INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Identity, creditworthiness and genuineness of parties and share transactions -

Assessee company raised share capital and share premium during the relevant assessment year. AO on the ground of failure to verify the identity, creditworthiness and genuineness of shareholders and made addition under section 68. Held: From a perusal of the bank statements filed it was discernible that the transactions, i.e., share capital and premium were transferred through proper banking channel and it was not the case of AO that there was any cash deposit prior to the issue of cheques to the assessee company. Thus, the genuineness of the transaction cannot be disputed and in order to prove the creditworthiness of the share subscribers, audited balance sheet of the share subscribing companies was filed and it was contended that shareholders possess sufficient capital and reserves out of which share subscription amounts were paid through account payee cheques. Thus, assessee discharged the burden of proof casted by section 68 in respect of share capital and premium it collected. and without finding any infirmity in the documents produced by the assessee in respect of identity, creditworthiness and genuineness of the transaction, no addition under section 68 was warranted.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15 to 2016-17

INCOME TAX ACT, 1961

Section 32

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