2020 (12) TMI 984 - AT - Income Tax

Unexplained cash credit u/s. 68 - HELD THAT - Assessee has filed all the necessary documents as required for substantiating its claim u/s. 68 - Assessee has discharged its initial onus which lay upon it by proving the identity and capacity of the share applicants and the genuineness of the transactions. It cannot be said that such a conclusion was unreasonable or perverse or passed on no evidence. Ld. CIT(A) has also relied upon the decision of the Hon ble Supreme Court of India in the case of CIT vs. Orissa Corporation Pvt. Ltd. 1986 (3) TMI 3 - SUPREME COURT . CIT(A) has deleted the addition in dispute, therefore, we are of the view that no interference is called for in the well reasoned order passed in the case of the assessee, accordingly the same is upheld and the appeal filed by the Revenue is dismissed.

Summary

Issues:
1. Addition of unexplained cash credit u/s. 68 of the I.T. Act, 1961.
2. Deletion of the addition of ?2,00,00,000 as unexplained cash credit by the Ld. CIT(A).

Issue 1: Addition of unexplained cash credit u/s. 68 of the I.T. Act, 1961:
The case involved the assessment of the assessee's return of income for A.Y 2012-13, where the AO made additions under section 68 of the Income Tax Act amounting to ?2 crore. The AO found discrepancies in the financial worth of the companies from which the assessee had received money. The Ld. CIT(A) partly allowed the appeal and deleted the addition of ?2 crores made by the AO on account of share capital and share premium. The Revenue appealed this decision before the Tribunal, arguing that the Ld. CIT(A) had not properly appreciated the investigation made by the AO and wrongly deleted the addition.

Issue 2: Deletion of the addition of ?2,00,00,000 as unexplained cash credit by the Ld. CIT(A):
During the hearing, the Ld. DR contended that the Ld. CIT(A) had not correctly assessed the documentary evidences filed by the assessee and had erred in deleting the addition. The Ld. CIT(A) had relied on various judgments to establish that the initial burden is on the assessee to explain the nature and source of share application money received. The Ld. CIT(A) found that the appellant had filed sufficient documents to establish the identities of the share applicants and the creditworthiness of the parties. The Ld. CIT(A) also noted that the AO had not provided any evidence to show that the investment made by the share applicants emanated from the assessee's coffers. Ultimately, the Tribunal upheld the decision of the Ld. CIT(A) and dismissed the appeal of the Revenue, stating that the assessee had discharged its initial onus by proving the genuineness of the transactions and the identity of the share applicants.

In conclusion, the Tribunal upheld the decision of the Ld. CIT(A) to delete the addition of ?2 crores as unexplained cash credit, as the assessee had successfully substantiated its claim under section 68 of the Income Tax Act. The Tribunal found that the assessee had fulfilled its burden of proof, and there was no reason to interfere with the well-reasoned order passed by the Ld. CIT(A).