ITO vs. Cinflex Infotech Pvt. Ltd., New Delhi - (Income Tax Appellate Tribunal) (19 Jul 2023)

For discharging the initial onus cast by Section 68 of the IT Act, the assessee has to establish identity, credit, worthiness and genuineness of the transaction

MANU/ID/1062/2023

Direct Taxation

Present appeal by the Revenue is preferred against the order of the learned CIT(A) pertaining to Assessment Year 2012-13. The solitary grievance of the Revenue is that the learned CIT(A) erred in deleting the addition of Rs.10.89 crores made by the Assessing Officer under Section 68 of the Income-tax Act, 1961.

The undisputed fact is that the letter sent by the assessee at the same addresses at which notices under section 133(6) of the Act were issued by the Assessing Officer were served, evidenced by deliveries thereof by submitting copies of printouts taken out from the website indiapost.gov.in, which are placed in the paper book. It is also not in dispute that the assessee has also proved the identity of some of the investing companies by obtaining information under the Right to Information Act, 2005. Confirmations and copies of relevant bank accounts along with copies of income, tax, return, acknowledgement, annual accounts, memorandum and articles of association of the share applicant companies were provided.

Shares were not allotted to share applicant companies and ultimately share application money was returned to all the companies. Repayment schedule is available in the paper book. This in itself shows that the assessee was not a beneficiary, as the amount has been repaid by the assessee in subsequent years.

The 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 Assessing Officer 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 of the Act, the 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. There is no merit in the additions made by the Assessing Officer and there is no reason to interfere with the findings of the learned CIT(A). Appeal of the Revenue is dismissed.

Tags : ASSESSMENT DELETION LEGALITY