ITAT CHANDIGARH - ACIT, LUDHIANA VS. A. P. REFINERY PVT. LTD.
ITA NO. 186/CHD/2016
10 FEBRUARY, 2017

Core Fact of the Case: ……..This appeal by revenue has been directed against the order of ld. CIT (Appeals)-2 Ludhiana dated 18.12.2015 for assessment year 2012-13 on the following grounds:

1) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting addition of Rs. 1,75,00,000/- made by the Assessing Officer u/s 68 of the IT Act on the issue of alleged receipt of share capital/premium by the assessee.

2) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting addition of Rs.1,59,00,000/- made by the Assessing Officer u/s 68 of the I.T. Act on the issue of peak credit in respect of unsecured loan received by the assessee.

Judgment: ………………………… The assessee has to initially establish the identity of the shareholder/lender, genuineness of the transaction and credit worthiness of the shareholder/lender………….. The assessee produced adequate evidences before the authorities below which would discharge burden on the assessee in proving identity of the shareholder/lender, genuineness of the transaction and credit worthiness of the shareholder…………. Therefore, if the Assessing Officer wanted to disbelieve these evidences and material on record, Assessing Officer should have brought some adverse material against the assessee on record which Assessing Officer has failed to do in this case…………. It is well settled law that additional burden was on the revenue to show that even if the share applicants did not have the means to make investment, the investment made by them actually emanated from the coffers of the assessee company so as to enable it to be treated as undisclosed income of the assessee. A.O. however, failed to do so………..Considering the facts and circumstances and material on record in the light of above discussion, we are of the view ld. CIT (Appeals), on proper appreciation of facts and material on record rightly deleted the addition of Rs. 3.34 Cr on account of investment in share capital/premium and peak credit of unsecured loans received by the assessee. The disallowance of interest was also correctly deleted by ld. CIT (Appeals). In the result, departmental appeal fails and is accordingly dismissed.

Analysis : In the case of JSM also, all required documents were placed before the Ld. A.O. to prove the identity and existence of the companies. No adverse material has been mentioned or found by the Ld. A.O.
* As the detailed judgment runs into several pages, it is not printed.