TaxTMI 
TaxTMI 
2018 (12) TMI 1322
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....tion and further did not examine money trail of the payments made in share capital andshare premium. 2. Whether on the facts and in the circumstances of the case, and in law the Ld. CIT(A) has erred innot following the decision by the jurisdictional High Court in the case of Raj Mandir Estate privateLimited reported in 70 Taxmann 124(cal) and approved by the Hon'ble Apex Court in the decisioncited as 2017-TIOL-13-SC-IT dated 09.01.2017. 3. That the appellant craves for leave to add, delete amend or modify any ground before or at thetime of appellate proceedings." 3. The appeal filed by the Revenue in ITA No.1755/Kol/2017, for Assessment Year 2012-13, is barred by limitation by 24 days. The Revenue moved a petition for condonation of delay in filing the appeal. We have heard both the parties on this preliminary issue and having regard to the reasons given in the affidavit, we condone the delay and admit the appeal for hearing. 4. The facts of the case may be stated briefly. The assessee company filed its return of income for Assessment Year 2012-13, showing total income at Rs.NIL. The assessee's case was selected for scrutiny u/s 143(2) of the Act and the....
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....n. ii) These companies are basically investment companies. iii) Income tax returns show a nominal income/loss. iv) No business activity. v) Investor companies received share capital with huge premium, andwas in turn invested inthe assessee company and similar other companies as well. Therefore, the Assessing Officer noted that it was important to understand as to how the investment decisions that too at a huge premium was taken, whether the applicants did not have their ownprofit, making apparatus to invest. Also whether the transactions in the bank statements were merely for rotating money or the transactions are commensurate with the income of those companies etc. Therefore, the Assessing Officer noted that unless the assessee and applicant companies appear with all its books, bankstatements, copies of return and the income tax returns of the directors, the answers to these questions will not be found out. As to how the onus can be discharged would depend on the facts and circumstances of each case. Under the circumstances, if considered in the light of preponderance of probability and normal human behavior, the entire amount should be treat....
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.... Shri Rabin Choudhury, submitted before the Bench that assessee has failed to prove the identity, creditworthiness and genuineness of the share capital and share premium received from various entities. During the assessment proceedings, the assessee only submitted the books of accounts, documents and some details before the Assessing Officer, but did not appear in person, in response to the summons u/s 131 of the Act. The director of the assessee company should have appeared before the Assessing Officer to explain the documents and details submitted before him. The assessee, during the assessment proceedings was just dumping papers and documents on the table of the Assessing Officer and this does not mean that the assessee is making compliance. If the books of accounts, documents and papers are not explained by the assessee, then Assessing Officer would not able to do complete examination of the three ingredients of the section 68 namely: identity, creditworthiness and genuineness. Therefore, Assessing Officer was right in making the disallowance u/s 68 of the Act. Apart from this, the assessee has introduced his unaccounted money by way of issuing shares at a higher premium. The a....
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....apital and its sources can't be explained to the satisfaction of the AO unless thedirectors appear in person. Therefore, considering these facts and circumstances, the addition made by the assessing officer should be upheld. 11. On the other hand, the ld. Counsel for the assessee submitted that assessee received the share application money including share premium amounting to Rs. 5,00,00,000/- from the five companies. The details of which are given below: Sl. No. Name Address Share capital @Rs.10 Share Premium @Rs.40 Amount (Rs.) 1 M/s Ganpati Hirise Pvt. Ltd. 45/D, S.N. Roy Road, Ground Floor, Behala, Kolkata - 700 038. 32,00,000/- 1,28,00,000/- 1,60,00,000/- PAN:AACCG5934A 2 M/s Gazal Textiles &Finvest Pvt. Ltd. 40, Weston Street, 3rd Floor, Kolkata-13. PAN:AABCG1486C 6,00,000/- 24,00,000/- 30,00,000/- 3 M/s Landmark Exim Pvt. Ltd. 47/1A, S.N. Roy Road, 3rd Floor, Flat No.8, Behala, Kol-38. PAN:AABCL1397D 27,00,000/- 1,08,00,000/- 1,35,00,000/- 4 M/s Procton Commerce Pvt. Ltd. 15, Bow Street, 1st Floor, P.S.-Bowbazar, Kol-12. PAN:AABCP6029N ....
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....ll as investor companies did not appear in respect of summons u/s 131 of the Act and hence genuineness of the transaction of the subscriber companies was not proved from their end. The ld. Counsel for the assessee pointed out that during course of assessment proceedings, the notice u/s 131 of the Act was issued to the subscribers of the share capital to which all of them made part compliance by submitting all the details asked for in the said notice and which the Assessing Officer himself has mentioned in his assessment order.In addition to this, the directors of the subscribing companies appeared before the assessing officer, who refused to record their presence due to his preoccupancy with the time barring cases. In spite of this, these investor companies filed documents, books of accounts and details as required by the Assessing Officer. But the Ld. AO without taking into cognizance the details and documents submitted,passed the assessment order making the addition ofthe entire amount to the income of the assessee, which is unjustified.Further on the observation made by the Ld. AO that the share application money receivedduring the financial year have been shown as again inve....
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.... Share capital @Rs.10 Share Premium @Rs.40 Amount (Rs.) 1 M/s Ganpati Hirise Pvt. Ltd. 45/D, S.N. Roy Road, Ground Floor, Behala, Kolkata - 700 038. PAN:AACCG5934A 32,00,000/- 1,28,00,000/- 1,60,00,000/- 2 M/s Gazal Textiles &Finvest Pvt. Ltd. 40, Weston Street, 3rd Floor, Kolkata-13. PAN:AABCG1486C 6,00,000/- 24,00,000/- 30,00,000/- 3 M/s Landmark Exim Pvt. Ltd. 47/1A, S.N. Roy Road, 3rd Floor, Flat No.8, Behala, Kol-38. PAN:AABCL1397D 27,00,000/- 1,08,00,000/- 1,35,00,000/- 4 M/s Procton Commerce Pvt. Ltd. 15, Bow Street, 1st Floor, P.S.-Bowbazar, Kol-12. PAN:AABCP6029N 13,00,000/- 52,00,000/- 65,00,000/- 5 M/s Sarvottam Commercial Pvt. Ltd. 203, Sarat Bose Road, 4th Floor, Tollygunge, Kol- 29. PAN:AADCS6468E 22,00,000/- 88,00,000/- 1,10,00,000/- Total 5,00,00,000/- From the paper book submitted by the ld counsel, where we note that the aforesaid shareholders had submitted the following relevant details as called for and had confirmed the transaction with the assessee company. The evidence which were filed before the AO, included the fo....
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.... AO made the addition was because the directors of the share subscribers did not turn up before him. In such a case the Hon'ble Apex Court in the case of Orissa Corpn. (P) Ltd. 159 ITR 78 and the Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360 [2003] 127 Taxman 523 , has held that onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, the Assessing Officer is dissatisfied about the source of cash deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). In arriving at this conclusion, the Hon'ble Court has further stressed the presence of word "may" in section 68. Relevant observations at pages 369 and 370 of this report are reproduced hereunder:- "Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as no....
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.... as may be logically permitted by the statute itself or by some other law connected therewith or relevant thereto. Keeping in view these fundamentals of interpretation of statutes, when we read carefully the provisions of section 68, we notice nothing in section 68 to show that the scope of the inquiry under section 68 by the Revenue Department shall remain confined to the transactions, which have taken place between the assessee and the creditor nor does the wording of section 68 indicate that section 68 does not authorize the Revenue Department to make inquiry into the source(s) of the credit and/or subcreditor. The language employed by section 68 cannot be read to impose such limitations on the powers of the Assessing Officer. The logical conclusion, therefore, has to be, and we hold that an inquiry under section 68 need not necessarily be kept confined by the Assessing Officer within the transactions, which took place between the assessee and his creditor, but that the same may be extended to the transactions, which have taken place between the creditor and his sub-creditor. Thus, while the Assessing Officer is under section 68, free to look into the source(s) of the creditor a....
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....edit to the creditor from whom the cash credit has been. eventually, received by the assessee. It, therefore, further logically follows that the creditor's creditworthiness has to be Judged vis-a-vis the transactions, which have taken place between the assessee and the creditor, and it is not the business of the assessee to find out the source of money of his creditor or of the genuineness of the transactions, which took between the creditor and sub-creditor and/or creditworthiness of the subcreditors, for, these aspects may not be within the special knowledge of the assessee. " ********** " ... If a creditor has, by any undisclosed source, a particular amount of money in the bank, there is no limitation under the law on the part of the assessee to obtain such amount of money or part thereof from the creditor, by way of cheque in the form of loan and in such a case, if the creditor fails to satisfy as to how he had actually received the said amount and happened to keep the same in the bank, the said amount cannot be treated as income of the assessee from undisclosed source. In other words, the genuineness as well as the creditworthiness of a creditor have to b....
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....cheques, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter the burden had shifted to the Assessing Officer to prove the contrary. On mere failure on the part of the creditors to show that their sub-creditors had creditworthiness to advance the said loan amounts to the assessee, such failure, as a corollary, could not have been and ought not to have been, under the law, treated as the income from the undisclosed sources of the assessee himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. Viewed from this angle, we have no hesitation in holding that in the case at hand, the Assessing Officer had failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. In the absence of any such evidence on record, the Assessing Officer could not have treated the said amounts as income derived by the appellant from undisclosed sources. The learned Tribunal seriously fell into error in treating the said amount....
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....a case where the issue was whether the assessee availed cash credit as against future sale of product, the AO issued summons to the creditors who did not turn up before him, so AO disbelieved the existence of creditors and saddled the addition, which was overturned by Ld. CIT(A). However, the Tribunal reversed the decision of the Ld. CIT(A) and upheld the AO's decision, which action of Tribunal was challenged by the Hon'ble High Court, Calcutta in the case of Crystal Networks (P.) Ltd. v. Commissioner of Income-tax 353 ITR 171 wherein the Tribunal's decision was overturned and decision of Ld. CIT(A) upheld and the Hon'ble High Court has held that when the basic evidences are on record the mere failure of the creditor to appear cannot be basis to make addition. The court held as follows: 8. Assailing the said judgment of the learned Tribunal learned counsel for the appellant submits that Income-tax Officer did not consider the material evidence showing the creditworthiness and also other documents, viz., confirmatory statements of the persons, of having advanced cash amount as against the supply of bidis. These evidence were duly considered by the Commissioner of Income....
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.... this -fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 464, the Supreme Court has observed as follows: "The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act; it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. " 11. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment ....
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.... the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well-accepted principle which are required to be followed in considering the effect of Section 68 of the Act and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities." 23. Our attention was also drawn to the decision of the Hon'bleSupreme Court while dismissing SLP in the case of Lovely Exports as has been reported as judgment delivered by the CTR at 216 CTR 295: "Can the amount of share money be regarded as undisclosed income under section 68 of the Income tax Act, 1961? We find no merit in this special leave petition for the simple reason that if the share application money is received by the assesseecompany from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment. 24. Our attention was also drawn to the decision of the Hon'ble Calcutta High Court while relying on the case of Lovely Exports, in the appeal of COMISSIONER OF INCOME TAX, KOLKATA-IV Vs ROSEBERRY MERCANTI....
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....n INCOME TAX APPEALNO.52 OF 2001 wherein the Court held as follows: "The Assessing Officer was of the view that the increase in share capital by Rs.52,03,500/- was nothing but the introduction of the assessee's own undisclosed funds/income into the books of accounts of the assessee company. The Assessing Officer accordingly treated the investment as unexplained credit under Section 68 of the Income Tax Act and added the same to the income of the assessee. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) being the First Appellate Authority and contended that the Assessing Officer had no material to show that the share capital was the income of the assessee company and as such the addition made by the Assessing Officer under Section 68 of the Act was wrong. The learned Commissioner of Income Tax (Appeals) after hearing the department and the Assessee Company deleted the addition of Rs. 52,03,500/- to the income of the assessee company during the Assessment Year in question. The learned Commissioner of Income Tax Appeals found that there were as many as 2155 allottees, whose names, addresses and respective sha....
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....tablish the identity of the subscribers, their credit worthiness and the genuineness of the transaction. The aforesaid judgment was rendered in the context of the factual background of the aforesaid case where, despite several opportunities being given to the assessee, nothing was disclosed about the identity of the shareholders. In the instant case, the assessee disclosed the identity and address and particulars of share allocation of the shareholders. It was also found on the facts that all the shareholders were in existence. Only nine shareholders subscribing to about 900 shares out of 6,12,000 shares were not found available at their addresses, and that too, in course of assessment proceedings in the year 1994, i.e., almost 3 years after the allotment. By an order dated 2nd May, 2001, this Court admitted the appeal on three questions which essentially centre around the question of whether the Appellate Commissioner erred in law in deleting the addition of Rs. 52,03,500/- to the income of the assessee as made by the Assessing Officer. We are of the view that there is no question of law involved in this appeal far less any substantial question of law. T....
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.... producing those share applicants. In our view, in the case before us so long the Assessing Officer was unable to arrive at a finding that the particulars given by the assessee were false, there was no scope of adding those money under section 68 of the Income- tax Act and the Tribunal below rightly held that the onus was validly discharged. We, thus, find that both the authorities below, on consideration of the materials on record, rightly applied the correct law which are required to be applied in the facts of the present case and, thus, we do not find any reason to interfere with the concurrent findings of fact based on materials on record. The appeal is, thus, devoid of any substance and is dismissed summarily as it does not involve any substantial question of law. 27. In the light of the aforesaid decisions of the Hon'ble Apex and jurisdiction High court and other High Courts let us examine the present case in hand. We will examine each share subscribers totallingfive (5). The Ld. counsel took pains to bring out the relevant facts in respect of each share subscribers which will throw light as to the identity, creditworthiness and genuineness of th....
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....ng with copy of audited accounts and list of Closing Stock for the financial year 2011-12. f) Copy of shareholding list and Bank Statement highlighting the transaction for the financial year 2011-12. (5). With regard to M/s. Procton Commerce Pvt. Ltd., since no notice, u/s. 131 was served on the said company, the assessee company obtained the relevant documents from the company, vide its letter filed on 24.03.2015, and furnished the following details and documents:- a) Copy of Form-18 filed with ROC as address proof and copy of PAN card for identity proof. b) Copy of PAN Card of the Directors. c) List of shareholders as on 31.03.2012. d) Copy of I.T. Return along with Audited Accounts, Balance sheet, for the F.Y. 2009-10 onwards e) Copy of Bank Statement duly showing the transaction. f) Copy of Annual Return for the F.Y 2009-10, 2010-11 and 2011-12. The Director Mr. Siddheswar Halder vide its letter, submitted on 20.03.2015, in response to notice u/s.131, furnished the following information and documents:- a) Copy of PAN Card for identity proof and copy of Driving License as a proof of address. ....
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....Court in CIT vs DATAWARE (supra) which has not been done, so no adverse view could have been drawn. Third ingredient is genuineness of the transactions, for which we note that the monies have been directly paid to the assessee company by account payee cheques out of sufficient bank balances available in their bank accounts on behalf of the share applicants. It will be evident from the paper book that the appellant has even demonstrated the source of money deposited into their bank accounts which in turn has been used by them to subscribe to the assessee company as share application. Hence the source of source is proved by the assessee in the instant case though the same is not required to be done by the assessee as per law as it stood/ applicable in this assessment year. The following chart explains that assessee in case of some investors proved source of source also: Showing details of source of the applicants as well as, source of the source Particulars of receipts by the assessee Particulars sources of the applicant Source of source, showing date, amount and particulars Sl. No. Name of the applicant Date Amount (Rs.) Particulars Date Amount (Rs.)....
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....ecently the ITAT Kolkata in several cases has deleted the addition on account of share application in similar circumstances. The relevant portion of the decisions are as follows: (a) The Ld ITAT Kolkata. in DC IT Vs Global MercantilesPvt.Ltd in ITA No. 1669/Kol/2009 dated 13-01-2016. In this the decision the Ld. Tribunal held as follows: "3.4. We have heard the rival submissions and perused the materials available on record including the detailed paper book filed by the assessee. The facts stated hereinabove remain undisputed are not reiterated herein for the sake of brevity. We find that the assessee had given the complete details about the share applicants clearly establishing their identity, creditworthiness and genuineness of transaction proved beyond doubt and had duly discharged its onus in full. Nothing prevented the Learned AO to make enquiries from the assessing officers of the concerned share applicants for which every details were very much made available to him by the assessee. We find that the reliance placed by the Learned Ld. CIT(1) on the decision of the Hon'ble Apex Court in the case of CIT vs Lovely Exports (P) Ud reported in (2008) 216 CTR 1....
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....ing the monies from share application money account to share capital account. The details of 20 individuals are reflected in page 6 & 7 of the Learned CIT(A) order. The Learned AO asked the assessee to produce the shareholders before him. He found that the assessee did not do so but furnished copies of pay orders used for payments to the assessee company and also furnished income tax particulars and balance sheets of all the shareholders. The Learned AO on analyzing all the balance sheets observed that the shareholders have paltry income and small savings and none of them have any bank account and huge cash balances were shown in their hands out of which Pay orders were obtained. Based on this, the Learned AO concluded that these shareholders do not have creditworthiness to invest in the assessee company and brought the entire sum of Rs. 57,00,000/- to tax as unexplained cash credit u/s 68 of the Act. 4.2. On first appeal, the Learned CIT(A) observed that entire share application monies of Rs. 57,00,000/- received during the previous year 2004-05 relevant to Asst Year 2005-06 from 20 persons and the shares were allotted to them during the asst year under appeal. He observe....
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....6 and only the shares were allotted to them during the asst year under appeal. Admittedly no monies were received during the asst year under appeal and hence there is no scope for invoking the provisions of section 68 of the Act. Hence we hold that the order passed by the Learned CITA in this regard does not require any interference. Accordingly the ground no. 3 raised by the Revenue is dismissed. (b) The ITAT Kolkata in R.B Horticulture & Animal Projects Co. Ltd, ITA No. 632/Koll2011 dated 13-01-2016. In this the decision the Ld. Tribunal held as follows: "6. We have heard the Learned DR and when the case was called on for hearing , none was present on behalf of the assessee. However, we find from the file that the assessee had filed a detailed paper book and written submissions. Hence the case is disposed off based on the arguments of the Learned DR and written submissions and paper book already available on record. The facts stated in the Learned CIT(A) were not controverted by the Learned DR before us. We find that the assessee had given the complete details about the share applicants clearly establishing their identity, creditworthiness and genuineness of tra....
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....e statements given by three persons the Assessing Officer found that the response from the others was either not available or was inadequate and added an amount of Rs. 46 lakhs pertaining to 30 persons to the income of the assessee. The Commissioner (Appeals) upheld the decision of the Assessing Officer. On appeal, the Tribunal set aside the order of the Commissioner (Appeals) and deleted the additions. On further appeal: Held, dismissing the appeal, that the additional burden was on the department to show that even if the share applicants did not have the means to make the investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. No substantial question of law arose. " 6.3. We find that the argument of the Learned DR to set aside this issue to the file of the Learned AO for verification of share subscribers would not serve any purpose as the ratio decided in the above cases is that in any case, no addition could be made in the hands of the recipient assessee. In view of the aforesaid findings and respectfully following the decision of the apex cou....
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....e receipt of letters and receive the same. Just because, a letter was received at the old address instead of present address, it cannot be said that the identity of the applicant has not been verified. All of these companies had duly replied to notice u/s. 133(6) and confirmed the transaction with all the evidences. The AO has not raised any objection on any of the information furnished before him. The AO has not asked the respective Company applicants also to explain the alleged discrepancy in the address. The AO has not brought any material on account of record to disbelief the evidences furnished with him and treat the transaction as not genuine. The assessee submitted the following material at the time of assessment. a) Copy of share applications from the share applicants (copies enclosed) b) Copy of Form 2 filed with Registrar of Companies, West Bengal (copy enclosed) c) Copy of Form 18 about the Registered Office of the applicants for change of address subsequent to the date of allotment, i.e. 31.03.2009 (copies enclosed) d) Members register e) Share application & Allotment Register f) Copy of board resolution. g)....
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....he creditors as well as the genuineness of transactions. It is observed that all the three share applicant companies i.e. M/s. Shree ShyamTrexim Pvt. Ltd., M/s Navalco Commodities Pvt. Ltd. and M/s. JewellockTrexim Pvt. Ltd. had filed their confirmations wherein each of them confirmed that they had applied for shares of the appellant -company. All the three companies provided- the cheque number, copy of bank statements and their PAN. It is observed that these companies also filed, copies of their return of income and financial statements for as well as copy of their assessment order u/s. 143(3) of the I. T Act for AY 2005-06. In the case of M/s. JewellockTrexim Pvt. Ltd. the assessment for AY 2005-06 was completed by the ITO Ward 9(3), Kolkata and the assessments in the case of M/s. Navalco Commodities Pvt. Ltd. and M/s. Shree ShyamTrexim Pvt. Ltd. for A. Y.2005-06 and AY.2004-05 respectively were completed by the I TO, Ward 9(4), Kolkata. Under the circumstances, I am of the opinion that the AO was not justified in holding that the share applicant companies were not in existence. The assessment orders were completed on the address as provided by the appellant company in the course....
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....ned not proved by the assessee. The decision of the Hon'ble Allahabad High Court as well as ITAT Kolkata Bench on which reliance was placed by the learned counsel for the assessee also supports the view that for non production of directors of the investor company for examination by the AO it cannot be held that the identity of a limited company has not been established. For the reasons given above we uphold the order of CIT(A) and dismiss the appeal of the Revenue. " 31. Reliance in this regard is also placed on the decision of the Delhi High Court in the case of CIT Vs Gangeshwari Metal (P) Ltd (ITA No. 597 of 2012) dated 21.01.2012. In this case the assessee had received share application money of Rs. 55.50 lacs during the year in question. The assessee filed the complete names, addresses of the share applicants, confirmatory letters from them, copies of bank statements of both the company as well as the share applicants and copies of share application forms. Inspite of the aforesaid documentary evidences the AO held the explanation to be unacceptable and treated the share application as unexplained cash credit thereby making addition under Section 68 of the Incometax Act,....
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.... Pvt Ltd (319 ITR 5). Accordingly the addition made under Section 68 on account of share application was deleted. 32. We would like to reproduce the Hon'ble High Court Delhi, order in CIT vs. Gangeshwari Metal P.Ltd. in ITA no. 597/2012 judgement dated 21.1.2013, the Hon'ble High Court after considering the decisions in the case of Nova Promoters and FinleasePvt. Ltd. 342 ITR 169 and judgement in the case of CIT vs. Lovely Exports 319 ITR (Sat 5)(5. C) held as follows:- "As can be seen from the above extract, two types of cases have been indicated. One in which the Assessing Officer carries out the exercise which is required in law and the other in which the Assessing Officer 'sits back with folded hands' till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in the latter category. Here the Assessing Officer after noting the facts, merely rejected the same. This would be apparent from the observations of the Assessing Officer in the assessment order to the following effect:- ''Investigation made by the Investigation Wing of th....
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....lease Pvt Ltd. 342 ITR 169 (supra) in ITA 232/2012 judgement dt. 22.11.2012 at para 6 to 8/ it was held as follows. "6. This Court has considered the submissions of the parties. In this case the discussion by the Commissioner of Income Tax (Appeals) would reveal that the assessee has filed documents including certified copies issued by the ROC in relation to the share application affidavits of the directors, form 2 filed with the ROC by such applicants confirmations by the applicant for company's shares, certificates by auditors etc. Unfortunately, the Assessing Officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr. Mahes Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the Assessing Officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed w....
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....of Raj Mandir Estate privateLimited reported in 70 Taxmann 124(cal)" We are of the view that judgment of the Hon`ble High Court of Calcutta in the case of Raj Mandir Estate private Limited reported in 70 Taxmann 124(cal), relates to section 263 of the Act. That is, in this judgment, the issue was that whether ld CIT was right in exercising the jurisdiction under section 263 of the Act or not. In this case, the ld CIT had directed the assessing officer to examine the genuineness, creditworthiness and identity of the share subscribers. The ld CIT had given direction to the assessing officer and this does not mean that ld CIT has adjudicated the issue against the assessee. It is just direction given by the ld CITto assessing officer and therefore, does not apply to the facts of the assessee. Therefore, issue in the case of Raj Mandir Estate private Limited reported (supra) is distinguishable on facts, that is, it was only the direction of the ld CIT to the assessing officer to examine the genuineness, creditworthiness and identity of the share subscribers, hence, does not apply to the assessee under consideration. 36. We note that the director of the assessee company, Mr. Siddhe....