Genuinity of Transaction is to be proved by Assessee as Statutory Approvals doesn't sanctify Transaction

In M/S. Vishwatej Developers Private Limited vs. Assistant Commissioner of Income Tax [No. - W.A.No.1791 of 2021 And C.M.P.No.1181 of 2021 dated August 23, 2021], M/s Vishwatej Developers Private Limited ("the Appellant'') has filed the current writ petition against the Order dated June 15, 2021, which is a common order in two writ petitions and the Appellant has preferred this appeal as against the decision rendered in W.P.No.1103 of 2011. dated December 30, 2010.

The Appellant had challenged an Assessment Order passed by the Assistant Commissioner of Income Tax ("the Respondent No.1") under Section 143(3) of the Income Tax Act, 1961 ("the IT Act") which was issued as a result of the income return of the Appellant being taken up for scrutiny by Assistant Commissioner Circle V(3) ("Respondent No. 2"). During the process of which, the matter was transferred back to the Respondent No.1 who thereby passed an Assessment Order dated December30, 2010 which is challenged in the current writ petition.

The Appellant contended that the Respondent No. 1 has invoked Section 68 of The Income Tax Act, 1961("the IT Act") as it erroneously concluded that there lies an unexplained investment worth Rs. 316 Crores received from a foreign entity based in Dubai in the books of the Appellant. Further contended the funds were provided by the Dubai company to the Mauritius company and from Mauritius to the Indian companies.

The Revenue contended that the Appellant has not proved the genuinity and the credit worthiness of the Mauritius company and therefore, the entire share application money was treated as undisclosed income and added to the returned income by applying Section 68 of the Act.

The Hon'ble Madras High Court observed that the onus of proving the genuineness of a transaction lies on the Appellant. To eject the findings of the Assessing Authority, a deeper examination into the facts has to be done and such exercise cannot be undertaken in a writ petition.