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2022 (9) TMI 506 - AT - Income TaxAddition u/s 68 - Bogus share capital received - unexplained cash credits - adition to be made in the hands of the subscriber company or recipient s hands? - HELD THAT - DR before us could not dispute that since the addition has been made in the hands of the subscriber company, then the same amount cannot be added twice in recipient s hands u/s 68 - DR insisted that one to one transaction that is to say that the exactly same money has been received in the hands of the assessee has not been proved. No in the above contention of the ld. DR. It is not the case of the Revenue that the subscriber company has invested more than the amount it was added in its hands. In view of this, since the Revenue could not dispute the identity, creditworthiness of the subscriber as well as genuineness of the transaction, therefore, the addition made by the lower authorities is not sustainable and the same is accordingly ordered to be deleted. - Decided in favour of assessee.
Issues:
1. Treatment of share subscription as unexplained cash credits under section 68 of the Income Tax Act. 2. Burden of proof on genuineness of transaction and identity of share subscriber. 3. Confirmation of additions by the Commissioner of Income Tax (Appeals). 4. Dispute over the addition made by the Assessing Officer. 5. Comparison with a similar case and reliance on a tribunal decision. 6. Dispute over the one-to-one transaction and sustainability of the addition. Issue 1: Treatment of Share Subscription: The appeal contested the treatment of share subscription as unexplained cash credits under section 68 of the Income Tax Act. The Assessing Officer added Rs.1,00,00,000 as unexplained cash credits due to the assessee's failure to produce directors of the companies involved. The Commissioner of Income Tax (Appeals) upheld this addition. Issue 2: Burden of Proof: The counsel for the assessee argued that the initial burden to prove identity, creditworthiness of the share subscriber, and genuineness of the transaction was discharged. Documents like audited accounts, bank statements, and source of investment were submitted. The share subscriber company's compliance with tax authorities and absence of adverse evidence supported the genuineness of the transaction. Issue 3: Confirmation of Additions: The Commissioner of Income Tax (Appeals) confirmed the additions made by the Assessing Officer, leading to the appeal challenging the decision. Issue 4: Dispute Over Addition: The counsel highlighted that the subscriber company's addition of Rs.1,22,50,000 as unexplained credits under section 69A explained the source of funds in the hands of the share subscriber. This argument aimed to show the explained nature of the investment in the assessee's hands. Issue 5: Comparison and Tribunal Decision: The counsel referred to a tribunal decision in a similar case to support the argument that the addition in the subscriber company's hands precludes a double addition in the recipient's hands under section 68 of the Act. This comparison strengthened the claim of the genuine nature of the transaction. Issue 6: Dispute Over One-to-One Transaction: The Departmental Representative's contention regarding the lack of proof of a one-to-one transaction was dismissed. The absence of evidence that the subscriber company invested more than the added amount supported the decision to delete the addition in the recipient's hands. In conclusion, the appeal was allowed on the grounds that the addition made by the lower authorities was unsustainable due to the lack of dispute over identity, creditworthiness, and genuineness of the transaction, leading to the deletion of the addition. This summary provides a detailed analysis of the legal judgment, covering all the issues involved comprehensively while preserving the legal terminology and significant phrases from the original text.
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