The Tax Publishers2013 TaxPub(DT) 1585 (Del-HC) : (2013) 357 ITR 0184 : (2013) 215 TAXMAN 0164 : (2013) 089 DTR 0008

Income Tax Act, 1961

--Income from undisclosed sources--Addition under section 68Genuineness of share application money--During assessment proceedings, it was observed by assessing officer that assessee had received shares application money from various subscribers. Summons issued to them under section 131 were not complied with. It was further noted by assessing officer that companies who were share applicants were, in fact, entry operators and gave accommodation entries to various persons. Assessing officer thus concluded that assessee failed to establish identity and creditworthiness of share applicants and added amount under section 68. Commissioner (Appeals) and Tribunal allowed assessee's appeal. Held: Not Justified. Tribunal had not disposed of appeal in manner required by law, it had not taken into account relevant materials and evidence which were brought on record by assessing officer. Its findings were, therefore, vitiated and could not be acted upon. Matter therefore remanded back to Tribunal for afresh disposal.

In the present case, the Tribunal, with respect, appears to have approached the matter rather superficially and mechanically. It ought to have adverted to the attempts made by the assessing officer to probe into the matter deeper by issuing notices/summons to the subscriber-companies which evoked no response. It also failed to note that the assessee started participating in the assessment proceedings only from 2-12-2008, though the reassessment notice was issued in March, 2008. The conduct of the assessee is a matter to be taken note of in such cases. The assessee no doubt submitted documentary evidence to show that the companies which subscribed to its shares were income tax assesses and they had also prepared profit and loss account, balance sheet, etc. but the evidentiary value of these on which the Tribunal has relied, ought to have been examined in the light of the stand taken by those companies in their assessment proceedings for the same assessment year. This court has extracted a specimen letter written by the Director of EC Pvt. Ltd. wherein it has been admitted that the company carries on the business of providing accommodation entries for commission. Identically worded letters were written by the other companies to their respective assessing officer, which are all reproduced in the assessment order. The money trail which the assessing officer has sought to trace and the definite pattern which he has termed as a pattern typically as that of entry operators has not been adverted to at all by the Tribunal. It seems that the Tribunal has looked at only the evidence adduced by the assessee and has not adverted to the attempts made by the assessing officer in the course of the assessment proceedings to examine the evidence and discredit the same. [Para 11] The Tribunal has not disposed of the appeal in the manner required by law. It is not taken into account the relevant material and the evidence which was brought on record by the assessing officer. Its findings are, therefore, vitiated and cannot be acted upon. [Para 15] For the above reasons is restored the impugned order of the Tribunal is set aside and restore the appeal to its file to be disposed of afresh in accordance with law. Whatever observations have made above with regard to the facts of the present case are only for the purpose of disposal of this appeal. [Para 16]

Income Tax Act, 1961, Section 68

In the Delhi High Court

S. Ravindra Bhat & R.V. Easwar, J.J.

CIT v. Titan Securities Ltd.

IT Appeal No. 263 of 2012

28 February, 2013

Decision: Matter remanded

Appellant by :Suruchi Aggarwal

Respondent by :S. Krishnan

ORDER

R. V. Easwar, J.

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