2011 (7) TMI 1361 - AT - Income Tax

Tribunal Upholds Decision on Share Application Money Addition

The Tribunal upheld the Commissioner's decision, dismissing the Revenue's appeal regarding the addition of share application money as unexplained cash ... - Issues involved: The judgment involves the issue of deletion of addition made by the Assessing Officer u/s 68 of the IT Act for unexplained/bogus cash credits and unaccounted cash paid for obtaining accommodation entries.Revenue's appeal: The Assessing Officer noted that the assessee had received accommodation entries from entry operators, and after investigation, made an addition of Rs. 35,11,256. The Commissioner of Income Tax (Appeals) examined the submissions and documents provided by the assessee, finding that the identity of the parties was established and discrepancies in share application money were clarified. The Commissioner held that the addition was not sustainable due to lack of evidence linking the money to the appellant assessee.Tribunal's decision: The ITAT Delhi Tribunal heard both sides and found that the assessee had provided necessary details to establish the identity of the parties involved. Citing legal precedents, including the case of CIT Vs. Lovely Exports, the Tribunal concluded that the addition of share application money as unexplained cash credit could not be sustained. The Tribunal upheld the Commissioner's order, emphasizing that the burden of proof had shifted to the revenue, and dismissed the Revenue's appeal.Legal Precedents: The Tribunal relied on legal precedents such as the case of CIT v Gourdin Herbals India Ltd. and CIT vs. Dwarkadish Investment P Ltd. to support its decision. These cases emphasized the importance of establishing the identity of share applicants and the genuineness of transactions to shift the burden of proof to the revenue. The Tribunal found that the assessee had discharged this burden in the present case.Cross Objection: The assessee's cross objection against the validity of the reopening became infructuous after the dismissal of the Revenue's appeal. The Tribunal dismissed the cross objection as infructuous, and ultimately, both the appeal filed by the Revenue and the cross objection filed by the assessee were dismissed.This summary highlights the issues involved, the arguments presented by the Revenue and the assessee, the Tribunal's decision based on legal precedents, and the outcome of the appeal and cross objection.