Identity, Genuineness and Creditworthiness of Investors and Relatives for S. 68 Already Examined: ITAT Rejects Dept's Appeal [Read Order]

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench, held that the identity, genuineness and creditworthiness of investors and relatives has already been examined and therefore rejected the appeal filed by the Income Tax Department.

The facts of the case are that the assessee company, on the perusal of the Financial Statements, issued Equity Shares amounting to INR 6.66 crores in the assessment year under consideration. The Assessing Officer treated the transactions as bogus and sham and mere accommodating entries and thus the amount was treated as unexplained cash credits of the assessee under Section 68 of the Act, the same was added to the income of the assessee.

The Commissioner of Income Tax (Appeals) [CIT(A)], when approached, partly allowed the appeal by sustaining the addition of INR 30.42 lacs. The Revenue then appealed before the Tribunal.

The departmental representative argued that examination of identity, genuineness and creditworthiness of the shareholders including investors in the bank account of a third party and of gifts received from other relatives did not happen. The authorized representative (AR) for the assessee provided sufficient evidence and argument before the CIT(A).

The tribunal noted that in no case the shareholders have given money out of cash deposited in their bank accounts. ITAT took into consideration the Paper Book filed, bank statements showing transfer of funds, ID proofs of the existing shareholders along with many other sources of evidence.

The bench of S. Rifaur Rahman (Accountant Member) and Sudhir Kumar (Judicial Member) hence found no infirmity with the order of the CIT(A) and upheld the same, dismissing the appeal filed by the Revenue.

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