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of <h1>High Court affirms Tribunal's decision on unexplained cash credit under Income Tax Act</h1> <h3>Gopal Iron And Steel Co. (Guj) Ltd. Versus Income Tax Officer</h3> Gopal Iron And Steel Co. (Guj) Ltd. Versus Income Tax Officer - [2018] 407 ITR 533 (Guj) Issues Involved:1. Legitimacy of the addition under Section 69 of the Income Tax Act, 1961.2. Genuineness of the share application money.3. Adequacy of the evidence provided by the assessee.Detailed Analysis:1. Legitimacy of the addition under Section 69 of the Income Tax Act, 1961:The primary issue in these appeals is whether the Tribunal was correct in law in restoring the order of the Assessing Officer and confirming the addition under Section 69 of the Income Tax Act, 1961. The Assessing Officer had initially passed an order of assessment determining the total income of the assessee at Rs. 46.92 lakhs, making an addition under Section 68 of the Act on account of unexplained cash credit in the form of share application money. This addition was challenged by the assessee, but the Tribunal confirmed the view of the Assessing Officer, leading to the present appeal.2. Genuineness of the share application money:The Assessing Officer conducted a scrutiny assessment and found several infirmities in the allotment of shares. The officer noted that the assessee failed to provide adequate confirmation from the share applicants, their PAN, and the source of money received in share applications. Specifically, for 26 parties involving share capital of Rs. 16,82,900, confirmations were filed without details like identity, genuineness, and creditworthiness. For 145 parties involving share capital of Rs. 30,10,000, no confirmations or details were provided. The officer observed that demand drafts for various applicants were issued on the same date, from the same bank and branch, and were sequentially numbered, indicating a lack of genuineness.3. Adequacy of the evidence provided by the assessee:The Assessing Officer's detailed investigation revealed that many demand drafts were obtained by cash payments, with applications written by a single person and some not signed by the applicants. The officer concluded that the assessee had not proven the identity, creditworthiness, and genuineness of the transactions. This conclusion was based on the precedent set by the Delhi High Court in CIT vs. Sophia Finance Ltd (1994) and the Calcutta High Court in CIT vs. Precision Finance Pvt. Ltd (1994). The Tribunal upheld the Assessing Officer's findings, noting that the entire issue was based on the appreciation of evidence and material on record.Conclusion:The High Court dismissed the tax appeals, stating that no question of law arises as the Tribunal, being the final fact-finding authority, had confirmed the findings of the Assessing Officer. The Court emphasized that the genuineness of the investors was under serious doubt, and the Revenue had given reasonable opportunity to the assessee before concluding that the investors were not genuine. The decision of the Supreme Court in Commissioner of Income Tax v. Lovely Export (Private) Limited was deemed inapplicable in this case due to the serious doubts about the genuineness of the investors.
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