2017 (11) TMI 312

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....e applicants and genuineness of the transactions had been proved by the appellant; 3. The Ld. AO and the Hon'ble CIT(A) have erred on the facts and in the circumstances of the case and in law, in applying the provisions of Section 68 of the Act despite the fact that identity of the share applicants, genuineness of the transaction and creditworthiness of the share applicants had been proved during the proceedings by the appellant. The above grounds are mutually exclusive and without prejudice to each other. The appellant craves leave to add, amend, alter and/or withdraw any of the grounds of appeal on or before the hearing of the appeal". 2. Briefly stated, the factual matrix of the case reveals that the appellant-company is trading in all kinds of pharmaceutical formulations. A return of income showing a loss of Rs. 28,32,700/- was filed by the appellant. The Assessing Officer directed the company to establish the identity, genuineness and creditworthiness of the five subscribers to the share capital of Rs. 50 Lakhs received by the appellant during the course of the year. The assessee had filed a factual note to the aforesaid query raised by the Assess....

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....ts remaining un-rebutted, which were material for ascertaining creditworthiness and genuineness of the transactions, a sum of Rs. 47,00,000/- was confirmed u/s 68 of the Act by the CIT(A). 4. The assessee company is now in appeal before this Tribunal. The Ld. Counsel for the assessee submitted that the authorities below had misdirected themselves in the verification of the amounts received as share capital subscriptions from the various companies as named. The revenue authorities had overlooked the principle that the onus on the assessee was only to submit prima facie evidence with regard to the identity, credit-worthiness and genuineness of the transactions in question. Ld. Counsel for the assessee submitted that this principle has been reiterated many times by different High Courts in the country. He submitted that even the Hon'ble Apex court had gone to the extent of ruling that in cases where the identity is certain then the verification of the relevant amount is required to be done in the hands of the subscribers so identified. If any flaw or discrepancy is noticed therein then it has to be dealt with in the account of the subscriber. He pointed out that the Hon'ble....

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.... said person had no experience of races. The assertions of the assessee as income derived from races were, therefore, disbelieved and so the observations of the Hon'ble Supreme Court ensued in that context. 7. Ld. Counsel further pointed out that next decision cited by the Assessing Officer is in the case of Sreelekha Banerjee vs. CIT (1963) 49 ITR 112 which was in the context of the burden of proof in the encashment of high denomination notes and the consequence of the rejection of the explanation of the assessee and the relevant inference thereafter. That again was hardly material in the facts of the subject case. The Ld. Counsel emphasized that there was no dispute in the subject case as to the initial burden of proof which all decisions have uniformly confirmed that it lay on the assessee only prima facie. The Ld. Counsel also pointed out that the decision of the Hon'ble apex court in A. Govindarajulu Mudaliar vs. CIT (1958) 34 ITR 807 was delivered under the 1922 Act which did not contain a deeming provision like Section 68 in the 1961 Act. That decision is widely recognized to have laid foundation in the 1961 Act in terms of the Evidence Act requirements. 8. Ld.....

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....itions were correctly made u/s 68 of the Act by the Assessing Officer. Strongly supporting the order of the CIT(A), the Ld. DR submitted that the CIT(A) had rightly confirmed the additions made by the Assessing Officer because the basic evidence concerning the genuineness of the transactions remained un-proved by the assessee. 11. The Ld. Senior DR strongly relied upon the decisions of the Hon'ble jurisdictional High Court in CIT vs. Jansampark Advertising & Marketing Pvt. Ltd. (2015) 375 ITR 373 to submit that if any lapse is found by the Tribunal in the verification as conducted by the Assessing Officer or the CIT(A), the matter requires to be remitted back to the lower authorities for conducting a proper scrutiny. The Ld. DR also relied upon the recent decision of the Hon'ble Delhi High Court in Principal CIT vs. Bikram Singh, ITA No. 55/2016 to submit that the additions made u/s 68 of the Act were done rightly by the Assessing Officer in terms of the principles enumerated in that case concerning bogus entries. 12. I have considered the rival submissions and the material available on record including the impugned order and the paper book as filed by the assessee-co....

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....the two cases as cited by the Department, the initial onus as claimed to be discharged by the assessee was not found to have been discharged. It is in that context that collateral proof was desired by the revenue authorities. The Assessing Officer, in the present case, had not brought on record any material in repudiation of the assessees' contentions. He has rejected this evidence canvassed by the assessee without any material. The jurisdictional High Court has pointed out in Nova Promoters & Finlease Pvt. Limited, (2012) 342 ITR 169 (Del) as under: "In our understanding, the ratio is attracted to a case where it is a simple question of whether the assessee has discharged the burden placed upon him under sec. 68 to prove and establish the identity and creditworthiness of the share applicant and the genuineness of the transaction. In such a case, the Assessing Officer cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him" 15. The case in hand is also one such case where the evidence as....