Obligation of Taxpayer is fulfilled when he establishes Identity, Credit Worthiness and Genuineness of Transaction concerning Unexplained Income u/s 68: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that discharging the initial onus cast by section 68 of the Act, the assessee has to establish (1) identity, (2) credit worthiness and (3) genuineness of the transaction. Once the assessee proves all these three things, his onus is discharged. While scrutinizing the return of income for the year under consideration, the Assessing Officer found that the assessee has received share application money amounting to Rs.10.89 crores from 19 share applicants. The Assessing Officer found that the shares have not been allotted by the assessee. The assessee was asked to submit the details in respect of share applicants. The assessee submitted confirmations of share application money along with tax particulars and respective bank statements. The Assessing Officer issued notice under Section 133(6) of the Income Tax Act at the addresses provided by the assessee and out of 19, 5 notices were received unserved with the remarks. The Assessing Officer deputed an Income tax Inspector to make field enquiry about share applicants situated at Delhi. The inspector submitted his report. Copy of the report was provided to the assessee. The assessee was asked to furnish current addresses. The assessee filed a letter alongwith details of current addresses of the 7 share applicants. On the basis of new addresses provided by the assessee, again, an Inspector was deputed to make field enquiries and the Inspector submitted a report that no such companies are situated at the given addresses. On the basis of this report, the Assessing Officer formed a belief that these companies were operated by a single person and these were not in existence, but operated by some entry provider, who issued cheques in favour of the beneficiaries in lieu of cash. The Assessing Officer further observed that though the alleged money was received through banking channel, but did not reflect the credit worthiness of the share applicants. Even their respective bank accounts do not reflect their credit worthiness or genuineness of the transactions. After referring to various judicial decisions, the Assessing Officer finally made addition of Rs.10.89 under Section 68 of the Income Tax Act. The assessee carried the matter before the CIT(A) and vehemently submitted that at the addresses given by the assessee, some of the notices issued under Section 133(6) of the Income Tax Act returned unserved and the Income tax Inspector reported that no such companies existed on the given addresses. But at the addresses when the assessee issued notices through speed post, they were duly served as confirmed by the delivery status by India Post portal. It was strongly contended that the assessee has proved the identity by suo moto taking action by sending letters to the same addresses at which notices under Section 133(6) of the Income Tax Act were issued by the Assessing Officer. After considering the facts and submissions, the CIT(A) was convinced that the assessee has successfully discharged the initial onus cast upon it by provisions of Section 68 of the Income Tax Act and deleted the impugned addition. Thus the present appeal was made by the revenue. After hearing both the parties, the tribunal held that discharging the initial onus cast by Section 68 of the Income Tax Act, the assessee has to establish (1) identity, (2) credit worthiness and (3) genuineness of the transaction. Once the assessee proves all these three things, his onus is discharged. Facts on records show that the assessee has successfully discharged the initial onus cast upon it. The two member bench consisting of Anubhav Sharma and N.K Billaiya held that they did not find any merit in the additions made by the Assessing Officer and did not find any reason to interfere with the findings of the CIT(A). Thus the appeal was dismissed. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Obligation of Taxpayer is fulfilled when he establishes Identity, Credit Worthiness and Genuineness of Transaction concerning Unexplained Income u/s 68: ITAT [Read Order]

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Obligation of Taxpayer is fulfilled when he establishes Identity, Credit Worthiness and Genuineness of Transaction concerning Unexplained Income u/s 68: ITAT [Read Order]

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