INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of share capital along with higher premium - Non-production of parties before AO--Assessee having filed supportive evidences

Assessee-company claimed to have received share capital along with premium. AO sought to treat the amount received as unexplained cash credit under section 68 on the ground that assessee had not justified charging of higher premium on shares without there being any corresponding business activity to justify projections and estimates relied upon for arriving at share premium. Assessee furnished complete details of share subscribers including their names and addresses, PAN, income-tax returns, copies of financial statements, bank statements, letter of allotment, etc. However, AO made addition on the ground that assessee failed to produce the parties before AO.Held: Once assessee discharged initial burden cast under 68 by filing necessary evidences, then burden shifted to AO to prove otherwise. As apparent, AO except doubting genuineness of transaction for charging higher premium on shares, did not bring on record any other evidence to disprove voluminous evidences filed by assessee. Therefore, merely for the reason that parties did not appear before AO or the assessee could not produce parties in person before AO, the whole set of documents produced to prove genuineness of transactions, could not be disregarded when AO did not have anything more than suspicion in his possession to doubt the transactions. Therefore, addition under section 68 was deleted.

Relied:CIT v. Lovely Exports (P) Ltd. (2008) 216 CTR 195 (SC) : 2009 TaxPub(DT) 261 (SC) and CIT-1 v. Gagandeep Infrastructure (P) Ltd. (2017) 394 ITR 680 (Bom) : 2017 TaxPub(DT) 1238 (Bom-HC).

REFERRED : CIT v. Gangeshwari Metal (P) Ltd. (2014) 361 ITR 10 (Del) : 2013 TaxPub(DT) 1319 (Del-HC), CIT v. Divine Leasing & Finance Ltd. (2008) 299 ITR 268 (Delhi) : 2008 TaxPub(DT) 400 (Del-HC), Hindustan Inks & Resins Ltd. v. Dy. CIT in (Tax Appeal No. 523 of 2004, dt. 17-6-2011) : 2011 TaxPub(DT) 2102 (Guj-HC), CIT v. K.C. Fibres Ltd. ITA No. 701 of 2009 (Del), CIT v. STI- Extrusion (P) Ltd. (2011) 333 ITR 269 (MP) : 2011 TaxPub(DT) 574 (MP-HC), CIT v. Prayag Hospital & Research ITA No. 917of 2009, CIT v. TDI Marketing (P) Ltd. IT Appeal No. 340 of 2009 and CIT v. Gangour Investment Ltd. (2011) 335 ITR 359 (Del) : 2009 TaxPub(DT) 1400 (Del-HC) .

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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