ITO Vs Cinflex Infotech Pvt Ltd (ITAT Delhi)
ITAT Delhi held addition u/s 68 of the Income Tax Act unsustained as assessee duly satisfied the initial onus i.e. identity, creditworthiness and genuineness of the transaction established.
Facts- AO observed that the assessee has received share application money amounting to Rs. 10.89 crores from 19 share applicants. AO formed a belief that these companies were operated by a single person and these were not in existence, but operated by some entry provider, who issued cheques in favour of the beneficiaries in lieu of cash. AO further observed that though the alleged money was received through banking channel, but did not reflect the credit worthiness of the share applicants. Even their respective bank accounts do not reflect their credit worthiness or genuineness of the transactions. Accordingly, AO made addition of Rs. 10.89 Crores u/s 68.
CIT(A) accepted the submission of the assessee. Accordingly, being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that 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.
We are of the considered view that 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.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal by the Revenue is preferred against the order of the ld. CIT(A) – 2, New Delhi dated 30.06.2017 pertaining to Assessment Year 2012-13.
2. The solitary grievance of the Revenue is that the ld. CIT(A) erred in deleting the addition of Rs.10.89 crores made by the Assessing Officer u/s 68 of the Income-tax Act, 1961 [the Act, for short]
3. The representatives of both the sides were heard at length, the case records carefully perused and we have duly considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules.
4. Briefly stated, the facts of the case are that while scrutinizing the return of income for the year under consideration, the Assessing Officer found that the assessee has received share application money amounting to Rs.10.89 crores from 19 share applicants as under:
