TaxTMI 
TaxTMI 
2022 (4) TMI 1669
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....t of commission thereon on the basis of a additional document submitted by the assessee during the appellate proceedings. Further, Ld. CIT (A) has not confronted the A.O. on additional documents produced by the assessee. 2. Ld. CIT (A)-III, Kanpur failed to confront the Assessing Officer with the affidavit filed even though the same was nowhere mentioned in the assessment order and is also not part of our records. 3. The Ld. Commissioner of Income Tax (Appeals)-III, Kanpur has erred in law and on facts without affording proper opportunity to the Assessing Officer under rule 46A to rebut/counter the same, which renders the order passed contrary to the principles of Audi Alteram Partem. 4. That the order of the Ld. Commissioner of Income Tax (Appeals)-III, Kanpur is erroneous, unjust and bad in law be vacated and the order dated 19.04.2018 passed u/s 148/143(3) of I.T. Act of the Assessing Officer be restored. I.T.A. No.702/Lkw/2018 "1. The Ld. Commissioner of Income Tax (Appeals)-III, Kanpur has erred in law and on facts by deleting the addition of Rs.4,56,00,000/- on account of bogus unsecured loan and Rs.22,80,000/- on account of commis....
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....d u/s 143(3) of IT. Act of the Assessing Officer be resorted. I.T.A. No.703/Lkw/2018 1. The Ld. Commissioner of Income Tax (Appeals)-III, Kanpur has erred in law and on facts in allowing relief of Rs.95,38,190/- out of commission paid by the assessee on sales pertaining to the previous year without appreciating the fact that as per the section 145 of the Income Tax Act, 1961, commission of export sales is not an allowable expenditure on payment basis as the assessee is regularly following Mercantile system of accounting. 2. The Ld. Commissioner of Income Tax (Appeals)-III, Kanpur has erred in law and on facts by deleting the addition of Rs.12,20,50,000/- on account of on account of bogus unsecured loans on the basis of a forged document submitted by the assessee during the appellate proceedings. Further, Ld. CIT (A) has not confronted the A.O. on additional documents produced by the assessee during the appeal proceedings. 3. Ld. CIT (A)-III, Kanpur failed to confront the Assessing Officer with the affidavit filed even though the same was nowhere mentioned in the assessment order and is also not part of our records. 4. The Ld. Commissione....
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....retraction and therefore, the order of learned CIT(A) is not as per law as the Assessing Officer has not been given opportunity to rebut such affidavit under Rule 46A of the IT Rules. Therefore, it was prayed that the order of learned CIT(A) in this respect be reversed and order of Assessing Officer be upheld. The learned CIT, D.R. further submitted that in view of survey conducted on assessee, assessment proceedings for the years 2015-16 and 2016-17 were completed u/s 143(3) of the Act and assessments for assessment years 2013-14 and 2014-15 were completed u/s 143(3) after reopening u/s 148 of the Act and it was submitted that in all these years such bogus entries were arranged by assessee and which were admitted by assessee and which were rightly added back to the income of the assessee and were wrongly deleted by learned CIT(A). It was further contended that for assessment years 2013- 14, 2014-15 and 2016-17, even the notices issued u/s 133(6) remained uncomplied with and the Income Tax Inspector had reported after visiting the addresses of lenders that no such company existed there and all were bogus companies and therefore, she argued that Assessing Officer had made the additi....
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....133A is not binding on the assessee if the assessee during the course of assessment proceedings is able to explain such entries by furnishing complete details and reliance in this respect was placed on the following case laws and CBDT instructions. 1. Jain Trading Co. v. Income Tax Officer, ITA 5935/Mum/2002 dated 30.10.2006 2. Suresh Chand Agarwal v. ACIT, ITA 191/Agra/2013 dated 31/07/2017 3. Paul Mathew & Sons vs. CIT, (2003) 263 ITR 101 (Kerala) 4. CIT vs. S. Kadar Khan & Sons, (2013) 352 ITR 480 (SC) 5. CIT vs. S. Kadar Khan & Sons, (2008) 300 ITR 157 (Madras) 6. Commissioner of Income-tax v. Dhingra Metal Works [2010] 328 ITR 384 (Delhi) dated 04-10-2010 7. ACIT vs. Maya Trading Co. ITA No. 31 (AGRA) OF 2012 & C.O. NO. 20 (AGRA) OF 2012 dated OCTOBER 5, 2012 8. Kishan Lal Shiv Chand Rai Vs. CIT reported in 88 ITR 293 9. Abdul Qayuam Vs. CIT reported in 184 ITR 4 10. CBDT Instruction No. 286/2/2003(Inv) It was submitted that the addition solely based upon the statement recorded during survey u/s 133A is not sufficient and assessee is entitled to retract from his offer by furnishing com....
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....along with the copy of annual accounts for financial year 2014-15 and copy of bank account from where the entries of unsecured loans were received by the assessee, was placed. Our attention was also invited to page 76 of the paper book where a copy of notice issued u/s 133(6) to Silver Agencies Pvt. Ltd. was placed and further our attention was invited to pages 78 to 80 of the paper book where a copy of reply, filed by such unsecured loan creditor before the Assessing Officer, was placed. Learned counsel for the assessee submitted that in view of these documents and evidences, the learned CIT(A) had deleted the additions by holding that the assessee had fulfilled his obligation u/s 68 of the Act. Learned counsel for the assessee further invited our attention to an order of learned CIT(A) dated 04/09/2018 for assessment year 2015-16, placed at pages 81 to 91 where on an application filed by the Assessing Officer for rectification in the order passed by learned CIT(A), the learned CIT(A) again reiterated his findings on merits of the deletions and rejected the application of the Assessing Officer u/s 154 of the Act. Therefore, it was submitted that learned CIT(A) has passed a reasone....
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.... of Order V of the CPC held that the service of notice was not in accordance with the law. Learned counsel for the assessee in this respect heavily placed reliance on the orders of learned CIT(A) wherein he has elaborately discussed about the manner in which the notices u/s 131 were issued by the commission and after discussing the same has categorically held that such service of notices were not in accordance with law and after having been satisfied that the assessee has discharged his part of onus has allowed relief to the assessee. 4.2 Now coming to other issue of commission, paid to foreign agents for sales made through them, Learned counsel for the assessee submitted that though the assessee is following mercantile system of accounting and is booking sales and purchases on mercantile basis however, as per the agreement entered into by it with the foreign agents, the assessee was required to pay commission only when the sale proceeds got realized and therefore, agents raised the bills in the year in which sale proceeds got realized and therefore, assessee debited the bills in the year during which such bills were raised. It was submitted that the learned CIT(A), after apprec....
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....essing Officer, are placed in the respective paper book pages as below: M/s Silver Agencies Pvt. Ltd. Documents details Page No 1. Copy of confirmation, copy of ITR, audited Financial statements, bank statements, Company's master data 55 to 72 2. Copy of notice u/s 133(6) 76 3. Copy of reply filed by unsecured loan creditors before the Assessing Officer 78-80 5.1 The only objection raised by the Revenue through its grounds of appeal is that learned CIT(A) has accepted additional evidence without confronting it to the Assessing Officer and has thus violated the provisions of Rule 46A of the Rules. In this respect we find that there is no fresh evidence filed by assessee before learned CIT(A) other than a copy of affidavit dated 28/09/2017 which the assessee had claimed to have filed before the Assessing Officer and which the Revenue has denied of it being on record. We find that before the learned CIT(A) the assessee filed a copy of affidavit dated 28th September 2017 placed at pages 101 to 104 of the paper book for his claim that the assessee had retracted from his statement within a period of six days. In the affidavit the assessee admitted that on an....
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....T Circular and on various judgments to allow relief to the assessee. 5.2 We further find that Assessing Officer had requested for recall of learned CIT(A)'s order on the basis that learned CIT(A) had allowed relief to the assessee on the basis of such affidavit which was not confronted to Assessing Officer and had filed an application u/s 154 of the Act for rectification of the mistake and learned CIT(A) has again reiterated that he has allowed relief to the assessee on merits and has rejected the application filed by the assessee u/s 154 of the Act. For the sake of completeness, such findings of learned CIT(A) have been made part of this order as below: Decision: I have considered the above application of the Assessing Officer and the letter received from P-r. CIT-1, Kanpur, reply filed by the assessee and judicial authorities relied upon by the assessee. It is clear from the above that AO has raised a request for recalling the order passed u/s 250 DT. 28.05.2018 in appeal no. CIT (A)-III/10079/KNP/17-18 before the Pr. CIT-1, Kanpur and not before the undersigned. Pr. CIT1, Kanpur in turn has requested this office to give fresh opportunity to AO on admission o....
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....Rs.6,738/- of Telephone expenses; of Rs.3,14,204/- of Vehicle Running & Maintenance was decided against the appellant on the basis of decision taken in assessee's own appeal for the AY 2011-12 and appeal no. CIT (A) - I, Knp/10048/2017-18 for AY 2012-13. This application moved by AO pertains to ground no. 4 & 5 of the impugned order. Ground No. 4 & 5 pertaining to addition of Rs.2,57,00,000/- of Unsecured Loan u/s 68 of IT. Act and Commission of Rs.12,85,000/- paid for arrangement of unsecured loan were decided in favour of the appellant on the basis of appellant's timely retraction from the statement given on oath during survey, on the basis of documents filed during the course of assessment proceeding like copy of ITR, Bank Statement of the loan creditor before AO, and on the basis of the result of the information called from the loan creditors u/s 133(6) by the AO, who confirmed these transactions before AO and finally following the law laid down by the apex court in CIT v. 5, Khader Khan Son (2013) 352 ITR 480 (SC). During the course of impugned appellate proceeding, AR had submitted written submissions made during the course of assessment proceeding a....
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.... 133(6) of IT Act conducted by AO and the law laid down by Hon'ble Apex Court in the case of S. Khader Khan Son (Supra) rather based upon retraction from surrender made. It is therefore clear that apart from the retraction statements and affidavits, there are two more factual and legal basis in support of appellant's contention, which led to the decision taken in the impugned order. All these three aspects go to the root of the matter. Now these very three basis cannot be reexamined in light of absence of any new facts coming on record. The fact that appellant did file the copy of retraction affidavit bearing the receiving stamp of the office of DCIT-1, Kanpur is not disputed and is a part of the record before me. This submission was taken to be filed at Bar by the appellant with a certificate that the same was filed before the appropriate authorities. In order to know the veracity of the affidavit the appellant was asked to prove that the affidavit filed is not a forged one. In support of his submission now the Oath Commissioner has further confirmed that this affidavit is not forged. Copy of the confirmation is placed on record. A perusal of the submissi....
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....quest for invoking S. 154 of IT Act has been made -by AO, who alone can be the aggrieved party before this office and at this stage fresh additional evidence cannot be examined as the appeal proceedings are closed and review of decision taken on the basis of complete analysis of all facts available on record cannot be done as per law, therefore now both these requests are dismissed as there is no proceedings pending in this office related to AY 2015-16. If the Assessing Officer has any grievance then the proper forum is to approach /higher appellate authorities highlighting all these facts along with necessary evidence. It is seen from the records that AO has already moved an appeal on 02.08.2018 before Hon'ble ITAT Lucknow Bench taking all these specific grounds that are taken in this application. This second appeal has been approved by Pr. CIT-1, Kanpur vide letter no. 10/PrCIT-l/Judl./KNP/l 7-18/225 dated 02.08.2018. The matter is now sub-judice before higher appellate authority now. AO is directed to ensure that all the evidence and records are produced before the Hon'ble ITAT who is the final fact finding authority for deciding all the issues raised in this ap....
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....cklog of the containers at the custom port. As Kanpur is a dry port of customs and the containers are railed out from this dry port to Nhava sheva for export. During that period there was a huge backlog of containers at the customs port due to this the export of these containers got delayed. Appellant also submitted that they did not claim the export commission as expense pertaining to these invoice in the last year, a finding not rebutted by AO in his order. Hence it is clear that there is no double benefit being claimed by the appellant in this regard. Regarding the commission paid in the year under consideration for the invoice raised in the month of September and other months of FY 2010-11 appellant submitted that the commission paid to foreign agents has been debited during the year under consideration on the basis of agreement between the appellant and foreign agents. The clause 4 of the agreement between the commission agent and appellant is reproduced as under: "That the second party shall be entitled to payment of commission only on realization of the sale bills and issuance of commission bill." Further, due to some dispute with the agent the commission w....
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....submissions. There is no doubt that the assessee is following the mercantile system of accounting and under this system, an expenditure is due as and when the liability to pay accrues and arises irrespective of whether or not the payment in question has been made. The point of time when such liability accrues and arises would normally depend, in the absence of an agreement to the contrary, on when the services in question for which the payment is to be made had been rendered. If, however, there is an agreement which indicates, the point of time when the liability would accrue and arise, the principle of rendering services would not avail. The question as to whether or not liability in question has arisen would in such a case be determined with reference to the terms of the contract between the parties irrespective of whenever the services in question might have been rendered. In the present case there is no doubt that services were rendered during the previous .year and, therefore, If there was nothing in the contract to the contrary, it could be said that the liability for paying the commission had accrued and arisen as soon as the services were rendered by the agent and nothing f....
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.... test, i.e., whoever rendered the services earned the income arising from those services. This argument was, however, negativated by their Lordships of the Supreme Court who said that one had to look not merely at the services rendered but at the fact whether as a result of the said services a right to sue in a court of law for the income resulting from such services had vested in the claimant. The accrual could result only at that point of time when the right to enforce the claim in a court of law had arisen. The relevant observations of their Lordships appearing at page 51 may be extracted here for ready reference as follows: "The word 'earned' even though it does not appear in section 4 of the Act has been very often used in the course of the judgments by learned Judges both in the High Courts as well as the Supreme Court. The concept however cannot be divorced from that of income accruing to the assessee. If income has accrued to the assessee it is certainly earned by him in the sense that he has contributed to its production or the parenthood of the income can be traced to him. But in order that the income can be said to have accrued to or earned by the assess....
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.... the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the asst. yr. 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the asst. yr. 1953-54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other. The aforesaid observations of the Bombay High Court were reiterated by this Court in the case of CIT vs. Shri Ram Pistons & Rings Ltd. [20081 174 Taxman 147, as under : "Finally, we may only mention what has been articulated by the Bombay High Court in Commissioner of Income Tax, Delhi, Ajmer, Rajasthan and Madhya Pradesh v. Nagri Mills Co. Ltd. [1958] 33 ITR 681 ....
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.... 9. Now coming to assessment year 2013-14, 2014-15 and 2016-17, we find that out of these three years, two years i.e. 2013-14 and 2014-15 were reopened u/s 148 of the Act on the basis of survey carried out on assessee. In these two years, there is no issue of commission on sales and the only issue involved in these two years, the addition made by the Assessing Officer on the basis of same statement, which has been recorded u/s 133A of the Act. During assessment year 2013-14, the addition has been made to the extent of Rs.4,70,50,000/- by treating the unsecured loan from M/s Wise Financial Advisor Services Pvt. Ltd. as bogus and in assessment year 2014-15, the amount involved is Rs.4,56,00,000/- which is from M/s Silver Agencies Pvt. Ltd. During these years also, the assessee had filed the necessary evidences in support of the genuineness of the receipt of unsecured loans. During assessment year 2013-14, the Assessing Officer, vide notice dated 19/02/2018, placed at pages 46 to 47 of the paper book, required the assessee to explain as to why the amount of unsecured loan, received from M/s Wise Financial Advisor Services Pvt. Ltd. along with 5% expenses incurred for arranging such ....
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....ame of Companies Unsecured loan taken in F.Y. 2012-13 Unsecured loan taken in F.Y. 2013-14 Unsecured loan taken in F.Y. 2014-15 Unsecured loan taken in F.Y. 2015-16 Unsecured loan taken in F.Y. 2016-17 M/s Cooper Commercial Pvt. Ltd. 12,05,00,000 8,18,00,000 M/s Silver Agencies Pvt. Ltd. 4,56,00,000 2,57,00,000 15,50,000 M/s Wise Financial Advisor Services Pvt. Ltd. 4,70,50,000 In assessment year under consideration an amount of Rs.4,70,50,000/- arranged through M/s Wise Financial Advisor Services Pvt. Ltd. on a commission of Rs. 23,52,500/- was received as unsecured loan by appellant. However, soon thereafter within a week of date of survey, on 28.09.2017 appellant retracted from the statement given on Oath for the reason that the assessee was not in sound health therefore he could not apply his mind and made the surrender without consulting regular books of account and other relevant records and on advise of the survey team. However as soon as records were examined, assessee realised his mistake and accordingly retracted from his statement b....
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....pellant and passed the order in undue haste. I have considered the facts and circumstances of the case. In the assessment order, it is seen that the AO, while making these two additions, has relied solely upon the report submitted by DDIT(Inv) Kolkata and upon the statement given by the appellant on 23.09.2017 and during post survey proceedings u/s 131 on 26.09.2017 admitting that the Unsecured Loan from M/s Wise Financial Advisor Services Pvt. Ltd. are bogus and arranged by Shri Manish Agarwal CA for a commission charged. It is also a fact, as evident from the assessment order that the appellant did file copies of return of income of M/s Wise Financial Advisor Services Pvt. Ltd. along with their bank account statements and confirmation of accounts in response to the queries raised by AO. However, AO held in the assessment order that since appellant has not retracted from his statement recorded on oath during survey proceedings and post survey proceedings, the confirmation of unsecured loans and other documents submitted by assessee has no force and same cannot be relied upon for allowing the benefit to appellant of shifting the initial statutory onus that is cast u/s 68 o....
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....t - for holding that the loan creditors are not existing and are not genuine. It is not clear from the report of DDIT(Inv) as to why the summons issued could not be served. As per the report received from the DDIT (Inv.), Unit-2, Kolkata the notice sent by post were returned back unserved. No reasons for non-service like - 'Left without address'; 'no such person/left' or 'Left without address' has been communicated to the AO. Comment from Postal department -'No Such Person' - raises many doubts about the genuineness or whereabouts of the person to whom the letter has been sent but comment of 'Left without address' shows that the postal department official found that the person to whom the letter was addressed to, was present on this place but has left without further intimation to the post office about its new address. Therefore a specific response from postal department is essential to understand the evidence being gathered and lack of the specific reason for non-service vitiates the process and lack of valid service does not prove that the Lender is a bogus entity or its identity is not established. The procedure for servi....
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....was a valid service of notice by DDIT (Inv), Kolkata on the address of the loan creditor. Hence this fact cannot be used to decide the question of the identity of the Loan creditor as held by the AO in his order. Now coming to the Inspector's report that has been relied upon by the AO for making this addition. It is said in the assessment order that "Inspector was also deputed to make enquiry for their existence but no company was found at their respective addresses". AO issued commission to Kolkata Wing giving old addresses and the new addresses i.e. 38/H/l Canal East Road, P.S. Narkeldanga, Kolkata700011, were ignored by AO while framing the assessment order. Address of M/s Wise Financial Advisory Services Pvt. Ltd. on which commission u/s 131(1)(d) was issued by AO was 79B, Dilkusha Street, Kolkata- 700017 and the enquiry was conducted by Inspector of DDIT, Kolkata at MCA data address was 7A Bentick Street, Kolkata700001 whereas the address of the party at the time of summon/enquiry stood changed to 38/H/1 Canal East Road, P.S. Narkeldanga, Kolkata- 700011. Address of M/s Grandura Agencies Pvt. Ltd. (earlier known as Silver Agencies Pvt. Ltd.) on w....
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....bsence of such an affidavit the Assessing Officer must examine the Inspector on oath. All these steps are prescribed just to safeguard all assessee from any misuse of these provisions relating to service of a notice or reporting nonexistence of a particular person on any given address. Report of the Inspector in the instant case lacks details of the efforts made and specific source and reasons for his observations, his report does not mention the names and addresses of the persons who identified the place of business of the lender's, nor any affidavit is filed by him that he personally knew the place of business of the lender's. In this background, this report filed by the Inspector cannot be relied upon as the valid material for coming to a conclusion that loan creditors are non-existent and for making this addition. In CIT vs. Ramendra Nath Chosh, 82 ITR 888 (SC), the Inspector of Income-tax, who was the service officer, claimed to have served the notice by affixing it on the assessee's place of business, but in his report did not mention the names and addresses of the persons who identified the place of business of the assessee's, nor did he men....
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....he rules of natural justice can only apply to these materials which the AO has brought on record and which they consider for the purpose of the case. Many persons may be interrogated, many materials may be looked into or considered, much of it may be irrelevant, and the AO ultimately decides what is relevant material, which should be brought on the record. It is only at that stage that the materials become evidence and the assessee has a right to urge that with regard to those materials, which have been brought on the record, his explanation should be taken and those materials should be brought on the record in a manner consistent with the rules of natural justice. AO has made the addition solely for the reason that assessee has admitted in his statement given during and after the course of survey that these loan transactions are bogus. Soon thereafter within a week of date of survey, appellant allegedly retracted from the statement given on Oath on 28.09.2017 by filing an affidavit dated 28.09.2017 before the AO as well as the higher authorities by filing the notarised affidavit. Though, this fact is disputed now by the AO and is subjudice before Lucknow Bench ITAT in the....
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....de Instruction No. 2862/2003/IT(Inv) held that while recording the statement in survey operation, no attempt should be made to obtained confession as to tax the undisclosed income. AO should rely upon the evidence and material gathered in the course of survey operation. The object of Survey proceedings under the Income Tax Act, are to unearth unaccounted income, which has escaped tax liability and not to obtain admission or confession from the Assessee. Admission made by a person cannot be used as evidence against himself in absence of corroborative evidence to admission. Admission of Income cannot be said to be conclusive to tax an amount. It is always open for the assessee to retract from the same. Since it is the Income of the Assessee that is being taxed, it is only the Assessee who knows his correct state of Affairs. The Assessing Officer can act upon Confession of Assessee. The same becomes an evidence but it does not partake the role of Proof. The confession is only one element in the consideration of all the facts proved in the case. It can be put into the scale and weighed with the other evidence. To act upon the retracted Confession for taxing an amount, the onus....
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....uineness of the transaction along with the identity of the lender/investor and his creditworthiness. Having done so, the appellant in the instant case has discharged the onus cast upon it. In the case of "Prem Castings (P) Ltd. vs. Department Of Income Tax, Income Tax Appellate Tribunal, Delhi Bench T' - New Delhi on 11 September, 2015 in UA 3401/Del/2011, held: "14. Before proceeding further, let us refresh ourselves as to the principles of burden of proof and whom it lies in the case of share capital which has been introduced into the tilt of the assessee by investors as claimed by the assessee. We would like to look at the concept of burden of proof. Though the Income-tax Officer is not fettered by the technical rules of evidence as known to the civil and criminal law, any issue has to be determined on the basis of proof of facts and production of evidence. When there are two parties to a dispute either the court or legislature has laid down, to whom the burden of proof so that each of the parties should be aware about who has the role assigned to it to prove a particular fact that is the discharge of the burden in order to prove his point or to defend it i....
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....e. It is fixed at the beginning of the trial and remains unchanged and, in this respect, reference may be made to section 101 of the Indian Evidence Act (emphasis given by us). In the second sense, the "burden of proof" relates to the region of production of evidence. In this sense, the "burden of proof" is ambulatory and shifting throughout the trial and the scale of evidence may go up and down with different and conflicting items of evidence pressed into service. However, though the distinction between the two senses is subtle, it is real. The second sense, which is of a shifting and ambulatory nature, may be called "onus of proof" while the "burden of proof as it is understood in the first sense may be called as such. Though the words "burden" and "onus" have to be understood and have been interpreted as discussed above, they are often loosely used as inter-changeable words. But then, the burden of proof, as explained earlier, remains unchanged under all circumstances (emphasis given by us). On the other hand, the onus of proof or onus probandi is shifting and ambulatory. Burden of proof is fixed by statute or contract or agreement or pleadings. Onus probandi is concerned with t....
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....c issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the Income-tax Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbors' doubts of the legitimacy of any subscription he is empowered, nay duty bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company. " As held in the case of R. B. Mittal v. CIT 246 ITR 283 (AP) in an enquiry u/s 68, the rule of audi alteram partem has to be observed and the assessee must be given a fair and reasonable hearing to discharge the burden cast on him u/s 68 of the Act. Furt....
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....s concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that It had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharged the onus cast upon him. Thereafter, it is for the Assessing Officer to scrutinize the same and in case he nurtures any doubt about the veracity of these documents, to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the Assessing Officer and he cannot go into the realm of suspicion. Thus element of credit worthiness and satisfaction of AO thereafter is subjective and requires more efforts/inquiry on the part of the AO to give a finding in the order that lender is not genuine or is not credit worthy. AO has not dealt with any of the submissions of appellant as to why AO does not believe the confirmations and other documents filed from loan creditors. No further enquiries or cross-examination of the Income Tax Inspector who visited the address of the lender company was done so that f....
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....e Financial Advisor Services Pvt. Ltd., then those evidence must be passed to ire concerned AO of these companies in order to examine the facts given by appellant in the statement recorded so that proper action can be taken in correct hands to protect interest of revenue. In view of the above both the additions made are deleted." 10. Learned CIT(A), in his detailed order, has clearly held that the assessee had fulfilled his part of onus and had filed all the necessary evidences in support of his claim. We also find that necessary evidences are there in respective paper books as detailed below: Assessment year:2013-14 Page No. 1.Copy of ITR of lender (Wise Financial Advisory Services (P) Ltd. 53 2.Copy of bank account of lender 65 to 67 3.Copy of bank account of assessee 70 to 76 4.Copy of master data of lender 78 5.Copy of assessment order for assessment year of lender 79 to 81 2014-15 Confirmed Copy of Account by lender 52 Copy of audited balance sheet, profit & loss account with Annexures 54 to 64 Assessment year:2014-15 1. Copy of ITR of lender M/s Silver Agencies (P) Ltd. 45 2. Confirmed copy of a....