INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - No genuineness of the transaction and the identity and creditworthiness of the creditors not proved -

During the course of assessment proceeding upon verification of the details submitted by the assessee it was noticed that assessee had received Share Application Money. The identity, creditworthiness of the creditors and the genuineness of the transactions were not found to have been established by the assessee and the said amount of Share Application Money was added to the total income of the assessee by AO under section 68 which was, in turn, deleted by First Appellate Authority. Held: Assessee had given adequate information in order to proof the genuineness of the transaction as well identity of the creditors, whereas the condition mentioned in provision of section 68 is this that when any sum is found credited in the books of the assessee maintained for any previous year and no explanation about the nature and source thereof or the explanation offered by him, is not in the opinion of AO satisfactory, the same so credited is to be charged to Income Tax as the income of the assessee. Where assessee is a company wherein the public are not substantially interested and the sum so credited consists of Share Application Money, share capital, share premium or any such amount, by whatever name called, explanation offered by such assessee shall be deemed to be not satisfactory. Since provision of section 68 was satisfied, therefore, AO rightly added the impugned amount in the hands of assessee.

Relied:Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (Guj.) : 2002 TaxPub(DT) 0305 (Guj-HC) CIT v. Metachem Industries (2000) 160 ITR 245 (MP) : 2000 TaxPub(DT) 0822 (MP-HC) CIT v. M/s. Lovely Exports (P) Ltd. (2009) 216 CTR 195 (SC) : 2009 TaxPub(DT) 0261 (SC) CIT v. Gujarat Heavy Chemicals Ltd. (2002) 256 ITR 795 (SC) : 2002 TaxPub(DT) 0822 (SC)

REFERRED :

FAVOUR : Against the assessee

A.Y. :

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