D.K.SETH, J. - (1.) THE reference under section 256(1) has since been made to this court on the question, viz. 'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the appellate order of the Commissioner (Appeals) by which the Commissioner (Appeals) had confirmed the addition of Rs. 8,70,387 under section 68 of the Income Tax Act by holding that the creditworthiness of the individual shareholders and consequently the genuineness of the investment recorded in the books of the Company in their names remained unestablished and the assessing officer was therefore justified in coming to the conclusion that the alleged subscriptions represented the appellant Companys income of the year from some concealed sources' ?
(2.) IN this case, it is alleged by the assessee that these shares were floated and subscriptions were invited from the public through advertisement in the newspapers and the whole paraphernalia of subscription for shares was undergone in accordance with law. These subscriptions were dealt with through nationalized banks and the receipts were received by cheques. However, the assessing officer and the Commissioner (Appeals) and the learned Tribunal had treated part of the receipts to the extent of Rs. 8,70,387 as receipt from undisclosed sources of income under section 68 of the Income Tax Act, 1961 (Act). In the proceedings, the assessee had disclosed the names and addresses of each of the subscribers. The assessing officer had issued notice upon 37 subscribers on test basis, namely who had subscribed between 300 and 3400 shares each. Out of these 37 persons, 10 persons appeared and produced satisfactory evidence regarding the genuineness about the persons and the sources of the funds out of which the shares were subscribed. One Mr. Vijay Kumar Singhania appeared and prayed for time, but did not appear subsequently to prove that the 700 shares purchased by him were from his own genuine fund. About 14 persons, though served, did not respond. Whereas in respect of 12 persons, the notices could not be served on the ground that those persons were not available at the addresses given. Mr. Pranab Pal, learned senior counsel, had pointed out that out of 1,47,000 shares, only in respect of purchase of 1000 shares, particulars of I.T. files were not disclosed. Whereas particulars of the I.T. files of the subscribers who had purchased 1,46,000 shares in aggregate were disclosed. From the assessment order, he pointed out that the assessing officer had excluded 10 persons who had appeared and the rest he had treated to be an income from undisclosed sources. According to Mr. Pal, the assessing officer had jumped into a conclusion without adverting to the materials placed before him. Once the assessee had discharged his burden prima facie by producing sufficient evidence, it was for the assessing officer to scrutinize the evidence available. Despite having been in possession of the particulars of the income -tax file of each individual subscriber, he did not scrutinize the material. Therefore, according to him, the conclusion arrived at in haste is perverse since the material evidence, though available, were not considered.
(3.) MR . Agarwal, on the other hand, contended that disclosure of income -tax file numbers were not sufficient to discharge the onus that lay on the assessee. It was for the assessee to establish the identity of the subscribers and prove their creditworthiness. The assessee was also required to prove the genuineness of the transaction. On the basis of the materials, the identity of the subscribers was not established. There was no scope for proving their creditworthiness or the genuineness of the transaction. The finding is based on the materials placed before the authority concerned. The findings are finding of facts. It does not appear to be perverse. This court sitting in reference under section 256 is not entitled to go into the question of fact. Therefore, this reference should be answered in favour of the revenue and against the assessee.;