TaxTMI 
TaxTMI 
2017 (12) TMI 368
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.... dated 11.09.2015 for the Assessment Year 2007-08. It has been admitted on the following question of law: "Whether the Assessing Officer was justified in making the addition under Section 68 of the Income Tax Act?" Admittedly, the assessee is a private limited company engaged in the manufacture and sale of Iron and Steel products. For the Assessment Year 2007-08 it filed it's return of income disclosing book profits Rs. 21,77,195/-. The assessment was taken as a scrutiny case under Section 143(3) of the Act. In the course of the assessment proceedings amongst others the Assessing Officer doubted the genuineness of the cash credit entries Rs. 3,46,00,000/- that had been recorded against share capital subscribed by 37 persons,....
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....sing Officer with regard to the handwriting expert opinion are not being referred to here because in the order passed by the Tribunal giving rise to the present appeal the Tribunal has chosen not to rely on that opinion of the handwriting expert. The inquiries with regard to PAN details also resulted in negative confirmation inasmuch as Assessee Information System (in short AIS) database of the department did not support/confirm the claim made by the assessee with regard to the identity of the persons who the assessee claimed had made the investment. Thus, the Assessing Officer disbelieved the explanation furnished by the assessee in support of cash credit entries amounting to Rs. 3.46 crores found recorded in the books of account of the as....
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....submits that in so far as the assessee is concerned, it is undisputedly a company. The cash credit entries in respect of which the addition has been made were admittedly entries reflecting subscription made to the share capital of the company. That investment having been made by the third parties, the assessee was not in a position to offer any further details other than that which was available with it. According to him, if such details had been found to be false or wrong, it was for the department to make additions at the hands of the persons who had subscribed to the share capital of the assessee and not at the hands of the company itself. Opposing the submission so made by the learned counsel for the assessee, Sri Praveen Kumar, lear....
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....e fact of having made the investment. The PAN details of the alleged investors also did not establish the identity of such persons. In that view of the matter, the Tribunal recorded its finding that the identity of the investors was not established. The Tribunal disapproved the reasoning given by the CIT (Appeals) to accept the claim of the investment based solely on the fact that the investments had been made through banking channel. Also, in respect of the bank account of the investors, inquiry had been made by the Assessing Officer and some of the bank account were found to be of persons other than the alleged investors. That notwithstanding, the Tribunal has reasoned that the assessee being a private limited company and it being admi....
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....ay be where such an addition may be proposed to be made at the hands of a private limited company at the very beginning i.e. at a time when it may not have conducted any business so as to give rise to any income or money to make such an investment. In that case, addition may be warranted at the hands of the directors etc. However, that is not the case here. No other fact has been pleaded or found to exist as may save the assessee in this case from the addition made u/s 68 of the Act. Also, merely because the cash credit entries have been shown as share capital cannot be cited as a reason to resist the addition under section 68 of the Act on a plea that no company can subscribe to its share capital (as has also been suggested during the c....
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....stablished and the assessee did not discharge its burden to lead evidence on that issue. The finding of the Tribunal is a finding of fact recorded on the basis of evidence and application of the correct principle/rule of evidence. The same calls for no interference by this Court and it is hereby sustained. Once, the identity of the investors was not established the assessee could not in any case claim to establish either the genuineness of the transaction or the creditworthiness of those persons. Therefore, the objection raised by learned counsel for the assessee as to lack of opportunity to cross-examine the Bank Manager or other witnesses, is largely inconsequential. Even if such opportunity has been granted to the assessee by the Asse....