INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of share capital/premium -

Assessee company received equity share capital/premium from three companies. An enquiry was got conducted by the AO in respect of all the above investor companies by issuance of commission under section 131(1)(d) of the Act to the Investigation Wing, Kolkata and these investor companies were found to be bogus and non traceable. AO on the analysis of bank account noticed that these investor companies were not carrying out any actual business activity. Hence, AO held that amount of investment in form of share capital/share premium was in form of cash credit and therefore, he made an addition under section 68. Held: Assessee furnished return of ROC, i.e., Form No. 2 submitted before R.O.C., PAN number copies of each share subscriber, Copy of Balance Sheet, Profit and loss account of all share applicant companies, Details of investments sold by all share applicant companies, Transaction with the assessee was duly highlighted in the bank statement, Explanation along with evidence of source of source of the funds of the share applicant Companies, Audited Accounts, Relevant address proofs/Form and information about Common Director of three share applicant companies. From these details, it was vivid that all the share applicants were income-tax assessees, they were filing their return of income. Share application form and allotment letter are available on record, share application money was paid through account payee cheques, in none of the transactions AO noticed deposit in cash before issuing cheques to assessee company, the applicants were having substantial creditworthiness which was represented by a capital and reserve. Therefore, assessee had discharged its onus to prove identity, creditworthiness of share applicants and genuineness of the transactions. In the absence of any investigation, much less gathering of evidence by AO, addition could not be sustained merely based on inferences drawn by circumstances. Therefore, addition was deleted.

Relied:CIT v. Dataware Private Limited ITAT No. 263 of 2011, dated 21-9-2011 : 2013 TaxPub(DT) 1384 (Cal-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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