· During the course of assessment, AO asked the assessee to file details in respect of share capital of Rs.3,26,00,000/- raised during the year from 19 parties.The assessee submitted the details thereof along with evidences.
· AO not being satisfied with the reply and evidences submitted by assessee, added a sum of Rs.86 Lakhs, being the share capital received from 4 shareholders during the year.
· CIT(A) also not being satisfied with the explanation and evidences of the assessee confirmed the addition made by the AO.
· The ITAT took note of the fact that the assessee duly filed the following evidences before the lower authorities:
(a) Confirmation
(b) Acknowledgement of income tax return
(c) Share application form
(d) Bank statement to demonstrate that there is no cash deposits in the bank account
(e) Audited Balance Sheet of each of the 4 shareholders to demonstrate that the net worth of each of the shareholders was substantial
· The Tribunal further took note of the fact that out of the total share capital of Rs.3.26 Crores received by the assessee company from 19 shareholders, the AO drew adverse inference only against 4 parties, from whom he did not receive replies in response to notices issued u/s 133(6) of the Act.
· Thus, the Tribunal was of the view that the assessee having discharged its onus, it was upon the AO to bring material or evidence to discredit the same, which has not been done in the case of assessee.
· ITAT further stated that the AO might have been justified in a circumstance where notice could not be served or when an adverse reply would have been received in response to notice issued by him u/s 133(6), but merely non-receipt of reply cannot be a justification for drawing adverse inference against the assessee.
· Therefore, the Tribunal concluded that the assessee had fully discharged its onus u/s 68 of proving the identity and creditworthiness of the parties and genuineness of the transaction, and accordingly directed to delete the addition made by the AO, and thus, allowed the appeal of the assessee.
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Further Reading