The Tax Publishers2020 TaxPub(DT) 3030 (Mum-Trib)

INCOME TAX ACT, 1961

Section 68

When it had been categorically proved that there was no physical existence of share applicant company at the given address, papers submitted in this regard could not be given precedence over actual fact about non-existence of said party and, therefore, AO was justified in making addition under section 68.

Income from undisclosed sources - Addition under section 68 - Receipt of share application money/premium - In spite of paper evidences filed by assessee share applicant not found to be in existence

Assessee received share application and share premium from sixteen parties, amounting to Rs. 2.24,00,000. With respect to receipt of share application and share premium from M/s. B (P) Ltd., Kolkata, AO made enquiries through DIT. Kolkata. It was found that said company was not at all in existence at given address. In the absence of cogent explanation from assessee about very existence of said company, AO added related to sum of Rs. 45,00,000 as unexplained cash credit under section 68. Assessee submitted that assessee had furnished all the necessary documents such as bank statements and financials of the said party and income-tax order for the past years. Assessee also submitted that all the papers of share application and share issue were available. Held: In case of a private limited company if a person was contributing so much money in share application and share premium, assessee-company was obliged to give correct whereabouts of said company. In case of concerned party there was no proof at all about existence of the said party which contributed said share premium and share application amount made necessary enquiry through income-tax office, Kolkata. The party was found to be not at all existing at the said address. Enquiry from nearby persons also indicated that no such company operated from given address. When it had been categorically proved that there was no physical existence of said company at the given address papers submitted in this regard could not be given precedence over actual fact about non-existence of said party and, therefore, AO was justified in making addition under section 68.

Applied:Sumati Dayal v. CIT (1995) 80 Taxman 0089 (SC) : 1995 TaxPub(DT) 1173 (SC) and PCIT v. NRA Iron & Steel Pvt. Ltd (TS-106-SC-2019) : 2019 TaxPub(DT) 1628 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2009-10

IN THE ITAT, MUMBAI BENCH

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