2017 (7) TMI 368 - HC - Income Tax

Unexplained credit under section 68 - Held that - Assessee had placed before the AO the following documents of the investing companies Memorandum of Association, Articles of Association, certificates of incorporation, bank accounts indicating the source of payment, copy of confirmations, Income Tax particulars, audited balance sheets, Profit and Loss Account etc. AO disregarded the above documents and came to the conclusion that transaction of receiving money as share capital was not a genuine one primarily because the premium charged by the Assessee was much higher than the prevalent market trend. As rightly observed by the CIT (A) unless the AO had brought on record some material to show that confirmation and other evidence placed by the Assessee was not genuine, he could not have simply discarded the documents produced by the Assessee. The Court too finds that there is no discussion of the above documents by the AO. In the circumstances, the conclusion reached by the CIT(A) that the addition under Section 68 of the Act was not justified appears to be unexceptionable.

Issues involved:
Delay in re-filing the appeal, delay in filing the appeal, appeal under section 260A of the Income Tax Act, deletion of addition made by the Assessing Officer under section 68 of the Act, consideration of documents by the Assessing Officer, remand for fresh consideration by the ITAT, justification of addition under Section 68 of the Act, substantial question of law.

Analysis:
1. *Delay in re-filing the appeal and delay in filing the appeal*: The court allowed the applications for delay in re-filing and filing the appeal. The delay was condoned in both cases.

2. *Appeal under section 260A of the Income Tax Act*: The appeal was filed by the Revenue against an order passed by the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 2009-10. The issue raised concerned the deletion of addition made by the Assessing Officer on account of alleged unexplained credit under section 68 of the Act.

3. *Deletion of addition made by the Assessing Officer under section 68 of the Act*: The Commissioner of Income Tax (Appeals) deleted the addition, which was confirmed by the ITAT. The Revenue's appeal on this aspect was dismissed by the ITAT, leading to the present appeal.

4. *Consideration of documents by the Assessing Officer*: The Assessee had provided various documents to the Assessing Officer, including Memorandum of Association, Articles of Association, certificates of incorporation, bank accounts, confirmations, Income Tax particulars, and audited financial statements. However, the AO disregarded these documents and concluded that the transaction was not genuine based on the premium charged by the Assessee.

5. *Remand for fresh consideration by the ITAT*: The Revenue insisted on remanding the case to the ITAT for a fresh consideration since there was no discussion on merits. However, the Court found that the conclusion reached by the CIT(A) was unexceptionable as there was no substantial discussion by the AO on the documents provided by the Assessee.

6. *Justification of addition under Section 68 of the Act*: The Court agreed with the CIT(A) that the addition under Section 68 of the Act was not justified, as the AO did not provide any material to show that the documents produced by the Assessee were not genuine.

7. *Substantial question of law*: The Court found that no substantial question of law arose from the impugned order of the ITAT, leading to the dismissal of the appeal.

This detailed analysis covers the various issues involved in the judgment, including the appeal under the Income Tax Act, consideration of documents, and the justification for the addition made by the Assessing Officer.

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