2015 (12) TMI 1687 - AT - Income Tax

Unexplained share capital - survey u/s.133A - Held that - Mere production of confirmation letter from Smt. Vimalamma is not sufficient in this case. She has given different statements at different stages. We do not know whether she is truthful and honest to disclose the correct fact. Being so her statements are not reliable when surrounding and attending facts brought on record by the A.O indicate and reflect paper work and documentation. But genuineness creditworthiness and identity are deeper it shall require to be established by documents. Being so the Commissioner of Income Tax (Appeals) has taken just cursory look at the entire things and deleted the addition which is improper. Hence the matter is remitted back to the file of the Assessing Officer for conducting detailed inquiry and decide the issue afresh. The assessee has to file bank account details of Smt. Vimilamma to prove the transaction. This appeal of the Revenue is partly allowed for statistical purposes.

Summary

Issues:
Appeal against deletion of addition of Rs. 2,50,00,000 set to be received from Smt. Vimalamma.

Analysis:
The case involved cross appeals against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2006-2007. The department's grievance was related to the deletion of an addition of Rs. 2,50,00,000 set to be received from Smt. Vimalamma. The facts revealed that during a survey, it was found that the assessee had purchased land from Smt. Vimalamma and paid Rs. 3,71,70,255. The remaining unpaid amount was shown as share application money pending allotment. The assessment was reopened as Smt. Vimalamma denied receiving the amount, leading to the addition of unexplained share capital. The Commissioner of Income Tax (Appeals) observed an increase in the shareholders' fund, which needed explanation by the assessee. The amount was shown as received from Smt. Vimalamma and other promoters. The Commissioner noted discrepancies in Smt. Vimalamma's statements regarding the investment in the company, leading to confusion about the balance amount. The AO's remand report highlighted Smt. Vimalamma's lack of consent to treat the difference as share application money. The Commissioner opined that the outstanding amount should be treated as a liability and allowed as share application money, thereby deleting the addition.

The Tribunal, after hearing both sides, noted discrepancies in Smt. Vimalamma's statements and emphasized the onus on the assessee to prove the transaction's genuineness, creditworthiness, and identity. Mere production of a confirmation letter was deemed insufficient. The Tribunal found the Commissioner's decision to delete the addition based on a cursory look improper and remitted the matter back to the Assessing Officer for a detailed inquiry. The assessee was directed to provide Smt. Vimalamma's bank account details to substantiate the transaction. The Revenue's appeal was partly allowed for statistical purposes.

The assessee's appeal was not pressed and thus dismissed. Consequently, the appeal of the Revenue was partly allowed for statistical purposes, and the appeal of the assessee was dismissed. The judgment was pronounced on 31st December 2015.