ACIT v. Supreme Placement Services (P) Ltd.

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The Tax Publishers2021 TaxPub(DT) 1535 (Del-Trib)

INCOME TAX ACT, 1961

Section 68

Though investors had filed return of income showing meager income, however, their balance-sheet clearly showed that they had sufficient bank balances with them in their bank accounts and accordingly all the investors have sufficient source with them to make investment in assessee-company. No evidence was found assessee received any bogus share capital/premium from any of the investor companies. AO did not call any investor under section 131 or under section 133(6) calling information directly from the parties. Therefore, AO was not justified to make addition under section 68.

Income from undisclosed sources - Addition under section 68 - Receipt of share capital - AO doubted creditworthiness due to investors having returned meager income

Assessee-company received share capital premium from certain investors. AO doubted creditworthiness of investors on the ground that investors had filed return of income showing meager income. Held: Though investors had filed return of income showing meager income, however, their balance-sheet clearly showed that they had sufficient bank balances with them in their bank accounts and in the balance-sheet their capital and reserves are ranging from Rs. 49 crores, Rs. 4 crores and Rs. 30 crores respectively. Thus, all the investors have sufficient source with them to make investment in assessee-company. No evidence was found assessee received any bogus share capital/premium from any of the investor companies. AO did not call any investor under section 131 or under section 133(6) calling information directly from the parties. Therefore, AO was not justified to make addition under section 68.

Relied:CIT v. Dwarakadhish Investment (P) Ltd. (2011) 330 ITR 298 (Del-HC), Rohini Builders (2002) 256 ITR 360 (Guj.) : 2002 TaxPub(DT) 305 (Guj-HC), Zafar Ahmad & Co. (2013) 30 Taxmann.com 269 (All-HC) : 2013 TaxPub(DT) 1318 (All-HC), CIT v. Fair Investment Ltd. (2013) 357 ITR 146 (Del-HC) : 2013 TaxPub(DT) 0912 (Del-HC), CIT v. Lovely Exports (P) Ltd. (2008) 216 CTR 195 : 2009 TaxPub(DT) 261 (SC), CIT v. Kamdhenu Steel and Alloys Ltd., & Ors. (2012) 361 ITR 220 (Del.-HC) : 2012 TaxPub(DT) 1644 (Del-HC), CIT v. Vrindavan Farms (P) Ltd., etc. ITA No. 71 of 2015, dated 12-8-2015 (Del-HC) : 2015 TaxPub(DT) 4373 (Del-HC), CIT v. Laxman Industrial Resources (P) Ltd., [ITA No. 169 of 2017, dated 14-3-2017] : 2017 TaxPub(DT) 4088 (Del-HC), Earth Metal Electric (P) Ltd., v. CIT, dated 30-7-2010 in SLP No. 21073 of 1999, Divine Leasing & Finance Ltd., (2008) 299 ITR 268 (Del.-HC) : 2008 TaxPub(DT) 400 (Del-HC), CIT v. Peoples General Hospital Ltd., (2013) 356 ITR 65 : 2013 TaxPub(DT) 1865 (MP-HC), CIT v. Winstral Petrochemicals (P) Ltd., (2011) 330 ITR 603 (Del-HC) : 2011 TaxPub(DT) 259 (Del-HC), CIT v. Value Capital Services (P) Ltd. (2008) 307 ITR 334 (Del.-HC) : 2008 TaxPub(DT) 1946 (Del-HC), Pr. CIT v. Kurele Paper Mills (P) Ltd., (2016) 380 ITR 571 (Del-Tib) : 2016 TaxPub(DT) 1068 (Del-HC), CIT, Orissa v. Orissa Corporation (P) Ltd., (1986) 159 ITR 78 (SC) : 1986 TaxPub(DT) 1425 (SC), Pr. CIT v. Chain House International (P) Ltd., (2018) 98 Taxmann.com 47 (MP-HC) : (2018) 408 ITR 561 (HC-MP) : 2018 TaxPub(DT) 5193 (MP-HC)