The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that the Assessing Officer (AO), has failed to discharge the secondary onus of demolishing/disproving the genuineness of the documentary evidences filed by the Assessee and thus addition made under Section 68 of the Income Tax Act,1961 which was sustained by the Commissioner of Income Tax (Appeals) CIT(A) was deleted.
The assessee Manhar Yarns Pvt. Ltd filed return for Assessment Year (AY) 2016-17 declaring an income of Rs.2,58,410. The assessment made by the AO under Section 143(3) of the Income Tax Act, at an income of Rs.95,58,410 after making addition of Rs.95,58,410 under Section 68 of Income Tax Act treating the same as bogus transaction.
Aggrieved by the order, an appeal was filed before the Commissioner of Income Tax (Appeals) [CIT(A)], which dismissed the Appeal filed by the assessee and also enhanced the income of the assessee under Section 251(1) of the Income Tax Act by Rs. 62,00,000 under the head of other sources by applying Section 56(2) (viib) of the Income Tax Act.
Aggrieved by the order of the CIT(A) the assessee filed an appeal before the ITAT.
The Counsel for the assessee vehemently submitted that the assessee had furnished all documentary evidence for establishing identity, creditworthiness of the investors and the genuineness of the transaction but the Revenue Authorities have failed to appreciate the material available on record.
Further, the assessee added that the investors have furnished the bank statements through which money towards subscription of the share capital in the Assessee Company and AO is wrong to hold that these are not having any creditworthiness.
The Departmental Representative argued that the assessee had failed established identity, creditworthiness of the investors and also failed to prove the genuineness of the transaction, further by relying on the orders of the Lower Authorities prayed for dismissal.
The Bench comprising of Dr.B.R.R Kumar, Accountant Member and Yogesh Kumar U.S., Judicial Member observed that the assessee had provided all the details to discharge the onus to prove the identity, creditworthiness and genuineness of the investors, the onus will shift to Income Tax Authorities to disprove the documents furnished by the assessee.
The Tribunal further stated that CIT(A) has not made any further investigation on the claim made by the assessee or the document produced by the assessee. Thus, the addition cannot be sustained merely based on the inferences without gathering tangible evidence and the AO has failed to discharge the secondary onus of demolishing/disproving the genuineness of the documentary evidences filed by the Assessee.
Thus, the appeal filed by the assessee is allowed and addition made under Section 68 of the Income Tax Act which was sustained by the CIT(A) his hereby deleted.
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