ALKA SECURITIES LTD,MUMBAI vs. DCIT 4(1), MUMBAI

Aforesaid appeal by the assessee is against order dated 21st August 2015, passed by the learned Commissioner (Appeals)–9, Mumbai, for the assessment year 2007–08.

“1. That on the facts and circumstances of the case, the learned Commissioner (Appeals) has erred in confirming addition of `

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69,00,000 to the total income as unexplained cash credits u/s 68 of the Act.

2. That on the facts and circumstances of the case, the learned Commissioner (Appeals) has erred in not considering the statement of facts submitted before him in totality. The addition made by A.O. on the grounds of purported receipt of share application money from companies belonging to Mr. Praveen Jain group, which is factually incorrect. In fact the appellant never received any share application money from Mr. Praveen Jain group and however the amount was received on third parties behalf in the books of the appellant.”

accommodation entries. Thus, on the basis of such information, the Assessing Officer re–opened the assessment under section 147 of the Act on the reasoning that the share application money of ` 69 lakh credited to assessee’s books of account are merely accommodation entries, hence, have to be treated as unexplained cash credit under section 68 of the Act. During the re–assessment proceedings, the Assessing Officer confronted the aforesaid fact to the assessee. In reply, the assessee submitted that it has not received any share application money from the companies referred to by the Assessing Officer. However, the Assessing Officer was not convinced with the claim of the assessee. Referring to a statement recorded from one Shri Nilesh Parmar, under section 131 of the Act, proprietor of M/s. Mohit International, who allegedly was working for Shri Pravin Jain, the Assessing Officer ultimately concluded that the assessee has failed to prove the genuineness of transaction relating to share application money of ` 69 lakh. He also observed that the assessee failed to prove the creditworthiness of the concerned parties. Accordingly, he added back the amount of ` 69 lakh under section 68 of the Act. Though, the assessee challenged the addition before learned Commissioner (Appeals), he also sustained the addition.

account of the assessee. In this context, he drew our attention to the audited Balance Sheet of the assessee as at 31st March 2007, a copy of which is at Page–13 of the paper book. He submitted, when no such share application money has been credited in assessee’s books, there is no question of making addition under section 68 of the Act. The learned Authorised Representative submitted that in course of assessment proceedings, the assessee has specifically brought this fact to the notice of the Assessing Officer, however, the submissions made by the assessee was totally ignored by the Assessing Officer. Further, learned Authorised Representative submitted, before learned Commissioner (Appeals), though, the assessee submitted all the material to demonstrate that no share application money of ` 69 lakh was credited to assessee’s books of account, the submissions of the assessee was totally ignored and addition was sustained. The learned Authorised Representative submitted, the amount in question was received for and on behalf of one Shri Harshvardhan Jain, and if at all it is to be assessed, it has to be assessed in the hands of the concerned individual. Thus, it was submitted that the addition made should be deleted.

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6 Alka Securities Ltd. was submitted by the assessee that the amount in question was neither shown as a credit in the books of account of the assessee nor in the Balance Sheet as share application money. The aforesaid contentions of the assessee appear to have not at all been examined or gone into either by the assessing officer or the learned Commissioner (Appeals). In fact, the learned Commissioner (Appeals) has dealt with the issue in a cryptic and summary manner without proper reasoning in spite of the fact that the assessee has stated that the amount in question was received on behalf of one Shri Harshvardhan Jain, and it has not been shown as a credit in assessee’s books. When the assessee in course of proceeding brings certain facts to the notice of the assessing officer, it is the duty of the assessing officer to conduct necessary enquiry to ascertain the veracity of assessee’s claim. In these circumstances without countering assessee’s contention that the amount in question does not appear as a credit in the books of account, the Departmental Authorities were not justified in making the addition as unexplained cash credit under section 68 of the Act. Since, we find that the Departmental Authorities have not properly enquired into assessee’s claim on the issue of receipt of share application money, we are inclined to restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. It is made clear, in course of de novo

7 Alka Securities Ltd. proceedings, it is open to the Assessing Officer to conduct necessary enquiry to verify assessee’s claim that the disputed amount belongs to a third party and is not appearing as a credit in assessee’s books of account. With the aforesaid observations, the grounds are allowed for statistical purposes.

Order pronounced in the open Court on 20.06.2018