TaxTMI 
TaxTMI 
2021 (3) TMI 688
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....y when the assessing officer had considered all the material placed while passing the assessment order? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in remitting the issue back to the file of the Assessing Officer by quoting the decision in the case of Kanhaiyal and Sons (HUF) in ITA No 1849/Chny/2014 Sunil Kumar Lalwani and that Aashesh Kumar Lalwani wherein the onus has been shifted to the revenue with a direction that the Assessing Officer is to bring on record the role of the Assessee in promoting the Company and the relation of the Assessee if any with that of the promoters and role of inflating of prices etc which exercise had already been done by the AO and the SEBI? 3. Is not finding of the Tribunal perverse especially when the decision of the Tribunal is contrary to the time tested Principal that the person who asserts a fact has to discharge the initial burden cast upon him to show that the said facts are true and only thereafter the burden would shift to the department?" 3. We have heard Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the appellant-Revenue. 4. The Tribunal relied upon its earlier decision in....
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....tion 10(38) of the Act. On a reading of the order passed by the Tribunal, we find that the Tribunal did not interfere with the factual findings recorded by the Assessing Officer and the CIT(A) with regard to the transaction done by the assessee. Thus, unless and until the Tribunal found an error in the approach of the Assessing Officer or the CIT(A) and only after interfering with such a finding, the Tribunal could have exercised its power of remand. Even in such circumstances, the Tribunal was required to record reasons as to why the matter should be remanded and as to why the Tribunal could not decide the factual issue on the available material. 16. We find from the order passed by the CIT(A) that the assessee raised a vague contention that a thirty party statement was relied upon by the Assessing Officer without affording an opportunity to the assessee to confront the same and the decision was taken against the assessee. Unfortunately, the Tribunal did not examine as to whether such a contention raised before the CIT(A) was rightly decided or not. Further, from the grounds raised by the assessee before the CIT(A), we find that they had not disputed the factual position, which....
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....ly 14 brokers for their alleged involvement in manipulating the market prices and rigging the markets for jacking up the share prices. The Income Tax Department Investigation Wing which had conducted detailed investigation had unearthed shell companies which specialized in manipulating the market prices of the shares of certain listed company on the stock exchange by a group of persons working as a syndicate for the purpose of providing entries of tax exempt, bogus long term capital gains to large number of beneficiaries in lieu of unaccounted cash converting black money into white without payment of tax. The profit made from the sale of scrip was multiple time the cost of the shares and sale price was not supported by the financial status of the company. The companies had shown very meager profits and were mostly loss making companies with negative earning per shares. These unknown companies never declared dividends and the Director's report did not show any projects or major events done in the operation of the company that would attract investors to trade in the scrip. Same set of brokerages would be seen selling and buying the shares and the sale prices were increased with....
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....ee had entered into engineered transaction to generate artificial long term capital gains and the Explanation offered by the assessee regarding the credit of Rs. 15,86,250/- in its book was found to be unsatisfactory and therefore, the Assessing Officer held the same as unexplained cash credit which was added to the total income of the assessee as per the provisions of Section 68 of the Act and assessed under the head Income from other sources." 18. The above facts have been culled out by the Assessing Officer as well as the CIT(A). If such is the case, it is not known as to whether there was any justification on the part of the Tribunal to interfere with the order and that too, by remanding the matter for a fresh consideration. 19. In the decision in the case of Sumati Dayal Vs. CIT [reported in (1995) 214 ITR 0801], the Hon'ble Supreme Court, while considering the aspect regarding burden of proof relating to cash credits, pointed out as follows: "4. It is no doubt true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the ....
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.... Tribunal, which held that the share transactions were bogus because the company, whose shares were allegedly purchased, was a penny stock. This decision was affirmed by the Hon'ble Supreme Court in the decision reported in (2019) 112 Taxmann.com 330. 23. In the decision of the Hon'ble Supreme Court in the case of PCIT, Central Vs. NRA Iron & Steel Private Limited [reported in (2019) 412 ITR 0161], the issue, which fell for consideration was as to whether in a case where share capital/premium was credited in the books of accounts of the assessee company, the onus of proof was on the assessee to establish by cogent and reliable evidence after identity of the investor companies, the credit worthiness of the investors and genuineness of transactions to the satisfaction of the Assessing Officer. While answering the issue, the Hon'ble Supreme Court, after referring to its decisions in the case of Sumati Dayal and CIT Vs. P.Mohankala [reported in (2007) 291 ITR 0278], held as follows: "8.2. As per settled law, the initial onus is on the assessee to establish by cogent evidence the genuineness of the transaction, and credit-worthiness of the investors under Section 68 of....
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....case, it is projected by the Revenue that the Directorate of Income Tax (Investigation) had purportedly found such a racket of floating bogus companies with sole purpose of lending entries. But, it is unfortunate that all this exercise if going in vain as few more steps which should have been taken by the Revenue in order to find out causal connection between the case deposited in the bank accounts of the applicant banks and the assessee were not taken. It is necessary to link the assessee with the source when that link is missing, it is difficult to fasten the assessee with such a liability. ....... 10. On the issue of unexplained credit entries/share capital, we have examined the following judgments : i. In Sumati Dayal v. CIT [(1995) 214 ITR 801 (SC), this Court held that : "if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory, there is prima facie evidence against the assessee, vis., the receipt of money, and if he fails to rebut the same, the said evidence being unrebutted can be used against him by holding that it is a receipt of an income nature. While considering the explanat....
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....sanct. Once the assessee has proved the identity of his creditors, the genuineness of the transactions which he had with his creditors, and the creditworthiness of his creditors vis-a-vis the transactions which he had with the creditors, his burden stands discharged and the burden then shifts to the revenue to show that though covered by cheques, the amounts in question, actually belonged to, or was owned by the assessee himself." (emphasis supplied) vi. In a recent judgment the Delhi High Court in CIT Vs. N.R.Portfolio (P) Ltd. [(2014) 42 Taxmann.com 339/222 Taxman 157 (Mag.) (Delhi) 21] held that the creditworthiness or genuineness of a transaction regarding share application money depends on whether the two parties are related or known to each other, or mode by which parties approached each other, whether the transaction is entered into through written documentation to protect investment, whether the investor was an angel investor, the quantum of money invested, creditworthiness of the recipient, object and purpose for which payment/investment was made, etc. The incorporation of a company, and payment by banking channel, etc. cannot in all cases tantamount to satisfactory dis....
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....careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be placed on the assessee since the information is within the personal knowledge of the assessee. The assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the assessee." 24. Bearing the principles laid down in the decision of the Hon'ble Supreme Court in the case of NRA Iron & Steel Private Ltd., in mind, if we examine the order passed by the Assessing Officer, we find that a detailed enquiry had been conducted by the Assessing Officer after affording an opportunity to the assessee. The assessee availed the opportunity through written submissions. The assessee was represented by an authorized representative and thereafter a finding had been rendered. The said finding was tested for its correctness by the CIT(A), who approved the same by order dated 07.8.2018. 25. We refer to the following factual findings rendered by the CIT(A) while dismissing the appeal filed by the assessee : "2.1. .......In response to no....
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.... the assessee the communication sent by this office to M/s.Excellent Batters Private Limited. 2. The postal remarks is 'not known' only. The postal authorities did not mention that the person left or something else. The word 'not known' means that the address itself bogus or incorrect one. 3. Accordingly, it is established that there is no such person in that address having name M/s.Excellent Batters Private Limited. 4. It is onus on the part of the assessee to prove the genuineness of the transaction. 5. It is also noticed that the documentary evidence filed by the assessee towards payment made for purchase of shares also not related to this transaction. 6. In the absence of the distinctive nos., in the sale bill dated 25.1.2010 of M/s.Excellent Batters Pvt. Ltd., and hence, it is not known that to whom the shares were originally allotted and how the same was subsequently transferred to the assessee for that there is no documentary evidence produced. The assessee HUF not furnished the copy of name transfer application also. 7. It is also noticed from the AR of the assessee's submission dated 15.11.2017 that M/s.Excellent Batters P. Ltd., is a ....
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....Explanation 1 thereto are separately initiated for furnishing the inaccurate particulars of income with respect to the claim of capital gain made in the light of the findings made in the preceding paragraphs. ...... 7.3.......However, in the present appeal, the appellant purchased the shares of M/s.Bakra Pratisthan Limited in off market. During the course of the hearing on 24.7.2018, the AR admitted that the assessee purchased the shares of M/s.Dhanlab Merchandise Limited in off market. ..... 7.4. These shares were purchased through off market and not through Stock Exchange. The notice under Section 133(6) dated 28.9.2017 sent by the Assessing Officer to M/s.Excellent Barter Private Limited from which the assessee had purchased the shares of M/s.Dhanlab Merchandise Limited was returned unserved with remark 'not known'. Moreover, the assessee did not bring any other material on record to establish the genuineness of the purchase of shares. M/s.Bakra Pratisthan Limited did not pay dividend or did not issue bonus shares during the period of holding of these shares by the assessee corresponding to the increase in the price of the share of M/s.Bakra Pratisthan ....