INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of share application money along with premium - Assessee having proved identity and creditworthiness of investors

AO required assessee-company to prove genuineness of share application money received by it and to prove identity, and creditworthiness of investors. Assessee filied copy of bank account statement of assessee, names and address of share applicants and their PAN details. However, AO treated amount received by assessee as unexplained credit under section 68 on the ground that notices under section 133(6) issued to some of the share applicants returned unserved. Held: AO had confirmed the bank accounts, ITRs and issuance of certificates in case of the share applicants. Also, share applicants were traceable by way of PAN, ITRs, Bank accounts and majority of them had responded to notices under section 133(6). Also, AO had not brought on record material to prove that extra premium was paid to assessee for shares or cash was deposited prior to issuance of cheques. Accordingly, AO was not justified in treating share application money/premium as unexplained credit under section 68.

Distinguished:CIT v. M/s. Vacmet Packaging (India) Pvt. Ltd. (All) [ITA No. 1 of 2014 (All) : 2014 TaxPub(DT) 2391 (All-HC);CIT v. Ultra Modern Exports Pvt. Ltd., ITA No. 262/2012 (Del) : 2013 TaxPub(DT) 0917 (Del-HC);Cornerstone property Investments Pvt. Ltd. v. ITO dt. 9-2-2018 (Bang) : 2018 TaxPub(DT) 1332 (Bang-Trib);DCIT v. M/s. Soni Hospital Pvt. Ltd., ITA No. 588/Jp/2011 (Jp) : 2015 TaxPub(DT) 3524 (Jp-Trib);PCIT v. NRA Iron & Steel Pvt. Ltd. (SC) (2019) 412 ITR 161 (SC) : 2019 TaxPub(DT) 1628 (SC);Mahaveer Kumar Jain v. CIT, Civil Appeal No. 4166 of 2006 (SC) : 2018 TaxPub(DT) 1992 (SC); and Jagmohan Ram Ram Chandra v. CIT (2005) 193 CTR 153 (All) : 2005 TaxPub(DT) 0533 (All-HC).

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2011-12

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