2017 (7) TMI 1173 - HC - Income Tax

Addition u/s.68 - assessee neither proved the identity of the share applicant nor substantiated the credit worthiness of the share applicant and hence failed to discharge its onus u/s.68 - Held that - The application which was made by the applicant was by account payee cheque in the name of the company or in the name of the assessee, therefore, the assessee cannot be assessed for the applicant, who is paid by the account payee cheque. No substantial question of law arises in the appeal.

Summary

Issues:
Challenging Tribunal's judgment on appeal, substantial questions of law framed by the appellant, assessment of payment made by account payee cheque, dismissal of the appeal.

Analysis:
1. The appellant challenged the Tribunal's judgment, which allowed the appeal of the assessee partially and the department's appeal for statistical purposes. The Tribunal reversed the findings of the CIT(A) and deleted an addition made under section 68 of ?78,00,000. The appellant raised substantial questions of law regarding the justification of the Tribunal's decision. The appellant questioned the legal basis for reversing the findings without proper proof of the share applicant's identity and creditworthiness, failing to meet the onus under section 68.

2. The Tribunal's decision to delete the addition under section 68 was based on the details of parties produced by the assessee, which the Tribunal deemed sufficient to not trigger the provisions of section 68. The appellant contended that the Tribunal's reasoning was not legally justified, considering the lack of evidence regarding the share applicant's identity and creditworthiness. The appellant sought clarification on whether the details provided by the assessee were indeed substantial enough to warrant the deletion of the addition under section 68.

3. The judgment highlighted that the payment made by the applicant was through an account payee cheque in the name of the company or the assessee. It was emphasized that the assessee cannot be held accountable for the applicant when payment is made through an account payee cheque. This aspect was crucial in determining the liability and responsibility concerning the transaction in question.

4. Ultimately, the High Court concluded that based on the payment method and the circumstances surrounding the case, no substantial question of law arose in the appeal. Consequently, the appeal was dismissed by the court, affirming the Tribunal's decision regarding the addition made under section 68. The dismissal of the appeal signified the court's acceptance of the Tribunal's reasoning and decision in the matter.