2017 (9) TMI 521 - AT - Income Tax

Addition u/s 68 - burden of proof proving the identity, creditworthiness as well as the genuineness of the transactions of receipt of share capital - Held that - First Appellate Authority, has granted opportunity to the assessee by calling for the remand report from the Assessing Officer. So, in our view ample opportunity was given to the assessee by the revenue authorities to prove its claim. The assessee has not attempted to file any additional evidence before this Bench of the ITAT. Under these circumstances, the question of remanding the matter to the file of the Assessing Officer for giving the assessee fresh opportunity does not arise. Hence this request is rejected. Addition u/s 68 of the Act on the ground that the assessee has not proved the genuineness of the transactions. - Decided against assessee.

Summary

Issues:
1. Addition of unexplained share application money.

Analysis:
The appeal was filed against the order of the ld. Commissioner of Income Tax (Appeals) concerning the Assessment Year 2007-08. The Assessing Officer added &8377; 1,30,00,000/- to the total income of the assessee on account of unexplained share application money. The assessee, a company engaged in transformer distribution, had received share application money with a premium of &8377; 40/- totaling &8377; 1.25 crore. Despite multiple requests for evidence regarding the genuineness, creditworthiness, and transactions related to the share application money, discrepancies were found between the information submitted to the Registrar of Companies (ROC) and the ledger accounts. The Assessing Officer considered the share application money unexplained due to the failure to establish genuineness and discrepancies in the details provided. Penalty proceedings under section 271(1)(c) were initiated. The ld. First Appellate Authority confirmed this addition, noting mix-ups in names and amounts, disproportionate premium charges, and discrepancies between ledger details and ROC filings.

The assessee contended that it had proven the identity, creditworthiness, and genuineness of the share capital transactions with registered companies and provided evidence such as PAN numbers and cheque transactions. The ld. DR opposed, highlighting the disproportionate premium charges and lack of explanation. The ITAT held that adequate opportunity was given to the assessee to prove its claim, but no additional evidence was submitted. Merely furnishing PAN numbers did not establish the source or creditworthiness of the party. The Tribunal cited a previous case where the genuineness of transactions was not proven due to exorbitant share premium charges without justification. As the assessee failed to prove the genuineness of transactions, the ITAT upheld the ld. First Appellate Authority's decision and dismissed the appeal.

In conclusion, the ITAT upheld the addition of unexplained share application money, emphasizing the failure to justify the share premium charges and prove the genuineness of the transactions. The decision was based on legal precedents and the lack of satisfactory evidence provided by the assessee, leading to the dismissal of the appeal.