TaxTMI 
TaxTMI 
2011 (10) TMI 675
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....en after specifically being asked to do so by the AO and thus failed to discharge its onus to establish the identity and creditworthiness of the share applicants and/ the genuineness of transaction. 3. That on the facts and circumstances of the case and in law the learned CIT(A) erred in relying upon the decision given in the case of Lovely Exports (P) Ltd., the AO did not ask the assessee to produce any of the investor shareholders. However, in the instant case the assessee was specifically asked and given a number of opportunities to produce the directors/authorized representatives of the investing companies, but yet none could be produced before the Assessing Officer by the taxpayer. 4. The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal. C.O. No.366/D/2010[Assessee] 1. That having regard to the facts and circumstances of the case, learned Assessing Officer in assuming jurisdiction u/s 147 and that too without complying with the mandatory conditions as prescribed u/s 147 to 153 of the Income-tax Act, 1961. 2. That in any case and in any view of the matter action of learne....
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....e assessment was reopened u/s 147 of the Act with the service of a notice u/s 148 of the Act on 25th March, 2009. In response, the assessee submitted a written reply dated 14th April, 2009 that the return filed u/s 139(1) may be treated as return in response to notice u/s 148 of the Act. The reasons recorded by the AO for reopening of the assessment were communicated to the assessee vide letter dated 2nd September, 2009. In response to a questionnaire issued by the AO, after taking a number of adjournments, the assessee submitted vide letter dated 17th November, 2009 that the reasons recorded for reopening the assessment did not contain the full details and reasons within the meaning of provisions of section 147 of the Act. Accordingly, the assessee objected to the notice issued u/s 148 of the Act and submitted that the company had received only an amount of Rs. 54 lacs out of the 11 items mentioned in letter dated 2nd September, 2009.After having details and confirmations for the aforesaid share capital, the AO issued a show cause notice dated 8th December, 2009 asking the assessee to explain as to why share capital of Rs. 54 lacs be not treated as income from undisclosed sources.....
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....Hanuman Pd. Aggarwal 151 ITR 151 (Patna) it was held that assessee having furnished the correct name and address of the creditor, having confirmatory letter from the creditor and all materials show prima facie not only identity of the creditor but also the genuineness of the transaction, no adverse inference can be drawn. Reference can also be made to the judgment of Hon'ble Apex Court in the case of Steller Investment Ltd. (2001) 251 ITR 263 (S.C.), wherein it was held that even if the subscribers to the increased share capital of assessee company were not genuine, the amount could not be regarded as undisclosed income of the assessee company. The above view point of the Hon'ble Apex Court has also been expressed by Jurisdictional Delhi High Court in the case of Divine Leasing & Finance Ltd. (2008) 299 ITR 268 (Del.), A-one Housing Complex Ltd. Vs. I.T.O. 110 ITD 361 (Del.), CIT Vs. Value Capital Service Pvt. Ltd. 307 ITR 334 (Del.) and CIT Vs. General Exports and Credits Ltd. (2008) 299 ITR 268 (Del.). In the case of CIT Vs. Divine Leasing & Finance Ltd. (supra) the Hon'ble Delhi High Court had laid down the law on the subject as to what is the extent of the burden li....
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....e share subscribers. In view of above, it is clear that the appellant has discharged the initial onus of establishing the identity of the subscribers and the bonafides of the transactions hence the assessing officer is not justified in ignoring various evidences provided to him by the appellant. Nothing adverse has been brought on record by the assessing officer to establish that the amount of share application money received by the appellant from the above mentioned different persons represents its own undisclosed income. In view of our aforesaid discussion, I direct the assessing officer to delete the addition of Rs. 54,00,000/- made U/S 68 of the Act. 4.5.1 As the addition of Rs. 33,00,000/- has been deleted in pre- pages of this order, hence there remains no justification for making and sustaining an addition of Rs. 1,08,000/- on account of commission paid to the persons from whom the appellant has been alleged to have received share application money. The Assessing Officer is accordingly directed to delete addition of Rs. 1,08,000/-. These grounds of appeal are taken as allowed to the appellant." 4. The Revenue is now in appeal against the aforesaid findings of lea....
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....the Ld. Commissioner of Income Tax (Appeals) that assessee has furnished sufficient evidences to justify the identity, creditworthiness of the parties and genuineness of the transactions. We find no verification was carried out by the Assessing Officer to controvert the evidences filed by the assessee from the income tax records of the concerned parties. Assessing Officer insisted for the production of the parties before him by the assessee but he did not make any independent effort to enforce the appearance of such parties. We agree with the finding of the Ld. Commissioner of Income Tax (Appeals) that no evidence was brought on record to establish that the documents filed by the assessee were false or the transactions entered into by the assessee were sham transactions. We further agree with the Ld. Commissioner of Income Tax (Appeals) that no cross examination was granted by the Assessing Officer to the assessee before making the additions. We also find that nothing has been brought on record to establish that the entries appearing in the assessee's books resulted from the assessee's own cash and were thus accommodation entries. 6.2 In this regard, we refer to th....
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....ssessment number and shows the genuineness of transaction by showing money / his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the revenue. Just because the creditors /share applicants could not be found at the address given, it would not give the revenue the right to invoke section 68. One must not lose sight of the fact that it is the revenue, which has all the power and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the source of source." 6.4 We also place reliance upon the Jurisdictional High Court decision in the case of C.I.T. vs. Oasis Hospitalities P Ltd. ,333 ITR 119 as under:- "27. The order of Assessing Officer would reveal that it had received an information from the Investigation Wing which had made various enquiries / investigations on the basis of which it was found that these six investors belong to one Mahesh Garg Group who were not carrying on any real business activity and were rather engaged in the business of providing accommodations entries. They were, thus, entry operators of which the appellant was the beneficiary. According to t....
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....nity to cross examine the persons whose statements were recorded by the Investigation Wing. 29. As regards discrepancies found by the Assessing Officer in the bank statement, suffice it to mention that the bank statements that were filed by the appellant were provided by the share holders and were computer printed on the bank stationery. The same were filed by the appellant during the assessment proceeding without any suspicion of their being incorrect. During the assessment proceedings, the appellant was never confronted by the Assessing Officer that there are discrepancies between the bank statements filed and the statements directly called by the Assessing Officer . However, even after considering the alleged discrepancies, it does not follow that the amount of share capital was the undisclosed income of the appellant. Even the correct bank statements as claimed by the Assessing Officer reveal that the appellant has received cheques from the shareholders. In this backdrop, the following observations of the Court in the case of C.I.T. vs. K.C. Fibres Ltd. (2010) 187 Taxman 53 (Del) are reproduced: "It is strange that when the Assessing Officer is questioning the....