The main legal point established in the judgment is the onus on the assessee to provide a reasonable explanation for the nature and source of credit amounts under Section 68 of the Income Tax Act, 1961, and the assessing officer's authority to make best judgment assessments in cases of non-cooperation.

Sanjiv Khanna, J.

1. This appeal by the Revenue relates to assessment year 2002-03 and was admitted for hearing by order dated 13th November, 2013 on the following substantial question of law:

“Whether the Income Tax Appellate Tribunal was right in deleting the addition of Rs. 55,66,995/- under Section 68 of the Income Tax Act, 1961 by applying correct principles?”

The said order also records that the aforesaid question will include the aspect whether the impugned decision is perverse.

2. The impugned order passed by the Income Tax Appellate Tribunal (Tribunal, for short) dated 9th September, 2011 affirms the order of the Commissioner of Income Tax (Appeals) CIT (A), for short, deleting the addition of Rs. 55,66,995/- purportedly received by the respondent assessee, a company, on account of share allotment. It has been held that the assessee has been able to discharge the onus and prove the identity, creditworthiness of the share applicants, and genuineness of the transactions on the ground that copy of the PAN number, income tax returns and bank details, etc. were filed and hence, ratio of the decision of the Supreme Court in CIT vs. Lovely Exports Pvt. Ltd. (2008) 299 ITR 268 (SC) and that of Delhi High Court in CIT vs. Rockford Metal & Minerals Ltd. 198 Taxman 497 (Del), applied. Consequently, the addition of the above said amount by invoking Section 68 of the Income Tax Act, 1961 (Act, for short) by the Assessing Officer, was contrary to law, and should be deleted.

3. At the outset, we notice that there is a big divergence on the aspect of PAN details, income tax returns, etc. as recorded in the assessment order dated 18th December, 2007 and as per the findings recorded by CIT (A) and the Tribunal. The assessment order records that the authorized representative of the assessee was pointedly asked to provide details vide note sheet entry dated 20th July, 2007, on the business activities carried out during the year; details of the share capital raised during the year; details of the investment made during the year; details of the loans and advances made during the year; job work income during the year; shareholding pattern, copy of all accounts of the company; list of bank accounts of Directors; and, a note justifying the expenses. Thereafter, the assessee did file some details but they were not exhaustive/complete. For example, the details of accounts received on account of share premium were not furnished along with the details of share capital, and the address and PAN numbers were not provided for all parties. Some other details were filed consisting of some short notes and a list without PAN numbers and addresses of the investors. In these circumstances, the assessment order passed was under Section 144 read with Section 147 of the Act. Thus, in the present case, the assessee had not cooperated in the assessment proceedings and hence, best judgment assessment was made.

4. The CIT (A) has recorded that the authorized representative of the assessee had brought to his notice relevant pages of the paper book wherein confirmation of the respective share applicants, their income tax returns, their PAN card and election card, etc. were made available. Tribunal had proceeded on the findings recorded by the CIT (A).

5. On being queried in the Court, learned counsel for the assessee accepted that these details might not have been filed during the course of the reassessment proceedings but were filed during the course of the original assessment proceedings, which had resulted in an order under Section 143(3), dated 29th November, 2004. There is no such finding recorded by the CIT (A) or the Tribunal. However, what is clear is that in the reassessment order dated 18th December, 2007, passed under Section 144 read with Section 147 of the Act, there is an unambiguous, assertive and decisive finding that the assessee had failed to cooperate and furnish the details. The assessment order records that summons under Section 131 of t