2013 (1) TMI 238 - HC - Income Tax

Reopening of assessment - share capital received by the company was alleged to represent mere accommodation entries - ITAT deleted the addition made u/s. 68 - Held that:- A perusal of the order of the Tribunal shows that it has gone on the basis of the documents submitted by the assessee before the AO and has held that in the light of those documents, it can be said that the assessee has established the identity of the parties. Also the report of the investigation wing cannot conclusively prove that the assessee’s own monies were brought back in the form of share application money. As it is not the burden of the AO to prove that connection as u/s 68 the onus is upon the assessee to prove the three ingredients, i.e., identity and creditworthiness of the person from whom the monies were taken and the genuineness of the transaction.

There has been no examination by the Tribunal of the assessment proceedings in any detail in order to demonstrate that the assessee has discharged its onus to prove not only the identity of the share applicants, but also their creditworthiness and the genuineness of the transactions. No attempt was made by the Tribunal to scratch the surface and probe the documentary evidence in some depth, in the light of the conduct of the assessee and other surrounding circumstances in order to see whether the assessee has discharged its onus under Section 68. Thus it appears that there has only been a mechanical reference to the case-law on the subject without any serious appraisal of the facts and circumstances of the case - appeal decided in favour of revenue.