Addition u/s 68 of Income Tax Act is invalid as AO fails to Verify Genuineness of Transaction: Calcutta High Court dismiss Appeal [Read Order]

The Calcutta High court dismissed the appeal as it lacked a substantial question of law. The Court found that the addition was made under section 68 of the Income Tax Act, 1961 as the Assessing Officer ( AO ) failed to verify the genuineness of the transaction.

The revenue filed appeal under Section 260A of the Income Tax Act, 1961 ( ‘the Act’). The challenge was against an order passed by the Income Tax Appellate Tribunal in favour of respondent assessee, Outcome Buildcon.Pvt Ltd.

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The issue was whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was erred in law in deleting the addition of Rs.13,56,00,000/- under Section 68 of the Income Tax Act,1961 on account of share capital and premium in absence of identity of creditors and, genuineness and creditworthiness of the entire transactions?

The Commissioner of Income Tax (Appeals) (CITA) set aside the addition made and allowed the assessee’s appeal. The Revenue carried the matter on appeal. We find from the order passed by the Tribunal that the facts of the case have been re-appreciated and the Tribunal has recorded a finding that the assessee has demonstrated successfully the nature of the sum received during the year and the source of the said sum being received from the share applicants and complete evidence has been submitted.

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Further, it has been pointed out that the Assessing Officer has not pointed out any specific error in all the documents nor any discrepancies in the information provided by the assessee.

The court found that the Assessing Officer has not paid any independent enquiry to verify the genuineness of the transaction in spite of the assessee having furnished all details and documents before the Assessing Officer.

The chief Justice T S Sivagnanam and Justice Hiranmay Bhattacharya dismissed the appeal as the matter is fully factual and no substantial question of law arises for consideration.

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