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2013 Supreme(Del) 2464
DELHI HIGH COURT
Sanjiv Khanna, Sanjeev Sachdeva, JJ.
Commissioner of Income Tax Delhi - Appellant
Versus
Globus Securities & Finance Pvt.Ltd. - Resopndent
ITA 409/2012
Decided On : 10-12-2013
For the Appellant : Mr. Sanjeev Sabharwal, Sr. Standing Counsel.
For the Respondent: Mr. Salil Kapoor with Mr. Sanat Kapoor, Mr. Vikas Jain , Ms. Sugandha Anand, Advs.
The onus to prove the identity, creditworthiness, and genuineness of the transaction under Section 68 of the Income Tax Act, 1961 lies with the assessee, and the reliance on neutral documentary evidence may not always be sufficient.
Headnote:
Section 68 - Assessment Year 2006-07 - Income Tax Act, 1961 - Section 68
Fact of the Case:
The respondent assessee received Rs.51,10,000 from six different companies as share capital and premium. The Revenue challenged the deletion of the amount included by the assessing officer under Section 68 of the Income Tax Act, 1961.
Finding of the Court:
The tribunal held that the respondent assessee had discharged the onus under Section 68 by providing sufficient evidence of the identity, creditworthiness of the shareholders, and genuineness of the transactions.
Issues: The main issue was whether the respondent assessee had established the identity, creditworthiness of the shareholders, and genuineness of the transactions to discharge the onus under Section 68.
Ratio Decidendi: The court emphasized that the onus to prove the identity, creditworthiness, and genuineness of the transaction is on the assessee, and mere reliance on neutral documentary evidence may not always be sufficient. The court also highlighted the importance of surrounding and corroborative factual details in establishing the onus.
Final Decision: The court remanded the case to the tribunal for a fresh decision, considering all the facts and circumstances, and conducting a detailed inquiry into the issue.
Sanjiv Khanna, J.
his appeal by the Revenue which relates to assessment year 2006-07 stands for adjudication on the following question: “Whether the impugned order of the Income Tax Tribunal (ITAT) is an error of law in approving the deletion of the amount included by the assessing officer by applying Section 68 of the Income Tax Act, 1961, in the facts and circumstances of the case?”
2. Commissioner of Income Tax (Appeals) and the tribunal have held that the respondent assessee has been able to discharge onus under Section 68 of the Act as the respondent assessee had filed names and addresses of share applicants, PAN number details, confirmation letters, their income tax returns, copies of bank statements of share applicants from the account from which investments were made, copy of share application form and copy of audited balance sheet of the share applicants. It has been accordingly held that the identity, creditworthiness of the shareholders and genuineness of the transactions has been established. Reference and reliance was placed on judgments of Delhi High Court in CIT vs. Stellar Investment Ltd. [1991] 192 ITR 287, Monnet Ispat and Energy Ltd. vs. DCIT (2008) 171 Taxman 27, CIT vs. Divine Leasing and Finance Ltd. (2007) and CIT vs. Lovely Exports Pvt. Ltd. both reported (2008) 299 ITR 268. Some other decisions have also been referred to in the order of the Commissioner of Income Tax (Appeals) (CIT (A) for short).
3. For the sake of convenience, we are reproducing below the observations made by the Tribunal in their order dated 4th November, 2011 dismissing the appeal of the Revenue. The relevant paragraph reads as under:
“4. We have considered the facts of the case and submissions made before us. We find that the assessee had filed sufficient evidence in the form of name, address and PAN details of the contributors. Further, copies of confirmation, income-tax return, bank statement, share application form and balance-sheet have also been filed. These details establish the identity of the contributors. This, in fact, has not been doubted by the AO also. He has relied on information received from investigation wing, which listed four of the contributors as persons who were indulging in furnishing accommodation entries. This point has not been examined in details by making any further enquiry. He has also noted that there are matching credits in the case of Inter Stellar Exports Pvt. Ltd., Sober Associates Pvt. Ltd. and Ritika Finance & Investments Pvt. Ltd. However, further enquiry has not been made in the case of the contributors to establish in any manner that the source of the credits was the assessee. It has also been found that shares were issued in the immediately preceding year and no premium was charged. This does not lead to the inference that the amount of premium received in this year is bogus or that such amount flowed from the coffers of the assessee. Therefore, we are of the view that the enquiries do not establish that source of the contribution was the assessee. On the other hand, the identities of the contributors have been established. In the light of the decision in the case of Lovely Exports (P) Ltd. (supra), the assessee was not required to bring anything further than establishing the identity. Thereafter, if any doubt persisted, the action lied in the case of the contributors. Accordingly, it is held that the ld. CIT(Appeals) was right in deleting the addition.”
4. It is an undisputed position that during the assessment year in question, the respondent assessee had received Rs.51,10,000/- from six different companies as per details given below:
“1. M/s Inter Steller Exports Pvt. Ltd. Rs. 9,35,000
2. M/s Parivartan Capital & Financial Services Pvt. Ltd. Rs. 9,75,000
3. M/s Sober Associates Pvt. Ltd. Rs. 7,00,000
4. M/s Ritika Finance & Investment Pvt. Ltd. Rs.10,00,000
5. M/s Victoria Advertising Pvt.Ltd. Rs. 9,00,000
6. M/s Shri Niwas Leasing & Finance Ltd. Rs. 6,00,000 Total Rs.51,10,000”
5. These s
