ITAT confirmed deletion as assessee had prima facie proved the nature of credit

1. The assessee had received share application money from various companies. The total share application money received from various companies aggregated to Rs. 2,37,24,900/-. From the stage of the CIT(A), relief of Rs.1,98,49,900/- was given on account of share application received from Smt Nirmala Barmecha, however, in respect of five companies share application money received was confirmed by the CIT(A) under section 68 (of Income Tax Act, 1961), as unexplained credit. In the quantum proceedings, the addition has been confirmed only on the ground that the addresses of these companies were same and their bank account were opened in the same bank and all of them remitted the amount of share application money on the same day. However, there was no further enquiry by the AO either in the course of the assessment proceedings or in the course of penalty proceedings, to rebut the assessee's evidence and explanation. During the course of penalty proceedings, the assessee had submitted the entire documents and evidences including bank account of the parties; Balance sheet; copy of return of income filed; confirmation letter; Form No. 2 filed with the Registrar of Companies; 'PAN card', etc. AO levied a penalty.

2. CIT(A) deleted the penalty.

3. On apeal, the ITAT held as under:

"The Explanation 1 to section 271(1)(c) (of Income Tax Act, 1961) raises rebuttable presumption and once the assessee has furnished all the evidences in support of its explanation and has substantiated his claim then the onus cost upon him is discharged and onus then shifts upon the AO to prove that such an explanation or evidence is false. Here in this case the AO has failed to rebut the assessee's explanation regarding nature and source of credit by conducting any enquiry or brining any material on record. The degree of burden under section 68 (of Income Tax Act, 1961) upon the assessee is to prima facie prove the nature of credit and then source which has to be proved by showing the identity, creditworthiness and genuineness of the transaction. Here all these primary ingredient has been discharged. Therefore, on these facts, the finding given by the CIT(A), as above cannot be deviated from and accordingly, the same is confirmed. Accordingly, ground raised by the revenue stands dismissed.”

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