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2020 (11) TMI 456 - AT - Income TaxAddition u/s 68 - allegation of providing the accommodation entries in the form of share capital, bogus purchases, bogus sales and the bogus investments through the companies - non-compliance of summons issued by the AO u/s 131 - Reopening of assessment - HELD THAT:- Merely because summons issued to some of the creditors could not be served or they failed to attend before the AO, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the AO u/s 131, by the alleged creditors will not be sufficient to draw an adverse inference against the assessee. As inferred that the principle, which is made applicable to addition under Section 68 is that the initial onus in on the assessee to discharge by producing the evidence which is required of him and once the assessee produces the evidence which is in his power and possession and which evidence prima facie proves the - (i) identity of the creditor; (ii) the capacity/creditworthiness of the creditor to advance the money; and (iii) the genuineness of the transaction, the onus shifts to the AO to make further inquiries. AO cannot perfunctorily reject the evidence produced and has to state cogent reasons for such rejection. Notice under Section 148 of the Act was issued dated 30th March 2016 and the time available with the AO for the completion of the assessment under Section 147 was up to 31stDecember 2016. In other words the available time with the AO was of 9 months from the date of the issue of notice under Section 148 of the Act for the completion of the assessment under Section 147 - Admittedly, the Department was also aware of the time available with it for the completion of the assessment. Accordingly, it was expected from the Department to Act swiftly for completing the assessment by making necessary enquiries within the time prescribed under the law and not to carry the matter till the fag-end of the assessment. What is transpired is that the revenue has not given enough time to the case on hand despite having the necessary powers and other supporting machineries. But the question arises, the assessee should be suffered on account of the inefficiency of the Department. The answers stands in negative. It is because the assessee should not be suffered on account of the inefficiency of the Income Tax Department. Transaction for transferring the shares as discussed above has taken place in the subsequent years. This transaction can create a doubt/suspicion about the genuineness of the transactions but this is not sufficient enough to treat the share capital as unexplained cash credit under Section 68 of the Act for the reasons that the AO has not provided sufficient opportunity to the assessee which has been discussed in detail in the preceding paragraph. Moreover, there can be change in the facts and circumstances in the year when the company has issued shares at premium viz a viz the year in which the director has acquired shares from the said companies. Appeal filed by the Revenue is dismissed.
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