In the presence of full disclosure of source of share application money AO cannot raise question on that

IN THE INCOME TAX APPELLATE TRIBUNAL

(DELHI BENCH “F” New Delhi)

BEFORE SHRI RAJPAL YADAV AND SHRI SHAMIM YAHYA

ITA No. 51/Del/2011

Assessment Year: 2002-03

Assistant CIT,

Circle 14(1),

New Delhi.

(Appellant)

Vs.

Puneet Mercantiles & Credits

(P) Ltd., B-156, Pachim Vr.,

Delhi.

(PAN: AAACP0538K)

(Respondent)

Appellant by: Smt. Mamta Kochar, Sr.DR

Respondent by: Shri Suresh K. Gupta, CA

Date of hearing: 07.03.2012

Date of pronouncement: 15.03.2012

ORDER

PER RAJPAL YADAV: JUDICIAL MEMBER

The revenue is in appeal before us against the order of Learned CIT(Appeals) dated 11.10.2010 passed for assessment year 2002-03. The solitary grievance of the revenue is that Learned CIT(Appeals) has erred in deleting the addition of Rs.50,07,000 which was added by the Assessing Officer with the aid of section 68 of the Income-tax Act, 1961.

2. The brief facts of the case are that assessee has filed its return of income on 30.3.2003 declaring an income of Rs.43,400. This return was processed under sec. 143(1) of the Income-tax Act, 1961 on 25.5.2003 at the returned income. According to the Assessing Officer, he has received information from the Director of Income-tax (Inv.) exhibiting that assessee has received accommodation entry/bogus share application money/bogus capital gain from the persons who were indulged in providing accommodation entries. He reopened the assessment and issued a notice under sec. 148 on 30th March 2009. The assessee contended before the Assessing Officer that it has received share application money of Rs.64 lacs from various parties. It has submitted the details of all the share applicants i.e. confirmation, name, address, GIR/PAN etc. Assessing Officer has alleged that Director of Income-tax(Inv.) has remitted information about the receipt of following amounts from other parties:-

3. Assessing Officer without confronting the assessee made the addition of Rs. 50,07,000.

4. Before Learned CIT (Appeals), assessee contended that Assessing Officer has not confronted the assessee with regard to the information received from the Director of Income-tax (Inv.) it has not received any share application money from the entities alleged by the Assessing Officer. Assessing Officer did not doubt about the genuineness of share application money received by the assessee amounting to Rs.64 lacs from other concerns. Learned First Appellate Authority has verified this contention and deleted the addition. The relevant observations of the Learned First Appellate Authority read as under:

“In respect of amount of Rs.50,07,000 alleged to have been received from Swetu Stone (P) Ltd. and Chintpurni Credits, the appellant contended before the A.O. as well as before me that they have not received any share application money from those two companies. The A.O. did not contradict this submission of the appellant. The A.O. did not confront the assessee company about the information received by him from Investigation Wing and used it against the assessee without opportunity of being heard in respect of material in his possession.

The A.O. did not bring any positive evidence on the record to establish that there was any credit in the books of account of the assessee in the name of M/s. Swetu Stone (P) Ltd. and in the name of M/s. Chintpurni Credit or that the appellant has paid any money to those two companies. Considering, the above facts and judicial pronouncements quoted by the appellant, I am of the considered opinion that the A.O. was not justified in making the addition on account of share application money alleged to have been received from M/s. Swetu Stone (P) Ltd. and Chintpurni Credit. Therefore, the addition made by the A.O. is hereby deleted. These grounds of appeal are allowed”.

5. With the assistance of learned representatives, we have gone through the record carefully placed. The revenue has not placed any material which indicates that the findings of the Learned CIT(Appeals) extracted supra is factually incorrect. If the assessee has not taken any share application money from M/s. Swetu Stone Pvt. Ltd. and Chintpurini Credits then how an addition can be made. Considering the findings of the Learned CIT(Appeals), we do not see any reason to interfere in it. Accordingly, appeal of the revenue is rejected

Decision pronounced in the open court on 15.03.2012

                                                            Sd/-                                  Sd/-

                                           (SHAMIM YAHYA)          (RAJPAL YADAV)

                                     ACCOUNTANT MEMBER    JUDICIAL MEMBER

Dated: 15/03/2012

Mohan Lal

Copy forwarded to:

1) Appellant

2) Respondent

3) CIT

4) CIT (Appeals)

5) DR: ITAT

ASSISTANT REGISTRAR