INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Alleged unexplained share application and share premium - Disallowance of two share applicants already made

During the course of assessment proceedings, on verification of the Balance Sheet of the assessee company, it was noticed by the AO that all the share application money and share premium money were received by the assessee-company from the three share applicant companies during the period December, 2012 to March, 2013. companies during the financial year 2009-10. Share application money and share premium money raised from paper companies were disallowed under section 263/147/143(3) in the assessment year 2010-11 by the respective AO. The AO concluded that assessee-company had failed to prove, identity of share applicants, genuineness of transaction and creditworthiness of share applicants as per the provisions of section 68, and noted that the amount of Rs. 17,49,95,000 claimed to have been received as share application money and share premium was treated as Assessee's own unaccounted income introduced in its business in the disguise of share application and share premium money, hence he made addition to the tune of Rs. 17,49,95,000. Assessee contended that all the share application money and share premium money which were received by the assessee-company from the two share applicant companies (M/s. P V (P) Ltd., M/s. G-V (P) Ltd.,), during the period December, 2012 to March, 2013 had already been suffered disallowance under section 68. Therefore, no further disallowance is warranted in the hands of the assessee-company.Held: In the facts of the present case, both the nature and source of the share application received was fully explained by the assessee. the share application money and share premium money which were received by the assessee-company from the two share applicant companies viz: M/s. PV (P) Ltd., and M/s. GV (P) Ltd., during the period December, 2012 to March, 2013 had already been suffered disallowance under section 68. As these two share applicant companies invested the same money in the assessee-company, therefore, no further disallowance was warranted in the hands of the assessee-company. Once taxed income cannot be taxed again. Besides, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the these three share applicants by submitting the relevont documents and evidences. All there documents were, the PAN details, bank account statements, audited financial statements, balance sheet, profit and loss account, income-tax acknowledgments, and ROC statements etc were placed on AO's record. One of the directors of share applicant companies appeared before the AO in response to summon under section 131 and explained the genuineness of three share applicants. Therefore, considering this factual position and precedents relied on the subject, the addition made by the AO under section 68 to the tune of Rs. 17,49,95,000 was, therefore, deleted.

Relied:Anand Prakash Agarwal 6 DTR (all-Trib) 191, Nemi Chand Kothari 136 Taxman 213 (Gau) : 2003 TaxPub(DT) 1401 (Gau-HC), Earth Metal Elecricals (P) ltd. v. CIT & Anr. [special leave to Appeal (Civil) No(s) 21073/2009, dt. 30-7-2010, Pr. CIt v. Paradise Inland Shipping (P) ltd. 84 Taxmann.com 58, Pr. CIt v. Vaishnodevi Refoils & Solvex (2018) 96 Taxmann.com. 469 (SC), Pr. CIt v. Chain House International (P) ltd. 92018) 98 Taxmann.com 47. CIT v. Gagandeep Infrastructure (P) Ltd. (2017) 80 Taxmann.com 272 : (2017) 394 ITR 680 (Bom) : 2017 TaxPub(DT) 1238 (Bom-HC), CIT v. Anshika Consultants (P) Ltd. 62 Taxmann.com 192, Jagannath Banwarilal Texofabs (P) Ltd. ITA No. 1762/Kol/2016, For assessment year 2012-13, Order, dt. 26-10-2018 and Wiz-Tech Solutions (P) Ltd. ITA No. 1162/kol/2015, for assessment year 2012-13, Order, dt. 14-6-2018.

REFERRED : CIT v. Smt. P. K. Noorjahan (1999) 237 ITR 570 (SC) : 1999 TaxPub(DT) 80 (SC), Orissa Corpn. (P) Ltd. (1986) 159 ITR 78 (SC) : 1986 TaxPub(DT) 1425 (SC), Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (Guj) : 2002 TaxPub(DT) 305 (Guj-HC), CIT v. Jalan Hard Coke Ltd. 95 Taxmann.com 330, CIT v. Orchid Industries (P) Ltd. (2017) 88 Taxmann.com 502 : (2017) 397 ITR 136 (Bom) : 2017 TaxPub(DT) 1911 (Bom-HC), CIT v. Orchid Industries (P) Ltd. (2017) 88 Taxmann.com 502 : (2017) 397 ITR 136 (Bom) : 2017 TaxPub(DT) 1911 (Bom-HC), S.K. Bothra & Sons, HUF v. ITO, Ward-46(3), Kolkata (2012) 347 ITR 347 (Cal.) : 2012 TaxPub(DT) 815 (Cal-HC), Crystal Networks (P) Ltd. v. CIT (2013) 353 ITR 171 (Cal) : 2013 TaxPub(DT) 1470 (Cal-HC), CIT v. Data ware (P) Ltd. (ITAT No. 263 of 2011), dt. 21-9-2011, CIT-IV v. Roseberry Mercantile (P) Ltd., ITAT No. 241 of 2010, dt. 10-01-2011 and CIT v. Nishan Indo Commerce Ltd. in ITA No. 52 of 2011, dt. 2-12-2013.

FAVOUR : In assessee's favour.

A.Y. : 2013-14

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