had given unsecured loan. He further submitted that the assessee had also filed confirmation letter from these parties, PAN or assessment particulars were given with regard to the proof of their existence. He submitted that the AO's contention that the details were not submitted, was totally false. The assessee, vide letter dated 16.09.2009 and letter dated 16.11.2009 had filed the names, addresses, details etc. of all loan creditors and even filed their ....
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....case of the revenue that additional evidences filed during the appellate proceedings were not forwarded to the AO under Rule 46A. The CIT (A) not only forwarded the additional evidences but also granted on month's time sought by the AO to verify the veracity of the documents and the AO sent the remand report after three months. We take note that AO in his remand report has not adversely commented upon the additional documents which was in front of him for three month's time when he could have easily cross-checked about the veracity of it. As stated earlier, the basic details were with AO at the assessment stage itself, but he preferred not to make enquiries, and made the addition which was rightly deleted by the ld. CIT (A). Therefore, in view of the above, we find that the assessee had discharged the onus cast upon him. In the background of the aforesaid discussions and respectfully following the Hon'ble Supreme Court in CIT vs. Orissa Corporation Pvt. Ltd. (supra), we do not find any infirmity in the order of the Ld. CIT(A), hence, we uphold the same and decide the ground no. 2 against the Revenue. 17. Ground No.3 of the revenue's appeal read as under :- "3. The Ld. C....
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....tments may be deemed to be the income of the assessee of such financial year." 24. In the case in hand, the investment in the plot and construction thereon was made by the assessee. While, it may be true, that the Ld. AO could not have the opportunity to peruse the books of accounts of the assessee, during the assessment stage, the fact of the matter is that even at the remand stage, the matter could have been looked into. AO could have requested for permission to enquire u/s 250(4) which has not been done. I am afraid that the same has not been done. When the bank account is disclosed, through which the cheques have been issued in each of the cases, the investment in the said plot and the construction thereon cannot be taken as not recorded in the books of accounts of the assessee. Circumstantial evidence suggests otherwise. Thus, the assessee deserves to succeed in Ground of Appeal No.4." 20. Ld. DR relied on the order of the AO and submitted that the issue of verifying the books of account at the remand report stage was not considered by Ld. CIT(A). Further, he submitted that the ground cited by the assessee for admission of additional evidence was not covered under ....
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....could not have the opportunity to peruse the books of accounts of the assessee, during the assessment stage because, according to assessee, it was all with CBI and the fact of the matter is that even at the remand stage, the matter could have been looked into by the AO, which has not been done. So, in the light of the transactions through banking channel and audited books of account, it cannot be said that the investments were not reflected in the books of account when there is a clear finding of the CIT (A) that the investments in building WIP was duly accounted for in the books of account and the balance sheet has been duly audited by a qualified chartered accountant. Thus, in our opinion, when the bank account is disclosed, through which the cheques have been issued in each of the cases, the investment in the said plot and the construction thereon cannot be taken as not recorded in the books of accounts of the assessee. In the background of the aforesaid discussions, we do not find any infirmity in the order of the Ld. CIT(A), hence, we uphold the same and decide the ground no. 3 against the Revenue. 24. Ground No.4 of the revenue's appeal read as under :- "4. The Ld....