CIT Vs. MAK DATA LTD

JUDGEMENT

(1.) The following substantial question of law was framed by this Court on 11 th October, 2012:-

(2.) This is an appeal by the Revenue under Section 260A of the Income Tax Act, 1961 ("Act? for short) and it pertains to the assessment year 2004-05. An assessment was completed upon the assessee under Section 143(3) of the Act in which an addition of Rs. 40,74,700/- was made in the following circumstances. There was a survey under Section 133A on 16 th December, 2003 in the course of which some documents pertaining to the assessee were found and were impounded. These documents consisted of blank transfer deeds for shares duly signed, affidavits, share application forms, copies of bank accounts, income tax returns and assessment orders of certain other companies. Those documents were forwarded to the AO assessing the present assessee who called upon the assessee to explain the contents of the documents and the genuineness of the transactions represented by them. It appears that the documents belonged to certain entities who had applied for shares in the assessee company. What the AO wanted the assessee to do was to prove the nature and source of the monies received as share capital, the creditworthiness of the applicants and the genuineness of the transactions.

(3.) In response to the above notice which was issued on 26 th October, 2006, the assessee stated as under:-