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| The Tax Publishers2019 TaxPub(DT) 2150 (Mum-Trib) INCOME TAX ACT, 1961
Section 68
Since assessee had furnished evidences such as confirmation letters from the parties, their bank statements along with financial statements to prove genuineness of receipt of share capital along with premium and identity and creditworthiness of investor, AO was not justified in taxing amount received under section 68.
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Income from undisclosed sources - Addition under section 68 - Receipt of share capital/premium -
AO received information that assessee had received accommodation entries in the guise of share application money along with premium. Accordingly, AO added share capital plus share premium under section 68 to the income of assessee.Held: The fact remains that investor companies were assessed to tax and had filed their returns of income. The parties had responded to notices under section 133(6). Therefore, it could not be said that parties did not exist at the given addresses. Also, assessee had filed detailed explanation of source of funds of investors proving that they had genuine business activity. Further, assessee had filed detailed explanation of source of funds of investors proving that they had genuine business activity. Confirmation letters along with PAN and address, bank statements of applicants, Income Tax return ITR acknowledgements, audited accounts, balance sheet and P & L account and copy of share application form of investor companies. Accordingly, assessee had proved all the three ingredients such as genuineness of transactions and creditworthiness and identity of investors and therefore, addition made under section 68 was not correct.
Relied on:CIT v. Gagandeep Infrastructure Pvt. Ltd. (2017) 394 ITR 680 (Bom) : 2017 TaxPub(DT) 1238 (Bom-HC); CIT v. Archid Industries Pvt. Ltd. in ITA No. 1433/Mum/2014, dt. 5-7-2017] : 2017 TaxPub(DT) 1911 (Bom-HC); CIT v. Lovely Exports Pvt. Ltd. (2008) 216 CTR 195 (SC) : 2009 TaxPub(DT) 0261 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
IN THE ITAT, MUMBAI BENCH
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