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of <h1>Share application money addition under s.68 deleted as assessee proves investor identity, burden shifts to Revenue</h1> HC upheld the Tribunal's order deleting the addition made under s.68 of the Income-tax Act in respect of share application money received by the ... Share application money - genuineness of transaction - search and seizure operation carried out u/s 132(1) - Held that:- Tribunal has taken note of judgment of this Court in the case of Rathi Finlease Ltd. [2007 (10) TMI 412 - MADHYA PRADESH HIGH COURT], as also the various judgments of the Supreme Court as well as Delhi High Court and has held that though it is the duty of the assessee to establish the genuineness of the credits but in the present case the assessee has duly established the identity and source of credits. The Tribunal has also held that once the identity and source of the subscribers of the share is established no addition can be made under section 68 of the Income-tax Act. The assessee having duly furnished the names, age, address, date of filing the application of share, number of shares of each subscriber there was no justification for the Assessing Officer for making the impugned addition because once the existence of the investors/share subscribers is proved, onus shift on the revenue to establish that either the share applicants are bogus or the impugned money belongs to the assessee itself. Issues:Challenge to order under Income-tax Act, 1961Validity of order dated 10-5-2010 by Income-tax Appellate Tribunal, Indore BenchAssessment years 2000-01 and 2002-03Discrepancies in Share Application Money receivedDismissal of appeal by Commissioner of Income-tax (Appeals)Decision of the Tribunal allowing the appealOnus of proving genuineness of creditsCharging of interest under section 243BAnalysis:The case involved an appeal challenging an order under the Income-tax Act, 1961 for assessment years 2000-01 and 2002-03. The respondent received a notice under section 153(c) regarding discrepancies in Share Application Money after a search operation. The Assessing Officer disbelieved the affidavits filed by the persons providing the money, suspecting the authenticity of the transactions. The Commissioner of Income-tax (Appeals) dismissed the appeal filed by the respondent, leading to a challenge before the Tribunal.The Tribunal, in its order dated 10-5-2010, allowed the appeal of the respondent. It noted that the assessee had proven the identity of the subscribers through duly notarized affidavits, which were not found to be false. The Tribunal emphasized that the Assessing Officer had not disapproved the contents of the affidavits and had not cross-examined the deponents. The Tribunal referred to legal precedents establishing that once the identity and source of the subscribers are proven, no addition can be made under section 68 of the Act.The Tribunal highlighted that the onus is on the revenue to establish the bogus nature of the share applicants if the existence of the investors/share subscribers is proved. It cited decisions supporting the view that once confirmation letters are filed, no addition can be made on account of share application money. The Tribunal also addressed the issue of charging interest under section 243B, deeming it consequential due to the deletion of the addition under section 68.The appellant argued that the Tribunal erred in not considering the precedent regarding the onus of proving the genuineness of credits. However, the Court found that the Tribunal had adequately considered legal precedents and held that no substantial question of law arose in the appeal. Consequently, the appeal was dismissed, affirming the Tribunal's decision in favor of the respondent.
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