The Tax Publishers2019 TaxPub(DT) 6571 (Ahd-Trib)

INCOME TAX ACT, 1961

Section 68

When there was evidence in the form of share application forms, copy of statements of share subscribers from which share application amount was paid, certificates of incorporation with copy of memorandum/resolution of companies so to prove identity and creditworthiness of investors and genuineness of concerned transactions, no room was left for doubt and suspicion as no otherwise was proved by AO. Entire action of AO spoke total non-application of mind, lack of inquiry and colourable exercise of power, excessive highhandedness as also close mindedness resulting into addition merely on the basis of statement made by alleged entry operator which was neither allowed to be cross examined and such addition, was therefore, 'nullity'.

Income from undisclosed sources - Addition under section 68 - Receipt of share premium held as bogus on the basis of statement of alleged entry operator - Assessee proved identity, creditworthiness and genuineness

AO based on statement recorded in case of alleged entry operator, treated share premium of Rs. 4 crores received by assessee as bogus and made addition under section 68. Held: When there was evidence produced in the form of share application forms, copy of statements of bank accounts share subscribers from which share application amount was paid, certificates of incorporation with copy of memorandum/resolution of companies so to prove identity and creditworthiness of investors and genuineness of concerned transactions, no room was left for doubt and suspicion as no otherwise was proved by AO. Entire action of AO spoke total non-application of mind, lack of inquiry and colourable exercise of power, excessive highhandedness as also close mindedness resulting into addition merely on the basis of statement made by alleged entry operator which was neither allowed to be cross examined and such addition, was therefore, 'nullity'.

Distinguished:Ayaana Comtrade (P) Ltd. v. ITO (2019) 104 Taxmann.com 66 (ahd) : 2019 TaxPub(DT) 2360 (Ahd-Trib).

REFERRED : Rajesh Babubhai Damania v. CIT (2001) 122 Taxman 614 (Guj) : 2001 TaxPub(DT) 473 (Guj-HC) and COIM India Private Ltd. v. Asstt. CIT (2018) 96 Taxman.com 511 (Del) : 2018 TaxPub(DT) 2637 (Del-Trib).

FAVOUR : In assessee's favour.

A.Y. : 2010-11


INCOME TAX ACT, 1961

Section 68

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