2016 (2) TMI 114 - AT - Income Tax

Addition u/s. 68 - CIT(A) deleted the addition - Held that - CIT(A) has rightly deleted the addition in dispute because the assessee has furnished all necessary documentary evidence for substantiating the claim in dispute. The issue in dispute is also squarely covered by the judgment of PR. CIT vs. Rakam Money Matters Pvt. Ltd. 2015 (10) TMI 2057. In view of the above we do not find any infirmity in the order of the Ld. CIT(A) hence we uphold the impugend order on the issue in dispute and dismiss the Apppeal filed by the Revenue. - Decided in favour of assessee

Summary

Issues:
- Appeal against Ld. CIT(A)'s order deleting addition made under section 68
- Failure to establish creditworthiness and genuineness of share applicants
- Consideration of landmark judgment by Ld. CIT(A)
- Assessee's submission of necessary documentary evidence
- Applicability of previous High Court judgments

Analysis:
1. The Revenue filed an appeal against the Ld. CIT(A)'s order dated 31.12.2012, challenging the deletion of an addition of Rs. 59,00,000 made under section 68 of the Income Tax Act. The grounds of appeal included contentions that the Ld. CIT(A)'s order was erroneous and contrary to facts and law, emphasizing the failure of the 17 share applicants to establish creditworthiness and genuineness of transactions.

2. The case involved the assessment year 2007-08, where the assessee initially declared an income of Rs. 2,50,220. Subsequently, the assessment was completed by the Assessing Officer (AO) under section 143(3) with an addition of Rs. 59,00,000 under section 68 of the Act. The assessee then appealed before the Ld. CIT(A), who partially allowed the appeal on 31.12.2012.

3. During the appeal before the Tribunal, the Revenue, represented by the Ld. DR, argued that the Ld. CIT(A) had wrongly deleted the addition without properly examining the genuineness, creditworthiness, and identity of the share applicants. The Revenue contended that the share applicants were benami persons of the company, and the addition should not have been deleted.

4. On the other hand, the Assessee's counsel supported the Ld. CIT(A)'s order, presenting a Synopsis with relevant case laws and judgments. The counsel highlighted that the issue was favorably covered by a High Court decision in the case of PR. CIT vs. Rakam Money Matters Pvt. Ltd. The counsel emphasized that the assessee had provided substantial documentary evidence to substantiate the transactions in question.

5. The Tribunal reviewed the orders of the Revenue Authorities, the Synopsis filed by the Assessee's counsel, and the relevant High Court judgment. The Tribunal noted that the Ld. CIT(A) had rightly deleted the addition based on the documentary evidence furnished by the assessee. The Tribunal referenced specific details provided by the assessee, including names, addresses, PAN details, bank account information, and confirmations from investors, which supported the genuineness of the transactions.

6. Further, the Tribunal cited legal precedents from various High Court cases, emphasizing the importance of proving the identity of subscribers, genuineness of transactions, creditworthiness of subscribers, and providing relevant details to the department. The Tribunal concluded that the Ld. CIT(A) had correctly applied the law and upheld the deletion of the addition based on the documentary evidence and legal principles cited.

7. Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the Ld. CIT(A)'s order and upholding the deletion of the addition made under section 68. The Tribunal found no infirmity in the Ld. CIT(A)'s decision, considering the documentary evidence provided by the assessee and the applicable legal precedents.