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2019 (1) TMI 462 - AT - Income TaxAdditions u/s 68 being share application money received from four parties - Held that:- The provisions of Section 68 provide that an assessee shall provide explanation in relation to the credit in its books of accounts. Once it has discharged its obligation to prove the said credit, it is not required to prove the source of funds of its source of share application money. An assessee is not required to provide details about its source's source. We notice that Ld CIT(A) therefore, concluded that the loan given to the farmers by IDBI for supply of material like cotton to BTCL was ghastly misused and were diverted back to BTCL in the form of share application money by using the conduit of banking channel in a circular rotation by using colourable devise. CIT(A) has accepted that the source of the funds invested by the farmers is the loan given by IDBI through BTCL. Therefore, such amount invested by the farmers cannot be said to be non-genuine transactions. Secondly, the IDBI had given loan to farmers against sale proceeds receivable by them from BTCL on sale of the crops. Therefore, the creditworthiness of the farmers is proved beyond doubt. We have also noticed from the details that the assessee had refunded the share application of the said three farmers in the month of March 2011 i.e. 2011-12. All other allegations of the Ld. CIT(A) are not relevant for deciding that the receipt of the share application money is genuine and the creditworthiness of the parties investing in share application is proved. The provisions of sec.68 places initial burden of proof upon the shoulders of the assessee, i.e., the assessee is required to prove three main ingredients viz., the identity of the creditor, the creditworthiness of creditor and genuineness of transactions. Once the assessee discharges the initial burden placed upon its shoulders, then the burden would shift upon the shoulders of the assessing officer, i.e., it is the AO who has to disprove the submissions made by the assessee. We notice that the assessee has discharged the initial burden of proof placed upon its shoulders by proving the identity of the share applicants, their sources and the genuineness of transactions. Referring to various documents furnished in the paper book. However, we notice that the AO could not disprove the same, meaning thereby, the AO has failed to discharge the burden placed upon his shoulders. CIT(A) was not justified in confirming the addition made by the AO u/s 68 - decided in favour of assessee.
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