Once identity & creditworthiness of parties and genuineness of transaction proved, section 68 cannot be invoked

Issue before court:

• Whether AO can made addition u/s 68 if primary onus of proving identity, creditworthiness and genuineness was discharged by assessee.
• Whether AO should make proper and due enquiry before invoking provision of section 68.

Brief Facts:

• Assessee was engaged in the sale & purchase of property. During assessment proceedings show cause notice was issued to issue pertaining to two huge amount reflected in his bank statement.
• The assessee explained that these amounts were consideration received either fully or in part and in some cases paid back during the concerned period and that everything was backed by documentary evidence.
• In the course of the assessment proceedings, the concerned material in the form of extracts of ledger, other books of accounts, bank account statements and confirmation by the parties concerned and the conveyance/sale deeds or copies thereof were produced.
• AO brought to tax the entire amount stating that the credits had not been properly explained.
• On appeal CIT (A) deleted additions after examining the various documents in support of submission and various case laws relied upon by the assessee. ITAT also dismissed appeal filed by revenue and sustained the order of CIT (A).

Contention of the revenue:

• The Revenue argues that the order of the CIT (A) and the ITAT acknowledges that certain transactions or entries require a more intensive scrutiny which is the reason why liberty has been given to issue notice under Section 147/148.
• The explanation afforded during the assessment proceedings with respect to the entries in question, was not satisfactory and in the given circumstances of the case, the AO acted correctly in adding back the amounts.

Contention of the assessee: