2020 (2) TMI 1143 - AT - Income Tax

Addition u/s 68 - allegation that assessee has introduced cash in the form of share capital thorough the racket of entry provider operating in Kolkata - information of which was provided by the Investigation Wing, Kolkata - CIT-A deleted addition - HELD THAT - When the assessee has produced all the relevant documents as narrated by the ld. CIT(A) in para 5.11 above then onus casted u/s 68 of the Act has been duly discharged by the assessee. Once the assessee has discharged his primary onus then burden is shifted on the AO to bring on record the contrary material or facts to disprove evidence produced by the assessee. The AO except narrating the modus operandi as disclosed by Shri Anand Sharma, has not referred to any documentary evidence or other material to support his view and findings. Therefore, the findings of the AO are merely an assumption and based on conjecture and surmises and not on any tangible material. The existence of the company is not in dispute as it is established from the record. In the case in hand, the AO has not brought any material on record as a result of any enquiry. The commission issued to the DIT (Inv), Kolkata has not yielded any result. Thus except on the reliance of the statement of Shri Anand Sharma, the AO was not having either any document in his possession or any other facts detected as an outcome of enquiry. The said statement of Shri Anand Sharma has not made any allegation regarding transaction of investment made by M/s. Abhishek Advisory Pvt. Ltd. Therefore, the documentary evidence produced by the assessee cannot be ignored or rejected. Hence, in view of the above facts and circumstances of the case, we do not find any error or illegality in the order of the ld. CIT(A). Thus the appeal of the Revenue is dismissed.

Issues Involved:
1. Deletion of addition made under Section 68 of the Income Tax Act, 1961.
2. Genuineness of share capital received by the assessee.
3. Credibility of the statement of Shri Anand Sharma.
4. Documentary evidence provided by the assessee.
5. Onus of proof under Section 68 of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made Under Section 68 of the Income Tax Act, 1961:
The Revenue's appeal was directed against the deletion of an addition of ?3,98,00,000/- made under Section 68 of the Income Tax Act, 1961. The Assessing Officer (AO) had added this amount as unexplained cash credit based on the statement of Shri Anand Sharma, who allegedly provided accommodation entries through various companies. However, the Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, noting that the AO failed to provide concrete evidence linking the assessee with the alleged accommodation entries.

2. Genuineness of Share Capital Received by the Assessee:
The assessee received share capital of ?3,98,00,000/- from M/s. Abhishek Advisory Pvt. Ltd. at a premium of ?790/- per share. The AO questioned the genuineness of this transaction, suspecting it to be an accommodation entry. However, the assessee provided comprehensive documentation, including the PAN card, income tax returns, and assessment orders of M/s. Abhishek Advisory Pvt. Ltd., to establish the legitimacy of the transaction. The CIT(A) found that the AO did not present any seized materials or corroborative evidence to prove that the share application money was an accommodation entry.

3. Credibility of the Statement of Shri Anand Sharma:
The AO relied heavily on the statement of Shri Anand Sharma, recorded during a search and survey action, to conclude that M/s. Abhishek Advisory Pvt. Ltd. provided accommodation entries. However, the CIT(A) noted that Shri Anand Sharma did not mention M/s. Abhishek Advisory Pvt. Ltd. as one of the companies controlled by him. Moreover, as of the date of the transaction, M/s. Abhishek Advisory Pvt. Ltd. was owned by group concerns of the assessee, not by Shri Anand Sharma.

4. Documentary Evidence Provided by the Assessee:
The assessee submitted various documents to prove the identity and creditworthiness of M/s. Abhishek Advisory Pvt. Ltd. and the genuineness of the transactions. These included the company's PAN card, income tax returns, assessment orders, and bank statements showing the transaction through banking channels. The CIT(A) found these documents sufficient to discharge the onus under Section 68 of the Income Tax Act, 1961, and noted that the AO did not provide any counter-evidence.

5. Onus of Proof Under Section 68 of the Income Tax Act, 1961:
The CIT(A) and the Tribunal emphasized that once the assessee had provided sufficient documentary evidence to prove the identity, creditworthiness, and genuineness of the transactions, the burden shifted to the AO to disprove these claims. The AO's reliance on the statement of Shri Anand Sharma without corroborative evidence was deemed insufficient. The Tribunal upheld the CIT(A)'s decision, stating that the AO's findings were based on assumptions and lacked tangible material.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the addition of ?3,98,00,000/- made under Section 68 of the Income Tax Act, 1961. The Tribunal concluded that the assessee had successfully discharged its onus by providing comprehensive documentary evidence, and the AO failed to provide any substantial counter-evidence. The appeal was dismissed, and the order was pronounced in the open court on 21/02/2020.

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