The Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) held that the receipts by the taxpayer cannot be added to income for non-compliance of summons under Section 131 of the Income Tax Act, 1961.
The only issue raised by the assessee is the confirmation of addition of Rs. 1.21 Crore by the CIT(A) as made by the Assessing Officer ( AO ) on account of share capital/share premium being unexplained cash credit under Section 68 of the Income Tax Act.
The AO issued summons under Section 131 of the Income Tax Act to the director of the assessee company in order to secure their presence. However, no compliance made to the said summons. Finally, the AO added the entire share capital and share premium to the tune of Rs. 1.21 Crore to the income of the assessee as unexplained cash credit on the ground that there was no compliance to the summons issued under Section 131 of the Income Tax Act and therefore, identity, creditworthiness of the subscribers and genuineness of the transactions could not be examined.
The assessee has filed all the details/evidences before the AO qua the subscribers namely ITRs, balance sheets, addresses and bank accounts before the AO. However, the AO without doing any further investigation treated the share capital/share premium as unexplained cash credit on the ground that summons issued under Section 131 of the Income Tax Act were not complied with.
A Two-Member Bench comprising Sonjoy Sharma, Judicial Member and Rajesh Kumar, Accountant Member observed that “In our opinion, once the assessee has filed the evidences as required by the AO in order to prove the share capital/share premium then the assessee has discharged his onus of filing the documents initially and the burden shifts to the Revenue. In other words, the AO has to carry out further verification/examination of these evidences and then come to a conclusion as to how the share capital/share premium is not proved and not merely on the ground that the assessee has not complied with the summons issued under Section 131 of the Income Tax Act.”
“The amounts received by the assessee cannot be added to the income of the assessee for just non-compliance of summons. The case of the assessee finds support from the decision of Coordinate Bench in the case of Yash Movers Pvt. Ltd. vs. ITO” the Tribunal noted.
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