CIT Vs. FUNNAY TIME FINVEST LTD.

JUDGEMENT

(1.) THE revenue claimed to be aggrieved by the order of Income Tax Appellate Tribunal (ITAT) dated 10.12.2010 whereby it confirmed the order of the CIT (Appeals). The latter had directed a deletion of the sum of Rs. 28,40,000/ - which was added by the A.O. The substantial question of law sought to be urged is that the ITAT and CIT(A) erred in holding that Section 148 did not apply in the facts and circumstances of the case.

(2.) THE assessee at the relevant time in A.Y. 2001 -02, filed its return declaring a sum of Rs. 2860/ -. The assessee was engaged in the business of investment in shares and fixed deposit in banks, and derived income from dividend and interest. Initially, the return was processed under Section 143(1) , thereafter assessment notice was issued to the assessee. On consideration of the material, the A.O. held that fresh share capital to the extent of Rs. 28.40 lac had to be added. This sum is sought to be brought to tax under Section 68 by the A.O. holding that the assessee did not furnish any satisfactory explanation, and had not, in fact, discharged the initial burden under the said provision. The A.O. had, in the course of the assessment proceedings, offered an opportunity to cross -examine one Mr.Mahesh Garg, (whose statement formed the basis for reassessment proceedings) to the assessee. Apparently, the assessee did not avail of the opportunity, and sought repeated adjournments. The CIT (Appeals) found in favour of the assessee, noticing that all the relevant particulars had been furnished in the course of assessment proceedings and that the A.O. did not choose to make any further enquiries from the investors, as seen from findings of the ITAT extracted below:

(3.) IT is urged on behalf of the revenue that the failure of the assessee to cross -examine Mahesh Garg mean that the statement recorded by him on oath earlier, were, uncontroverted, and in the facts of the case, unless material in the form of bills and statements of the investors on oath were provided by the assessee, the latter could not be said to have discharged the onus that initially lay upon it under Section 68. Learned counsel relied upon the judgment of this Court reported as CIT vs. Empire Builtech : 2014 366 ITR 110 and also judgment reported as CIT vs. Nova Promoters & Finlease : (2012) 342 ITR 169. In those cases this Court had occasion to deal with the ruling of the Supreme Court in CIT V. Lovely Exports (P) Ltd. : 216 ITR 195.