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Dy. Commissioner of Income Tax-CC-45, Room No.659, 6th floor, Aayakar Bhavan, M K Road, Mumbai-400020 Vs. M/s Niketan Mercantile Pvt. Ltd., S.S-4,Ground Floor, Shop No.285, Xerox Lane, Sector-2, Vashi, Navi Mumbai.
October, 08th 2015
                 ,   "" 


                  ./I.T.A. No.2026/Mum/2011
                 (   / Assessment Year:2005-06)
 Dy. Commissioner of Income / M/s Niketan Mercantile Pvt. Ltd.,
 Tax-CC-45, Room No.659,        S.S-4,Ground Floor, Shop No.285,
  th                        Vs.
 6 floor, Aayakar Bhavan,       Xerox Lane, Sector-2,
 M K Road,                      Vashi,
 Mumbai-400020.                 Navi Mumbai.
       ( /Appellant)        ..  ( / Respondent)

        ./   ./PAN. :AACCNO893K

            / Appellant by              Shri Mohandas
            /Revenue by                 None

            / Date of Hearing
           /Date of Pronouncement: 5.10.2015

                               / O R D E R
Per B R Baskaran, AM:

       The revenue has filed this appeal challenging the order dated 31-12-
2010 passed by Ld CIT(A)-36, Mumbai for assessment year 2005-06
assailing his decision to delete the addition of Rs.2.75 crores made by the
AO by assessing the Share application money as unexplained cash credit.

2.      None appeared on behalf of the assessee even though several
notices were sent to the assessee by Registered post and also through the
revenue. We notice that the assessing officer has given a certificate about
the service of notice to the assessee by affixure. Hence we proceed to
dispose of the appeal ex-parte, without the presence of the assessee.
                                                       I T A N o . 2 0 2 6 / Mu m / 2 0 1 1

3.      The facts relating to the case are that the AO noticed that the
assessee has received share application money to the tune of Rs.5.75
crores from various persons, who were mainly private limited companies.
The assessee furnished details to support the claim of receipt of share
application money. However, the AO noticed that one of the directors of
M/s SKS Ispat Group had admitted in the assessment proceedings that
they were providing only accommodation entries in connection with the
Share Application money. The AO noticed that the assessee has received
share application money of Rs.2.75 crores from M/s SKS Ispat Group.
Hence the AO assessed the same as income of the assessee.                      In the
appellate proceedings, the Ld CIT(A) deleted the same and hence the
revenue has filed this appeal before us.

4.    We heard ld D.R and perused the record. We notice that the Ld
CIT(A) has granted relief to the assessee by following the decision
rendered by Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports
(P) Ltd (216 CTR (SC) 195). In our considered view, the said decision is
not applicable to the facts available in the present case. We notice that
the assessing officer has placed reliance on the statement given by the
director of SKS Ispat group, wherein he has categorically admitted that the
Share application money given by their group was only accommodation
entries, meaning thereby, they have not made investment out of their own
funds. The question of application of the decision rendered by Hon'ble
Supreme Court in the case of Lovely Exports (P) Ltd (supra) shall apply
only if the share applicant has made investment out of his own funds.                  In
the instant case, the assessing officer has taken the view that M/s SKS
Ispat group has not made any investment out of their own funds, but
provided only accommodation entries, i.e., the case of the AO is that the
assessee's own funds have been introduced through M/s SKS Ispat group.
                                                          I T A N o . 2 0 2 6 / Mu m / 2 0 1 1

Hence, in our view, the Ld CIT(A) has misguided himself and accordingly
his order requires reversal. However, in the interest of natural justice, we
are of the view that the assessee should be given one more opportunity to
explain its stand before Ld CIT(A). Accordingly, we set aside the order of
Ld CIT(A) and restore the matter to his file with the direction to examine
the issue afresh and take appropriate decision in accordance with the law.

5.     In the result, the appeal filed by the revenue is treated as allowed for
statistical purposes.

              Pronounced accordingly on 5th October, 2015.
                    5 October, 2015    

         Sd                                                  sd
      (PAWAN SINGH)                                ( B.R. BASKARAN)
     JUDICIAL MEMBER                                 ACCOUNTANT MEMBER

 Mumbai:         5th October, 2015.

.../ SRL , Sr. PS

    /Copy of the Order forwarded to :
1.  / The Appellant
2.     / The Respondent.
3.      () / The CIT(A)- concerned
4.       / CIT concerned
5.     ,   ,                      /
      DR, ITAT, Mumbai concerned
6.      / Guard file.

                                                             / BY ORDER,
True copy
                                                       (Asstt. Registrar)
                                             ,  /ITAT, Mumbai
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