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| The Tax Publishers2019 TaxPub(DT) 1636 (Mum-Trib) INCOME TAX ACT, 1961
Section 68
As assessee had furnished necessary evidences to prove identity and creditworthiness of share applicants and genuinenesss of reciept of share application money, no addition could be made under section 68 on the basis of statement of alleged entry provider who himself admitted in the remand proceedings of having invested in assessee-company.
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Income from undisclosed sources - Addition under section 68 - Receipt of share capital along with premium - AO alleging routing of unaccounted money through alleged entry provider
AO noticed that assessee-company had received share application money and premium to the tune of Rs. 35 lacs from B. Ltd. & T Ltd. run by one 'M' whose admission was that these entities were utilized by him only in the business of providing bogus share application money. Accordingly, AO held that assessee had utilized its own resources but through 'M' for routing back its unaccounted income of Rs. 35 lakhs in the form of share application money and share premium and accordingly, AO added these receipts of share application money and share premium as cash credit under section 68. Held: Assessee had furnished name, address, PAN no and share application form to prove that shares were allotted to the applicants. The assessee had also furnished its bank statement to show that money was received through banking channels and there were no immediate withdrawals from bank which proved that share application amounts had not been returned back to those parties in cash. Thus, assessee had discharged primary onus cast on it to prove the identity, capacity and genuineness of transactions. Also, during remand proceeding, AO provided opportunity to assessee to cross examine 'M' who in turn during cross examination admitted having invested in assessee company by the two concerns namely B Ltd. & T Ltd. in assessee as share application and premium amounting to Rs. 35 lakhs. However, AO did not further examine said 'M'. In view of all this, addition made by AO under section 68 could not be sustained.
Followed:CIT v. Orchid Industries Pvt. Ltd. (2017) 397 ITR 136 (Bom.) : 2017 TaxPub(DT) 1911 (Bom-HC).
REFERRED : CIT v. Gagandeep Infrastructure (P) Ltd. (2017) 394 ITR 680 (Bom) : 2017 TaxPub(DT) 1238 (Bom-HC) and CIT v. Lovely Exports (P) Ltd. (2008) 216 CTR 195 (SC) : 2009 TaxPub(DT) 0261 (SC).
FAVOUR : In assessee's favour.
A.Y. : 2008-09
IN THE ITAT, MUMBAI BENCH
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