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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI G. D. AGRAWAL & SMT SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM
This appeal is filed by the Department against the order dated 21/2/2012 passed by CIT(A)-IV, New Delhi.
The grounds of appeal are as follows:-
“1. The Ld.CIT(A) has erred on facts and in law in deleting addition of Rs.3,05,00,000/- u/s 68 of the Income Tax Act on account of unexplained cash credit.’ 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground (s) of appeal at any time before or during the hearing of this appeal.”
The assessee is engaged in the business of construction and dealing in real estate and properties. Return declaring an income of Rs.1,53,55,720/- was filed through electronic media on 21/10/2008. The said return was processed u/s 143(1). Subsequently, the case was selected for scrutiny. Notice u/s 143(2) and 142(1) along with detail questionnaire were issued to the assessee in response to this notice assessee’s representative filed details of the proceedings from time to time. In this case, a survey u/s 133A was carried out by ADIT Investigation, Ghaziabad on 4/9/2008. The ADIT submitted his return of the survey operation. In his report, ADIT has stated that survey was conducted on various premises. On the basis of unfounded material documents of fictitious share application money worth Rs.21,72,00,00/- were found. The Assessing Officer held that the amount of Rs.3,05,00,000./- introduced as share capital of company was unexplained cash proceeds of the assessee company inconformity with provisions laid down u/s 68 of the Income Tax Act, 1961 and added the same to the total income of the assessee company.
Aggrieved by this the assessee filed appeal before the CIT(A). The CIT(A) followed the order of the predecessor CIT(A)- IV, New Delhi for Assessment Year 2006-07 & 2007-08 as well as ITAT order vide Assessment Year 2007-08 (ITA No.
3612/Del/2010) and deleted the said addition. The CIT(A) has also discussed various High Court decisions while allowing the appeal of the assessee. The Department is in appeal before us.
The Ld. DR relied on the Assessing Officer’s order and submitted that the Assessing Officer has rightly taken cognizance and added the said income as undisclosed income u/s 68 of the Act.
The Ld. AR submitted the issue in the present Assessment Year is already covered in the favour of the assessee as per the order passed by ITAT, New Delhi Bench in the Assessment Year 2007-08 (ITA No. 3612/Del/2010 dated 10.12.2010.
We have heard both the parties and perused all the records. The AO in the remand report has not considered the documentary evidences submitted by the assessee and has repeated the observations made in the assessment order without giving any opportunity of cross-examination to the assessee. The assessee has sufficiently discharged its onus with regard to explaining the nature and source of the above share capital. Even in the event of the investor companies being bogus, as alleged, no addition can be made u/s 68 in the hands of the assessee company. The Id. AR has accordingly argued that the said addition of Rs.3,05,00,000/- u/s 68 made by the AO in the hands of the assessee company was illegal. The Id. AR has relied
upon various case laws in support of his claim. Similar addition of Rs.8.45 crores made in the case of the assessee for A.Y. 2006- 07 u/s 68 on account of share capital basing on the same report of ADIT (Inv.) was fully deleted by the predecessor CIT(A)-IV, New Delhi vide his order dated 05.10.2009 in appeal no. 80/08- 09. The order of the CIT(A) was accepted by the Department and no further appeal was filed. Similarly, addition of Rs.3.47 crores made u/s 68 on account of share capital in the case of the assessee for A.Y. 2007-08 basing on the same report of the ADIT was also deleted by the predecessor CIT(A)-IV, New Delhi vide his order dated 05.05.2010 in appeal no. 50/09-10. The Department preferred appeal against the above order of CIT(A) for A.Y. 2007-08 which was dismissed by the ITAT, Delhi Bench vide order dated 10.10.2010 in ITA No.3612/Del/2010. The Id. AR has filed copies of the above orders, it is argued that most of the parties from whom share capital has been received during A.Y. 2008-09 are the same from whom share capital had been received in the earlier two years. In view of the above, it is argued that the impugned addition made in A.Y. 2008-09 has no merit and needs to be deleted. Now, coming to the additional evidence filed by the Assessee before the AO during the remand proceeding in the form of bank statement of appellant’s dividend account maintained with Corporation Bank, New Delhi - Dilshad Garden Branch, the same is only to corroborate the assessee’s stand taken before the AO during the assessment proceeding that the account payee dividend cheques issued by the assessee company were duly encash by the shareholders through bank clearing. The additional evidences had been duly confronted to AO during the remand proceeding and no adverse comment on merit was given by the AO in his remand report. Considering the above, the said evidences were rightly admitted under Rule 46A by the CIT(A). The AO has failed to provide cross- examination of the parties whose statements were relied upon by the ADIT/inspector report to the assessee during the assessment proceeding. The AO has failed to provide any opportunity of cross-examination to the assessee during the remand proceeding as well. It is important to mention that the AO in A.Y. 2007-08 was also unable to provide such cross- examination during the assessment/remand proceeding, although specific query in this regard had been made by the CIT(A) in the remand proceeding as is evident from the orders of the CIT(A) and ITAT. for Assessment Year 2007-08, the issue is identical. It is pertinent to note that on the basis of the report of Investigation Wing to the effect that applicant companies were not found existent at the given addresses and the directors were also not available at the addresses given as per After going through the order dated 10.12.2010 passed by the ITAT in the enquiry conducted by Investigation Wing, share application money received by the assessee during assessment year 2006-07 was treated by the Assessing Officer to be unexplained income of the assessee, and on an appeal, the same was deleted by the CIT(A) by giving identical reasons and basis as given in this assessment year. Department has not preferred any appeal against the CIT(A)’s order pertaining to Assessment Year 2006-07. The CIT(A) has taken into cognizance all the relevant judgments passed by the High Court especially jurisdictional High Court. Thus appeal of the Revenue does not sustain as DR could not make out any difference between the Assessment Year 2007-08 and the present Assessment Year 2008-09.
In the result, the appeal of the Revenue is dismissed.
The order is pronounced in the open court 09th of November, 2016.