2022 (5) TMI 727 - AT - Income Tax

Unexplained cash credit in view of section 68 - three ingredients as liable to be proved on behalf of the assessee i.e. Identity of the shareholder, Genuineness of the transaction Credit worthiness of the shareholder - HELD THAT - The assessee has given the address, PAN, certificate of incorporation, Memorandum and Articles of Association of the above subscriber who have subscribed to the shares. To prove the creditworthiness of the subscribers, the appellant has submitted the certificate of source of fund, balance-sheet, Profit Loss A/c and Return of income of share applicants. To prove the Genuineness of above share transaction, appellant has submitted, Copy of Cheque, Copy of Cheque Deposit Slip, Copy of Bank Statement of M/s. Moongipa, Copy of Share Certificate Counterfoil, Copy of Extract of Minutes of BOD Meeting, Copy of source of Funds Certificate, Copy of ITR Acknowledgement, Copy of Audit Report along with Balance-Sheet, Copy of Certificate of Incorporation, Copy of Memorandum Articles of Association Company Master Data showing status active. The facts of the present case are quite identical to the facts of the assessee s own case and other sister concern cases M/S. SHIVA SHAKTI ENCLAVES PVT LTD. 2021 (6) TMI 325 - ITAT MUMBAI , M/S MOONGIPA DEV. INF. LTD. 2021 (5) TMI 156 - ITAT MUMBAI and M/S. MOONGIPA DEVELOPMENT AND INFRASTRUCTURE LTD. 2020 (12) TMI 768 - ITAT MUMBAI , M/S BINI BUILDERS P. LTD. 2021 (5) TMI 186 - ITAT MUMBAI and M/S. BINI BUILDERS PVT. LTD. 2020 (3) TMI 595 - ITAT MUMBAI . Thus we delete the addition and decide this issue in favour of the assessee against the revenue.

Summary

Issues Involved:
1. Initiation of reassessment proceedings under section 147.
2. Reasons to believe for escaped assessment under section 147.
3. Confirmation of assessment order under section 143(3) read with section 147 against the principles of natural justice.
4. Addition of Rs. 82,50,000/- as unexplained cash credit under section 68.
5. Charging of interest under sections 234A, 234B, and 234C.
6. Initiation of penalty proceedings under section 271(1)(c).

Issue-wise Detailed Analysis:

Issue Nos. 1 & 2:
The assessee did not press these issues during the argument. Therefore, these issues were decided in favor of the revenue against the assessee.

Issue No. 3:
The assessee argued that the issue was covered by the decision of ITAT in the sister concern cases. The Tribunal found that the facts in this case were identical to those of earlier years and sister concerns. The primary onus was on the assessee to prove the identity of the investor, creditworthiness of the investors, and genuineness of the transactions. The assessee provided extensive documentary evidence, including share application forms, cheques, bank statements, share certificates, financial statements, and tax returns of the investor entities. The Tribunal concluded that the assessee had successfully discharged the onus under section 68, and the revenue failed to rebut the assessee's evidence. The sole basis for the addition was a statement recorded during a survey, which was retracted and held to have little evidentiary value without credible evidence. The Tribunal deleted the addition, following the earlier decisions in the assessee’s own case and sister concerns.

Issue No. 4:
This issue was consequential in nature and did not require specific adjudication.

Issue No. 5:
This issue was deemed premature and was dismissed.

Issue No. 6:
This issue was formal in nature and did not require any adjudication.

Conclusion:
The appeal filed by the assessee was allowed. The Tribunal ordered the deletion of the addition of Rs. 82,50,000/- and instructed the Assessing Officer to recompute the assessee’s income accordingly. The order was pronounced in the open court on 28/04/2022.