2014 (4) TMI 812 - AT - Income Tax

Deletion made u/s 68 of the Act Onus to prove Creditworthiness of the creditors Held that - The assessee has given the confirmation in respect of all the creditors, copy of their income tax returns, identity proof, PAN proof, balance sheet, copy of bank statement as well as source of funds from where they invested in the share capital - the onus is upon the assessee to prove the credit in his books of account - To discharge such onus, the assessee has to establish the identity of the creditor, the creditworthiness of the creditor and genuineness of the transaction - the identity of the share applicants cannot be doubted - All the money has come by cheque, all the share applicants have confirmed the same and the amount is duly debited in the share applicants bank account - the genuineness of the transactions also cannot be doubted - the capital of each and every creditor is much more than the investment made by him in the share capital - The amount has duly been disclosed in their balance sheet which is also furnished by the assessee before the AO - the assessee was able to discharge the onus of proving the credit in the form of share application money of its books of account thus, there was no infirmity in the order of the CIT(A) Decided against Revenue.

Summary

Issues:
- Deletion of addition of Rs.23,50,000/- made by the AO under section 68 of the IT Act, 1961.

Analysis:
The judgment by the Appellate Tribunal ITAT Delhi involved the issue of the Revenue appealing against the order of the CIT(A) regarding the deletion of an addition of Rs.23,50,000/- made by the Assessing Officer under section 68 of the IT Act, 1961 for the assessment year 2003-04. The Revenue contended that the CIT(A) erred in deleting the addition, and the other grounds raised by the Revenue were in support of this main ground.

The facts of the case revealed that the assessee company had received share application money from various parties during the relevant accounting year. The Assessing Officer had added the amount to the assessee's income under section 68 as he believed that the income or capital of the share applicants was not sufficient to justify the credit. However, the CIT(A) accepted the assessee's evidence and contentions, leading to the deletion of the addition, which prompted the Revenue to file the appeal.

Upon examination of the evidence and arguments presented by both sides, the Tribunal found that the assessee had fulfilled the onus of proving the credit in its books of account. The Tribunal emphasized that the assessee had established the identity, creditworthiness, and genuineness of the transactions with the share applicants. The Tribunal noted that all creditors were income tax assesses, provided their PAN and income tax returns, and the share application money was transacted through cheques, confirming the genuineness of the transactions. Additionally, the Tribunal highlighted that the capital of each creditor exceeded the investment in share capital, as reflected in their balance sheets submitted to the Assessing Officer. Consequently, the Tribunal concluded that the assessee had successfully discharged the onus of proving the creditworthiness of the share application money, and upheld the CIT(A)'s decision to delete the addition.

In the final verdict, the Tribunal dismissed the Revenue's appeal, affirming the decision to delete the addition of Rs.23,50,000/- made by the Assessing Officer under section 68 of the IT Act, 1961 for the assessment year 2003-04. The judgment was pronounced in open court on 25th October 2013.