2016 (6) TMI 653 - HC - Income Tax

Addition u/s 68 - ITAT deleted the addition - Held that - The share application forms, it is in evidence, were destroyed by fire. The point raised by the Assessing Officer is that the FIR lodged by the assessee does not contain any mention to the share application forms allegedly destroyed during the fire. We are unable to attach any importance to the omission pointed out by the Assessing Officer. It is not humanly possible for a person who has suffered an accident by fire to give particulars of all the documents in the FIR, which were or may have been destroyed. Merely on the basis of this omission, it cannot be said that the assessee failed either to offer an explanation as regards the sum found credited in its books or that the explanation offered by it was not satisfactory - Decided in favour of assessee

Summary

Issues:
1. Addition under Section 68 by Assessing Officer
2. Deletion of additions by Tribunal
3. Destruction of share application forms
4. Appeal dismissal

Analysis:
1. The Assessing Officer made additions under Section 68 due to the absence of share application forms and shareholders before him. The CIT(A) upheld the additions. However, the Tribunal deleted the additions based on the assessee establishing the identity of share applicants and their income tax details. Citing precedents like CIT vs Orissa Corporation P. Ltd., the Tribunal held that the burden of proving share application money was discharged by the assessee, leading to the deletion of additions for multiple assessment years.

2. The revenue's advocate argued that the Tribunal overlooked the non-production of share application forms. The Court, however, noted that the forms were destroyed in a fire. The Assessing Officer's contention regarding the FIR's lack of mention of the destroyed forms was dismissed by the Court, stating it's unreasonable to expect all destroyed documents to be listed in such situations. As no other substantial point was raised, the Court found no legal question involved and dismissed the appeal.

3. The issue of the destruction of share application forms played a crucial role in the case. The Court's understanding of the practicality of detailing all lost documents in an FIR was pivotal in rejecting the revenue's argument. This aspect highlighted the importance of considering real-world circumstances and practical limitations in evaluating evidence and explanations provided by taxpayers in such cases.

4. Ultimately, the Court's decision to dismiss the appeal signifies the importance of factual considerations and adherence to legal precedents in tax matters. The judgment reinforces the principle that meeting the burden of proof, establishing identities, and complying with legal requirements are essential in addressing additions under Section 68 of the Income Tax Act.