No addition if assessee discharged initial onus to prove identity of Investor Companies, creditworthiness, genuineness of transaction

Shri Shyam Sunder Infrastructure (P) Ltd. Vs ITO (ITAT Delhi)

Conclusion: Since assessee produced sufficient documentary evidences before AO to prove the identity of the Investor Companies, their creditworthiness  and genuineness of the transaction and no evidence had been brought on record by AO to disprove the same, hence addition made under section 68 was deleted.

Held: AO had issued notice under section 148 after recording the reasons that assessee had been beneficiary of accommodation entries being provided by certain entry operators and received unexplained credits in its bank account during the assessment year under appeal. AO asked assessee to give details of the shareholders from whom share application was received during assessment year under appeal. Assessee submitted before AO that it had received share capital/premium money totaling to Rs.98 lakhs from 14 parties. Assessee furnished share application form, affidavit, copy of the return of income and  copy of the  bank account of all the share applicants. However, the summons issued under section 131 returned un-served. Assessee was asked to produce the Principal Officers of the share applicants, however, assessee failed to produce the same. AO therefore, made addition of Rs.98  lakhs under section 68 and also made addition of Rs.1,96,000/- on account of commission paid by assessee @ 2%. AO completed the assessment under section 144/147. It was held that assessee produced sufficient documentary evidences before AO to prove ingredients of Section 68. The Investors had directly confirmed making investment in assessee company in reply to the notice under section 133(6) at the appellate stage. Therefore, assessee had discharged its initial onus to prove the identity of the Investor Companies, their creditworthiness  and genuineness of the transaction. No evidence had been brought on record by AO if assessee paid any commission to any person of  RS.1,96,000/-.  Therefore, there was no justification to make both the additions against the assessee.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-XI, New Delhi, Dated 31.01.2013, for the A.Y. 2003-2004.

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