2023 (7) TMI 1264 - AT - Income Tax

Addition u/s 68 - Bogus share transactions - as per AO companies were operated by a single person and these were not in existence, but operated by some entry provider, who issued cheques in favour of the beneficiaries in lieu of cash - HELD THAT - As transactions have been made through banking channel, entries are duly reflected in the bank accounts of both the parties. Share applicant companies have furnished complete Income tax details alongwith their respective bank statements and it is not the case of the AO that the assessee has purchased cheque by paying cash, nor there is any allegation or suspicion on the documentary evidences furnished by the assessee. For discharging the initial onus cast by section 68 assessee has to establish (1) identity, (2) credit, worthiness and (3) genuineness of the transaction. Once the assessee proves all these three things, his onus is discharged. Facts on records show that the assessee has successfully discharged the initial onus cast upon it. We do not find any merit in the additions made by the AO and do not find any reason to interfere with the findings of the ld. CIT(A). Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the issue of addition of Rs.10.89 crores made by the Assessing Officer under section 68 of the Income-tax Act, 1961.

Facts and Decision:
The Assessing Officer found that the assessee received share application money from 19 share applicants, but shares were not allotted. Notices issued under section 133(6) were unserved for some applicants. An inspector's report revealed discrepancies in the addresses provided by the assessee. The Assessing Officer concluded that the companies were paper entities used to transfer funds. The ld. CIT(A) deleted the addition, stating the assessee proved identity and genuineness. The Tribunal found the assessee discharged its onus by proving identity, credit worthiness, and genuineness of the transactions. The appeal of the Revenue was dismissed.

Key Observations:
The Assessing Officer noted discrepancies in addresses and lack of business activity by share applicants. The ld. CIT(A) accepted the assessee's proofs of identity and genuineness. The Tribunal found the assessee successfully proved identity, credit worthiness, and genuineness, discharging its onus under section 68 of the Act.

Conclusion:
The Tribunal upheld the ld. CIT(A)'s decision to delete the addition, stating the assessee fulfilled the requirements of section 68. The Tribunal found no merit in the Assessing Officer's additions and dismissed the Revenue's appeal.