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Issues involved: Appeal by Revenue against deletion of addition u/s 68 of the Income Tax Act, 1961 regarding unexplained share application money received by the assessee from two companies.
Issue 1: Sustainability of addition u/s 68 of the Act The judgment pertains to two appeals by the Revenue challenging the deletion of addition u/s 68 of the Act concerning unexplained share application money received by the assessee from two companies for the assessment year 2003-04. The primary issue revolves around the genuineness of the transactions and the application of section 68. The Revenue's contention is based on the alleged admission by a director of one of the share applicant companies regarding providing accommodation entries, suggesting the investments were bogus. The onus is on the Revenue to prove that the amounts did not belong to the creditors and belonged to the assessee. The absence of proper enquiry by the assessing authority was noted, and the Revenue failed to provide substantial evidence to impugn the transactions as not genuine. The tribunal dismissed the appeals by the Revenue, emphasizing the importance of evidence and proper enquiry in such cases. Issue 2: Burden of proof and evidentiary requirements The judgment discusses the burden of proof in cases involving section 68 of the Act, citing relevant case law. The burden lies on the assessee to prove the identity, capacity, and genuineness of the transaction. The assessee presented relevant documentary evidence to support their case, which was not rebutted effectively by the Revenue. The non-production of directors of the investor companies was noted, but the absence of evidence to challenge the transactions' genuineness weakened the Revenue's case. The judgment highlights the significance of evidence, proper enquiry, and the onus on the Revenue to establish their claims. The decisions cited by the Revenue regarding burden of proof were considered but deemed not directly applicable to the present case involving share investments. Separate Judgment: No separate judgment was delivered by the judges in this case.
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