The Tax Publishers2013 TaxPub(DT) 1319 (Del-HC) : (2014) 361 ITR 0010 : (2014) 264 CTR 0277 : (2013) 214 TAXMAN 0423 : (2013) 096 DTR 0299

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 68 Unexplained share application money-- Assessing officer asked assessee to explain as to why on amount of Rs. 1,11,50,000 should not be added to assessee's income. Assessee submitted that there were several entries which had been taken into, account twice over and by removing the duplicate entries amount received as share application money was only Rs. 55,50,000 it had furnished various documents in support of share application money received by it. Assessing officer found explanation to be unacceptable and held that the sum of Rs. 55.5 lakhs was unexplained and, therefore, made an addition under section 68. Held: Was not justified as it was found that there would be two types of cases one in which the assessing officer carries out the exercise which is required in law and the other in which assessing officer 'sils back with folded hands' till the assessee exhausts all he evidence as material in his possession and then comes forward to merely reject the same on the presumptions. The present case was covered in the latter category. As there was a clear lack of inquiry on the part of assessing officer once the assessee had furnished all the material, therefore, in such an eventuality, no addition could be made under section 68.

Income Tax Act, 1961 Section 68

In The Delhi High Court

Badar Durrez Ahmed & R. v. Easwar

CIT v. Gangeshwari Metal Pvt. Ltd.

ITA 597/2012

21 January, 2013

Appellant by : Sanjeev Sabharwal, Sr. Standing Counsel with Mr Puneet Gupta, Jr. Standing Counsel.

Respondent by : O. P. Sapra with Mr Sandeep Sapra, Advocates

JUDGMENT

Badar Durrez Ahmed, J (Oral)

In this appeal the following question of law has been framed for our consideration by virtue of the order dated 16-10-2011 :

'Whether the Tribunal by the impugned order dated 19-12-2011 fell into error in upholding the order of the appellate commissioner which directed deletion of Rs. 55,50,000 added on account of unexplained share application, added by the assessing officer in the case of the assessee under section 68 of the Act?'

The learned counsel for the revenue/ appellant submitted that the Commissioner (Appeals) and the Income Tax Appellate Tribunal were both wrong in deleting the addition of Rs. 55.5 lakhs on account of unexplained share application money under section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act).

The present case pertains to the assessment year 2004-05. The assessment proceedings were completed by the assessing officer on 16-12-2009. The assessment order indicates that initially the respondent was asked to explain as to why an amount of Rs. 1,11,50,000 should not be added to the respondents income. It was explained by the assessee that there was several entries which had been taken into account twice over and by removing the duplicate entries the amount received as share application money by the respondent/assessee was only Rs. 55,50,000 and not Rs. 1,11,50,000. In response to the query with regard to the said sum of Rs. 55.5 lakhs, the respondent/assessee had furnished various documents in support of the share application money received by it. Those documents included :

(i) Complete names and addresses of the share applicants and PAN/GIR details.

(ii) Confirmatory letters of the share applicants.

(iii) Copies of Bank statements of the share applicants.

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