2011 (1) TMI 1422 - AT - Income Tax

Revenue's Appeal Dismissed: Burden of Proof Shifts to Revenue in Income Tax Disputes

Assistant CIT, Circle 10 (1), New Delhi Versus Divine India Infrastructure Pvt. Ltd., New Delhi

The revenue's appeal against the deletion of an addition of Rs. 12 lacs under section 68 of the Income-tax Act, 1961 for the assessment year 2006-07 was ... - Issues Involved: Appeal against deletion of addition u/s 68 of the Income-tax Act, 1961 for assessment year 2006-07.Summary:1. The revenue appealed against the deletion of an addition of Rs. 12 lacs made by the Assessing Officer u/s 68 of the Income-tax Act, 1961. 2. The assessee, a real estate development company, received fresh share capital of Rs. 24 lacs, with doubts raised by the Assessing Officer regarding the genuineness and creditworthiness of the share applicants, M/s. Athnic Creation (P) Ltd. and M/s. MV Marketing (P) Ltd., due to alleged discrepancies in their operations and transactions. 3. The assessee contended before the Learned CIT(Appeals) that the share application money was genuine, providing evidence such as PAN, registration with ROC, affidavits, and bank statements. The CIT(A) relied on precedents like CIT Vs. Lovely Exports and decisions of the Hon'ble Delhi High Court to support the assessee's case. 4. The Hon'ble Delhi High Court's decisions in Victor Electrodes Ltd. and Dwarkadish Financial Services emphasized that the burden of proof shifts to the Revenue once the assessee establishes the identity and genuineness of transactions. The court criticized the Assessing Officer for not summoning the directors of the applicant companies for verification. 5. The ITAT upheld the CIT(A)'s decision, stating that the Assessing Officer failed to collect concrete evidence and relied on circumstantial defects, dismissing the revenue's appeal.6. The appeal of the revenue was dismissed, affirming the decision of the CIT(A) in favor of the assessee.