Case Laws Analysis
REFERRED Pr. CIT v. NRA Iron & Steel (P) Ltd. 2019 TaxPub(DT) 1628 (SC)
REFERRED Pr. CIT v. NDR Promoters (P) Ltd. 2019 TaxPub(DT) 0886 (Del-HC)
REFERRED Vijay Proteins Ltd. v. CIT 2018 TaxPub(DT) 7917 (Guj-HC)
REFERRED M.L. Singhi & Associates (P) Ltd. v. Dy. CIT 2018 TaxPub(DT) 6397 (Del-Trib)
REFERRED Pr. CIT v. Dharampal Premchand Ltd. 2018 TaxPub(DT) 5159 (Del-HC)
REFERRED Pr. CIT v. Meeta Gutgutia 2018 TaxPub(DT) 4130 (SC)
REFERRED Pr. CIT v. Laxman Industrial Resources Ltd. 2017 TaxPub(DT) 4088 (Del-HC)
REFERRED CIT v. Sinhgad Technical Education Society 2017 TaxPub(DT) 3941 (SC)
REFERRED Pr. CIT v. Best Infrastructure (India) (P) Ltd. 2017 TaxPub(DT) 3839 (Del-HC)
REFERRED Pr. CIT v. Meeta Gutgutia 2017 TaxPub(DT) 1767 (Del-HC)
REFERRED Dayawanti v. CIT 2016 TaxPub(DT) 4888 (Del-HC)
REFERRED N.K. Industries Ltd. v. Deputy Commissioner of Income Tax 2016 TaxPub(DT) 3862 (Guj-HC)
REFERRED Pr. CIT v. Saumya Construction Pvt. Ltd. 2016 TaxPub(DT) 3466 (Guj-HC)
REFERRED CIT v. Harjeev Aggarwal 2016 TaxPub(DT) 1836 (Del-HC)
REFERRED Andaman Timber Industries v. CCE 2015 TaxPub(DT) 5186 (SC)
REFERRED CIT v. Kabul Chawla 2015 TaxPub(DT) 3486 (Del-HC)
REFERRED CIT v. Continental Warehousing Corpn Ltd. 2015 TaxPub(DT) 2182 (Bom-HC)
REFERRED CIT v. Kamdhenu Steel & Alloys Ltd. 2012 TaxPub(DT) 1644 (Del-HC)
REFERRED CIT v. Dwarkadhish Investment (P) Ltd. 2011 TaxPub(DT) 0374 (Del-HC)
REFERRED CIT v. Winstral Petrochemicals (P) Ltd. 2011 TaxPub(DT) 0259 (Del-HC)
REFERRED CIT v. Victor Electrodes Ltd. 2010 TaxPub(DT) 1927 (Del-HC)
REFERRED Sanjay Oilcake Industries v. CIT 2009 TaxPub(DT) 0370 (Guj-HC)
REFERRED CIT v. Divine Leasing & Finance Ltd. 2008 TaxPub(DT) 0400 (Del-HC)
REFERRED Sri Ganesh Rice Mills v. CIT 2007 TaxPub(DT) 0062 (All-HC)
REFERRED Deputy CIT v. Rohini Builders 2002 TaxPub(DT) 0305 (Guj-HC)
REFERRED CIT v. La Medica 2001 TaxPub(DT) 1244 (Del-HC)
REFERRED CIT v. Shri Ramdas Motor Transport 1999 TaxPub(DT) 0812 (AP-HC)
REFERRED Kishinchand Chellaram v. CIT 1980 TaxPub(DT) 1130 (SC)
REFERRED CIT v. U.M. Shah, Proprietor, Shrenik Trading Co. 1973 TaxPub(DT) 0251 (Bom-HC)
REFERRED K.S. Kannan Kunhi v. CIT 1969 TaxPub(DT) 0201 (Ker-HC)
REFERRED Madhuri Das Narain Das v. CIT 1968 TaxPub(DT) 0045 (All-HC)
REFERRED Sri Ram Tandon v. CIT 1961 TaxPub(DT) 0133 (All-HC)
REFERRED Lalchand Bhagat Ambica Ram v. CIT 1959 TaxPub(DT) 0181 (SC)
REFERRED CIT v. Mcmillan & Co. 1958 TaxPub(DT) 0107 (SC)
REFERRED Kanpur Steel Co. Ltd v. CIT 1957 TaxPub(DT) 0105 (All-HC)
REFERRED Mehta Parikh & Co. v. CIT 1956 TaxPub(DT) 0171 (SC)
 
The Tax Publishers2019 TaxPub(DT) 7430 (Del-Trib) : (2019) 076 ITR (Trib) 0504

INCOME TAX ACT, 1961

Section 68

Since all the transactions were recorded in the books of account of assessee and other related parties which were supported by confirmation, bank statements, therefore, there was no reason to believe that assessee had earned any unaccounted undisclosed income in the issue of share capital and premium.

Income from undisclosed sources - Addition under section 68 - Alleged unexplained share capital and premium - Assessee discharged its onus

Assessment under section 153A was carried out and it was found that assessee had issued share capital at different premium from different assesses on different dates and, therefore, assessee was asked to prove identity and creditworthiness of these companies. AO found that these companies do not have much operation but have a robust balance sheet. These companies have common directors. The companies were operated by Kolkata based operator. Further, during the course of search blank sign share transfer forms, blank signed power of attorney and other documents necessary for transfer of shares were found and seized. These documents related to the companies from which the assessee was claimed to received share capital and share premium. Thus, the AO noted that the entire transaction was a sham transaction. He stated that the amounts so received, as share capital was nothing but the assessee's own money that was routed back to the assessee-company in the form of share capital. thus, the AO made an addition as unaccounted income of the assessee which had been introudced into the books in the form of share capital and share premium. AO further made addition of 2% of the amount of share capital as commission to obtain share capital. CIT(A) confirmed the addition with respect to the share capital under section 68. He also confirmed the addition because of commission paid allegedly for the above share capital.Held: It was clear that assessee produced sufficient documentary evidences before the AO to prove that money routed from the assessee itself which came back to the assessee in the form of share capital/premium, therefore, assessee proved identity of the Investors, their creditworthiness and genuineness of the transaction in the matter and as such have been able to prove ingredients of section 68. AO however did not make any further enquiry on the documentary evidences filed by the assessee. The AO did not verify the trail of the source of funds received by assessee through various entities. Assessee had been able to prove that it had received genuine amounts which was routed through various companies. Therefore, there was no justification to make any addition under section 68 . Further, there was no evidence on record that assessee paid any amount on account of commission for arranging any transaction because it was a genuine transaction between the parties. Therefore, there was no justification to make the addition under section 69C as well. In view of the above, the Orders of the authorities below were set aside and the entire addition was therefore, deleted in all the assessment years under appeals.

Relied:Kishanchand Chellaram 91980) 125 ITR 713 (Sc) : 1980 TaxPub(DT) 1130 (SC) : Andaman timber Industries (2015) 281 CTR 214 (SC) : 2015 TaxPub(DT) 5186 (SC).

REFERRED : CIT v. Continental warehousing Corp Ltd. & All Cargo Global Logistics Ltd. (2015) 374 ITR 645 (Bom) : 2015 TaxPub(DT) 2182 (Bom-HC), Pr. CIT v. Sayumya Construction Private Ltd. (2016) 387 ITR 529 (Gujarat) : 2016 TaxPub(DT) 3466 (Guj-HC), Pr.CIT v. NRA Iron and Steel (2019) 103 Taxmann.com 48 (SC) : 2019 TaxPub(DT) 1628 (SC), NDR Promoters Private Limited 2019-TIOL-172-HC-Del-IT : 2019 TaxPub(DT) 0886 (Del-HC), Vijay Proteins Ltd. v. Asstt. CIT (2015) 58 Taxmann.com 44 (Guj) : 2018 TaxPub(DT) 7917 (Guj-HC), Sanjay Oilcake Industries v. CIT (2009) 316 ITR 274 (Guj) : 2009 TaxPub(DT) 370 (Guj-HC), Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (Guj) : 2002 TaxPub(DT) 305 (Guj-HC), CIT v. U.K. shah (1973) 90 ITR 396 (Bom) : 1973 Tax Pub(DT) 251 (Bom-HC), CIT v. Rohini Builders (2002) 256 ITR 360 (Guj) : 2002 TaxPub(DT) 305 (Guj-HC) and CIT v. Winstral Petrochemicals (P.) Ltd. (2011) 330 ITR 603 (Del) : 2011 TaxPub(DT) 259 (Del-HC).

FAVOUR : In assessee's favour.

A.Y. : 2012-13 to 2017-18


INCOME TAX ACT, 1961

Section 69 and 145(3)

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