The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted the addition under Section 68 of the Income Tax Act, 1961 after validating the taxpayer’s document, affirming the identity and genuineness of the transaction.
The assessee has agitated against the addition of Rs.3,58,00,000/- made by the Assessing Officer treating share capital and share premium received by the assessee as unexplained income of the assessee under Section 68 of the Income Tax Act.
Mr. Miraj D. Shah representing the assessee furnished all the details relating to the identity and creditworthiness of the creditors and genuineness of the transaction. Further submitted that the assessee was having share subscription from the said subscribers for the last 10 years and all the details were furnished before the Assessing Officer. That it was beyond the control of the assessee to produce all the shareholders/directors of the corporate entities before the Assessing Officer. It was explained about the identity, creditworthiness and financials etc. of each of the share subscriber company.
It was added that the assessee had made detailed submissions before the CIT (A), which have also been reproduced in the impugned order. However, the CIT (A), without considering any of the submissions and evidence furnished by the assessee, confirmed the addition in a mechanical manner.
The two member bench of the tribunal comprising Girish Agarwal ( Accountant member ) and Sanjay Garg ( Judicial member ) held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the same.
It was noted that the Assessing Officer in this case has not made any independent enquiry to verify the genuineness of the transactions. The assessee having furnished all the details and documents before the Assessing Officer and the Assessing Officer has not pointed out any discrepancy or insufficiency in the said evidence and details furnished by the assessee before him.
The assessee having discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon the Assessing Officer to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee, noted the tribunal.
ITAT did not find justification on the part of the lower authorities in making the impugned additions and the same are accordingly ordered to be deleted.
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