2017 (9) TMI 247 - AT - Income Tax

Addition u/s 68 on account of unexplained sources - proof of identity and creditworthiness and the genuineness of the Companies - discharge of burden of proof - non cooperation by assessee - exparte qua assessee - Held that - AO has passed assessment order u/s 143 by holding that assessee has failed to discharge the burden cast upon it to satisfy the genuineness and creditworthiness of the companies passed order u/s. 143(3) of the Act by assessing the income of the assessee at ₹ 2,46,51,592/-In view of evidence filed by the assessee, the onus had shifted to the AO, but the AO has not been able to controvert the evidence filed by the assessee. In view of aforesaid discussions, we are of the considered view that the assessee remain non-cooperative before the AO and did not file requisite documents before the AO, as asked by him and as a result thereof,we are deciding the present appeal exparte qua assessee and the AO did not verify the documents furnished by the Assessee and also not done the independent inquiry and verification properly. Therefore, we think it proper to set aside the issue in dispute to the file of the AO to decide the same afresh, after making independent inquiry and verification, as deem fit. However, the Assessee is also directed to submit all the necessary documents, as asked by the AO during the assessment proceedings and fully cooperate with the AO and did not take any unnecessary adjournment. Accordingly, the issue in dispute is set aside to the file of the AO with the aforesaid directions. Appeal filed by the Revenue allowed for statistical purposes.

Summary

Issues:
1. Addition of share application money without confirmations from parties
2. Non-cooperation of assessee in furnishing details during assessment proceedings

Detailed Analysis:

1. Addition of Share Application Money:
The appeal by the Revenue challenged the deletion of the addition of ?1,25,54,000 disallowed by the Assessing Officer (AO) on account of share application money received by the assessee company. The AO observed that the assessee failed to submit confirmations from the parties who had subscribed to the share capital during the financial year 2004-05. The AO added the amount as unexplained sources under section 68 of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) partly allowed the appeal of the assessee, leading to the Revenue's appeal before the Tribunal. The Tribunal noted that the appellant had discharged the burden of proof regarding the identity and creditworthiness of the creditors and the genuineness of the transactions. The Tribunal found that the AO had not been able to controvert the evidence filed by the appellant. Therefore, the Tribunal concluded that the addition made under section 68 was not sustainable in law and deleted the addition.

2. Non-cooperation of Assessee:
The Tribunal highlighted the non-cooperation of the assessee during the assessment proceedings. The assessee failed to furnish requisite details and information despite multiple opportunities provided by the AO. The AO noted that the assessee deliberately adopted delay tactics in providing details of persons who had subscribed to the share premium account or share capital. The AO emphasized the importance of the assessee proving the identity of the creditor/subscriber, the genuineness of the transaction, and the creditworthiness, which the assessee failed to do. The Tribunal acknowledged that the assessee remained non-cooperative before the AO and did not submit necessary documents as requested. In light of this non-cooperation, the Tribunal set aside the issue in dispute to the file of the AO to decide afresh after conducting an independent inquiry and verification. The Tribunal directed the assessee to fully cooperate with the AO and submit all necessary documents without unnecessary adjournments.

In conclusion, the Tribunal allowed the appeal filed by the Revenue for statistical purposes, emphasizing the importance of cooperation and providing necessary evidence during assessment proceedings to avoid disputes regarding additions made under the Income Tax Act.