INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Alleged uenxplained share application/share premium - Identity, creditworthiness and genuineness of transaction proved

AO noted that during relevant assessment year the assessee company had raised capital of Rs. 21,07,55,000 including share premium by issuing shares to different concerns with higher premium. According to AO, the show cause notice along with summons issued to the share subscribers were returned by the postal authorities with the remark 'insufficient address' goes on to show that the assessee failed to prove the identity, creditworthiness and genuineness of the transaction so he made an addition of Rs. 21,07,55,000. Aggrieved, the assessee was in appeal before the CIT(A), who deleted the same.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 assessee had thus, discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax assessments under section 143(3) were placed on record. Accordingly all the three conditions as required under section 68, i.e., the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO was based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under section 68. Therefore, Tribunal does not want to interfere in the impugned order of CIT(A) which was confirmed and consequently the appeal of revenue was dismissed.

Relied:CIT v. Mayawati (2011) 338 ITR 563 (Delhi) : 2011 TaxPub(DT) 1993 (Del-HC), CIT v. Smt. P. K. Noorjahan (1999) 237 ITR 570 (SC) : 1999 TaxPub(DT) 80 (SC), Orissa Corpn. (P) Ltd. (supra) (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), Nemi Chand Kothari (2004) 136 Taxman 213 (Gau) : 2003 TaxPub(DT) 1401 (Gau-HC), CIT v. S. Kamaljeet Singh (2005) 147 Taxman 18 (All.) : 2005 TaxPub(DT) 1275 (All-HC), S.K. Bothra & Sons, HUF v. ITO, Ward-46(3), Kolkata (2012) 347 ITR 347 (Cal.) : 2012 TaxPub(DT) 815 (Cal-HC), CIT v. Gangeshwari Metal (P) Ltd. in ITA No. 597/2012 judgment, dated 21-1-2013, Nova Promoters and Finlease (P) Ltd. (2012) 342 ITR 169 (Del-HC) : 2012 TaxPub(DT) 1558 (Del-HC) and Finlease (P) Ltd. (2012) 342 ITR 169 (Del-HC) : 2012 TaxPub(DT) 1558 (Del-HC) ITA 232/2012 judgment dt. 22-11-2012