2019 (6) TMI 1465 - ITAT KOLKATA - Income Tax

Head Note / Extract:
Disallowance u/s 68 - Unexplained cash credit - proof of identity, creditworthiness and genuineness of the transactions - main plank on which the AO made the addition was because the directors of the share subscribers did not turn up before him - HELD THAT:- In this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, thereafter the onus shifted to AO to disprove the documents furnished by assessee cannot be brushed aside by the AO to draw adverse view cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the Assessing Officer, we hold that an addition cannot be sustained merely based on inferences drawn by circumstance - we are inclined to uphold the order of the Ld. Commissioner of Income Tax (Appeals) To sum up section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature & source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68. Addition of commission - HELD THAT:- When the assessee has filed the name of the commission agents, their addresses, their respective Income Tax acknowledgement, commission bills, bank statement, balance sheet, profit & loss a/c, ledger copy of each commission agent etc. which is found placed at from page 92 to 274 of the Paper Book, and the Inspector deputed by the AO has found their changed address and when the payment of commission is through banking channel, merely on surmises and conjectures the AO ought not to have disallowed ₹ 32,19,156/- out of total claim of ₹ 93,76,718/-. Merely because these Commission Agents are companies and is functioning from a premises next to the tax consultant of the assessee, though raises suspicion however on the strength of the documents filed before us, and the AO having not controverted theses documents as fabricated documents / false, or without proper enquiry could not have disallowed the claim. It has to be kept in mind that suspicion how so ever strong cannot take the place of evidence. Moreover, the impugned order of the ld. CIT(A) order cannot be held to be perverse order. In the light of the discussion and documents supra, we confirm the order of the Ld. CIT(A) and dismiss this ground of appeal of Revenue.