TMI Blog2014 (2) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... did not have any independent transaction carries no consequence - Since the aspect goes to the root of the second requirement under Section 68 - the genuineness of the transaction by the assessee cannot be said to have been shown by it in discharge of the initial burden placed on it by Section 68 of the Income Tax Act – Decided against Assessee. - ITA 142/2013 - - - Dated:- 20-2-2014 - S. Ravindra Bhat And Rajiv Sahai Endlaw,JJ. For the Appellant : Sh. Ajay Vohra with Ms. Kavita Jha, Advocates. For the Respondents : Sh. Rohit Madan, Sr. Standing Counsel with Sh. Ruchir Bhatia, Jr. Standing Counsel. JUDGMENT Mr. Justice S. Ravindra Bhat 1. The assessee in this appeal questions the decision of the Income Tax Appellate Tribunal (ITAT) by which the Revenue s appeal was allowed for the assessment year (AY) 1996-97. 2. The substantial question of law framed for consideration by this Court is as follows: Did the Tribunal fall into an error in holding that the assessee had not discharged the initial onus cast upon it under Section 68 and furnishing satisfactory explanation in respect of the total amount of Rs.29,70,900/- in the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. This time round, the AO, in the order, noted the Tribunal s direction. The AO observed that as far as the production of those two individuals was concerned, the assessee s explanation was that since they lived abroad, it was not possible to comply with such a requirement. The assessee was also unable to collect any evidence or show whether the two companies which had remitted the amounts were substantially owned or any substantial shareholding in them was owned by the said two individuals. The assessee again repeated before the AO the assertion that it had purchased land on behalf of the two persons and they were duly registered in their names. The AO rejected the assessee s explanations and confirmed the addition yet again. 5. The assessee s appeal was successful. The order of the appellate Commissioner allowing the assessee s claim was premised on the affidavits of one Ms. Rosna Singjirakul as well as that of Sh. Vinay Kumar Kedia and Sh. Narottam Singh, the two purchasers. The CIT was satisfied as to the link in the chain of transactions that led to the two individuals. The CIT, therefore, held that in substance the amounts deposited with the assessee pertained to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase were the real investors had to be seen in the light of the end-use of the amount. Learned counsel submitted that these two concerns were more in the nature of facilitators for financial transactions that were commonly prevalent in Thailand which routinely facilitated remittances abroad from that country. 8. Reliance is placed upon the decision of the Supreme Court in Commissioner of Income Tax. v. Lovely Exports Pvt. Ltd., 216 CTR 195 (SC). In that case, the Court affirmed the judgment of the Division Bench which had ruled that so long as the identity of the person making the investment or the source of funds could be traced, the assessee is said to have discharged the burden placed upon him. The assessee also relied upon the judgments reported as CIT-IV v. Dwarkadhish Investment (P.) Ltd., 2010 (330) ITR 298 (Del); CIT v. Oasis Hospitalities (P.) Ltd., 2011 (333) ITR 119 (Del) and CIT v. Victor Electrodes Ltd., 2012 (329) ITR 271 (Del). It was urged that in the light of these decisions, the approach of the Tribunal amounted to casting an unreasonable, if not impossible, burden on the assessee. The assessee argued in addition that for the Revenue to infer that the amounts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been debited from their account. Superficially, the explanation seems plausible. Yet, the Court cannot lose sight of the fact that the identity of the investor and the genuineness are the twin requirements that have to be established to the satisfaction of the AO in each case where Section 68 is sought to be invoked. Section 68 is in the nature of an attributive or deemed income in the hands of the assessee, and the AO is given the power to include unexplained cash in the hands of the assessee. Lovely Exports (supra) and various other decisions culminating are forthright that if the identity of the transaction and the genuineness are established, the burden cast upon the assessee is said to be discharged and the AO, in order to invoke Section 68, has to probe further and discharge the onus placed upon the Revenue. The question in this case, therefore, is whether those requirements are said to have been met with by the Revenue. 10. The remand in the first round of the litigation was on a narrow and pointed aspect, i.e. the identity of the remitters, M/s. Thailand and General Co. Ltd. and M/s. Preet Trading Co. Ltd. of Thailand. No doubt, the affidavits of the purchasers (of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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