High
Court of
Commissioner
of Income-tax
v.
Dwarikadhish
Investment (P.) Ltd.
MADAN
B. LOKUR AND Dr. S. MURALIDHAR, JJ.
INCOME
TAX APPEAL NOS. 5 & 8 OF 2007
October
30, 2007
Section 68 of the Income tax Act, 1961 - Cash credit - Assessment year 1997-98 - Assessing Officer made additions on account of share application money received by assessee - Commissioner (Appeals) admitted evidence furnished by assessee and inter alia observed that applicants concerned were identified; applicants confirmed payment of monies to assessee for purpose of shares ; transaction in question were by cheques ; there was no ground for disbelieving contents of affidavits of subscribers ; Assessing Officer had not issued summons to subscribers or had asked assessee to produce them and most of subscribers were companies incorporated with Registrar of Companies – Commissioner (Appeals) accordingly deleted addition – Tribunal upheld order of Commissioner (Appeals) – Whether Tribunal was justified - Held, yes - Whether findings of Commissioner (Appeals) were sufficient to show that additions made were not justified, and reasoning and conclusions arrived at concurrently by Commissioner (Appeals) and Tribunal suffered from no perversity - Held, yes - Whether, therefore, no substantial question of law arose in instant appeal - Held, yes
The assessee companies were
engaged in the business of financing and trading in shares.
For the assessment year 1997-98, the assessee declared a loss Assessing Officer on finding of certain share application money received by the assessees required the assessees to furnish details and documents and to furnish bank statement to substantiate the money availability with the assessee and also to prove the genuineness of the transactions. The assessees produced copies of sale and purchase bills of the share brokers through whom the transactions took place and photocopies of confirmation of persons who had contributed the fresh share application money, and furnished the PAN (GIR) numbers of the applicants, the details of the cheque numbers and dates. However, the Assessee having not furnished bank statement, the Assessing Officer got enquiries made through an income tax inspector who found that none of the applicants were found to exist at the address given in the confirmations. The assessment was accordingly completed by making addition of unexplained share application money. On appeal, the Commissioner (Appeals) after admitting the additional evidence furnished by the assessees and after receiving no response from the Assessing Officer on the said additional evidence, deleted the addition for the reasons that (i) the applicants concerned were identified; (ii) the applicants confirmed the payment of monies to the appellant for purpose of shares; (iii) the transaction in question were by cheques; (iv) the affidavits of the subscribers were filed indicating their full address, details of deposits made with the appellant and the source wherefrom money was obtained to make the deposits, copies of Bank accounts were furnished; these affidavits were notarized; there was no ground for disbelieving the contents of the affidavits; (v) If the Assessing Officer entertained any doubts regarding genuineness of the credits in respect of share application money, he could have issued summons to the subscribers or could have asked the assessee to produce them; this was not done; (vi) Most of the subscribers were companies incorporated with the Registrar of Companies, and proper enquiries would have revealed the true facts of the case; (vii) the deposits were not of an order that could not be believed. The Tribunal after examining the document giving the details of each of the applicants dismissed the revenue’s appeal.
On appeal:
HELD
The findings of the Commissioner (Appeals) were sufficient to show that the additions made by the Assessing Officer were not justified. The reasoning and conclusions arrived at concurrently by the Commissioner (Appeals) and the Tribunal suffered from no perversity. Hence, no substantial question of law arose in instant appeals, which were accordingly dismissed.
CIT v. Divine Leasing & Finance Ltd. [2007]158 Taxman
449 (