TaxTMI 
TaxTMI 
2019 (3) TMI 157
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....ently, the AO found that the assessee had claimed share issue expenses of Rs. 93,000/- as deduction while computing the total income which escaped assessment. This led the AO to reopen the assessment u/s. 147 of the Act. The reassessment order was framed by the AO u/s. 143(3)/147 of the Act on 29.12.2010 on a total income of Rs. 1,51,080/-. During the course of re-assessment proceedings the AO also found that during the year the assessee company raised share capital of Rs. 80,91,00,000/- along with premium. Accordingly, the AO asked the assessee vide notice issued u/s. 142(1) of the Act for the details of such share capital. As required, the assessee filed the confirmation letters of the share applicants, their profit and loss account, balance sheet, acknowledgment of filing of the return , PAN of the share applicants amount received , no. of shares allotted and also filed copies of Form No. 2 (Return of Allotment) and Form No. 5 (for increase in authorized share capital) to prove the identity, genuineness and creditworthiness of the share applicants. The AO then issued notices u/s. 133(6) of the Act to majority of share capital contributors. According to AO, all these share applic....
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....1.02.2014 to substantiate the existence, identity and creditworthiness of its share subscribers and genuineness of share subscription transaction claimed by it. Thereafter, a final reminder dated 21.02.2014 was issued to the assessee company. Thereafter, summons u/s. 131 of the Act dated 21.02.2014 was issued and served on the director of the assessee company directing his personal appearance of the director along with complete set of books of account and all the relevant documents. Simultaneously summons u/s. 131 of the Act dated 21.02.2014 were issued to the directors of the share subscriber companies for their personal appearance along with complete set of books of account and all of the relevant details/documents to substantiate their identity, the existence, identity, creditworthiness and sources of funds of the subscriber company to make payment of share application money to the assessee company and genuineness of share subscription transactions claimed by the assessee company. According to AO, inspite of all the aforesaid notices, neither the directors of the assessee company nor the subscribing companies appeared to substantiate the genuineness of share subscription tran....
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....tion from the liquidation of assets shown in the balance sheet after the change of Directors, if any." 6. However, the Ld. AR drew our attention to the AO's notice i.e. dated 21.02.2014. After that the AO passed the reassessment order on 24.03.2014 ex parte by invoking sec. 144 of the Act. So, according to him, the AO passed the reassessment order ex parte without affording proper opportunity of being heard to the assessee. 7. Hence, the main grievance of the assessee is that no proper opportunity was given to the assessee to discharge the onus casted upon it as required when section 68 is involved wherein documents/proof of identity, creditworthiness and genuineness of the cash credit needs to be adjudicated. We note that AO has drawn adverse inference against the assessee company since assessee's as well as the investor's directors failed to personally appear before him. Thereafter, the AO passed the "Best Judgment Assessment" u/s. 144 of the Act. And we note that other than issuing summons u/s. 131 of the directors of the assessee company no other investigation as directed by Ld. CIT was conducted by AO as is discernable from the order. So, in the light of the afores....
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....e that the Ld. CIT after looking into the pernicious practice of converting black money into white money has given the guidelines to AO as to how the investigation should be conducted to find out the source. Since similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld by the Tribunal as well as by the Hon'ble Calcutta High Court as well as the SLP has been dismissed by the Hon'ble Supreme Court, similar order of the Ld. CIT has to be given effect to as directed by the Ld. CIT. We take note that the Ld. CIT with his experience and wisdom has given certain guidelines in the backdrop of black money menace should have been properly enquired into as directed by him. The AO ought to have followed the investigating guidelines and method as directed by him to unearth the facts to determine whether the identity, genuineness and creditworthiness of the share subscribers. We note that the Hon'ble Supreme Court (three judges bench) in the case of Tin Box, (supra), has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh and thereby reversed the Hon'ble High Court, Tribunal and CIT(A)'s orders and r....