TaxTMI 
TaxTMI 
TaxTMI 
2014 (2) TMI 1376
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....for preparation of appeal. After the lapse of considerable time when the assessee enquired from the office of Chartered Accountant, it was found that the appeal was not prepared and thereafter the assessee took the steps to file the appeal immediately without any further delay. The assessee in this respect has filed an affidavit of one Ms. Malathy M. Pillai, the concern person handling the case of the assessee in the office of the Chartered Accountant, M/s Kailash Chand Jain & Co. It has been stated that due to some inadvertent oversight, she failed to make an entry in the appeal register maintained in the office and, therefore, the appeal could not be filed within the period of limitation. The assessee has also corroborated the reasons explaining the delay by filing the affidavit of its Director, namely, Vijay Singh Baid. 2.2 On the other hand, learned DR has vehemently objected to the condonation of delay. 2.3 Having considered the rival submissions and facts of the case, we found that the assessee has explained a reasonable cause for not filing the appeal within the period of limitation as there was an inadvertent mistake at the office of the Chartered Accountant of the assess....
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....the majority of the shareholders were from Kolkata. Accordingly, a letter dated 15-11-2006 was issued to the ADIT(Investigation Unit) Kolkata to conduct an enquiry with regard to the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors. The ADIT(Inv.) Kolkata submitted enquiry report, wherein it has been stated that for verification of the creditors, summons under Section 131 were issued to the parties. Since there was no compliance of summons and the whereabouts of the parties could not be located as far as five creditors and, therefore, it was observed that the existence of the parties appears to be doubtful. In case of two creditors the summons were duly served and in response the representative of the creditors were appeared before the ADIT (Investigation), Kolkata, however, it was observed in the report that these companies were only paper company and used by the assessee to bring its unaccounted money back in the form of share capital. Based on the report of the ADIT(Investigation) Kolkata, the AO made an addition of Rs. 95 lakhs as unexplained cash credit under Section 68 of the Act. This addition was made in respect of share appli....
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....nvestigation), Kolkata and remaining 5 did not response to the notice. Merely because no response was received from the creditors, it cannot be said that the transaction is not genuine. He has relied upon the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Orbital Communication (P) Ltd., reported in (2010) 327 ITR 560 and submitted that the Hon'ble High Court has held that substantial evidence was produced by the assessee to prove the creditworthiness of the creditors and genuineness of the share application. Mere failure to produce the creditor is not material, hence, the money cannot be regarded as an undisclosed income. Learned AR has contended that the assessee has produced all the relevant evidence to establish the identity and creditworthiness of the creditors as well as the genuineness of the transaction. To discharge its onus, the assessee has produced PAN of all the creditors along with confirmation, bank statement showing payment of share application money and, therefore, the assessee has proved beyond any doubt the identity and creditworthiness of the creditors. Since the assessee has produced all the relevant record regarding issues and allotment of shar....
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....hese parties are having same address, which shows that companies were not in existence in real sense but only on papers. He has further submitted that onus is on the assessee to prove the genuineness of the transaction. The investigation carried out by the ADIT(Investigation) Kolkata, goes to show that all these 7 creditors are used by the assessee for bringing its unaccounted money in the books. 8. In rebuttal, learned AR has submitted that the decision relied upon by the CIT(A) in the case of M/s Earthmetal Electrical Pvt. Ltd. has been reversed by the Hon'ble Supreme Court. He has filed the copy of the decision of the Hon'ble Supreme Court. 9. We have given our thoughtful consideration to the submissions advanced at the hands of the learned AR for the assessee as well as learned DR for the Department and also considered the relevant material placed on record. The assessee has received share capital and share premium from 13 parties, out of which 7 parties belong to Kolkata. The AO has decided to conduct an enquiry in respect of the 7 parties belong to Kolkata by writing a letter dated 15-11-2006 to ADIT(Inv.) Kolkata. The details of 7 parties from Kolkata are as under :- Sl. ....
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....assessee has produced PAN, Acknowledgement of Income Tax Return filed by these parties, confirmation letter from these parties, whereby it has been confirmed that they have applied for shares of the assessee company and the respective payments were made towards share application. The assessee has also filed the bank account of these parties to show the availability of fund and the payment from the bank account. Apart from this, the assessee has also produced the book of accounts of these parties to show the financial soundness of the parties and sufficient amount of reserve and surplus as well as capital of these companies. Thus, it is clear from the evidence produced by the assessee that the parties were very much in existence as these parties were assessed to income tax. The assessee has produced respective PAN and Income Tax Return along with other details. It is manifest from the evidence produced by the assessee that existence/identity and creditworthiness of the parties cannot be doubted. Thus, it appears that the report of the ADIT(Inv.) Kolkata in respect of these five parties, is contrary to the fact proved by the assessee with tangible and material evidence brought on rec....
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.... in the accounts of these two parties. Merely because the cheques were deposited in the respective accounts would not lead to the conclusion that these cheques money was the assessee's own money routed through these parties until and unless it is found in the enquiry and substantiated with the facts and material. This is but natural that whenever a large payment is to be made, funds are to be arranged and, therefore, if an amount through cheque is deposited in the bank account before making the payment of share application money, in absence of any fact, material or finding, it cannot be said that the said money is assessee's own money. 11. We further note that the assessee produced the balance sheet, profit and loss account, income tax return, PAN and confirmation from these parties, which clearly discharge the assessee from its onus to prove its claim. When the assessee has brought on record the relevant evidence including the balance sheet and profit & loss account and return of income of these parties, then in the absence of proving contrary by the AO these material evidence cannot be brushed aside merely on the basis of suspicious. Even otherwise, when the assessee has produce....