TaxTMI 
TaxTMI 
2017 (10) TMI 1473
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....h credit. The learned CIT(A) noticed that the assessee has discharged the initial burden placed upon him by producing all the materials. Further, transaction carried out by BMPL is not found to be fake or bogus by the learned CIT(A) in the order passed by him in A.Y. 2011-12 in the hands of BMPL. The learned CIT(A) further noticed that the Revenue has accepted the order passed by the learned CIT(A) in the hands of BMPL. He further noticed that identical addition made by the Assessing Officer in the hands of M/s. Watermarks Systems (India) Pvt. Limited for A.Y. 2008-09 was deleted by him. Accordingly, the learned CIT(A) deleted the impugned addition of Rs. 41 lakhs. Aggrieved, the Revenue has filed this appeal before the Tribunal. 5. I noticed that the learned CIT(A) has deleted the addition with the following observations :- 5.2.1 This relates to addition of Rs. 41,00,000/- u/s. 68, representing loan received from BMPL. The assessing officer dealt with this issue at para 4 of his order. He has observed that during the relevant previous year, the appellant has shown unsecured loans from BMPL at Rs. 56,65,500/-. He has reproduced reply of the appellant dated 07/03/2015 und....
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....intained for any previous year, and the assessee offers no explanation about the nature and source of such credit found in the books or the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory, it is only then the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The expression 'the Assessee offers no explanation' means where the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. Accordingly, in order to discharge this burden, assessee is required to prove the (a) Identity of Shareholder (b) Genuineness of transaction and (c) Credit worthiness of creditors. 7.3.5 Various courts have discussed the aspects of burden of proof that lies on assessee. Inference can be drawn about the nature of evidence offered, the circumstances explaining the credit and the actions of an assessee that would constitute reasonable discharge of that burden of proof. Some of those cases are mentioned hereunder. i. Supreme Court in case of CIT v. P. Mohanakala [2007] 291 ITR 278 / 161 Taxman 169 held that the expre....
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.... burden then shifts on the Revenue to establish that such an investment has come from assessee-company itself. vii. C1T v. Gangour Investment Ltd. [2009] 179 Taxman 1 (Delhi), C/T v. Victor Electrodes Ltd. [2010] 329 1TR 271 (Delhi), Dy. C/T v. Dolphine Marbles (P.) Ltd. [2011] 129 1TD 163/10 taxmann.com 75 (Jab.)(TM), Bharti Syntex Ltd. v. Dy. C/T 52 OTR 73 (Jp.): Assessee-company filed letters of the share applicant companies wrote to the AC1T confirming that they had applied for shares in the assesseecompany, giving details of draft, copies of resolutions passed by BOD of applicant-companies besides their bank statement/copies of acknowledgement of returns, certificates of incorporations and balance sheets of the applicant-companies wherein investment made in the assessee-company was shown, PAN, ROC certificate, it had discharged the onus which lay upon it under section 68 by establishing the identity and creditworthiness of each shareholder and, therefore, no addition could be made under section 68. viii. CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78 125 Taxman 80F (SC): In this case assessee gave the names and addresses of the creditors. It was in the know....
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.... of third parties, the Income-tax Officer is entitled to satisfy himself as to the true nature and source of the amounts entered therein, and if after investigation or inquiry he is satisfied that there is no satisfactory explanation as to the said entries, he would be entitled to regard them as representing the undisclosed income of the assessee. When these credit entries stand in the name of the assessee himself, the burden is undoubtedly on him to prove satisfactorily the nature and source of these entries and to show that they do not constitute a part of his business income liable to tax. When, however, entries stand, not in the assessee's own name, but in the name of third parties, there has been some divergence of opinion expressed as to the question of the burden of proof The Income-tax Officer's rejection not of the explanation of the assessee, but of the explanation regarding the source of income of the depositors, cannot by itself lead to any inference regarding the non-genuine or fictitious character of the entries in the assessee's books of account." xii. The assessee having discharged the initial burden, by giving complete name and address of the bankers....