Shareholders failed to prove Source of their Investments: ITAT grants Opportunity to prove Genuineness and Creditworthiness of Shareholder [Read Order]

The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) grants the opportunity to prove the genuineness and creditworthiness of shareholders as they file to prove the source of Investment.

A survey under section 133A of the Income Tax Act, 1961 was conducted at the business premises of Pritham and Prathik, the assessee and during the survey proceedings, certain documents/loose sheets found at the business premises were impounded.   The Assessee company did not file its Return of Income for the A.Y.2014-15.

The AO added Rs.1,29,10,000/- as unexplained share capital money appearing in the balance sheet as of 31.03.2014 assessed under section 68 of the Income Tax Act, 1961 after reducing initial Share Application Money invested during the F.Y.2012-13. 

The CIT(A) observed that the assessee furnished the address of the person, a confirmation letter from him and some of these creditors were present before the Assessing Officer and they explained the source for their investment. Further, the CIT(A)  held that the appellant discharged the onus of proving the credits and deleted the addition of Rs.1,29,10,000/-.

It was submitted by the revenue that the CIT(A) has not considered the submission of the Assessing Officer wherein the Assessing Officer had categorically pointed out that despite the grant of sufficient opportunities to the shareholders, they have not appeared before the Assessing Officer and only four shareholders had appeared and they were examined. On examination, the said shareholders have failed to prove their source of investment made in the company of the assessee. 

Per contra, the assessee prayed to grant one more opportunity to prove and produce the shareholders before the Assessing Officer / CIT(A) to prove the genuineness, creditworthiness and identity of the shareholders.

A Coram comprising of Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member remanded the matter to the file of the Assessing Officer to produce the shareholders before the Assessing Officer to prove the genuineness, creditworthiness and identity of the shareholders to prove the case. The appeal of Revenue is partly allowed for statistical purposes.  

The assessee was represented by Ms S. Sandhya, Advocate and the revenue was represented by Ms Swapna. 

To Read the full text of the Order CLICK HERE

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