D.K.Seth, J. - (1.) In this case, the AO has disbelieved the genuineness of the subscription received by the assessee from its directors and promoters as well as from the public. On appeal, the CIT(A) had found that proper investigation was not made in respect thereof. Therefore, the matter was remanded to the AO for enquiring the matter afresh on the ground that the earlier enquiry was made in hot haste. On remand, in course of the enquiry, opportunity was given to the assessee. It was found that the income-tax file numbers of the promoters and directors were disclosed and all those payments were made by cheques except a sum of Rs. 20,000 subscribed in cash by one Amarnath Gupta, who is not an income-tax assessee. The rest Rs. 19,88,750 was subscribed by general public. Despite successive opportunity being given, nothing was disclosed about the identity of the subscribers except furnishing a list of subscribers. Therefore, on appeal, the CIT(A) had again remanded the case in respect of shares worth Rs. 3,80,000 for investigation of the income-tax files for ascertaining their creditworthiness and genuineness of the transaction. Whereas CIT(A) had disallowed Rs. 19,88,750 under Section 68 of the IT Act 1961 (Act) on the basis of the finding of facts arrived at by him relying on the materials produced. On appeal, the Tribunal had held that since these were paid by cheques, therefore, this could not have been disallowed. The learned Tribunal had also observed that this was the position in law.
(2.) Identical question was involved in Hindusthan Tea Trading Co. v. CIT (IT Ref. No. 20 of 1996, disposed of on 11th and 12th March, 2003, by this Bench). All these questions as to the extent of the burden lying on the assessee and its extent of discharge and the duties and the responsibilities of the AO were discussed in detail: Various case laws were also discussed.
(3.) In course of argument in this case, Mr. Deb had relied on various decisions namely, CIT v. Steller Investment Ltd. ; CIT v. Sophia Finance Ltd. and Sumati Dayal v. CIT. Relying on these decisions, he contended that in such a case, the IT authority had every right to apply Section 68 of the IT Act.;