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TaxTMI 
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TaxTMI 
2017 (3) TMI 1332
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....passed a consolidated order in a batch of 115 appeals involving various other assessee's, which included 6 appeals by assessee and 6 appeals by revenue in case of assessee before us. Against the order passed by this Tribunal, revenue preferred appeal before Hon'ble High Court under section 260A of the Act. Before Hon'ble High Court Revenue raised questions: (i) Whether in the facts and circumstances of the case, ITAT could have deleted additions under section 68 of the Act on the ground that they are not based on any material found as a result of the search on the assessee company? (ii) Whether in the facts and circumstances of the case, ITAT could have held that there was no valid search since the impugned additions have been made under section 153A/143(3) of the Act without reference to any material found as a result of search? (iii) Whether in the facts and circumstances of the case, ITAT could have held that additions made in non-abated assessments, are invalid? (iv) Whether on the facts and circumstances of the case, findings of the ITAT are perverse?" 3. Hon'ble High Court vide order dated 18.12.2015, on the basis of various observations held as under: "Insofar as quest....
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.... such as the Assessee. However, AO needed evidence to establish the hypothesis and without any material to establish the link between the source of funds received by the Assessee company (and such other companies) and the investee companies of SVP Group, it was not permissible for the AO to hold that the Assessee had acted as a conduit. There was no material before the AO which would establish that the funds received by the SVP Group were cash funds generated by the SVP Group and, therefore, the question of deleting any alleged unexplained credit on account of the funds invested with the SVP Group did not arise. In the circumstances, the only issue that could be examined by the AO and the CIT(A) was whether the Assessee had explained the sources of the credit entries in its books. It cannot be disputed that the fact; (a) that the Assessee's registered office was located at a Janta Flat occupied by the persons belonging to lower middle class; (b) that no commercial activity was found at the registered office of thecompany; (c) that several persons/companies which the Assessee claimed had paid funds to the Assessee for acquiring its share capital or for purchase of shares of other co....
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..... AO that assessee did not have a bank account during assessment years 2003-04 and 2004-05. Ld. Counsel submitted that, only activity carried on by assessee during these two years was sale of shares, which was purchased and settled without taking delivery. Ld. Counsel submitted that, in these assessment years being 2003-04 and 2004-05 there does not arise any issue of unexplained cash credits under section 68 and grounds raised by revenue for assessment year 2003-04 and 2004-05 cannot be sustained. 6. It has been submitted that grounds that requires addition are ground Nos. 2.2, 2.3 and 2.4 in assessee's appeal Ld. Counsel submitted that besides trading in shares, assessee did not carry on any other activity. Ld. Counsel further submitted that, Ld. AO has not disputed trading in shares for these assessment years and hence no addition under section 68 could be made. 7. Ld. DR on the other hand relies upon the decision of authorities below. 8. We have perused relevant materials on record in the light of the arguments advanced by both sides. 9. On perusal of balance sheet and profit and loss account for assessment years 2003-04 and 2004-05 it is observed that, only activity carrie....
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.... persons which have been taxed on their income, and it was not open for revenue to now contest their identity or genuineness in respect of transactions, which has been accepted by revenue itself, while making assessment in respect of those persons. Ld. Counsel further submitted that assessee was carrying on with its business of trading in shares and stocks of different companies, details of which were filed before Ld. AO. He submitted that credit entries in bank are either receipts on account of sale of old investments or deposits out of cash in hand or recovery of old debts. 17. On the other hand, revenue has contested that funds invested into SVP group by assessee were cash funds and there was no material placed before Ld. AO which could establish that cash credit for alleged sale of shares, share capital etc., were genuine and from creditworthy sources. Ld. DR submitted that registered office of assessee was located at Janta flat and there was no commercial activity that was found to have been carried on by assessee. She submitted that large number of payments received by assessee in cash has been shown in the nature of share capital in its books, and assessee has not discharge....
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....issions filed before the assessing officer the assessee has submitted that it has been working as Investment Company and was dealing in purchase and sale of investment in shares and other companies. The assessee had also submitted that assessee had received investment from various different sources for fresh shares have been issued and form No.2, has been filed regarding allotment of shares with the registrar of companies, Delhi and Haryana. 22. On further verification of the paper book and the records it is observed that the assessee has tried to substantiate by way of an affidavit in order to prove credit entries in the bank account being in the nature of share capital. The affidavit of the depositor has been examined. These affidavits do not show any evidence of the creditworthiness and genuineness of the transaction. It merely shows mean, addresses and amount deposited with the assessee. Specific reference is made to page Nos. 378, which is an affidavit of Sh. Danesh Sadiue, who deposited Rs. 25,000/-for funding initial expenses. Likewise most of the affidavits are similarly worded. Therefore according to us, assessee does not discharge the initial onus cast upon, with respect....
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....es of the shareholders registered, share application forms should, share transfer register, etc., It would constitute acceptable proof or acceptable explanation by the assessee. (5) the department would not be justified in drawing an adverse inference only because the creditor/subscriber failed to neglect to respond to blitz notices; (6) the onus would not stand discharge if the creditor/subscriber denies to repudiate the transaction set up by the assessee nor should the assessing officer take such repudiation at face value to construe it, without more against the assessee; and (7) assessing officer is duty bound to investigate the creditworthiness of the creditor/subscriber to the genuineness of the transaction and the veracity of the repudiation." 25. It is also observed that assessee in the case of CIT vs. Lovely Exports (supra) had established by way of confirmation and affidavits of share applicants, containing the details including PAN/IT Ward number, racial card of share applicants, and further the payments were made through proper banking channels. In that particular case all the necessary details, particulars of the creditors were furnished thereby discharging the onus. ....