INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Treating of share capital and share premium amount as unexplained cash credits -

During the course of assessment proceedings, assessee could not explain satisfactorily share capital raised during the year under consideration in terms of section 68. AO made addition under section 68 by treating the amount as unexplained. CIT(A) also made a further addition by treating share premium amount received by the assessee as unexplained cash credits. Assessee's contention was that proper and sufficient opportunity in respect of explaining cash credits in form of share capital and share premium amount was not given to it. Held: The assessee was very much in a position to produce shareholders for verification before the AO and also to produce all relevant documentary evidence to explain the share capital as well as share premium amounts in terms of section 68. Therefore, opportunity was given to the assessee to explain the relevant cash credits representing share capital and share premium amounts in terms of section 68. Thus, the order of the CIT(A) was set aside and the matter was restored to the file of the AO for deciding the same afresh.

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2005-06

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