The Tax Publishers2020 TaxPub(DT) 0829 (Kol-Trib) : (2020) 181 ITD 0408

INCOME TAX ACT, 1961

Section 68

Where documents relating to all the three conditions as required under section 68 i.e., the identity, creditworthiness and genuineness of the transaction was placed before the AO thereafter the onus shifted to AO to disprove the materials placed before him without doing so, the addition made by the AO was based on conjectures and surmises cannot be justified.

Income from undisclosed sources - Addition under section 68 - Alleged unexplained share capital money, various subscribers provide cash to assessee -

Assessee company was a 'NBFC' (non-banking finance company) engaged in the business of trading and investments during the assessment year under consideration. The assessing officer noted that the assessee company had received share application money in cash from the various subscribers. AO issued notices under section 133(6) to all the parties/persons. The AO acknowledges that pursuant to the notice issued under section 133(6), all the share applicants filed the various evidences : (a) Balance sheet; (b) ITR acknowledgement for the assessment year 2013-14; (c) Bank statements. However, according to the AO the share subscribers failed to explain sources of cash payments. So, he added back the entire amount of share capital and premium. The assessee before the CIT(A) had brought to the notice of the CIT(A) that the persons were individuals and that they have filed the following details :-- (a) PAN Number(s); (b) ITR acknowledgements; (c) Accounts statements of the share applicants; (d) Share Application Forms; (e) Copy of bank accounts of the share applicants; (f) Balance sheet; CIT(A) however, confirmed the addition. Held: The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, thereafter the onus shifted to AO to disprove the documents furnished by assessee which cannot be brushed aside by the AO to draw adverse view which could not be countenanced. In the absence of any investigation, much less gathering of evidence by the AO, an addition cannot be sustained merely based on inferences drawn by circumstance. Tribunal was, therefore, inclined to allow the appeal of the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. Accordingly, all the three conditions as required satisfied and addition was deleted under section 68, i.e., the identity, creditworthiness and genuineness of the transaction was consequently the appeal of assessee was therefore, allowed.

Followed:CIT v. Gangeshwari Metal (P.) Ltd. [ITA No. 597 of 2012, dt. 21-1-2012] : 2013 TaxPub(DT) 1319 (Del-HC) and CIT v. Lovely Exports (P.) Ltd. (2009) 319 ITR (St.) 5 : 2009 TaxPub(DT) 261 (SC). Relied:CIT v. Smt. P.K. Noorjahan (1999) 237 ITR 570 (SC) : 1999 TaxPub(DT) 80 (SC), CIT v. Orissa Corpn. (P.) Ltd. (1986) 159 ITR 78 (SC) : 1986 TaxPub(DT) 1425 (SC), Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (Guj) : 2002 TaxPub(DT) 305 (Guj-HC), Nemi Chand Kothari v. CIT (2003) 264 ITR 254 (Gau) : 2003 TaxPub(DT) 1401 (Gau-HC), CIT v. S. Kamaljeet Singh (2005) 147 Taxman 18 (All.) : 2005 TaxPub(DT) 1275 (All-HC), S.K. Bohra & Sons, HUF v. ITO (2012) 347 ITR 347 (Cal) : 2012 TaxPub(DT) 0815 (Cal-HC), Crystal Networks (P.) Ltd. v. CIT (2013) 353 ITR 171 (Cal) : 2013 TaxPub(DT) 1470 (Cal-HC), CIT v. Dataware (P.) Ltd. [ITAT No. 263 of 2011, dt. 21-9-2011] : 2013 TaxPub(DT) 1384 (Cal-HC), CIT v. Lovely Exports (P.) Ltd. CTR at (2008) 216 CTR 195 (SC) : 2009 TaxPub(DT) 261 (SC), CIT v. Roseberry Mercantile (P.) Ltd. [ITAT No. 241 of 2010, dated 10-1-2011], CIT v. Nishan Indo Commerce Ltd. [ITA No. 52 of 2001, dated 2-12-2013] : 2014 TaxPub(DT) 1934 (Cal-HC), CIT v. Leonard Commercial (P.) Ltd. in [ITAT No. 114 of 2011, dated 13-6-2011], ITAT, Kolkata in Dy. CIT v. Global Mercantiles (P.) Ltd. (2016) 67 Taxmann.com 166 (Kol.-Trib.) : 2016 TaxPub(DT) 1420 (Kol-Trib), Dy. CIT v. Global Mercantiles (P.) Ltd. (2016) 67 Taxmann.com 166 (Kol.-Trib.) : 2016 TaxPub(DT) 1420 (Kol-Trib), ITA No. 1061 (Kol) of 2012, dated 5-2-2016] : 2016 TaxPub(DT) 1414 (Kol-Trib), ITO v. Steel Emporium Ltd., and ITO v. Cygnus Developers (I) (P) Ltd. [ITA No. 282 (Kol.) of 2012, dated 2-3-2016].

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