2011 (2) TMI 980 - AT - Income Tax

Unexplained cash credit - assessee has not established the identity of the investors, genuineness of the transactions and creditworthiness of the 2 investors as required under section 68 - It is true that the opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record - Held that - The law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him - The claim of the assessee is that since the income was below taxable limit, no return was filed - It is pertinent to mention here that out of 18 investors, only 16 were produced and in spite of sufficient opportunity given to the assessee, two shareholders were not produced which cast a cloudy shadow of transaction in respect of these two persons & it is not the case of the assessee that these two persons can be produced now, therefore, there is no infirmity

Summary

Issues:
1. Confirmation of addition of share capital received from specific individuals.
2. Deletion of addition of unexplained cash credit under section 68 of the Act.

Issue 1: The appeals were made by the assessee and the revenue against the order of the CIT(A) regarding the confirmation of addition of share capital received from two individuals and the deletion of addition for other shareholders. The assessee argued that it established the identity, genuineness, and creditworthiness of the investors, citing relevant case law. The revenue contended that the assessee failed to establish the identity of certain persons. The Tribunal reviewed the arguments and found that the CIT(A) confirmed the addition for two individuals while deleting it for others based on the assessee's burden of proof under section 68 of the Act.

Issue 2: Section 68 of the Act deals with cash credit, requiring the assessee to explain the nature and source of credits in their books. The Tribunal explained that if the assessee fails to provide a satisfactory explanation, the sum credited may be charged as income. It emphasized that the burden of proof lies with the assessee to explain the sources of money received. The Tribunal analyzed the case in detail, noting that the assessee failed to sufficiently prove the investments from the disputed individuals, leading to the confirmation of additions. The Tribunal upheld the CIT(A)'s decision regarding the appeals, dismissing both the assessee's and the revenue's appeals.

In conclusion, the Tribunal upheld the CIT(A)'s decision, confirming the addition of share capital from specific individuals while deleting the addition for other shareholders. The Tribunal emphasized the importance of the assessee meeting the burden of proof under section 68 of the Act and dismissed both the assessee's and the revenue's appeals.