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2012 (11) TMI 333 - AT - Income TaxAddition on account of unexplained share application money u/s 68 of the Income-tax Act alleged that AO, seeking details of genuineness of the share application money, the assessee did not respond Held that - Just because the creditors /share applicants could not be found at the address given, it would not give the revenue the right to invoke section 68 - it is settled law that the assessee need not to prove the source of source - appellant filed copies of PAN, acknowledgement of filing of income tax returns of the companies, their bank account statements for the relevant period, i.e. for the period when the cheques were cleared addition deleted in favor of assessee
Issues Involved:
1. Whether the CIT(A) erred in deleting the addition of Rs. 23,20,000/- made by the Assessing Officer on account of unexplained share application money under Section 68 of the Income-tax Act. Issue-wise Detailed Analysis: 1. Deletion of Addition of Rs. 23,20,000/- under Section 68 of the Income-tax Act: Facts and Background: - The assessee, a manufacturer of M.S. pipes and GS pipes, filed a return declaring an income of Rs. 52,71,342/-. - During scrutiny, the Assessing Officer (AO) noticed the assessee received Rs. 26,20,000/- as share application money from 23 persons. - The AO sought details to establish the genuineness of the share application money, but the assessee did not respond adequately. - Notices issued under Section 133(6) to the applicants were mostly returned unserved, and the affidavits submitted by the assessee were not notarized. - The AO found cash deposits in the bank accounts of the share applicants coinciding with the dates of the share application money and concluded the transactions were not genuine, adding Rs. 23,20,000/- under Section 68. CIT(A) Findings: - The CIT(A) deleted the addition, noting the assessee had provided: - Complete names, addresses, and PAN details of share applicants. - Confirmations from share applicants. - Copies of income tax returns and bank statements of share applicants. - The CIT(A) emphasized that the onus of proving cash credit is rebuttable and the Department must provide evidence to reject the assessee's explanation. - The CIT(A) cited various judicial precedents, including decisions from the Hon'ble Delhi High Court and the Supreme Court, establishing that the identity, creditworthiness, and genuineness of transactions were sufficiently proven by the assessee. Tribunal's Analysis: - The Tribunal upheld the CIT(A)'s decision, noting the assessee had discharged its initial burden by providing necessary documents. - The Tribunal referenced the decision in CIT Vs. Lovely Exports Pvt. Ltd., where it was held that if share application money is received from alleged bogus shareholders whose names are given, the Department can reopen their assessments but cannot treat it as undisclosed income of the assessee. - The Tribunal also cited the decision in CIT Vs. Dwarkadhish Investment P Ltd., emphasizing that once the assessee proves the identity and genuineness of transactions, the onus shifts to the Revenue. - The Tribunal found no justification for the AO's adverse inference merely because the assessee did not produce the share applicants in person. Conclusion: - The Tribunal concluded that the CIT(A) was justified in deleting the addition of Rs. 23,20,000/- as the assessee had sufficiently proven the identity, creditworthiness, and genuineness of the share applicants. - The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order. Final Judgment: - The appeal by the Revenue was dismissed, and the deletion of the addition of Rs. 23,20,000/- by the CIT(A) was upheld.
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