RAJESH BALIA, J. - (1.) HEARD learned counsel for the appellant.
(2.) LEARNED counsel for the appellant urges that in this appeal against the order of Tribunal, Jodhpur Bench, Jodhpur, dt. 28th Nov., 2001 [reported as Shree Barkha Synthetics Ltd. vs. Asstt. CIT (2002) 75 TTJ (Jd) 1--Ed.], following two substantial questions of law arise for consideration : "1. Whether, on the facts and in the circumstances of the case the Tribunal was justified in law in deleting the addition of Rs. 21.76 lacs on account of unexplained share application money by relying or the judgment of Honourable Supreme Court which is distinguishable in the facts of the case ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the addition of unsecured loan and interest paid thereon without, discussing the issue on merits of the material and evidence available ?" The first question relates to that part of the order of the Tribunal by which it has deleted the addition made on account of unexplained cash credit in respect of money received as share application on expansion of share capital to the extent of Rs. 21.76 lacs. For contending that the aforesaid contention is question of law, learned counsel for the appellant relies on the decision of Delhi High Court in CIT vs. Sophia Finance Ltd. (1993) 113 CTR (Del)(FB) 472 : (1994) 205 ITR 98 (Del)(FB). The Tribunal has relied on another decision of Delhi High Court in CIT vs. Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del) as affirmed by the Supreme Court in the case of CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC) and also on the decision of Delhi High Court in Sophia Finance Ltd.'s case (supra) on which reliance has been placed by the learned counsel for the appellant also. Having considered the contentions of the learned counsel for the appellant and perused the order of the Tribunal and other material placed before us, we are of the opinion that no question of law arises on account of deleting the addition made by the assessing authority on account of unexplained receipt of share application by the assessee for which s. 68 of the IT Act, 1961, has been invoked.
(3.) THE Tribunal has noticed the break-up of share application money, which has been added by the AO in the taxable income of the assessee as unexplained cash credits, by invoking s. 68 of the IT Act, 1961, as under : In this connection, the finding of the Tribunal is that 6 out of 7 companies from which the share application money has been received is found to be genuinely existing and no enquiry has been conducted in respect of their source of share application money received from them at the time of making of the investment in the company. THE assessee has discharged his initial burden and the Revenue has failed to discharge its burden as it did not hold any enquiry into the genuineness of those transactions. However, it found that existence of Westbury Investors (P) Ltd. was not established by the assessee and in respect of alleged investment made by Westbury Investors (P) Ltd. the initial burden has not been discharged by the assessee. About the individual investors the finding of the Tribunal is that 9 out of 10 individual investors have confirmed the fact of making investments in the shares of assessee-company and that they are income-tax assessees and the mode of receipt has been through banking channel. THE identity of 9 out of 10 individual investors excluding Mr. Umesh Kumar has been established and about the genuineness of the transaction of the share of the assessee-company no further enquiry was directed by the AO. As regards Umesh Kumar, the Tribunal found that the assessee has failed to explain the said investment made by Umesh Kumar and to that extent the additions were retained amongst investment by individual investors. Likewise, additions made in respect of investment alleged to have been made by Westbury Investors (P) Ltd. were also sustained for the same reason. The finding of the Tribunal in this regard can be best known by reproducing the order of the Tribunal in that regard : "In the instant case analysing the fact situation in its entirety we find that as regards the seven corporate investors, the return of notices unserved is not very material for the reasons that the address of five of them had changed and the assessee did furnish their changed addresses along with their confirmations but the AO thereafter took no further steps/efforts to pursue/effect the service of notice on them and make enquiry. The changed new addresses have been given in the paper book and the pages of the same have also been detailed on p. 13 of assessee's written submission furnished before us. One party, namely, M/s Good Earth Organics (I) Ltd., Bombay, has gone into liquidation. Again, the notice sent to M/s Vijay Chem-Pharma Ltd. returned with the postal endorsement "shifted" which obviously shows that the party existed at that address sometime. The GIR No./PAN of six corporate investors except M/s Westbury Investors (P) Ltd. were furnished by assessee and these companies had confirmed the investment in shares of the Status of parties No. of parties Amount involved Rs. Public Ltd. companies 4 8,80,000 Private Ltd. companies 3 6,00,000 Individuals 10 8,96,000 Total 17 23,76,000 appellant. In that view of the matter, considering all the facts and circumstances of the case, we find the identity of the above six corporate investors to have been established and also that they did invest in the shares of the assessee-company. The genuineness of the transactions in respect of these six corporate investors cannot, therefore, be doubted. However, neither GIR No./PAN nor confirmation of the seventh corporate investor M/s Westbury Investors (P) Ltd. was furnished by assessee, so the primary onus lying on the assessee in respect of the same cannot be treated to have been discharged. Accordingly, its identity as also the genuineness of transaction pertaining to this party cannot be held to have been established. As regards ten individual investors, they did respond to the notice issued to them under s. 133(6) and nine out of them confirmed the fact of making investment by them in the shares of the assessee-company. The mode of payment was banking channel. As such, considering all the facts and circumstances of the case as also the legal position emanating from the judicial pronouncements discussed above, we find that the identity of nine out of above ten individual investors (excluding Sh. Umesh Kumar Bansal) has been established and also the genuineness of the transactions of investment by them in the shares of the assessee-company. However, as regards Sh. Umesh Kumar, no doubt, the share application is stated to have been signed by him as also the cheque to have been signed by him yet for the reason that he has denied the fact of investment in the assessee-company in the letter sent in response to notice the transaction of investment by him in the shares of assessee-company to be treated as having not been proved and the primary onus lying on the assessee as having not been discharged. No doubt there may have been several reasons for subsequent denial on his part as has been contended by the learned authorised representative of assessee, yet the assessee having not brought on record any further cogent evidence/material explaining his subsequent denial and convincingly corroborating investment by him the transaction pertaining to him cannot be held as acceptable or genuine. In view of our discussion/finding we hold that the investments i.e., the deposit of share application money by M/s Westbury Investors (P) Ltd. (Rs. 2,00,000) and Sh. Umesh Kumar Bansal (Rs. 1,00,000) to have not been explained/established and so the addition in respect of these to parties is found to have been rightly made. However, as regards the remaining fifteen parties the investment of Rs. 20,76,000 by them in aggregate is found to have been satisfactorily explained/established and so the addition in respect of them is uncalled for and not justified, which we delete accordingly." In this connection, we may notice that the Tribunal has referred the decision of Supreme Court in CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138 : (1986) 159 ITR 78 (SC). It was a case in which the assessee has given names and addresses of the alleged creditors. In the aforesaid decision of Orissa Corporation (P) Ltd. (supra), the three amounts were shown to have been received by way of loans from three individual creditors of Calcutta under Hundis. By way of explanation, the respondent produced before the ITO the letters of confirmation and the discharged Hundis and gave particulars of those creditors, who were assessees and whose general index numbers were with the Department. Since the respondent, after making attempts, could not produce the parties, the ITO, on its request issued summons under s. 131 of the IT Act, 1961, to the creditors, which however were returned unserved with the remark "left". For want of production of those persons amounts credited in the books of account as loan from said persons were treated as unexplained income and the same were added to the assessee's total taxable income. The Tribunal had found that because the respondent could not produce the parties, it did not follow automatically that an adverse inference should be drawn that the amount represented undisclosed income of the respondent and that the Revenue was not justified in drawing the adverse inference and adding the amounts of the cash credits to the income of the assessee. Consequently, addition of such amount as unexplained cash credit was deleted; and also deleted the imposition of penalty in that regard. The application for making a reference of the like question, as before us, was rejected by the Tribunal as well as High Court. On further appeal before the Supreme Court the Revenue pressed into service that in matters governed under s. 68, onus is on the assessee to explain the receipt of such amount by him and by not appreciating that legal position, deletion of the amount by the Tribunal gave rise to question of law. Rejecting the contention of the Revenue, the Court said : "In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessee. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under s. 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises". ;