2011 (8) TMI 1328 - AT - Income Tax

Summary

Issues involved: Department's appeal against order dated 01.10.2009 by CIT(A) and Assessee's cross objections.

Department's Appeal:
1. Grounds of appeal included erroneous order by CIT(A).
2. Addition of Rs. 25,00,000 u/s 68 as unexplained cash credit and Rs. 50,000 as commission.
3. AO's observations on failure to prove credit-worthiness of creditors and genuineness of transactions.
4. AO's reasoning on unaccounted money routed through bank accounts.
5. CIT(A) deleted the AO's addition.

Assessee's Cross Objections:
1. Challenge to assessment order legality and reopening under u/s 147.
2. Request to quash assessment order.

Details of Department's Appeal:
- AO noted receipt of share capital of Rs. 25,00,000 from 18 parties.
- Parties did not respond to summons or provide details.
- Assessee failed to produce parties or confirmations.
- AO added unaccounted money as share capital.
- CIT(A) deleted the AO's addition.
- Department appealed, citing failure to prove credit-worthiness and genuineness.
- Assessee defended, claiming addition was baseless.

Judgment and Analysis:
- Tribunal reviewed evidence submitted by assessee.
- Assessee fulfilled initial burden under u/s 68 by providing details of share applicants.
- AO did not find discrepancies or conduct independent verification.
- Tribunal cited precedents where primary onus was considered discharged.
- CIT(A)'s decision to delete the addition was upheld based on lack of error.
- Appeal by Department was dismissed, cross objections withdrawn.

This judgment highlights the importance of fulfilling the burden of proof in cases of unexplained cash credits under section 68 of the Income Tax Act. The Tribunal emphasized the need for thorough verification by tax authorities and upheld the CIT(A)'s decision to delete the addition based on the evidence provided by the assessee.