DCIT, CIRCLE - 1(1), PANAJI vs. M/S KAGAL IRON AND STEEL LTD, PANAJI

Revenue has raised following grounds of appeal :

Brief facts of the case as culled out from the record are that the assessee is a Limited Company and declared Nil income in the return for A.Y. 2010-11 furnished on 25.03.2011. Subsequently, based on the information about the alleged accommodation entries amounting to Rs.1,77,50,000/- received through Paper/Dummy companies the reopening proceedings were carried out u/s.147 of the Act by issuance of notice u/s.148 of the Act on 30.03.2013 followed by serving of statutory notices u/s.143(2) and 142(1) of the Act. Various details called for by the Assessing Officer were duly submitted by the assessee which also included the details of share applicants who have paid share application money to the assessee company during year amounting to Rs.1.90 crore. Ld. Assessing Officer referred to the search and survey u/s.132/133A of the Act in the case of another assessee namely Mr. Surendra Kumar Jain and his brother Mr. Virendra Kumar Jain at New Delhi where they admitted that they have floated various companies and have their control through various persons appointed by them and used for the purpose of providing accommodation entries. Based on this information received from DDIT (Investigation) Wing, New Delhi, ld. Assessing Officer came to a conclusion that share application money of Rs.1.90 crore received by the assessee during the year is in the nature of accommodation entry and deserves to be added u/s.68 of the Act and accordingly after making the addition of Rs.1.90 crore income assessed at the same amount.

Aggrieved assessee preferred appeal before ld.CIT(A) and furnished complete set of documents to explain the nature and source of the share application money and furnished share application form, board resolution, share receipt letter and confirmation, PAN Registration Number of the share applicant companies along with bank statement and annual report and PAN card of the company and submitted that the onus/burden of proof has been duly discharged and ld. Assessing Officer failed to bring on record any contrary material to dislodge the veracity of evidence filed by the assessee. Ld.CIT(A) on duly considering the ratios laid down in the case of Kale Khan Mohammad Hanif Vs. CIT (1963) 50 (SC) and other judgments concluded that since the assessee has discharged the primary onus u/s.68 of the Act ld. Assessing Officer failed to bring any corroborative material on record to establish that the transactions are bogus, therefore, ld. Assessing Officer grossly erred in invoking section 68 of the Act and accordingly deleted the impugned addition. Now the Revenue is in appeal before this Tribunal.

Ld. Departmental Representative vehemently argued supporting the order of the Assessing Officer and further submitted that as per the report of the Investigation Wing, New Delhi the alleged share applicant companies are mostly registered at common address and during the course of post search/seizure action, these companies did not exist on those addresses and infact their addresses were very small dwelling units which are incapable of accommodating so many companies.

On the other hand, ld. Counsel for the assessee firstly placed heavy reliance on the finding of ld.CIT(A) and subsequently also made reference made to the written submissions filed before ld.CIT(A) placed at paper book 1 to 23. He also submitted that assessee is a Limited Company and the share application money received has been duly accounted for. Assessee has no relationship with these parties, all the requisite documents required to prove the genuineness of the share application money have been duly furnished. He also submitted that even though it is an established law that the assessee should be confronted or make available of any incriminating documents against the assessee and to give fair opportunity to explain, establishing the facts, deny or relate of such documents etc. but then in the present case assessee was never made available with the documents based on which ld. Assessing Officer has made the impugned addition which is contrary to the natural justice to punish or penalise the appellant on some alleged documents which have not been made available to the assessee. Reliance placed on the following decisions :

We have heard the rival submissions and perused the record placed before us. The grievance of the Revenue in various grounds of appeal are mainly centred against the finding of ld.CIT(A) relating to addition of Rs.1.90 crore made by the Assessing Officer for the alleged accommodation entry in the form of share application money received by the assessee Limited Company from following Private limited/Limited Companies :

We observe that the assessee which is a Limited Company has filed its regular return of income and has submitted its audited balance sheet which contains the transaction of receiving share application money from various share applicants. We note that ld.

Ld. CIT(A) on duly examining these details and also observing that assessee being Limited Company has furnished all necessary documents with