2017 (5) TMI 1748 - AT - Income Tax

Addition u/s 68 - Bogus LTCG - CIT(A) deleted the impugned addition - HELD THAT - CIT(A) has analysed the issue in a proper perspective in accordance with the law by drawing support from the decisions rendered by Hon ble High Courts. CIT(A) has specifically observed that the assessee has discharged the burden of proof placed upon it u/s 68 of the Act where as the assessing officer has failed to rebut the same. Even though the assessee has offered to produce Mr. Mukesh Chokshi before the AO yet the AO did not order for production. Under these set of facts we are of the view that no interference is called for in the decision rendered by Ld CIT(A) on this issue. Accordingly we affirm the same. - Decided against revenue.

Summary

Issues:
- Appeal challenging deletion of addition made by assessing officer under section 68 of the Income Tax Act in assessment year 2010-11.

Analysis:
1. Facts and Background: The assessee, engaged in steel and iron materials business, declared a turnover of ?202.99 crores and net profit of ?5.91 crores during the relevant year. The assessing officer (AO) added ?1.65 crores as unexplained share capital & premium received by issuing shares to a company linked to a group known for providing accommodation entries for speculation profits. The AO considered the share capital as bogus and fabricated based on group's activities.

2. Assessee's Response: The director of the assessee company maintained that the share capital was received through cheques and offered to produce the group's head to confirm past transactions. The company submitted financial statements and confirmation letters from the investor to establish creditworthiness. The AO disregarded these proofs, leading to the addition of the share capital amount.

3. Appellate Proceedings: The Commissioner of Income Tax Appeals (CIT(A)) deleted the addition, noting that similar addition in the previous year was deleted and the assessee provided necessary documents proving identity, transaction genuineness, and shareholder creditworthiness. The CIT(A) highlighted the AO's failure to rebut the evidence furnished by the assessee and emphasized the legal requirement to not draw adverse inferences without proper refutation.

4. Judgment and Conclusion: The Appellate Tribunal upheld the CIT(A)'s decision, emphasizing that the burden of proof under section 68 of the Act was discharged by the assessee, and the AO did not order the production of the group head despite the offer. The Tribunal found no reason to interfere with the CIT(A)'s ruling, affirming that the addition of ?1.65 crores was unjustified and should be deleted. The appeal filed by the revenue was dismissed, and the decision was pronounced on 5th May 2017.

This detailed analysis showcases the legal proceedings, the arguments presented by both sides, the evidentiary support provided by the assessee, and the subsequent decisions of the authorities involved in resolving the issue of the disputed addition under section 68 of the Income Tax Act for the assessment year 2010-11.