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2013 (11) TMI 1496 - HC - Income TaxShare application money - Addition u/s 68 - Held that - Following CIT VS NR PORTFOLIO PVT. LTD 2013 (11) TMI 1381 - DELHI HIGH COURT - Mere production of PAN Number or assessment particulars does not establish the identity of a person. The identification of a person includes the place of work, the staff and the fact that it was actually carrying on business and further recognition of the said company/individual in the eyes of public. Burden to prove - The onus to prove is on the Assessee - Mere production of incorporation details, PAN Numbers or income tax returns may not be sufficient when surrounding and attending facts predicate a cover up - The production of incorporation details, PAN numbers or income tax details may indicate towards completion of paper work or documentation but genuineness, creditworthiness and identity of investment and the investors are deeper and obtrusive than mere completion of paper work or documentation - The assessee has not been able to establish the identity, creditworthiness of the share applicants and the genuineness of the transaction - The surrounding circumstances and inquiries made by the Assessing Officer were significant but the said finding have been ignored by the Tribunal - It has failed to take holistic view - Decided in favour of Revenue.
Issues Involved:
1. Whether the ITAT's order dated 24.08.2009 ignored and did not deal with the factual findings recorded by the Assessing Officer, thereby making it perverse. Detailed Analysis: Issue 1: ITAT's Order and Factual Findings by the Assessing Officer Background: This case pertains to the Assessment Year 2001-02, where the Assessee filed a return declaring an income of Rs. 1,42,508/-. The assessment was completed at Rs. 8,90,160/-. Subsequently, information from the Investigation Wing indicated that the Assessee received bogus entries from certain parties. Consequently, a notice under Section 148 of the Income Tax Act was issued, leading to a reassessment. Assessing Officer's Findings: The Assessing Officer (AO) discovered that the Assessee had received share application money from various entities, amounting to Rs. 34,50,000/-. Upon investigation, it was found that the bank statements provided by the Assessee were fabricated. The AO established that there were cash deposits immediately before the issuance of cheques for share application money, indicating that the transactions were not genuine. The AO concluded that the Assessee failed to prove the creditworthiness of the investors and the genuineness of the transactions, thereby making an addition of Rs. 30,50,000/- under Section 68 of the Act. CIT (Appeals) Decision: The CIT (Appeals) deleted the addition made by the AO, accepting the Assessee's argument that once the identity of the share applicants was established, no further addition could be made under Section 68, even if the share applicants were bogus. The CIT (Appeals) held that the Assessee had provided necessary details like addresses, PAN numbers, and other confirmations, thereby discharging the onus of proof. ITAT's Decision: The ITAT upheld the CIT (Appeals) decision, relying on the Supreme Court's decision in CIT vs. Lovely Exports P. Ltd., which stated that if the Assessee provides details of the share applicants, no addition can be made under Section 68. The ITAT confirmed that the Assessee had furnished PANs, account details, share application forms, confirmation letters, and bank accounts, thus discharging the onus. High Court's Analysis: The High Court found the orders of the CIT (Appeals) and the ITAT to be perverse and unsustainable. It emphasized that mere production of PAN numbers or assessment particulars does not establish the identity of a person. The identity includes the place of work, staff, and recognition of the company/individual in public. The Court noted that PAN numbers are allotted without actual verification of business activity, and thus cannot be blindly treated as proof of identity. The High Court observed that the AO had conducted a thorough inquiry, requisitioning bank statements which revealed cash deposits before the issuance of cheques, proving the transactions were not genuine. The fabricated bank statements misled the AO during the original assessment. The Court held that the Assessee failed to establish the identity, creditworthiness, and genuineness of the transactions, which are deeper than mere documentation. Conclusion: The Court concluded that the Assessee did not satisfactorily discharge the onus of proof. The Tribunal failed to consider the significant surrounding circumstances and inquiries made by the AO. The substantial question of law was answered in favor of the Revenue, and the appeal was allowed with costs assessed at Rs. 20,000/-. The additions made by the AO were justified and sustainable.
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