The court upheld that burden of proof under Section 68 lies with the assessee, reinforcing the requirement to substantiate the genuineness and identity of investors for share capital contributions.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned Senior Standing Counsel Mr. Karan G. Sanghani for the appellant.

2. This appeal is preferred under section 260A of the Income Tax Act, 1961 (For short “the Act”) raising the following substantial question of law arising out of order dated 28.03.2024 passed by the Income Tax Appellate Tribunal, Rajkot (For short “the Tribunal”) in ITA No.373/Rjt/2015 for Assessment Year 2011-2012:

“i) Whether the Appellate Tribunal has erred in law and on facts in deleting the addition made under section 68 of the Act without appreciating that the assessee has introduced unaccounted money in form of bogus share capital and share premium raised from paper companies/ accommodation entries and therefore, the same is an unexplained capital introduction under section 68 of Income-tax Act, 1961?"

3. Brief facts of the case are that the assessee is a private limited company and engaged in the business of manufacturing Brass products.

4. The Assessing Officer passed an order dated 13.02.2015 under Section 153A read with section 143(3) of the Act for the year under consideration assessing total income at Rs.13,73,05,004/-.

5. Being aggrieved, the respondent assessee preferred an appeal before the CIT(Appeals) who by order dated 14.05.2015 partly allowed the appeal and deleted the addition made under section 68 of the Act.

6. The appellant Revenue preferred an appeal before the Tribunal who by order dated 24.02.2023 dismissed the appeal confirming the order passed by CIT(Appeals) on the issue of addition under section 68 of the Act.

7. Being aggrieved, the Revenue preferred Tax Appeal No.508 of 2023 before this Court which was also dismissed by order dated 29.08.2023.

8. It appears that against the order dated 24.2.2023 passed by the Tribunal, the appellant Revenue had also preferred Miscellaneous Application No.33/Rjt/2023 before the Tribunal on the ground that the arguments and the submissions made by the departmental representative was not considered in the order. The fact of preferring Miscellaneous Application was not disclosed before this Court. The Tribunal however, without considering the order passed by this Court dated 29.08.2023 recalled the order dated 24.02.2023 passed in ITA No. 373/Rjt/2015.

9. It is pertinent to note that once this Court has passed the order dated 29.08.2023 dismissing the tax appeal of the Revenue, order passed by the Tribunal on 24.02.2023 had already merged into order of this Court and therefore, the Tribunal could not have recalled the said order.

10. Be that as it may, the Tribunal thereafter again by the impugned order dated 28.03.2024 dismissed the appeal of the Revenue reiterating the same reasoning which were given in order dated 24.02.2023 dismissing the appeal of the Revenue which is confirmed by this Court.

11. The Tribunal while recalling its order dated 24.02.2023, has observed as under:

“12. We have heard the rival contentions of both the parties and perused the materials available on record. The facts of the case are not in dispute. Therefore, we are not inclined to repeat the same. The provisions of Section 68 of the Act fasten the liability on the assessee to provide the identity of the lenders/creditor/investor, establish the genuineness of the transactions and creditworthiness of the lenders/creditor/investor. These liabilities on the assessee were imposed to justify the cash credit entries under Section 68 of the Act by the Hon'ble Calcutta High Court in the case of C