COMMISSIONER OF INCOME TAX - II, V. M/s. Rusmi Distilleries Pvt. Ltd.,

ITTA/79/2013

AI Insights

The case involved the Commissioner of Income Tax-II, Hyderabad, as the appellant, and M/s. Rusmi Distilleries Pvt., Ltd., Hyderabad, as the respondent. The core issue was the addition of Rs.43,24,600 towards unexplained share applications under section 68 of the Income Tax Act. The ITAT had deleted this addition, leading to the appeal by the Commissioner of Income Tax. The High Court examined whether the ITAT was justified in its decision and whether the assessee had discharged the onus of proving the identity, creditworthiness, and genuineness of the share application money received. The court concluded that the ITAT's findings were based on a proper appreciation of facts and evidence, and thus, no substantial question of law arose.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 719128 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 25-06-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Creditworthiness; Genuineness of transaction; Income Tax; ITAT; Share Application Money; Unexplained share applications
• Section: 68; 131

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE MS. JUSTICE G. ROHINI I.T.T.A. No.79 of 2013 DATE: 25.06.2013 Between: Commissioner of Income Tax-II, Hyderabad. … Appellant And M/s. Rusmi Distilleries Pvt., Ltd., Hyderabad. … Respondent This Court made the following: THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE MS. JUSTICE G. ROHINI I.T.T.A No.79 of 2013 JUDGMENT: (Per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be admitted on the following suggested substantial questions of law. “1. Whether in the given facts and circumstances of the case, the ITAT is justified in deleting the addition of Rs.43,24,600/- made towards unexplained share applications u/s.68-such deletion being totally contrary to the facts and evidence brought on record by the AO, in respect of each of the component of the aggregate figure i.e., Rs.43,24,600/-? 2. Whether the Appellate Tribunal is justified in holding that the assessee discharged primary onus cast on it by mere establishing the identity of the creditors by furnishing their permanent account number and the creditors filing their income tax returns? 3. Whether the finding of the appellate Tribunal that the primary onus in connection with the above was discharged by the assessee can be said to be based on material on record?” After hearing the learned counsel for the appellant and after going through the impugned order of the learned Tribunal it appears to us that no question of law is involved in the matter, as the learned Tribunal decided the matter on appreciation of fact. How the appreciation of fact was recorded by the learned Tribunal is set out hereunder: “We find that the aforesaid amount was received by the assessee company towards share application money. For instance, with regard to the investment of Rs.2,20,000/- made by Shri Sai Venkata Kumar, we find that the share-applicant categorically stated that he has invested such amount in the assessee company in the statement recorded under Section 131 of the Act. We also find that the identity and creditworthiness of the share-applicant was proved by way of filing the income-tax returns and employee identity proof issued by the Indian Air Force. Similarly we find that all the share- applicants are income-tax assesses and all were presented before the assessing officer except the share-applicant of J. Ankineedu. It is pertinent to note that the initial burden is upon the assessee to explain the nature and sources of share application money received by it. In order to discharge its burden, the assessee company has to prove the identity of shareholders, creditworthiness of the shareholders and the genuineness of the transaction. In the case under consideration, the assessee company had produced before the assessing officer all the share applicants except one person called Sri J. Ankineedu. The CIT(A) clearly observed in his order that all the 13 share-applicants are existing. Once the CIT(A) observed that the shareholders are existing, the identity is proved. Hence, in our considered view, the assessee company satisfactorily discharged its onus caste upon it.” The above fact-finding of the learned Tribunal is so compact that this Court, in any circumstances, cannot touch the same. Once the identity is established, it is heavy burden on the part of the revenue asking the adjudicating authority concerned to disbelieve it. The Commissioner of Income Tax (Appeals) as well as the learned Tribunal have correctly accepted the factual position and granted relief. Therefore, we do not find any error in the order impugned to interfere with the same. The appeal is accordingly dismissed. No costs. _____________________ K.J. SENGUPTA, CJ ______________ G. ROHINI, J Date: 25.06.2013 ES "