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| The Tax Publishers2020 TaxPub(DT) 3867 (Jp-Trib) Income Tax Act, 1961
Section 68
Share premium received by assessee-company could not be treated as unexplained credit on the mere ground of meagre income declared by assessee especially when most of the corporate subscribers were filing returns and were being regularly assessed to tax and further valuation report furnished by assessee for charging of premium before AO was not controverted.
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Income from undisclosed sources - Addition under section 68 - Receipt of share premium -
Assessee-company filed return declaring income of Rs.3600. AO treated share premium of Rs.190 received by assessee as unjustified and thus unexplained credit under section 68. Held: Most of the corporate subscribers were filing returns and they were being regularly assessed to tax. AO had not brought any adverse findings against them. Also, assessee submitted a valuation report for charging of premium before AO and the same was neither mentioned nor controverted in the assessment order by AO. Further, if AO had any doubts regarding source of investment of subscribers, he could have examined bank accounts from where investment was routed. AO was duty bound to investigate creditworthiness of creditors/subscribers, to verify identity of subscribers and ascertain whether transaction was genuine or bogus entries of name lenders but it was not properly done. AO had not been able to prove that premium charged by assessee was unjustified or bogus or sourced from undisclosed or unexplained funds/source. Therefore, addition was deleted.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
IN THE ITAT, JAIPUR BENCH
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