The Tax Publishers2022 TaxPub(DT) 1611 (Ind-Trib)

INCOME TAX ACT, 1961

Section 68

Assessee during the course of re-assessment proceedings and first appellate proceedings filed requisite documentary evidences which included share application form, extract of minutes of the meeting of the companies, Master data and signatory details, Certificate of incorporation, MOA, AOA, audited financial statements, etc., so as to justify identity and creditworthiness of share applicants and genuineness of the transactions entered into with them. Therefore, no addition under section 68 was called for.

Income from undisclosed sources - Addition under section 68 - Receipt of share application money - AO doubted identity and creditworthiness of the share applicants and genuineness of the transations

Assessee received share application money of Rs. 2,60,00,000. AO doubted identity and creditworthiness of the share applicants and genuineness of the transations entered into with them and thus treated amount received by assessee as unexplained credit under section 68. Held: AO deputed inspectors to physically visit Kolkata money to assessee. Notices under section 133(6) were issued to said share applicants which were duly complied with, AO himself accepted that inspectors met Ashok Kumar Surekha who represented as the chairman in these companies. The share applicant companies also provided their acknowledgement of return, copy of account of the assessee in their books of accounts, copy of share certificate and copy of their bank statement directly to AO which were never disproved by AO. With the help of supporting/corroborative documentary evidences, existence of share applicant companies was proved beyond doubt by assessee. Assessee during the course of re-assessment proceedings and first appellate proceedings filed requisite documentary evidences which included share application form, extract of minutes of the meeting of the companies, Master data and signatory details, Certificate of incorporation, MOA, AOA, audited financial statements etc. so as to justify identity and creditworthiness of share applicants and genuineness of the transactions entered into with them. The said documents were never disproved by AO and CIT(A). Accordingly assessee discharged primary onus cast upon it under section 68 and, therefore, no addition was called for.

Relied:People General Hospital Limited (Appeal No. ITA No. 89/2011) : 2013 TaxPub(DT) 1865 (MP-HC) and Lovely Exports (P) Limited (2008) 216 CTR 195 (SC) : 2009 TaxPub(DT) 261 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09



IN THE ITAT, INDORE BENCH

MAHAVIR PRASAD, J.M. & MANISH BORAD, A.M.

Reliable Global Venture (P) Ltd. v. ITO

ITA Nos. 310 & 335/Ind/2020

20 December, 2021

In favour of assessee.

Appellant by: S. N. Agrawal & Bhavesh Agrawal, Authorised Representatives

Revenue by: Harshit Bari, Sr. Departmental Representative

ORDER

Manish Borad, A.M.

The above captioned appeals filed at the instance of the Assessee and Cross Appeal by the revenue for assessment year 2008-09 are directed against the order of learned Commissioner (Appeals)-2 (in short 'Ld. CIT), Bhopal, dated 7-9-2019 which is arising out of the order under section 147 of the Income Tax Act 1961(In short the 'Act'), dated 29-3-2016 framed by Income Tax Officer-4(1), Bhopal.

In ITA No. 310/Ind/2020, the assessee has raised the following grounds of appeal :--

'1. That on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in upholding the validity of r-assessment proceedings initiated under section 147 of the Income Tax Act, 1961 without properly appreciating the facts of the case and submissions made before him.

2. That on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in upholding the validity of reassessment proceedings initiated under section 147 of the Income Tax Act 1961 even when there was no tangible material in possession of the assessing officer so as to prove the live link of concealment of income.

3. That on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in upholding the validity of reassessment proceedings initiated under section 147 of the Income Tax Act 1961 even when assessing officer re-opened the case of the appellant merely for the purpose of making roving the fishing inquiries which is not permissible in law.

4. That on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in upholding the validity of re-assessment proceedings initiated under section 147 of the Income Tax Act 1961 without obtaining proper sanction from the competent authority under section 151 of the Income Tax Act, 1961.

5. That on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in maintaining the addition of Rs. 80,00,000 out of the addition of Rs. 2,60,00,000 made by the assessing officer under section 68 of the Income Tax Act 1961 on account of share application money received during the year without properly appreciating the facts of the case and submissions made before him more so when the appellant had properly discharged the primary onus case upon it under section 68 of the Act.

6. That on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in maintaining the addition of Rs. 80,00,000 out of the addition of Rs. 2,60,00,000 made by the assessing officer under section 68 of the Income Tax Act 1961 on account of share application money received during the year even when no business activities were carried out during the year and henceforth, there arises no question of earning any income, much less any undisclosed income.

7. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by it.

The Revenue has raised the following grounds of appeal in ITA No. 335/Ind/2020 :--

1. Whether on the facts and in the circumstances of the case, the Commissioner (Appeals) was justified in deleting the addition of Rs. 1,80,00,000 out of total addition of Rs. 2,60,00,000 made by the assessing officer on account of share application money.

2. Whether on the facts and in the circumstances of the case, the learned Commissioner (Appeals) was justified in holding that the assessee has discharged the onus to prove the identity and creditworthiness of the share applicants/creditors and the genuineness of the transactions in accordance with section 68 of the Income Tax Act.

2. Brief facts as culled out from the records are that case of the assessee was reopened under section 147 of the Act for the assessment year 2008-09. The learned assessing officer while passing the assessment order added an amount of Rs. 3,17,50,000 to the total income of the assessee on account of share application money received by the assessee under section 68 of the Act. The assessee thereafter filed a rectification application before the learned assessing officer wherein it was stated that an amount of Rs. 57,50,000 added to the total income on account of share application money was related to the Financial Year 2003-04 and was not received during the year. The said contention was duly accepted by the learned assessing officer who subsequently passed a rectification order and reduced the amount of addition to Rs. 2,60,00,000 (Rs. 3,17,50,000 (-) Rs. 57,50,000).

3. Being aggrieved, the assessee in the meantime also preferred an appeal before the learned Commissioner (Appeals) and partly succeeded as the learned Commissioner (Appeals) deleted the addition of Rs. 1,80,00,000 out of the total addition of Rs. 2,60,00,000 made by the learned assessing officer and sustained the remaining amount of addition of Rs. 80,00,000.

4. Ground Nos. 5 and 6 raised by the assessee challenge the action of the learned Commissioner (Appeals) in sustaining the addition of Rs. 80,00,000 out of the total addition of Rs. 2,60,00,000 made by the learned assessing officer whereas Ground Nos. 1 and 2 raised by the Revenue challenge the action of the learned Commissioner (Appeals) in deleting the addition of Rs. 1,80,00,000 out of the total addition of Rs. 2,60,00,000 made by the learned assessing officer on account of share application money. Brief facts relating to this issue are that the learned assessing officer during the course of re-assessment proceedings made addition of Rs. 2,60,00,000 to the total income of the assessee on account of share application money received from following share applicants:--

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