2023 (7) TMI 1077 - AT - Income Tax

Addition u/s 68 - accommodation entry receipts - basis for dismissing the vortex of evidences is the fact that the notice u/s 133(6) of the Act issued by the AO was returned unserved - HELD THAT - We find that in the case in hand, the investors throughout have confirmed the investment and no material has been led by the AO to even allege that such investment was made from the coffers of the assessee company as it is not the case of the Revenue that the assessee has purchased cheque by paying cash to the investor company. The investors are corporate entities duly assessed to tax and have made investment through banking channel from their own sources which fact has neither been denied nor rebutted in the assessment nor by the first appellate authority. This is also evident from the chart exhibited elsewhere. Considering all we are of the considered opinion that the assessee has discharged the primary onus cast upon it by provisions of section 68 of the Act. It is not the case of the Revenue that the assessee is a beneficiary of accommodation entry. For AY under consideration is Assessment Year 2012-13 and for this Assessment Year, the assessee is not required to establish source of source. Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of addition made under Section 68 of the Income-tax Act, 1961.
2. Genuineness and creditworthiness of share applicants.
3. Compliance with statutory notices under Section 133(6) of the Act.

Summary:

Issue 1: Deletion of Addition Made Under Section 68 of the Income-tax Act, 1961
The Revenue's appeal contested the CIT(A)'s order, which deleted an addition of Rs. 5,79,99,060/- made by the Assessing Officer (AO) under Section 68 of the Income-tax Act, 1961. The AO had added this amount to the assessee's income, questioning the genuineness and creditworthiness of the share premium received.

Issue 2: Genuineness and Creditworthiness of Share Applicants
The AO scrutinized the assessee's return, focusing on "Large Share Premium Received." Notices issued under Section 133(6) to share applicants went unanswered. The AO doubted the creditworthiness of the share applicants, citing that they had no business activities, insufficient bank statements, and suspicious financial transactions. Despite the assessee providing balance sheets, confirmations, share application forms, ITRs, and bank statements, the AO added the amount under Section 68.

Issue 3: Compliance with Statutory Notices Under Section 133(6) of the Act
The CIT(A) reviewed the assessee's submissions and various judicial decisions, concluding that the share applicants had sufficient funds and the assessee had discharged its initial onus under Section 68. The CIT(A) found that the AO's reliance on the non-compliance of notices under Section 133(6) was insufficient for making the addition. The Tribunal upheld this view, citing Delhi High Court's judgment in PCIT Vs. Radius Industries, which stated that non-compliance with Section 133(6) notices alone cannot justify additions under Section 68.

Conclusion:
The Tribunal found that the assessee provided comprehensive details, including investor identities, PANs, bank statements, and financial statements. The AO's dismissal of these evidences based solely on unserved notices under Section 133(6) was not justified. The Tribunal referred to judicial precedents, emphasizing that the burden of proof under Section 68 requires proper investigation by the AO. The Tribunal directed the AO to delete the addition of Rs. 5,79,99,060/-, dismissing the Revenue's appeal. The order was pronounced on 31.05.2023.