2023 (4) TMI 809 - AT - Income Tax

Unexplained cash credit u/s. 68 - Onus to prove - onus of proof u/s. 68 in the case of listed company - Assessee contended that it is a listed company with Bombay Stock Exchange, therefore, proviso to section 68 is not applicable and accordingly onus of proof u/s. 68 in the case of listed company is different compared to the onus that is required to be discharged in the case of private non listed company - whether CIT(A) grossly erred in giving relief to the assessee on the ground that it was a listed company, ignoring the law that provisions of Section 68 applied to one and all? - HELD THAT - Revenue failed to consider the first proviso to Section 68 of the Act which was introduced by the Finance Act, 2012 with effect from 01.04.2013 which specifically says where the assessee is a company, not being a company in which public or substantially interested . It is for this reason, the Ld. CIT(A) at Para 5.9 of his order clearly held that the assessee company is a listed company in which public are substantially interested and invocation of section 68 not applicable. Further the assessee submitted the confirmation, bank statement, Return of Income and Allotment Advice, etc. before the A.O. We also see from record that Shri Chintan N. Shah has appeared before the A.O. in response to the summons issued and also explained his source of investment in the share capital of the assessee company which was from the commission received from his brother in law in Dubai. Shri Harshal K. Shah who is the director in M/s. Akhil Retail Pvt. Ltd. and M/s. Shvansh Estate Pvt. Ltd. submitted the copy of the confirmation bank account and Profit and Loss account and balance sheet, in response to the summons issued by the A.O. Shri Harshal K. Shah submitted the share application money details through bank transactions and the loan taken from M/s. India Infraspace and M/s. Shree Ghantakarna Rolling Mills Pvt. Ltd. which is reflecting in the balance sheet. Thus primary onus that lay on the assessee to establish the identity, genuineness and creditworthiness of the assessee is being proved beyond doubt by the assessee. Further the assessee also proved source of source of the investment made by the three parties. The Ld. A.O. could not disprove the same with necessary evidences, therefore the question of invoking Section 68 does not arise. As relying on M/S. KRAFT LAMINATE, C/O. LAXMI TIMBER, NR. MAHALAXMI TEXTILE MILL 2022 (3) TMI 774 - ITAT AHMEDABAD , DARSHAN ENTERPRISE 2022 (1) TMI 605 - GUJARAT HIGH COURT and RANCHHOD JIVABHAI NAKHAVA 2012 (5) TMI 186 - GUJARAT HIGH COURT we have no hesitation in confirming the order passed by the Ld. CIT(A) deleting the addition made u/s. 68 of the Act. Decided in favour of assessee.

Summary

Issues Involved:
1. Genuineness of the share application money received by the assessee.
2. Applicability of Section 68 of the Income Tax Act, 1961.
3. Onus of proof in the case of a listed company versus a private non-listed company.

Summary:

Issue 1: Genuineness of the share application money received by the assessee
The Assessing Officer (AO) scrutinized the share application money received by the assessee from four parties and accepted the investment from M/s. Lesha Agro Foods Pvt. Ltd. but added Rs. 5.8 crores as unexplained cash credit under Section 68 of the Act for the remaining three investors. The assessee provided confirmations, bank statements, income tax returns, and other documents to prove the identity, genuineness, and creditworthiness of the investors. The CIT(A) deleted the addition made by the AO, stating that the assessee, being a listed company, had adequately explained the source of investment.

Issue 2: Applicability of Section 68 of the Income Tax Act, 1961
The CIT(A) noted that Section 68's proviso applies differently to listed companies compared to private non-listed companies. The assessee, being a listed company, had discharged its onus by providing necessary documentation and explanations. The Tribunal upheld the CIT(A)'s decision, emphasizing that the primary onus was on the assessee to establish the identity, genuineness, and creditworthiness of the investors, which was duly discharged.

Issue 3: Onus of proof in the case of a listed company versus a private non-listed company
The Tribunal observed that the Revenue's grounds were general and did not specifically address the deletion made by the CIT(A). The Tribunal reiterated that the assessee, as a listed company, had provided sufficient evidence to prove the genuineness of the transactions and the source of the investments. The Tribunal also referenced various judicial precedents supporting the view that the onus of proof shifts once the assessee provides prima facie evidence.

Conclusion:
The Tribunal dismissed the Revenue's appeal, confirming the CIT(A)'s order deleting the addition made under Section 68 of the Act. The Tribunal emphasized that the assessee had adequately discharged its burden of proof, and the AO had not provided sufficient evidence to counter the assessee's claims.