The Tax Publishers2020 TaxPub(DT) 5261 (Del-Trib) : (2020) 084 ITR (Trib) 0537

INCOME TAX ACT, 1961

Section 68

Where assessee had discharged onus under section 68 and proved all three ingredints and share applicants also had complied with notices under section 133(6) and also some of promotors/directors were produced before AO, though not all, deletion of addition by CIT(A) was, therefore, justified in respect of alleged unexplained share application money.

Income from undisclosed sources - Addition under section 68 - Alleged bogus share application money and premium thereon -

AO noted that the assessee company had introduced share capital and received the share application money. He observed that the assessee-company had issued shares to the six companies for a huge premium of Rs. 1,990 per share. Since the shares were issued at a huge premium, it created doubts in the mind of the AO. Therefore, to verify the identity and creditworthiness of the share applicants and genuineness of the transactions, the AO asked the assessee to prove the three ingredients within the meaning of section 68. The assessee, in its submissions, filed various details such as copy of the income-tax return, bank statements of the share applicants, their confirmations, etc. From the various details furnished by the assessee, AO noted that these companies were not having capacity to deposit such huge amounts as share application money and that too, at a premium of Rs. 1,990 per share. He further noted that all the above six companies were directly or indirectly operated by the promoters of the assessee-company. He, therefore, was of the opinion that the assessee-company had introduced share application money in the name of six companies and these companies were not having any capacity to deposit such huge amounts as share application money. Relying on various decisions and observing that assessee failed to prove the three ingredients as per provisions of section 68, AO made addition of Rs. 20,17,00,000 to the total income of assessee under section 68. Held: Every case depends on its own sets of facts and straight-jacket formula cannot be applied to all cases. The assessee in the instant case has duly discharged the three ingredients cast on it by proving the identity and creditworthiness and genuineness of the transaction. In the instant case, the company was showing huge profits year after year starting from assessment year 2004-05 running into crores and assessments have been completed under section 143(3) from assessment year 2004-05 till assessment year 2014-15, except for assessment year 2005-06 which was under section 143(1). Further, the AO had analysed the holding of shares of the applicant companies and had given a finding that all these companies were group companies and were directly or indirectly operated by the promoters of the assessee company. Assessee had discharged the onus cast on it by proving the three ingredients of section 68. In this view of the matter and in view of the detailed reasoning given by the CIT(A), there was no infirmity in the same. Accordingly the grounds raised by the revenue challenging the addition under section 68 for both years were dismissed.

Distinguished:CIT v. NR Portfolio (P) Ltd., (2013) 29 Taxmann.com 291 (Del-HC) : 2013 TaxPub(DT) 1173 (Del-HC), CIT v. Navodaya Castle Pvt. Ltd., (2014) 367 ITR 306 (Del-HC) : 2014 TaxPub(DT) 3789 (Del-HC), Riddhi Promoters (P) Ltd. v. CIT, (2015) 377 ITR 641 (Del-HC) : 2015 TaxPub(DT) 1997 (Del-HC), Pr. CIT v. NRA Iron & Steel (P) Ltd., (2019) 412 ITR 161 (SC) : 2019 TaxPub(DT) 1628 (SC),Pr. CIT v. NDR Promoters Pvt. Ltd., 2019-TIOL-172 : 2019 TaxPub(DT) 886 (Del-HC), CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) : 1971 TaxPub(DT) 375 (SC), CIT v. Nipun Builders and Developers Pvt. Ltd., (2013) 30 Taxman.com 292 (Del) : 2013 TaxPub(DT) 526 (Del-HC), CIT v. MAF Academy Pvt. Ltd. (2014) 42 Taxmann.com 377 (Del) : 2014 TaxPub(DT) 87 (Del-HC), CIT v. Titan Securities Ltd. (2013) 32 Taxmann.com 306 (Del) : 2013 TaxPub(DT) 1585 (Del-HC),CIT v. Youth Construction Pvt. Ltd. 44 Taxmann.com 364 (Del), CIT v. Ultra Modern Exports (P) Ltd., (2013) 40 Taxmann.com 458 (Del) : 2013 TaxPub(DT) 917 (Del-HC), CIT v. NR Portfolio Pvt. Ltd. (2014) 264 CTR 258 (Del) : 2014 TaxPub(DT) 501 (Del-HC),Beutex India Pvt. Ltd. v. CIT, (2012) 18 Taxmann.com 09 (Del-HC) : 2012 TaxPub(DT) 2059 (Del-HC),CIT v. Precision Finance (P) Ltd. (1994) 208 ITR 465 (Cal) : 1994 TaxPub(DT) 368 (Cal-HC),; and Pr. CIT v. Bikram Singh (2017) 399 ITR 407 (Del) : 2017 TaxPub(DT) 3937 (Del-HC), ITO v. KNS Realtors Pvt. Ltd. vide ITA No. 1286/Del/2014, Order, dated 24-8-2020 : 2020 TaxPub(DT) 3411 (Del-Trib).

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