The materials on record showed not mere superficial details like PAN, ROC, etc., but further facts relating to the bank accounts of the share applicants were also there. The share applicants were entering into proper commercial transactions and were not per se forged, bogus or sham investors. There was not perversity in order passed by Tribunal warranting interference of Court.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
The revenue is aggrieved by the ITAT’s decision upholding deletion of the sum of Rs. 1,14,02,600 under section 68. The assessee’s returns were processed under section 143(1). Urging the failure to disclose the material and particulars, re-assessment was resorted to. During the course of the re-assessment, the assessing officer was of the opinion that bogus transactions were shown as receipts towards share application money through 10 entities. The assessing officer disallowed the assessee’s claim and brought to tax the sum of Rs. 1,14,02,600. The Commissioner (Appeals), upon appeal, accepted the plea about the genuineness of the transactions; the ITAT confirmed that finding.
2. The revenue urges that the findings of the Commissioner (Appeals) and the ITAT cannot be sustained because even though the identity and nature of transactions were disclosed and perhaps even the creditworthiness of the share applicants, the genuineness was not established. Mr. Asheesh Jain, learned counsel relied upon Commissioner of Income Tax v. N.R. Portfolio (P) Ltd. (2013) 214 Taxman 408 (Del). It was submitted that the assessing officer, on analysis of the bank statements, correctly surmised that the transactions towards share application deposits were not genuine transactions and correctly brought the amounts to tax under section 68.
3. The Commissioner (Appeals) and the ITAT reconsidered the materials on the record and upon their overall analysis formed the opinion that the appropriate tests, indicated by the Supreme Court in Commissioner of Income Tax v. Lovely Exports (2009) 319 ITR 0005 (SC) were satisfied that the materials on record are not mere superficial details like PAN, ROC, etc. but further facts relating to the bank accounts of the share applicants. The relevant extracts have been reproduced in the order of the assessing officer as well as Commissioner (Appeals) which disclosed that the share applicants were entering into proper commercial transactions and were not per se forged, bogus or sham investors. Undoubtedly, the assessing officer had ground to suspect that the entries were made prior to the investments. But that was precisely what was required of him. The assessee in re-assessment, provided all that it could; share investors’ income tax returns and balance-sheets could appropriately have been sourced by the assessing officer in the reassessment proceedings.
4. In these circumstances, it cannot be said that the assessing officer exercised due diligence in respect of all facets of the case. Even a contrary view would amount to re-assessment in the facts and circumstances. The Commissioner (Appeals) and the ITAT’s findings, therefore, do not call for any interference. The appeal is, therefore, dismissed.