COMMISSIONER OF INCOME TAX Vs. RATHI FINLEASE LTD

JUDGEMENT

(1.) THE Revenue has filed this appeal under Section 260A of the IT Act, 1961 against the order of the Tribunal dt. 17th March, 2004 in Appeal No. ITA -825/Ind/2003 for the asst. yr. 2000 -01, by which the Tribunal has deleted the addition of Rs. 15,00,000 made by the AO and affirmed by the CIT(A).

(2.) THE respondent assessee submitted its retusn for the year 2000 -01 and indicated loss of Rs. 3,56,325. The matter was taken up in scrutiny and due notice was given to the respondent assessee to explain the receipt of Rs. 5,00,000 from M/s Flag Synthetics, Rs. 5,00,000 from Palasiya Leasing and Investment (P) Ltd. and Rs. 5,00,000 from Patni Industries Ltd. on the ground that identity, genuineness and creditworthiness of these parties were not established. The assessee produced the confirmatory letters before the AO but the AO on making deeper probe learnt that in each case the sum of Rs. 5,00,000 was deposited on the same day on which the cheque was issued in favour of the assessec towards purchase of shares. The assessee was also given adequate opportunity to prove the genuineness of the transaction.

(3.) THE matter was carried in appeal by the assessee but the CIT(A) by his order dt. 24th July, 2003 in Appeal No. ITA -38/2003 -04/165 dismissed the appeal by holding that there was sufficient material collected by the AO to the effect that the identity of the creditors was not established, genuineness of the transaction was doubtful and creditworthiness of these parties was not shown. In further appeal to the Tribunal, the Tribunal has allowed the appeal of the assessee by the impugned order and set aside the addition made by the AO. It is in these premises that this appeal has been filed which has been admitted on the following two substantial questions of law: (1) Whether the Tribunal was justified in holding that additions made by the AO amounting to Rs. 15,00,000 are not sustainable on facts and in law? (2) Whether the material brought on record was adequate to hold that the three alleged companies were existing/running so as to give genuineness of the transactions of investment of money by way of share application money to the extent of Rs. 15,00,000?