2024 (6) TMI 1233 - HC - Income Tax

Addition u/s 68 - Tribunal affirming the order passed by CIT(A) by which the addition made by the assessing officer stood deleted - HELD THAT - Tribunal as noted that pursuant to the notice issued under Section 133(6) of the Act by the assessing officer, the share applicants have furnished the evidence called for by the assessing officer and established their identity, creditworthiness and the genuineness of the transaction. Tribunal noted that summons issued to the director by the assessing officer was complied with and he has given statement on oath by appearing in person before the assessing officer. If we turn back to the findings recorded by the CIT(A), we find that the matter was taken up by the PCIT under Section 263 of the Act and an order was passed holding that the reassessment order was erroneous and prejudicial to the interest of the revenue for not making profit and sufficient enquiries into the share capital raised by the assessee during the relevant year. In the said order dated 10th March, 2014 the CIT(A) had set aside the assessment order and issued three specific directions. These directions were scrupulously taken into consideration and we find from the order passed by the CIT(A), the entire factual aspect has been discussed which have been noted by the assessing officer while completing the assessment. Thus, we find that the matter to be entirely factual and no substantial questions of law arise for consideration. Revenue appeal dismissed.

Summary

Issues:
1. Appeal against order under Section 260A of the Income Tax Act, 1961 regarding addition under Section 68 for assessment year 2009-10.

Analysis:
1. The revenue appealed against the Tribunal's order deleting the addition under Section 68 of the Income Tax Act, 1961, amounting to Rs. 11,07,50,000. The revenue contended that the Tribunal erred in law by relying solely on the assessee's paper submissions without verifying the identity, creditworthiness of shareholders, and genuineness of the transaction. The revenue argued that the Tribunal failed to follow the Supreme Court's directive to investigate the creditworthiness of creditors/subscribers and verify the genuineness of transactions.

2. The Tribunal's order was challenged on the grounds that it lacked a detailed discussion of facts and did not require shareholders to appear before the assessing officer despite summons. However, the Tribunal's order was found to be a speaking order as it extensively discussed the documents submitted by the assessee, including share application and allotment, bank statements, ITA acknowledgments, and audited financial statements. The Tribunal noted that the share applicants had provided evidence to establish their identity, creditworthiness, and the genuineness of the transaction in response to the assessing officer's notice under Section 133(6) of the Act.

3. The CIT(A) had previously set aside the assessment order under Section 263 of the Act, directing further inquiries into the share capital raised by the assessee. The CIT(A) discussed the factual aspects thoroughly, addressing the concerns raised by the assessing officer. Ultimately, the High Court found that the matter was factual in nature, and no substantial questions of law arose for consideration. Therefore, the appeal was dismissed, and the connected application was closed.