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2021 (8) TMI 455 - AT - Income TaxAddition u/s 68 - Huge difference in purchase and selling price of rice - sham transaction - discharge the primary onus of the assessee or not? - HELD THAT:- Assessee was dealing in Rice contracts in the area Naya Bazaar, Delhi, which functions as mandi/local market and there are chances of movement of buyers and sellers over the period. In the given case, the tax authorities have verified the existence of parties after eight years of transactions. The Courts have held that after lapse of reasonable time, the findings after lapse of such reasonable time is not trustable and chances of migration is proved. In the given case, the investigation is carried out after lapse of eight years, which is after lapse of considerable time. When we considered the present issue under dispute, the Revenue authorities allege that the assessee is carrying on three types of transactions and in order to avoid tax on the huge income earned by the assessee in the insurance division and elevator division, the assessee had indulged in the trading of Rice transactions in order to book the fictitious losses to avoid the tax. When we look at the above proposition, what benefit the assessee might have gained by this way. As assessee has given all the relevant details of all the parties along with the confirmations still the Revenue doubts the identity and genuineness then it is they who has to prove that the assessee has indulged in the activities to avoid tax. In the given case, the Revenue has not brought any material in support of their belief and applied assumptions merely on verification of address aspect of identification. In the given case, AO has not carried out any useful investigation but merely followed the previous pattern of investigation and completed the assessment on preconceived notion that the parties are bogus without really verifying the real aspect - the assessee has clearly given the details of suppliers and parties with whom the assessee has made purchases and sales to Revenue authorities, not only the address but also the PAN details, sales tax details, bank details, etc., AO cannot verify one aspect of identifying the parties and neglecting the other important aspect of identification and comes to conclusion which itself is not proper. Therefore as held in the case of Dwakadhish Investment (P) Ltd. [2010 (8) TMI 23 - DELHI HIGH COURT] that any matter the onus of proof is not a static one, though the initial burden of proof lies on the assessee, yet once they proves the identity of the parties by furnishing the PAN details or income tax assessment numbers and the genuineness of the transactions in their books and making payments by account payee cheques or drafts then the onus of proof would shift to the Revenue. Just because the creditors could not be found at the address given, it would not give the Revenue the right to invoke the provisions of section 68 of the Act. One must not loose the sight of the fact that it is the Revenue which has all the powers and wherewithal to trace any person. Assessee has given all the relevant details of all the parties along with the confirmations still the Revenue doubts the identity and genuineness then it is they who has to prove that the assessee has indulged in the activities to avoid tax. In the given case, the Revenue has not brought any material in support of their belief and applied assumptions merely on verification of address aspect of identification. - Decided in favour of assessee.
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