C.R. Investments Vs ACIT (ITAT Delhi)
Dividend Income Cannot Be Treated as Unexplained Cash Credit: ITAT Delhi Deletes Section 68 / 115BBE Addition
The Delhi Bench of the ITAT allowed the assessee’s appeal for AY 2018-19 and deleted the addition of ₹40.53 lakh made under section 68 read with section 115BBE, holding that exempt dividend income cannot be recharacterised as unexplained cash credit in the absence of any incriminating nexus.
The Tribunal noted that both the Assessing Officer and the CIT(A) had treated the assessee’s dividend income—duly disclosed and claimed as exempt—as unexplained, allegedly relying on irregularities found during search proceedings conducted in the payer group. However, the ITAT found that the assessee had furnished complete documentary evidence in support of the dividend income, and no material was brought on record to establish any link between the assessee and the alleged irregularities in the payer group.
Applying the settled tests laid down by the Supreme Court in Sumati Dayal v. CIT, CIT v. Durga Prasad More and PCIT v. NRA Iron & Steel Co., the Tribunal held that suspicion or third-party allegations, without cogent evidence establishing the assessee’s involvement, cannot justify an addition under section 68. The Revenue failed to rebut the assessee’s evidence or demonstrate that the dividend receipts were non-genuine.
Accordingly, the ITAT deleted the entire addition of ₹40.53 lakh and allowed the appeal in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
