TaxTMI 
TaxTMI 
2003 (3) TMI 62
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....wo parts. One in respect of promoters' quota and the other in respect of public issue. Loss of share: Question No. 3: We may deal with the loss in share transaction first. The grounds disallowing share loss by the Assessing Officer affirmed by the Commissioner of Income-tax (Appeals), were those that out of the four blocks of shares delivery of three blocks were received after five months and the price was also paid after five months, but were immediately sold at a loss. The other grounds were that the share broker only in respect of one group was produced but the other share brokers did not appear despite notice. The books of account of the share broker, who appeared, also show some discrepancies in the entries made. On these grounds this transaction was held to be ingenuine. Whereas the learned Tribunal had found that all relevant documents relating to contract notes, bills, the quoted price and other materials were produced. The transactions were made through cheques. All the shares related to reputed companies and were quoted shares in the stock exchanges and were purchased and sold at the prevalent quoted market rates, which was verified from the statement of the stock excha....
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....hom sold. Even when two views are possible, if the view taken by the learned Tribunal is possible, it cannot be said to be perverse. Having regard to the proposition of law as discussed above and the facts and circumstances of the case, we find that in the present case, the view taken by the learned Tribunal cannot be said to be erroneous or perverse. Therefore, we answer question No.3 in the negative in favour of the assessee. Section 68: The principle: Respective contentions: Mr. Khaitan had relied on the decision in CIT v. Orissa Corporation (P) Ltd. [1986] 159 ITR 78 (SC) to support his contention where it was held that there was no effort made to pursue the so-called alleged creditors and that after the materials were produced by the assessee, they could not do anything further. Therefore, it was incumbent on the Revenue to scrutinise and find out the real nature of the transaction. It cannot proceed on the basis of surmises and conjecture. He had also relied on the decision in Bharati (P.) Ltd. v. CIT [1978] 111 ITR 951 (Cal). In this case, it was held that mere filing of confirmatory letters would not discharge the onus that lay on the assessee unless the identity of the ....
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....iness should also be established and the genuineness should be proved. In this case the identity had admittedly been established but for establishing the creditworthiness, no further steps were taken by the income-tax authority nor proper opportunity was given to the assessee. Mr. Khaitan then relied on K.M. Sadhukhan and Sons (P.) Ltd. v. CIT [1999] 239 ITR 77 (Cal). Relying on the decision, he contended that reliance placed on this decision by Mr. Agarwal does not help Mr. Agarwal in view of the distinguishing facts of the case. Mr. Agarwal had relied on CIT v. Precision Finance (P.) Ltd. [1994] 208 ITR 465 (Cal), which was distinguished by Mr. Khaitan as discussed here inbefore. Mr. Agarwal had also relied on the decision in CIT v. Ashwani Kumar Liladhar [1997] 225 ITR 576 (All). Mr. Khaitan had distinguished the same on the ground that there the assessee itself had not taken steps but here it is not a case and on facts, this decision does not apply. Share capital : Public issue So far as the part of the share capital is concerned, we may first deal with the part related to the public issue. In this case, it appears that notices under section 133(6) of the Income-tax Act, 1961....
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....itted proposition that the burden lies on the assessee. After this was communicated to the assessee that these persons were not responding, it was the responsibility of the assessee to prove the creditworthiness of the subscribers or the genuineness of the transactions, but it had done nothing. Therefore, the finding of the learned Tribunal with regard to the public issue in respect Of these 30 per cent. subscribers seems to be perverse. Therefore, we are unable to accept the learned Tribunal's finding with regard to the public issue. We affirm the decision of the Commissioner (Appeals) with regard thereto. Share capital: Promoters' quota: So far as the promoters' quota is concerned, it appears that the Assessing Officer had accepted the subscription by 30 shareholders to the extent of Rs. 3,13,000 as genuine but disbelieved those of nine at page 70 of the paper book. Whereas the Commissioner of Income-tax (Appeals) had accepted the contribution of five shareholders in serial Nos. 4, 6, 7, 8 and 9 at page 70 of the paper book representing Rs. 1,88,000. He had, however, sustained addition with regard to the contribution of four shareholders in serial Nos. 1, 2, 3 and 5 representin....
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....bsp; verifiable from assessment records. 2. Dilip Kumar Biswas 2,500 Shareholder dead. Summons could  ....
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....sp; of the ward. 6. Sitaram Khaitan 5,000 -do-. 7. Shantilal Jain 2,500 No such file in the blue book of the ward. 8. Chand Ratan Mohta 4,500 &n....
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....f the shareholders had denied to have made the subscription (p. 78 PB). He also found that non-verification to establish the identity of the shareholders and genuineness of the subscription does not mean that the addition should be made because of making addition only. He proceeded on the footing of the human probability test leading to calculate general truth from the bank of the shareholders from which nothing comes forward to deny the contribution. Therefore, the same should accepted as genuine. We can well accept the case of the persons in serial Nos. 2 and 3, who were dead on account whereof nothing could be verified. In the absence of any finding that these two persons were dead before subscribing their contribution, the subscription cannot be held to be ingenuine. So far as the subscriber in serial No. 1 is concerned, he was identified but he could not produce the books of account and the investment could not be verified from the assessment records., Subscription of serial No. 4 was not shown in the file of the subscriber. Even if the identity is established, the creditworthiness is required to be proved. Once the creditworthiness is established, the genuineness of the tran....
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....t be served. Neither this subscriber was produced by the assessee. Therefore, the identity was not established. Therefore, his case also cannot be accepted. Thus the finding of the learned Tribunal as well as that of the Commissioner of Income-tax (Appeals), with regard thereto appears to be perverse. So far as the nine shareholders in promoters' quota are concerned, we have accepted the subscription of serial Nos. 2 and 3 who were dead. The appellate authority had proceeded on the basis that summons under section 131 was served and confirmation was given by these persons but the Assessing Officer does not mention that these persons, namely, those in serial Nos. 4, 6, 7, 8 and 9, had sent their confirmatory letters. There seems to be unexplained discrepancy. This is also not clarified in the order by the learned Tribunal. In the circumstances, we feel it necessary to remit the cases so far as these persons in serial Nos. 1, 4, 5, 6, 7, 8 and 9 to the learned Tribunal for taking a decision afresh in the light of the observations made in this judgment. Taking of steps by the assesses after communication: Another point insisted on by Mr. Khaitan was that in such a case the assessee....