2012 (7) TMI 305 - AT - Income Tax

Addition u/s 68 - unexplained share application/capital - Assessing Officer received information from the Investigation Wing, Delhi stating that the assessee had taken accommodation entries by obtaining/arranging bogus documents etc. and thereby introduced its own unaccounted money in its account - Assessing Officer reopened the case under section 147 of the Income Tax Act Held that - Assessee has produced the names, address, PAN account details and affidavit, resolution of the Board of Directors and also the necessary documents failed before the Registrar of companies for the purpose of making investment in the share of the assessee company by the applicant companies CIT(A) deleted the addition In favor of assessee

Summary

Issues:
- Appeal against deletion of addition made under section 68 for unexplained share application/capital
- CIT(A) deleting the addition without examining creditworthiness and genuineness of the transaction
- Comparison of facts with previous years' cases and judgments

Analysis:

1. Issue 1 - Appeal against deletion of addition under section 68:
The Revenue filed an appeal against the order of CIT(A) deleting the addition made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The AO had added Rs.1,17,37,350 as unexplained share application/capital. The CIT(A) based the deletion on previous ITAT judgments for AY 2002-03 and AY 2004-05, where similar facts led to the deletion of such additions. The Hon'ble ITAT, Agra and the Allahabad High Court upheld these decisions, emphasizing the production of necessary documents by the assessee to prove the genuineness of the transactions.

2. Issue 2 - CIT(A) deleting addition without examining creditworthiness:
The Departmental Representative argued that the CIT(A) erred in deleting the addition without considering the creditworthiness of the creditors and genuineness of the transaction, as required under section 68. However, the Authorized Representative contended that the facts in the current case were identical to previous years' cases where the ITAT and High Court had ruled in favor of the assessee, emphasizing the importance of following the principle of judicial discipline in such matters.

3. Issue 3 - Comparison with previous years' cases and judgments:
The ITAT noted that the facts in the current case were similar to those in AY 2002-03 and AY 2004-05, where the ITAT had decided in favor of the assessee. The CIT(A) also highlighted the production of necessary documents by the assessee, which were crucial in proving the genuineness of the transactions. The ITAT and the Allahabad High Court had confirmed these decisions, emphasizing the importance of following higher appellate authorities' orders as per principles of judicial discipline.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the addition under section 68, citing the precedents set by previous judgments and emphasizing the importance of following higher appellate authorities' orders. The appeal of the Revenue was dismissed based on the consistent rulings in favor of the assessee in similar cases.