2014 (7) TMI 600 - AT - Income Tax

Addition u/s 68 of the Act - Genuineness of investment Held that - There was no merit in the Revenue s grounds it could not be understood as to how the Revenue is contesting the issue, when Shri Chamundeswar Nath confirmed the amount as invested by him and also furnished the evidence with reference to his bank accounts and returns filed by him - all the four investors are assessees on record, and there is no dispute with reference to confirmations filed by them, as far as share application money receipts are concerned - If the AO has any doubt about the loans obtained by Shri Chamundeswar Nath, it is for the AO who is assessing the person to examine the credits AO does not have power to examine the source of the source and on the facts of the case, there is no merit in the Revenue s grounds at all Decided against Revenue.

Summary

Issues:
Revenue's appeal against the Commissioner of Income-tax(Appeals) V, Hyderabad's order for the assessment year 2009-10 regarding the acceptance of investment of Rs. 5 crores as genuine without confirmation from the Assessing Officer.

Analysis:
1. Acceptance of Investment: The Revenue raised four grounds challenging the acceptance of investment of Rs. 5 crores as genuine by the CIT(A) without confirmation from the Assessing Officer. The assessee company admitted total income of Rs. 11,32,423 for the assessment year 2009-10 but received share application money of Rs. 205.88 crores. The Assessing Officer added Rs. 19 crores to the income due to non-availability of confirmation letters for four persons. However, the CIT(A) deleted the addition of Rs. 19 crores after considering detailed submissions and evidences, stating that the provisions of Section 68 were not applicable as there was no reason to doubt the genuineness of the credits and the creditworthiness of the investors.

2. Assessing Officer's Remand Report: The Assessing Officer, in various remand reports, accepted the confirmation of investments by the investors, including Shri V. Chamundeswar Nath. Although there was an issue regarding the source of Rs. 5 crores claimed to be received from M/s. Suresh Productions, the assessee provided evidence of the transaction. The Assessing Officer doubted this transaction but the CIT(A) considered the bank statements, income-tax returns, and confirmation letters filed by the appellant, concluding that there was no reason to doubt the genuineness of the credits.

3. Grounds of Appeal: The Tribunal dismissed the Revenue's appeal after considering the contentions. It noted that all four investors were assessees on record, and there was no dispute regarding the confirmation of share application money receipts. The Tribunal highlighted that if the Assessing Officer had doubts about the loans obtained by Shri Chamundeswar Nath, it was within the Assessing Officer's jurisdiction to examine those credits, but the Revenue's grounds lacked merit as the Assessing Officer could not examine the source of the source. Therefore, the Tribunal rejected the Revenue's grounds and dismissed the appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 19 crores, emphasizing the genuineness of the credits and the lack of merit in the Revenue's grounds of appeal.