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Facts
The assessee filed a return of income, and during scrutiny, the AO made an addition of Rs. 3,53,40,000/- under Section 68 of the Income Tax Act, 1961, deeming the investment transactions as not genuine. The CIT(A) deleted this addition.
Held
The Tribunal held that the assessee had discharged its onus under Section 68 by providing documentary evidence like confirmation of share applicants, bank statements, ITRs, and audited accounts. The Tribunal noted that the AO doubted the 'source of source' rather than the source of the amount credited, which is not required for the assessment year in question. Therefore, the CIT(A) did not err in deleting the addition.
Key Issues
Whether the deletion of addition made under Section 68 by the CIT(A) was justified, considering the documentary evidence provided by the assessee to establish the genuineness of the share capital introduction.
Sections Cited
68, 147, 148, 143(3)
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Income Tax Appellate Tribunal, DELHI
(A.Y. 2011-12) DCIT Vs. Tarun International Ltd. Circle-25(1) 5037, Excelsior Cinema, New Delhi Street Sirikiwalan, Chandni Chowk, Delhi PAN: AAACT2713N Appellant Respondent Assessee by Shri Amit Goel, CA & Sh. Pranav Yadav, Adv Revenue by Sh. Om Prakash, Sr. DR Date of Hearing 15/05/2025 Date of Pronouncement 04/06/2025 ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Department of Revenue against the order of the Commissioner of Income Tax Appeals-15 [‘Ld. CIT (A)’ for short] dated 10/07/2019 for the Assessment Year 2011-12.
The grounds of Appeal are as under:-
“1. "On the facts and circumstances of the case, the Id. CIT(A) erred in deleting the addition made u/s 68 of the I.T Act, 1961 of Rs.3,07,09,348/- made by the Assessing Officer since the evidences available during assessment proceedings, on the face of it, establishes that the transactions leading to investment in the Assessee company are not genuine.
2. On the facts and circumstances of the case the order of Ld. CIT(A) is perverse." 3. "The appellant craves, leave or reserving the right to amend modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal."
Brief facts of the case are that, the Assessee filed return of income declaring income at Rs. 83,43,730/-. The case was taken up under scrutiny, statutory notices were issued and an assessment order came to be passed on 31/03/2014 by making addition of Rs. 3,53,40,000/- u/s68 of the Income Tax Act, 1961 ('Act' for short).
Aggrieved by the assessment order dated 31/03/2014, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 10/07/2019, deleted the additions made by the A.O. Aggrieved by the order of the Ld. CIT(A), the Revenue preferred the present Appeal on the grounds mentioned above.
The only grievance of the Revenue is regarding deletion of addition of Rs. 3,07,09,348/- made u/s 68 of the Act by the A.O. The Ld. Department's Representative contended that the Ld. CIT(A) committed error in deleting the addition. The addition made by the A.O. is based on the evidences available during the assessment proceedings which establishes that the transactions leading to the investment in the Assessee Company are not genuine. Thus, the Department has questioned the genuineness of the transaction in the present Appeal.
Though the Department in its grounds of appeal questioned the order impugned on the ground that the Assessee failed to establish the transaction leading to investment in the Assessee company are not genuine,however filed detailed written submission on the investments made by the entities wherein questioned the genuineness and the source of source of share capital. The Ld. Departmental Representative also submitted that details of the source of source of the investments are not provided to the Department and submitted that the Assessee has failed to discharge the onus conferred u/s 68 of the Act, however, the Ld. CIT(A) erroneously deleted the addition .
Thus sought for allowing the Appeal.
Per contra, the Ld. Assessee's Representative submitted that the additions have been made by the A.O. in respect of three shareholders, wherein the Assessee had discharged its onus cast upon it under Section 68 of the Act. The Ld. CIT(A) after appreciating all the documents which are on record, deleted the addition which requires no interference at the hands of the Tribunal. Thus sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. The Ld. A.O. held that the Assessee failed to discharge its onus cast upon the Assessee u/s 68 of the Act in respect of following parties:-
M. R. Tradex (P) Ltd. 1,87,00,000/- TarunBuildwell (P) Ltd. 1,10,95,000/- TarunRealcon (P) Ltd. 29,00,000/- Pawan Kumar Jain 18,35,000/- TOTAL 3,45,30,000/- However, the Ld. CIT(Appeals) deleted the addition made by the A.O.
In the present Appeal, it is pertinent to mention in the Grounds of Appeal, the Department has questioned only the genuineness of the transaction.
It emerges from the record that the Assessee had produced the following documentary evidences to discharge its onus cast upon it u/s 68 of the Act:
a) Complete name and addresses of Share Applicants b) Confirmation of Share Applicants c) Copy of bank statements of shareholder reflecting the investments made in appellant company. d) Income Tax particulars of shareholders, copy of their ITR and computation of income. e) Copy of Audited Statement of accounts of Investor Companies.
In response to the notice issued by the A.O.,theshareholders have appeared before the A.O., and confirmed their investment in the Assessee Company. In order to prove the identity of the parties, the Assessee produced documents to show that all the share applicants are existing income tax Assessees, they have been allotted with the PAN by the Department, having bank accounts and three out of four shareholders are Companies incorporated in Companies Act, 1956.
In so far as the genuineness of the transaction is concerned,admittedly, the transactions have been taken place by account payee cheques and the shareholders have confirmed about their investment in the Company. The copy of the Bank statement, and copy of audited statement of account of the shareholdershave been furnished to the A.O. Thus, the Assessee has discharged the onus cast upon it u/s 68 of the Act. It is further observed that one of the reasons for making the additions by the A.O. on the pretext of doubting the source of source of the investments. The assessment year under consideration being 2011-12 and for the year underconsideration, the Assessee has to explain the source of the amount credited in its book and need not prove the source of source.
Moreover, the Ld. A.O. has not made any further enquiry after the Assessee producing thedocuments to discharge the burden u/s 68 of the Act by producing the confirmation, ITR, balance sheet and the bank statement of the investors. Considering the above facts and circumstances of the case, we are of the opinion that the Ld. CIT(A) committed no error in deleting the addition made by the A.O. Finding no merits in the Grounds of the Revenue, we dismiss the Appeal of the Revenue.