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2021 (6) TMI 1027 - AT - Income TaxAddition u/s 68 - unexplained cash credit - Can the amount of share money be regarded as undisclosed income under section 68 ? - CIT-A deleted the addition - assessee has issued share warrants to M/s BDPL during the year - HELD THAT:- The transactions were duly reflected in the financial statements of the investor entity. The transactions have taken place through banking channels. After going through all these facts and evidences, we find that the onus casted upon assessee in terms of requirement of Sec.68 to prove the identity of the investor, their respective creditworthiness and the genuineness of the transactions, was duly discharged by the assessee. The onus, had thus shifted on Ld. AO, to disprove the assessee’s documents and to bring on record any material to prove that assessee’s own money flew back to it in the shape of share warrant application money. However, noting of that sort is available in the assessment order. The documents, which in the opinion of Ld. AO could not be furnished, include correspondence with M/s BDPL prior to issue of warrants, details of introducers of directors of M/s BDPL, details of services taken from investment banker, proof of receipt of share warrant application form, proof of dispatch of notice of AGM along with postal records, proof of dispatch of share warrants and shares. However, all these documents, as rightly noted by Ld. CIT(A), were not of much relevance since the transactions were duly confirmed by the investor entity as supported by other vital documentary evidences. So far as the applicability of the provisions of Sec.56(2)(viia) is concerned, the same do not apply to the assessee since the assessee is not the recipient of any property rather it is only an issuer of share warrants only and therefore, these provisions do not apply to the assessee. As settled position of law that to avoid the rigors of Section 68, the assessee must prove the identity, creditworthiness of the lenders / investors to advance such monies and genuineness of the transactions. Once these three ingredients are shown to be fulfilled by the assessee, the primary onus casted upon him, in this regard, could be said to have been discharged and accordingly, the onus would shift upon revenue to dislodge the assessee’s claim by bringing on record material evidences and unless this onus is discharged by the revenue, no addition could be sustained u/s 68. The assessee had discharged the onus of proving the fulfillment of primary requirements of Section 68 and the onus was on Ld. AO to disprove the same. In the absence of any such facts on record, the impugned additions could not be sustained in the eyes of law and therefore, Ld. CIT(A) has rightly deleted the same. - Decided against revenue.
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