R.C. Sharma, A.M. -
(1.) THIS appeal by the assessee is directed against the order dt. 14th Sept., 2007 of CIT(A) for the asst. yr. 1997-98. The assessee has raised disputes on the following grounds:
(1) The order of the learned CIT(A)-V, New Delhi, is against the facts and l0aw of the case.
(2) The learned CIT(A) has wrongly confirmed addition of Rs. 8,90,000 on account of share capital as the source of it was not proved, which was on account of Rs. 2 lacs in name of Smt. Kamla Devi, Rs. 2 lacs in name of Smt. Sarita Agrawal and Rs. 4,90,000 on account of Anju Chordia.
The learned CIT(A) has not properly considered evidences on record in which source of share application money/creditor was fully established. The assessee has fully established transactions, genuineness of the credit in their names by filing evidences, but learned CIT(A) has ignored the same and simply routed order in another fashion, that AO can verify the transaction of share application money, accordingly learned CIT(A) has ignored paper books/evidences filed before AO as well as him in appellate order. Hence addition made is unjustified.
(2.) Rival contentions have been heard and records perused. The facts in brief are that originally, the assessment was framed under Section 144, wherein several additions were made on account of subscribing share application money from directors and shareholders. The additions so made were confirmed by the CIT(A), in the appeal filed by the assessee before the Tribunal, the Tribunal vide its order dt. 17th Jan., 2005, restored the matter back to the file of the AO with the following observations:
We have considered the rival submissions carefully in the light of the material placed on record before us. Admittedly, the assessee has placed before the lower authorities, voluminous evidence, inter alia including respective confirmations, income-tax particulars, documents showing the source of funds, bank details relating to the share capital and share money credited by the assessee during the year. Our attention has been specifically drawn to p. 94 of the paper book wherein it is placed communication addressed to the AO, which inter alia, contains the evidence and material sought to be relied upon by the assessee. In any case, we are satisfied that both the lower authorities have not given finding with regard to the efficacy of the voluminous material and evidence relied upon by the assessee in support if its return of income. Therefore, we are of the view that the matter be restored to the file of the AO with the direction to de novo consider and examine the material and other evidence convassed by the assessee in support of the share capital and share application moneys credited in its balance sheet for the year under consideration. The AO shall allow reasonable opportunity to the assessee of being heard in the matter and thereafter pass appropriate orders in accordance with law.
It is crystal clear from the above order of the Tribunal that the Tribunal was satisfied that both the lower authorities have not given any finding with regard to efficacious and voluminous matter and evidence relied upon. The Tribunal also observed that "assessee has placed before the lower authorities voluminous evidence, inter alia, confirmation of income-tax particulars, bank details regarding share capital credited by the assessee during the year". After the matter was set aside, the AO again started proceedings and passed order on 28th Dec, 2006, in which addition of Rs. 8.90 lacs was retained on account of share capital, in place of addition of Rs. 37,99,500 made originally. The addition so retained pertained to amount of share capital of Rs. 2 lacs received from Smt. Kamla Devi relative of director Ramesh Agarwal, share capital of Rs. 2 lacs received from Smt. Sarita Agarwal relative of director Ramesh Agarwal and share capital of Rs. 4.90 lacs received from Smt. Anuj Chauradia. The CIT(A) confirmed the action of the AO, against which the assessee is again in appeal before us.
(3.) THE learned Authorised Representative, Shri Ajay Vohra, drew our attention to the various documents comprising of confirmation for introduction of share capital, balance sheet, PAN, copy of assessment order being filed before the lower authorities, and submitted that assessee has discharged primary onus, no addition is required to be made in the hands of assessee company with regard to the share capital brought in by the three persons. Our attention was also drawn to the part of the AO's order wherein AO himself has admitted at p. 1 of his order that Smt. Anuj Chauradia was one of the subscribers to share application money, AO issued summons to her and contacted on her mobile phone. As the assessee did not appear before the AO, AO made addition for the amount received through cheque. As per learned Authorised Representative, the AO has wide powers to act for compelling the appearance under Section 131 of the IT Act, 1961. He submitted that assessee company has filed confirmation of such share capital, full whereabouts of the shareholders, therefore, their identity was duly proved, the amount received through account payee cheque which was duly credited in the bank account "State Bank of Travencore, Noida" hence, genuineness of transaction was also proved. THE learned Authorised Representative relied on the decision of Delhi High Court in case of Value Capital Services (P) Ltd., order dt. 25th April, 2008, in IT Appeal No. 348 of 2008, wherein it was held that burden is on the Revenue to show that assessee has no money to make investment, the investment made by the assessee actually emanated from the coffer of the assessee so as to enable it to be treated as undisclosed income of the assessee. Since this has not been done, the Hon'ble High Court held that under these circumstances, the Tribunal has not committed any error in deleting the additions made on account of share capital of Rs. 51 lacs as the share application money from 33 persons. He further placed reliance on the decision of Hon'ble Supreme Court in case of CIT v. Lovely Exports (P) Ltd. (2008) 6 DTR (SC) 308, wherein it was held that if the share application money is received by the company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of the assessee company. THE question referred to the Hon'ble Supreme Court was "can the amount of share money be regarded as undisclosed income under Section 68 of the IT Act. 1961?" THE Hon'ble Supreme Court did not find any merit in the SLP on the plea that if the share application money is received by the assessee company from the alleged bogus shareholders whose names are given to the AO then the Department is free to proceed to reopen their individual assessments in accordance with law.;