2018 (9) TMI 1159 - AT - Income Tax

Rectification of mistake - Addition u/s 68 - whether the assessee has proved the genuineness of the transaction at its hands by proving the identity, creditworthiness and genuineness of the creditors? - Held that - Since, neither the Assessing Officer at the time of remand or the learned Commissioner (Appeals) while deciding the appeals have doubted the identity, creditworthiness and genuineness of the transaction, assessee s claim had to be accepted, more so, when the creditors have confirmed the credits appearing in their name. SEBI report is not in the case of the assessee but in case of persons some of whom are share applicants of the assessee. The assessee is required to prove the source of fund at its hands and cannot be called upon to prove the source of source. Since, the Department has failed to demonstrate any mistake of the nature as contemplated under section 254(2) of the Act the present application is bound to fail. What the Department wants by filing this application is a review of the earlier decision of the Tribunal which is not permissible under the provision of section 254(2) of the Act which is very limited in its scope and ambit and only applies to rectification of mistake apparent on the face of record. With the aforesaid observations, we decline to entertain the misc. application filed by the Revenue.

Summary

Issues Involved:
1. Recall of the Tribunal's order under section 254(2) of the Income Tax Act, 1961.
2. Consideration of SEBI's final order dated 31.03.2015 in the Tribunal's decision.
3. Examination of the genuineness and creditworthiness of unsecured loans and share capital investments.

Issue-wise Detailed Analysis:

1. Recall of the Tribunal's order under section 254(2) of the Income Tax Act, 1961:
The Revenue filed an application under section 254(2) seeking recall of the Tribunal's order dated 29th April 2016. The Departmental Representative argued that the SEBI's final order dated 31.03.2015 was not considered during the Tribunal's decision, which could have influenced the outcome in favor of the Department. The Tribunal noted that the application did not specify any particular mistake or error in the order dated 29th April 2016. The Tribunal emphasized that its role is to adjudicate based on facts and materials presented during the hearing, not to conduct investigations. The Tribunal concluded that the Department's failure to present the SEBI order during the appeal hearing does not constitute an error apparent on record under section 254(2).

2. Consideration of SEBI's final order dated 31.03.2015 in the Tribunal's decision:
The Departmental Representative contended that the SEBI's final order, which was available but not presented during the appeal hearing, should have been considered. The Tribunal examined the SEBI order and found that it did not contain any adverse findings against the entities involved in the unsecured loans and share capital investments to the assessee. The SEBI order indicated that no prima facie evidence of orchestrated transactions by the entities was found, and the prohibition against them was lifted. The Tribunal concluded that the SEBI order would not have impacted the decision on the genuineness and creditworthiness of the transactions.

3. Examination of the genuineness and creditworthiness of unsecured loans and share capital investments:
The Tribunal reviewed the factual position and noted that during the assessment proceedings, the Assessing Officer had examined the unsecured loans and share capital investments. The Assessing Officer found the transactions to be through banking channels and the subscribers to be identifiable. However, the creditworthiness and genuineness were doubted based on the interim SEBI order. The Commissioner (Appeals) directed the Assessing Officer to conduct further inquiries, which confirmed the genuineness of the transactions. The Tribunal found that during the appeal hearing, the Department did not present any new material to challenge the findings of the Assessing Officer or the Commissioner (Appeals). The Tribunal concluded that the Department's failure to provide adverse material meant the Tribunal had to uphold the Commissioner (Appeals)'s decision.

Conclusion:
The Tribunal dismissed the Revenue's application for recall, emphasizing that section 254(2) is limited to rectifying mistakes apparent on record and does not permit a review of the decision. The Tribunal found no error in its original order and concluded that the SEBI's final order did not impact the genuineness and creditworthiness of the transactions. The application was deemed not maintainable, and the Tribunal declined to entertain it. The order was pronounced in open court on 10.09.2018.