| The Tax Publishers2023 TaxPub(DT) 687 (Kol-Trib) INCOME TAX ACT, 1961
Section 68
Where assessee furnished all the evidences proving identity and creditworthiness of shareholders and genuineness of transactions and AO did cross-verification by issuing notices under section 133(6) to the shareholders, which were duly responded by them by filing all the requisite details and also the AO did not point out any defect or deficiency in the evidences filed by the assessee as well as by the shareholders; the AO was not justified in making addition under section 68 on account of unexplained cash credit merely for non-production of Managing Directors of the shareholding companies.
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Income from undisclosed sources - Addition under section 68 - Unexplained cash credit - Assessee duly furnished all evidences proving identity and creditworthiness of shareholders and genuineness of transactions --- Non-production of Managing Directors of shareholding companies
Assessee-company's case was selected for scrutiny for the reason of high premium. During the year, the assessee issued equity shares of face value of Rs. 10 at a premium of Rs. 490 per equity share. Accordingly, AO called upon the assessee to prove genuineness of transactions and also identity and creditworthiness of shareholders. AO also issued notice under section 131 to directors of the assessee calling upon them to produce Managing Directors of all the shareholding companies. Assessee filed evidences before the AO comprising names, addresses, PANs of investors, bank statements, etc. Further, the AO also issued notices under section 133(6) to all the shareholders. All the shareholders responded to the said notices and filed requisite information before the AO. However, the AO made addition on account of share capital and share premium by treating the same as unexplained cash credit under section 68 on the ground that genuineness and creditworthiness of the investors could not be verified due to non-production of the Managing Directors of the share subscribing companies. On appeal, CIT(A) deleted the said addition. Held: Assessee-company furnished all the details in support of share capital and share premium raised by it besides the details of investors. It filed names, addresses, PANs of investors, bank statements, statement giving complete details of the share application money, etc. Further, notices under section 133(6) issued to all the investors, were duly responded by them by filing all the requisite details comprising shares subscribed, ledger accounts, bank statements, ITRs, etc. Further, the AO did not point out any defect or deficiency in the evidences filed by the assessee as well as by the investors. AO mainly harped on non-production of Managing Directors of the share holding companies to make addition under section 68. Moreover, the assessments framed in cases of all the investors were also furnished. Therefore, non-production of the Managing Directors of the shareholding companies could not be a ground for making addition in the hands of the assessee under section 68 when the other evidences relating to the raising share capital and also qua the share subscribers were duly furnished by the assessee and also cross-verification was done by the AO on the basis of the notices issued under section 133(6) to the investors. Hence, CIT(A) was justified in deleting the addition made under section 68.
Relied:Crystal Networks (P) Ltd. v. CIT 2013 TaxPub(DT) 1470 (Cal-HC), ITO, Ward-9 (3), Kolkata v. M/s. Cygnus Developers (I) (P) Ltd. [ITA No. 282/Kol/2012, dt. 2-3-2016]
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE ITAT, KOLKATA BENCH
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