INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Assessee proved identity and creditworthiness of persons having introduced share capital and share premium along with genuineness of transactions - Treatment as unexplained credit

Assessee-company received share capital and share premium during year under consideration. AO made addition under section 68 on account of failure of the assessee to prove identity and genuineness of the persons having introduced share capital and share premium. Held: All the three persons, from whom share capital money along with share premium was collected, were companies incorporated under the Companies Act and were having PAN numbers and were filing income tax returns. Thus, there could not be any doubt about the identity of such companies. Further, as regarding the creditworthiness of those companies, it was found the investments made by them in the assessee-company were duly reflected in their respective balance sheets and such investments were out of their share capital and reserves. Further, as regarding the genuineness of transactions, it was found that the share capital along with the share premium was received through banking channels and from the analysis of the bank accounts of the investing companies, it was found that they had sufficient balance in their bank accounts to make investments in the assessee-company. Hence, the addition made by the AO under section 68 was deleted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 143

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