INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of share application money - Investors not appeared before AO--Assessee proved identity, creditworthiness and genuineness of transactions

Assessee-company raised share capital by issuing capital by issuing shares of face value of Rs. 10 each at premium of Rs. 40 per share. AO in order to verify these investments issued commission to DDIT (Inv.) Investigation Wing, Kolkata under section 131(1)(d) besides calling upon the assessee to furnish the evidences and documents proving the investments in share capital by the various investments. Assessee filed various evidences, however, no investor appeared before investigation wing. Therefore, AO treated amount received by assessee as unexplained credit under section 68. Held: Assessee filed various evidences comprising copies of bank statements of investors evidencing payments through banking channel, confirmations from investors, copies of ITRs and balance sheets of investors along with share application forms and share certificates. Accordingly, ingredients under section 68, namely, identity, creditworthiness of parties/investors and genuineness of transactions were satisfied and it was for AO to prove to the contrary, which AO failed to do so. Therefore, addition under section 68 was not justified.

Relied:CIT v. Lovely Exports (P) Ltd. (2008) 216 CTR 195 (SC) : 2009 TaxPub(DT) 261 (SC) and CIT v. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC) : 1986 TaxPub(DT) 1425 (SC) and Pr. CIT v. Ami Industries (India) (P.) Ltd. [ITA No. 1231 of 2017, dated 29-1-2020] : 2020 TaxPub(DT) 845 (Bom-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

INCOME TAX ACT, 1961

Rule 34(5)(c)

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