INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of share capital and premium - CIT(A) deleted addition without considering detailed findings recorded by AO on merit

Assessee-company received share application money from 35 companies. AO meticulously examined financial statments and affairs of assessee as well as of investor companies and concluded that share investing companies were paper companies. thus, AO took the view that assessee was not able to discharge onus as contemplated under section 68 and accordingly made addition. However, CIT(A) deleted addition.Held: Primary onus to prove genuineness of transactions and creditworthiness and identity of the 35 shareholder companies was on assessee. AO had given a detailed reasoned order while coming to the conclusion that these companies were paper companies not doing any business and having common key person namely Praeen Kumar Jain and were also operating from same address in small cubicles. However, CIT(A) had not dealt with any of the findings recorded by AO on merit. To serve the interest of justice matter was remanded to CIT(A) to decide the matter expeditiously with a period of six months after providing reasonable opportunity of hearing to assessee and also to AO.

REFERRED : Pr. CIT v. NRA Iron & Steel (P) Ltd. [Special Leave to Appeal (C) No. 29855/2018, dt. 5-3-2019] : 2019 TaxPub(DT) 1628 (SC), Vedanta Ltd. v. Asstt. CIT & Anr. [WP(C) No. 13036/2019, dated 20-12-2019] : 2020 TaxPub(DT) 307 (Del-HC), RDS Project Ltd. v. Asstt. CIT & Anr. [WPC No. 11274/2019, dt. 23-10-2019],Pr. CIT v. NDR Promoters (P) Ltd. [ITA No. 49/2018, dated 17-1-2019] : 2019 TaxPub(DT) 0886 (Del-HC).

FAVOUR : Matter remanded.

A.Y. : 2009-10 to 2011-12

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