INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of share capital/premium - Investors not appeared before AO--Assessee proved identity and creditworthiness of share applicants and genuineness of transactions

Assessee company raised share capital of Rs. 90 lakhs involving face value of Rs. 10 along with premium of Rs. 90 per share. AO treated the same as unexplained credit under section 68 on the ground that despite having afforded ample opportunities, neither assessee nor investor parties appeared to satisfy genuineness of impugned share capital investment. Held: Assessee filed complete names, addresses of share applicants, confirmatory letters from them, copies of bank statements of both the company as well as share applicants and copies of share application forms. Identity of share applicants stood established beyond doubt, all the payments were through account payee cheques and share applicants were regular income-tax assessees. Accordingly, assessee proved identity, and creditworthiness of share applicants and genuineness of transaction and onus shifted to AO to disprove materials placed before him. However, AO did not bring any evidence on record to suggest that share application had been received by assessee from its own undisclosed sources. Accordingly, AO was not justified in making addition under section 68.

Followed:Sanmin Trading & Holding Pvt. Ltd. v. ITO [ITA No. 2020/Kol/2019, decided on 13-11-2020]

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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