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ITO, Room No. 225A, Central Revenue Building, New Delhi 110 002 VS. M/s Value Fabrics Pvt. Ltd.,52-Asalatpura, Badi Masjid,Moradabad-244001
January, 30th 2014
                                                           ITA NO. 3892/Del/2012

                    DELHI BENCH "H", NEW DELHI

                          I.T.A. No. 3892/Del/2012
                                 A.Y. : 2007-08
ITO, Room No. 225A,             VS.                   M/s Value Fabrics Pvt.
Central      Revenue                                  Ltd.,
Building, New Delhi ­                                 52-Asalatpura,
110 002                                               Badi Masjid,
                                                      (PAN: AABCV4422D)

(APPELLANT)                                           (RESPONDENT)

           Assessee by                :     Dr. Rakesh Gupta, Sr. Adv., Sh.
                                            Ashwani Taneja, Adv., Sh. Somil
          Department by               :     Ms. Nidhi Srivastava, Sr. D.R.

     This appeal by the Revenue is directed against the order of the
Ld. Commissioner of Income Tax (Appeals-XIX), New Delhi                 dated
24.5.2012 pertaining to assessment year 2007-08.

2.   The grounds raised read as under:-

     i)    Ld. CIT(A) erred in law and on the facts of the case in
           setting aside the issue of addition of Rs. 1,75,20,000/-
           made by the AO under section 68 of the I.T. Act as the
           Income Tax Act, 1961 does not confer any power on the
           CIT(A) to set aside the assessment.

                                                         ITA NO. 3892/Del/2012

      ii)    Ld. CIT(A) erred in law and on the facts of the case in
             accepting additional evidences in contravention of Rule
             46A of the I.T. Rules, 1962 without confronting the AO.

      iii)   Ld. CIT(A) erred in law and on the facts of the case in
             allowing the expenses of Rs. 51,601/- on the basis of
             additional evidence accepted by him by violating the
             provisions of Rule 46A of the I.T. Rules.

      iv)    The appellant craves, leave or reserving the right to
             amend, modify, alter, add or forgo any ground(s) of
             appeal at any time before or during the hearing of this

3.    In this case the AO       noted that    perusal of return of the
assessee reveals that during the year the assessee has             received
share application money of Rs. 1,75,20,000/-.            Despite several
opportunities assessee failed to comply with the notices of the AO.
AO observed      that the onus was upon the assessee to prove the
creditworthiness and genuineness and identity of the shareholders.
Since the same was not done, AO treated the same as undisclosed
income       of the assessee and added the same under section 68 of
the I.T. Act.

4.    Before the Ld. CIT(A)     assessee submitted that assessee has
only received Rs. 12,00,000/- share application money during the
financial year 2006-07. The balance of Rs. 1,63,20,000/- was share
application money received during the financial year 2005-06. The
total of the aforesaid sums as on 31.3.2007 came to Rs.
1,75,20,000/-. In this regard, copy       of the balance sheet of the
assessee was referred which was said to have been filed alongwith
the return.      Regarding the share       application    money of Rs.
12,00,000/- received during the financial year 2006-07 from three

                                                     ITA NO. 3892/Del/2012

parties, assessee submitted copy of      application for shares and
confirmation letter and PAN Number.      Considering the above, Ld.
CIT(A) directed as under:-

                "Since the documents and the details as mentioned
                in above paras are filed for the first time ­ either by
                the AR on his own or on enquiry from the
                undersigned in these proceedings ­ in the interest
                of justice, the AO is hereby directed to verify the
                genuineness of the documents and the contentions
                of the AR and if he is satisfied with the explanation,
                no addition is called for. The issue of addition of Rs.
                1,75,20,000/- is set aside for limited verification as
                mentioned above."

5.   Against the above Order the Revenue is in appeal before us.

6.   We have heard both the counsel and perused the records. We
find that as regards the contention of the assessee that the amount
of Rs. 12,00,000/- was received as share application money for the
impugned financial year and the balance Rs. 1,63,20,000/- pertain to
financial year 2005-06, it is a matter of factual verification. If the
assessee has only received Rs. 12,00,000/- share application money
during financial year 2006-07, AO can consider only the said amount
u/s. 68 of the IT Act for A.Y. 2007-08.     Rest amount cannot be
considered in the current year as share application money receipt
under section 68 of the I.T. Act. Accordingly, we remit this issue to
the file of the AO.     The AO shall make examination            of the
submissions of the assessee and decide as per directions as above.

7.   As regard the balance amount of share application money

amounting to Rs. 12,00,000/- received from three parties, assessee

                                                           ITA NO. 3892/Del/2012

has not submitted any document whatsoever before the AO.

Assessee   has   submitted   copy       of   application   of   shares     and

confirmation and PAN number before the Ld. CIT(A).                Ld. CIT(A)

remitted these documents and the contention of the Ld. AR to the

file of the AO for examination.   Ld. CIT(A) further directed that if the

AO is satisfied with the explanation, no addition is called for.

Against the above directions, Revenue is in appeal before us.

8.   We find that Revenue's contention in this regard is correct that

Ld. CIT(A) does not have any power to set aside the issue to AO.

However, we find that assessee has failed to submit the relevant

documents before the AO. However, he has submitted some details

before the Ld. CIT(A). In our considered opinion, interest of justice

will be served, if the matter is remitted to the file of the AO.

Accordingly, we remit this issue to the file of the AO.             AO shall

examine the issue afresh regarding the identity of the depositors,

genuineness of the transactions and the creditworthiness of the

share applicants.   Needless to add that the assessee should be

granted adequate opportunity of being heard.

9.   Ground No. 3 raised by the Revenue is regarding the allowance

of expenses of Rs. 51,601/-. We find that the same is not arising out

of the order of the Ld. CIT(A). Hence, the same is dismissed.

                                                     ITA NO. 3892/Del/2012

10.   In the result, the appeal filed by the Revenue is partly allowed
for statistical purposes.

      Order pronounced in the Open Court on 23/1/2014,             upon
conclusion of hearing.

      Sd/-                                              Sd/-

 [A.T. VARKEY]                                  [SHAMIM YAHYA]
JUDICIAL MEMBER                             ACCOUNTANT MEMBER

Date 23/1/2014
Copy forwarded to: -
1.    Appellant -

2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT

                            TRUE COPY
                                                  By Order,

                                                 Assistant Registrar,
                                                 ITAT, Delhi Benches

    ITA NO. 3892/Del/2012

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