2012 (10) TMI 320 - AT - Income Tax

Rebuttal of presumption u/s 68 - Onus to prove cast by sec. 68 is on the assessee To establish the identity, creditworthiness of the creditor and genuineness of the transaction Held that - As assessee produced sales note of shares & sale proceeds were received through banking channels. Assessee also submit the death certificate of purchaser therefore, the production of purchaser was beyond possibility. Rebuttal does not carry effective meaning to dislodge assessee s explanation and discharged his burden following the decision of Delhi High Court in case Medshave Health Care Ltd. (2010 (2) TMI 120). Decision in favour of assessee.

Summary

Issues:
Challenge to addition of Rs. 10 lacs on sale of shares as accommodation entries.

Analysis:
The appellant contested the addition of Rs. 10 lacs received from the sale of shares, claiming it was not an accommodation entry. The appellant provided various explanations and evidence to support the legitimacy of the transaction, including purchase notes and sale notes through banking channels. However, the Assessing Officer disagreed and added the amount under section 68. The appellant then appealed, arguing insufficient opportunity was given and seeking to submit additional evidence. The CIT(A) called for a remand report, which the Assessing Officer opposed, leading to the confirmation of the addition.

The appellant's counsel highlighted that all relevant documents were submitted, but the Assessing Officer raised concerns regarding the connection of M/s Batra Investment with another individual. The appellant clarified that transactions were solely with Shri Satish Kumar, not Mahesh Batra, and provided evidence of legitimate purchase and sale transactions through banking channels. The appellant emphasized that the addition was based on conjectures and lacked a solid basis, especially considering the deceased status of Shri Satish Kumar.

The Tribunal referenced a Delhi High Court judgment supporting the appellant's position, emphasizing the importance of establishing the genuineness of transactions and the discharge of the burden of proof under section 68. The Tribunal found the appellant had sufficiently proven the legitimacy of the transaction, while the lower authorities' vague assertions lacked substantial evidence to justify the addition. Consequently, the Tribunal ruled in favor of the appellant, deleting the addition of Rs. 10 lacs.

In conclusion, the Tribunal allowed the appellant's appeal, noting the lack of concrete evidence to support the addition made by the lower authorities. The judgment emphasized the importance of meeting the burden of proof under section 68 and highlighted the need for substantial reasoning to challenge the appellant's explanations. The decision was also supported by a relevant Delhi High Court precedent, reinforcing the Tribunal's ruling in favor of the appellant.