Unexplained share application money: documentary proof meeting identity, creditworthiness and genuineness shifts onus to revenue and leads to deletion.

Addition under the law treating share application money as unexplained credit was contested on the grounds of identity, creditworthiness and genuineness of investors; the assessee furnished ITRs, bank statements, confirmations and source documents and the appellate authority held that these satisfied the three statutory requirements, shifting the onus to the assessing officer to make independent enquiries to rebut the evidence. Because the assessing officer conducted no such enquiries or recording of statements, the appellate authority deleted the addition and the deletion was sustained on appeal.

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Issues: Whether the addition of Rs. 15,00,00,000 made by the Assessing Officer under Section 68 of the Income-tax Act, 1961 as unexplained share application money for AY 2014-15 was correctly deleted by the Commissioner of Income Tax (Appeals).

Analysis: The assessment relied on a trial balance seized during survey showing share application money from 23 entities and the Assessing Officer recorded additions under Section 68. The assessee produced ITR acknowledgements, bank statements, confirmations and source documents from the investor companies and the remand report showed no independent enquiries or recording of statements by the Assessing Officer in rebuttal. The appellate authority examined the documentary evidence, applied authorities on the three requirements under Section 68 (identity, creditworthiness and genuineness) and found that once the assessee discharged these requirements the onus shifted to the Assessing Officer to carry out enquiries to rebut the evidence; no such enquiries were conducted. The appellate authority's reliance on precedents addressing similar facts supported deletion of the addition.

Conclusion: Deletion of the addition of Rs. 15,00,00,000 under Section 68 is sustained in favour of the assessee; the Revenue's appeal is dismissed.

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