DCIT, Circle - 2, Siliguri, Siliguri V. Manokamna Food Product (P) Ltd., Siliguri

ITA 1259/KOL/2010

• Counselvise Citation: 125923514 RSA 2010
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 26-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-06-2010
• Court: TRIBUNAL
• Department Lawyers: S C JAIN
• Assessee Lawyers: SUBASH AGARWAL
• Keywords: Unexplained cash credit; Unexplained investment; Sale consideration of property below Jantri Value; Income from undisclosed sources; Fair market value; Onus to prove
• Section: 131; 68; 69; 145; 50C

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , , , , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND ! ! ! ! , '# SHRI AKBER BASHA, ACCOUNTANT MEMBER $% &'/ ASSESSMENT YEAR : 2006-07 ) ) ) ) / ITA NO . 1259/KOL/2010 (*+,-/ RESPONDENT ) D.C.I.T., CIRCLE-2, SILIGURI - $ - - VERSUS - . (,- / APPELLANT ) M/S. MANOKAMNA FOOD PRODUCT (P) LTD. (PAN: AAECM 4141 R) ) ) ) ) / C.O.NO.174/KOL/2010 A/O ITA NO . 1259/KOL/2010 $% &'/ ASSESSMENT YEAR : 2006-07 (,- / APPELLANT ) M/S. MANOKAMNA FOOD PRODUCT (P) LTD. (PAN: AAECM 4141 R) $ - - VERSUS (*+,-/ RESPONDENT ) D.C.I.T., CIRCLE-2, SILIGURI ,- / 0 '/ FOR THE DEPARTMENT SHRI S.C.JAIN *+,- / 0 '/ FOR THE ASSESSEE: SHRI SUBASH AGARWAL '! / ORDER ( (( ( ! ! ! !) )) ), , , , '# PER SHRI AKBER BASHA, AM THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION F ILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 03.03.2010 OF THE CIT (A)-SILIGURI PERTAINING TO THE ASSESSMENT YEAR 2006-07. SINCE BOTH ARE RELATED TO THE SAME ASSESSEE AND COMMON 2 GROUNDS INVOLVED IN THESE APPEALS, THEY ARE HEARD T OGETHER AND DISPOSED OFF ACCORDINGLY, FOR THE SAKE OF CONVENIENCE. ITA NO.1259/KOL/2010 (BY THE REVENUE) : 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,50,022/- ON ACCOUNT OF UNDERSTATED G.P. WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE COMP ANY DID NOT MAINTAIN THE STOCK REGISTER AND ORDER REGISTER TO SUBSTANTIATE I TS DISCLOSED G.P. RATE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE C.I.T.(A) HAS ERRED IN DELETING THE ADDITION OF RS.17,50,000/- AS MADE U/S 69B OF THE ACT, WITHOUT CONSIDERING THE DECISION AS HELD IN THE CAS E OF SMT. AMAR KUMARI SURANA VS CIT [226 ITR 344]. 3. THE FIRST GROUND OF THE APPEAL RAISED BY THE RE VENUE IS WHETHER THE CIT(A) IS RIGHT IN DELETING ADDITION OF RS.4,50,022 /- ON ACCOUNT OF UNDERSTATED GROSS PROFIT WITHOUT CONSIDERING THE FACT THAT THE ASSESS EE COMPANY DID NOT MAINTAIN THE STOCK REGISTER AND ORDER REGISTER TO SUBSTANTIATE I TS DISCLOSED GROSS PROFIT RATE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND ALSO THE CASE LAW S RELIED ON BY BOTH THE PARTIES. AT THE OUTSET, WE FIND THAT THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT BEFORE ESTIMATING THE INCOME. WE FIND THAT THE ASS ESSING OFFICER ESTIMATED THE HIGHER RATE OF GROSS PROFIT WITHOUT BRINGING ANY ADVERSE M ATERIAL ON RECORD OR ANY COMPARABLE CASE OF ANY ASSESSEE ENGAGED IN THE SAME LINE OF BU SINESS. WE ALSO FIND THAT THE ASSESSEE FILED SOME COMPARABLE CASE OF TWO ASSESSEE ENGAGED IN THE SAME LINE OF BUSINESS BEFORE THE LOWER AUTHORITIES. WE ALSO FIND THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE DULY AUDITED AND NO DEFECT WAS DETECT ED BY THE ASSESSING OFFICER. WE FIND THAT THE MAINTENANCE OF STOCK REGISTER AND ORD ER REGISTER ARE ONLY SUPPLEMENTARY TO THE MAINTENANCE OF MAIN BOOKS OF ACCOUNT. IN OUR CONSIDERED VIEW, WITHOUT POINTING OUT ANY DEFECT IN THE ASSESSEES MAIN BOOK S OF ACCOUNT OR WITHOUT DETECTING ANY SUPPRESSED SALE OR INFLATED EXPENSES AND WITHOU T RESORTING TO THE PROVISIONS OF 3 SECTION 145 [3] OF THE ACT, THE ASSESSING OFFICER I S NOT JUSTIFIED IN ESTIMATING THE HIGHER RATE OF GROSS PROFIT. OUR VIEW IS FORTIFIED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SRK TEA PROCESSING IND USTRIES LTD VS. ACIT IN ITA NO.1685/KOL/2009. ACCORDINGLY, THE CIT (A) IS RIGHT IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE, AFTER CONSIDERING THE TOTALITY FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT SEE ANY INFIRM ITY IN THE ORDERS OF THE CIT (A) ON THIS ISSUE AND THE SAME IS CONFIRMED. HENCE, GROUND NO.1 OF THE REVENUE IS REJECTED. 5. THE OTHER GROUND RAISED BY THE REVENUE IS WITH REGARD TO DELETION OF ADDITION OF RS.49,25,000/- [WRONGLY STATED IN GROUN DS OF APPEAL AS RS.17,50,000/-] AS MADE UNDER SECTION 69B OF THE ACT WITHOUT CONSIDERI NG THE DECISION AS HELD IN THE CASE OF SMT. AMAR KUMARI SURANA VS CIT REPORTED IN 226 ITR 344. 6. THE BRIEF FACTS OF THE CASE ARE THAT, IN THE CO URSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COMPA NY PURCHASED TWO OWNERSHIP SPACES DURING THE PREVIOUS YEAR RELEVANT TO ASSESSM ENT YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER FOUND THAT THE FAIR MARKET VALUE OF BOTH THE PROPERTIES IS AT RS.81,25,000/- AS DETERMINED BY THE SRO WHEREAS THE VALUE OF THE SALE CONSIDERATION STATED IN THE SALE DEED IS AT RS.32,00,000/-. ACCOR DINGLY, THE ASSESSING OFFICER APPLIED THE PROVISION OF SECTION 50C OF THE ACT AND HELD TH AT THE FAIR MARKET VALUE OF THE PROPERTY DETERMINED BY THE SRO SHOULD BE ADOPTED AS THE PURCHASE PRICE OF THE LAND. THEREFORE, THE ASSESSING OFFICER MADE AN ADDITION O F RS.49,25,000/- AS UNEXPLAINED INVESTMENT OF THE ASSESSEE UNDER SECTION 69B OF THE ACT. 6.1. AGGRIEVED BY THIS ORDER OF ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (A). 6.2. ON APPEAL, THE CIT (A) HELD THAT THE LEGAL FI CTION CREATED FOR COMPUTATION OF CAPITAL GAIN IS ONLY IN THE CASE OF THE SELLER OF ANY ASSET AS PER THE PROVISION OF SECTION 50C OF THE ACT AND THE SAME CA NNOT BE EXTENDED IN THE CASE OF THE PURCHASER TO ESTIMATE THE UNDISCLOSED INVESTMEN T. HE FOLLOWED THE DECISION OF THE 4 HONBLE SUPREME COURT IN THE CASE OF CIT VS. MOTHER INDIA REFRIGERATION INDUSTRIES P LTD. REPORTED IN 48 CTR 176 AND IN THE CASE OF CIT VS. AMARCHAND N.SHROFF REPORTED IN 48 ITR 59 (SC) AND FINALLY HE DELETED THE ADDITI ON MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER SECTION 69B OF THE ACT BEING THE DIFFERENCE BETWEEN THE VALUE OF THE PROPERTY AS PER SRO AND TH E SALE VALUE STATED IN THE SALE DEEDS. 6.3. AGGRIEVED BY THE FINDINGS OF THE CIT (A), THE DEPARTMENT IS IN APPEAL BEFORE US. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THE CIT (A) DELETED THE SAID ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE IT ACT WITHOUT CONSIDERING THE DECISION IN THE CASE OF SMT. AMAR KUMARI SURANA VS. CIT REPORTED IN 226 ITR 344. IT IS SUBMITTED THAT I N ORDER TO APPLY THE PROVISION OF SECTION 50C OF THE ACT IN THE HANDS OF THE SELLER, THE PROVISION OF SECTION 69B SHALL BE APPLIED IN THE HANDS OF THE PURCHASER. MAINLY HE RE LIED ON THE ORDER OF THE ASSESSING OFFICER. WHEREAS THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT 56(2)(B) WAS SUBSTITUTED BY THE FINANCE ACT 2010 WITH RETROSPECT IVE EFFECT FORM 1.10.2009 AND IT IS FURTHER SUBMITTED THAT THE ISSUE IS COVERED IN FAVO UR OF THE ASSESSEE IN THE FOLLOWING CASE LAWS:- 1. ITA NO.1249/KOL/2010 IN THE CASE OF ITO,WARD-6(3) VS- M/S. NIWAS NIRMAN (CALCUTTA) (P) LTD. ORDER DATED 30 TH MARCH, 2011-KOLKATA BENCH 2. ITA NO.41/RJT/2009 IN THE CASE OF DCIT,CC-1 VS SHRI MANSUKH C.SAVALIA ORDER DATED 30 TH MARCH, 2011-RAJKOT BENCH 3. ITA NO.715/HYD/2010 IN THE CASE OF ITO,WARDNO.1 VS SHRI BOLLAM SAMPATH KUMAR(HUF) ORDER DATED 13 TH AUGUST, 2010-HYDERABAD BENCH. 4. ITA NO.843/RJT/2009 IN THE CASE OF ITO,WD-2 VS SMT. SETHNA DINAZ ALI ORDER DATED 18 TH MARCH, 2011-RAJKOT BENCH 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF MATERIALS AVAILABLE ON RECORD, WE FIND THAT, ON IDENTICAL FAC TS, THE ISSUE IS COVERED IN FAVOR OF THE 5 ASSESSEE IN THE DECISIONS RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE, IN PARTICULAR, BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ITO VS. HARLEY STREET PHARMACEUTICALS LTD., IN ITA NO.2 492/AHD/2007 FOR THE ASSESSMENT YEAR 2004-05 DATED 16.03.2010. ACCORDINGLY, WE DO N OT SEE ANY INFIRMITY IN THE ORDER OF THE CIT (A) IN DELETING THE ADDITION UNDER SECTI ON 69B OF THE ACT MADE BY THE ASSESSING OFFICER. WE CONFIRM HIS ORDER ON THIS ISS UE. THE GROUND RAISED BY THE REVENUE ON THIS ISSUE IS REJECTED. C.O.NO.174/KOL/2010 (BY THE ASSESSEE) : 9. NOW WE WILL TAKE UP THE CROSS OBJECTION FILED B Y THE ASSESSEE. THE ONLY EFFECTIVE GROUND ARISING OUT OF THIS CROSS OBJECTIO N IS WHETHER THE CIT (A) IS RIGHT IN CONFIRMING THE ADDITION OF RS.4,00,000/- MADE BY TH E ASSESSING OFFICER UNDER SECTION 68 OF THE ACT ON ACCOUNT OF SHARE APPLICATION MONE Y ALLEGED TO HAVE BEEN RECEIVED BY THE ASSESSEE COMPANY. 10. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY RECEIVED SHARE APPLICATION MONEY OF RS.4,00,000/- FROM SHRI KAMAL KR. SARAOGI. THE ASSESSING OFFICER REQUESTED THE ASSESSEE TO PRODUCE MR. SARAO GI IN PERSON. BUT THE ASSESSEE FAILED TO PRODUCE MR.SARAOGI AND FILED ONLY THE BAL ANCE SHEET OF SRI SARAOGI AS ON 31.03.2006. IN THE BALANCE SHEET, THE ASSESSING OFF ICER FOUND THAT SHRI SARAOGI HAD CAPITAL AS ON 01.4.2005 OF RS.3,99,040/- AND DURING THE FINANCIAL YEAR 2005-06 HE EARNED INCOME OF RS.1,02,900/- FROM SUPPLY BUSINESS AND SHOWN SOME UNSECURED LOAN OF RS.18,000/- EACH FROM THREE PERSONS. THE ASSESSI NG OFFICER OBSERVED THAT UNLESS HE RECEIVED THE UNSECURED LOAN, THE ASSESSEE DID NOT H AVE THE REQUISITE FUND OF RS.4,00,000/- TO INVEST IN THE ASSESSEE COMPANY. HE ALSO OBSERVED THAT THERE IS NO EXISTENCE OF ANY BANK ACCOUNT IN THE BALANCE SHEET. THEREFORE, THE ASSESSEE WAS KEEPING THE ACCUMULATED CASH WITH HIM WITHOUT DEPOS ITING IN THE BANK ACCOUNT AND GIVEN SHARE APPLICATION MONEY TO THE ASSESSEE COMPA NY BY CASH. HE ALSO OBSERVED THAT THE ASSESSEE NEVER RECEIVED ANY DIVIDEND FROM THE A SSESSEE COMPANY AND IT IS QUITE UNUSUAL THAT A PERSON HAS INVESTED HIS HARD EARNED MONEY IN THE SHARE OF A COMPANY 6 INSTEAD OF INVESTING IN OTHER INVESTMENTS WHEREFROM HE COULD HAVE EARNED SOME INCOME. ACCORDINGLY THE ASSESSING OFFICER HELD THAT CREDITWORTHINESS OF MR.SARAOGI REMAINS DOUBTFUL AND BY RELYING ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF SMT. KALPANA GHOSH VS. ITO IN ITS NO.1027/KOL/2007 AND A LSO HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS M/S. KORLAY TRADING CO. LTD., REPORTED IN 233 ITR 820 TREATED THE SAID SHARE CAPITAL RECEIVED BY THE ASSE SSEE COMPANY AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 10.1. AGGRIEVED BY THIS ORDER OF THE ASSESSING OFF ICER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (A). 10.2. AFTER CONSIDERING THE ELABORATE SUBMISSIONS OF THE AR OF THE ASSESSEE THE CIT (A) CONFIRMED THE ADDITION MADE UNDER SECTI ON 68 OF THE ACT BY THE ASSESSING OFFICER. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. AR AND ALSO PERUSED THE ASSESSMENT ORDER. THE AO HAS MENTIONED THAT ONLY TH E BALANCE SHEET OF THE SHARE APPLICANT WAS FILED. THOUGH THE LD AR CLAIMED THAT THE SHARE APPLICANT WAS ASSESSED TO INCOME-TAX, IT IS APPARENT FROM THE ASSESSMENT ORDER THAT NO SUCH DOCUMENT SHOWING THAT HE WAS ASSESSED TO TAX W AS FILED BEFORE THE AO. HIS BALANCE SHEET REVEALS THAT HE HAD NO BANK ACCOU NT AND HAS SHOWN HUGE CASH IN HAND FOR YEARS TOGETHER. HIS SOURCE OF INCO ME WAS NOT EXPLAINED, HIS DRAWINGS AND POSITION OF ASSET CLEARLY INDICATES TH AT THE ALLEGED CREDITOR IS A MAN OF VERY SMALL MEANS. IN SPITE OF REPEATED REQUE ST, THE ASSESSEE FAILED TO PRODUCE HIM BEFORE THE AO FOR EXAMINATION. THUS, TH E SOURCE OF HIS INCOME AND ACCUMULATION OF HUGE CASH BALANCE WAS NEVER EST ABLISHED. THE SHARE APPLICATION MONEY WAS STATED TO HAVE BEEN RECEIVED IN CASH. IN ABSENCE OF ANY BOOKS OF A/CS OR CASH FLOW STATEMENTS, IT IS DIFFIC ULT TO PROVE THAT ACTUALLY CASH WAS GIVEN TO THE ASSESSEE. THUS, IN ALL RESPECT, IT IS HELD THAT THE ASSESSEE HAD FAILED TO PROVE THE CREDITWORTHINESS OF THE DONORS AND THE GENUINENESS OF THE TRANSACTIONS, THEREBY FAILED TO DISCHARGE THE LEGAL OBLIGATION. IT IS NEC ESSARY FOR THE ASSESSEE TO PROVE PRIMA-FACIE THE TRANSACTION GENUINE WITH IDENTITY O F THE CREDITOR, HIS CAPACITY AND THE TRANSACTION. ONCE, THESE THREE THINGS ARE P ROVED PRIMA-FACIE, ONLY THEN THE BURDEN SHIFTS ON THE DEPARTMENT. [REF. SHANKAR INDUSTRIES VS CIT (1978) 114 ITR 689 (CAL); PRAKASH TEXTILE AGENCY VS CIT (1980) 121 ITR 890 (CAL). IN THE CASE OF CIT VS BAISHNAV CHARAN MAHANTI (1995) 2 12 ITR 199 (ORI), IT WAS HELD THAT ONLY WHEN THREE CONDITIONS FULFILLED BY T HE ASSESSEE THEN THE BURDEN SHIFTS TO THE DEPARTMENT. BUT IN THIS CASE, THE ASS ESSEE FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITOR, AND THE GENUINENE SS OF THE TRANSACTIONS. 7 THEREFORE, THE BURDEN NEVER SHIFTED TO THE DEPARTME NT. THE IDENTITY OF THE CREDITORS AND THEIR CREDITWORTHINESS SHOULD BE PROV ED AND THERE SHOULD BE GENUINE TRANSACTIONS AS HELD IN CIT VS KORLEY TRADI NG CO.LTD. (1998) 232 ITR 820 (CAL). THE ASSESSEE NEVER ASKED THE LD. AO TO ISSUE SUMMO NS U/S 131 OF THE ACT FOR ENFORCING THE ATTENDANCE OF THE SHARE APPLI CANT. IT IS NOT THE DUTY OF THE LD. AO TO ISSUE SUMMONS TO A CREDITOR SUE-MOTTO. IN THIS CONNECTION, THE DECISION IN S.PUNJABI VS ACIT (ITAT, MAD) 62 TTJ 74 9 CAN BE RELIED ON. THE LD. AR MADE AN EFFORT TO DISTINGUISH THE FACT OF THE CASES CITED BY THE LD. AO, BUT THE PRINCIPLE LAID DOWN IN THESE TW O CASES ARE EQUALLY IMPORTANT. IN THE CASE OF SMT. KALPANA GHOSH, THE J URISDICTIONAL ITAT HELD THAT EVEN IF THE IDENTITY OF THE CREDITOR IS ESTABLISHED AND TRANSACTION IS MADE THROUGH BANKING CHANNEL, THE GENUINENESS OF THE CAS H CREDIT IS NOT ESTABLISHED. THE ACTUAL TEST IS WHETHER THE CREDITOR WAS CAPABLE TO PAY THE MONEY. IT IS ALSO HELD IN CIT VS KORLEY TRADING CO. LTD. (1998) 232 I TR 820, 824 (CAL) THAT MERE FILING THE INCOME TAX FILE NUMBERS OF THE CRED ITOR IS NOT ENOUGH. HIS IDENTITY AND CREDITWORTHINESS SHOULD BE PROVED AND THERE SHOULD BE GENUINE TRANSACTIONS. AS THE CREDITOR NEVER APPEARED BEFORE THE LD AO AN D NO DOCUMENT RELATING TO HIS GENUINE IDENTITY WAS PRODUCED, IT C ANNOT BE SAID THAT HIS IDENTITY WAS A ESTABLISHED. AS SUCH, THE RATIO OF M/S. LOVEL Y EXPORT P LTD. (SUPRA) CANNOT BE APPLIED IN THIS CASE. IN VIEW OF THE ABOVE DISCUSSION, I FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD AO AND THE ADDITION MADE BY THE LD AO IS CONFIRMED. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF TH E PARTIES AND CAREFUL PERUSAL OF MATERIAL AVAILABLE ON RECORD, WE FIND TH AT THE ISSUE IS SQUARELY COVERED IN FAVOR OF THE ASSESSEE BY THE RATIO OF JUDGMENT OF T HE HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD REPORTED IN 216 C TR 195 (SC) WHEREIN THE APEX COURT OBSERVED THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. IN THE CASE UNDER CONSIDERA TION, THE ASSESSEE COMPANY HAS GIVEN THE DETAILS OF THE SHARE HOLDERS TO THE LOWER AUTHORITIES. THE ASSESSEE ALSO FILED COPIES OF INCOME TAX RETURNS, STATEMENT OF ACCOUNT, PAN DETAILS AND ADDRESS OF THE SUBSCRIBER BEFORE THE LOWER AUTHORITIES. THE SUBSCR IBER HAS SHOWN THE SAID INVESTMENT IN THE ASSESSEE COMPANY IN HIS BALANCE SHEET FILED BEFORE THE DEPARTMENT. WE FIND THAT ONCE THE IDENTITY OF THE SHAREHOLDERS WAS PROVED, I T IS IMMATERIAL WHETHER THE SAME WAS INVESTED BY HIM OUT OF HIS OWN MONEY OR FROM TH E BORROWED FUNDS. THE 8 DEPARTMENT CANNOT EXPECT FROM THE ASSESSEE COMPANY TO PROVE THE SOURCES OF THE SOURCE. IT IS ALSO IRRELEVANT FOR THE ASSESSEE COMP ANY TO KNOW WHETHER THE SUBSCRIBER WAS KEEPING THE MONEY IN BANK OR WITHIN THEMSELVES. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE FIND THAT THE ASSES SEE COMPANY HAS DISCHARGED THE PRIMARY ONUS CAST UPON IT AND PROVED THE IDENTITY O F THE PERSON WHO INVESTED THE MONEY. BUT IF THE ASSESSING OFFICER FAILS TO UNEART H ANY WRONG OR ILLEGAL DEALINGS, HE CAN NOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TRE AT THE SHARE APPLICATION MONEY AS THE UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. WHI LE SECTION 68 OF THE ACT PLACES THE BURDEN OF PROOF ON THE ASSESSEE COMPANY TO EXPL AIN THE NATURE AND SOURCE OF THE CREDIT FOUND IN THE BOOKS, THIS AT BEST CAN BE THE INITIAL BURDEN VIZ. IDENTITY OF THE PERSONS WHO INVESTED, AND WHERE THE EXPLANATION IS PRIMA FACIE CREDIBLE, THE BURDEN SHIFTS TO THE DEPARTMENT. IN THE CASE UNDER CONSIDE RATION, NO COGENT EVIDENCE WAS BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE COMPANY ROUTED ITS UNACCOUNTED INCOME THROUGH SHARE APPLICATION MONEY. IN VIEW OF THE AB OVE, AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LOWER AUTHORITIES ARE NOT CORRECT IN TREATING THE SHARE APPLICATION MONEY REC EIVED BY THE ASSESSEE COMPANY AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE IT ACT. ACCORDINGLY, WE REVERSE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE CROSS OBJECTION FILED BY THE ASSESSEE IN THIS REGARD. 12. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.04.2011. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER ! ! ! !, ,, , '# '# '# '# , AKBER BASHA, ACCOUNTANT MEMBER. ( (( (1# 1# 1# 1#) )) ) DATE: 26.04.2011. R.G.(.P.S.) 9 '! / *2 3'2&4- COPY OF THE ORDER FORWARDED TO: 1. M/S.MANOKAMNA FOOD PRODUCT (P) LTD., GHANSHYAM BUIL DING, SEVOKE ROAD, SILIGURI. 2 THE D.C.I.T., CIRCLE-2, SILIGURI 3. THE CIT, 4. THE CIT(A)-SILIGURI 5. DR, KOLKATA BENCHES, KOLKATA +2 */ TRUE COPY, '!$:/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES