TaxTMI 
TaxTMI 
2011 (7) TMI 1361
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....On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in deleting the addition of ₹ 35,02,500/- made by the Assessing Officer u/s 68 of the IT Act, being the unexplained / bogus cash credits and ₹ 8756/- being the unaccounted cash paid for obtaining the accommodation entries." 3. In this case Assessing Officer noted that as per information received from Director of Income Tax (Investigation), assessee had received accommodation entries as beneficiaries from entry operators and following sums were received :- Beneficiary Instrument No./Date Amount Name of the entry provider i.e. the operator Bank account of the entry Operator More Credit Securities Ltd. ....
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....ed following documents in support of receipt of application money of ₹ 35Lacs from the three parties namely, M/s Fair 'N' Square Exports Pvt Ltd, M/s M.v Marketing Pvt Ltd and M/s Mastero Marketing and Advertising Pvt Ltd.:- (a). Copy of Income Tax return (b). Copy of Profit & loss A/c and Balance sheet (c). Parties wise share capital raised (d) Copies of confirmations and, (e) Affidavits. As there was a discrepancy in the amount of share application money received by the appellant company during the financial year under consideration, a written clarification was submitted on behalf of the appellant company to the effect that out of ₹ 20 Lacs, shown in the report of the investigation wing to have been r....
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....ny correlation between the Act of providing Hawala entries and receipt of share application money by the appellant company. Further, I also agree with the Ld. counsels for the appellant that it is the duty of the assessing officer to not only collect adverse material but also to confront the same with the concerned party before using the same for making additions. I also do not find any merit in the reply submitted by the Ld. assessing officer that the copies of bank statements etc collected by the department have now been provided to the appellant. Further, the claim of the assessing officer that Form no 2 regarding return of allotment of shares, submitted to the ROC also speaks about only M/s Fair 'N' Exports Pvt Ltd, and the name....
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.... provided all the necessary details required for establishing the identity of the parties. The details provided including copy of income tax returns and the PAN of the parties. Under these circumstances, in our considered opinion when the identity of the parties are established, addition of share application money as unexplained cash credit cannot be sustained in the hands of the assessee. In our considered opinion, the Ld. Commissioner of Income Tax (Appeals) has made a reasonable order which does not need any interference on our part. 7. On coming to the above conclusion we also place reliance of the Hon'ble Apex Court decision delivered in the case of CIT Vs. Lovely Exports 216 CTR 195. In this case it was held that if the share applic....
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.... the case of Commissioner of Income Tax vs. Lovely Exports Pvt. Ltd., 216 CTR 195, the ITAT has rightly held that the assessee had discharged its burden. In case those three companies had received certain cash, which were deposited in the bank accounts, it was for the Income Tax Department to take action against the said companies." 9. We further place reliance upon the decision of the Hon'ble Jurisdictional High Court in the case of C.I.T. vs. Dwarkadish Investment P Ltd. The relevant paras of this judgement of Hon'ble Delhi High Court i.e. para No. 6, 7 & 8 are reproduced herein below:- "6. In our opinion, as section 68 of the Act, 1961 has been interpreted as recently as 2008 by a Division Bench of this Court in Divine Leasing and F....
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.... showing money / his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the revenue. Just because the creditors /share applicants could not be found at the address given, it would not give the revenue the right to invoke section 68. One must not lose sight of the fact that it is the revenue which has all the power and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the source of source." 10. From the above paragraphs of the Hon'ble Jurisdictional High Court decision, it is seen that it has been held by the Hon'ble High Court that assessee has proved the identity of the share applicants by either furnishing their PAN number or income ....