2019 (7) TMI 1864 - AT - Income Tax

Addition u/s 68 as unexplained cash credit - Bogus share application money received by the assessee - HELD THAT - It is well settled that in order to discharge the onus u/s 68 of the, the assessee must prove the identity of the creditor, the capacity of the creditor to advance money; and the genuineness of transaction. It is also well settled that after the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts to the department - assessee filed before the AO the relevant details and supporting documents with regard to issue of shares at a premium. A perusal of the assessment order clearly indicates that the AO without making any sort of inquiry has rejected the evidence filed by the assessee on the basis of conjectures and assumptions. Facts being so, we confirm the order of the Ld. CIT(A). Appeal filed by the revenue is dismissed. Reopening of assessment u/s 147 - want of approval of satisfaction for re-opening the case from the competent authority as required u/s 151 - HELD THAT - In the instant case, the return of income originally filed by the assessee on 30.09.2009 was processed u/s 143(1) of the Act -In the instant case, the AO has rightly issued notice u/s 148 for reopening the return of income processed u/s 143(1) of the Act. Accordingly we dismiss the cross-objection filed by the assessee.

Summary

Issues:
1. Addition of share application money u/s 68 of the Income Tax Act, 1961.
2. Validity of reopening the assessment under section 147.

Analysis:
1. Issue 1 - Addition of share application money u/s 68 of the Income Tax Act, 1961:
The appeal involved a dispute over the addition of ?70,000,000 as share capital and share premium under section 68 of the Income Tax Act, 1961. The Assessing Officer (AO) reopened the case based on information received regarding the issuance of shares at a high premium. The AO contended that the share premium was suspicious due to the disparity between the intrinsic value of shares and the premium received. However, the Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, stating that the appellant had proven the identity, genuineness of transaction, and the source of share application money. The CIT(A) emphasized that the share application money was received from established companies, and the AO failed to provide evidence of any undisclosed sources. The Tribunal upheld the CIT(A)'s decision, emphasizing the importance of the assessee meeting the burden of proof under section 68.

2. Issue 2 - Validity of reopening the assessment under section 147:
The cross-objection by the assessee challenged the validity of reopening the assessment under section 147. The assessee argued that there was no substantial material to justify the reopening. However, the Tribunal upheld the AO's decision to reopen the assessment, citing the wider latitude available to the AO under section 143(1) processing compared to section 143(3) assessment. Referring to legal precedents, the Tribunal concluded that the AO had valid reasons based on information provided by the Income-tax investigation wing, enabling the formation of a belief that income had escaped assessment. Therefore, the Tribunal dismissed the cross-objection filed by the assessee, affirming the validity of the assessment reopening under section 147.

In conclusion, the Tribunal dismissed the appeal filed by the revenue and the cross-objection filed by the assessee, upholding the deletion of the addition of share application money and confirming the validity of reopening the assessment under section 147. The decision was pronounced on 24/07/2019 by the Appellate Tribunal ITAT Mumbai.