The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition made by the assessing officer in respect of share capital without considering the relevant documents and evidence by the assessee.
Gulmohar Distributors Pvt. Ltd, the appellant assessee filed its return of income reporting a total income at nil which was processed under section 143(1) of the Income Tax Act,1961. The assessing officer made an addition to the income of the assessee during the assessment proceedings.
Thus the assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition made by the assessing officer.
S. M. Surana, the counsel for the assessee contended that the assessing officer in the impugned assessment had made the addition towards subscription of its share capital merely based on the direction given by the Commissioner of Income Tax (Appeals).
It was further submitted that the assessing officer did not carry out any effective investigation and concluded that the assessee had failed to discharge its onus to prove the identity, creditworthiness, and genuineness of the transactions by ignoring and overlooking the material already available on record.
Ranu Biswas, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the assessee failed to comply with the summons issued under section 131 of the Income Tax Act which qualifies the addition made by the assessing officer.
Further contended that furnishing a plethora of documents and flawless paperwork compliance was of least significance if the assessee fails to comply with the summons issued under section 131 of the Income Tax Act.
The bench observed that the assessing officer ignored the facts, documents, confirmations, and evidence, which were available on record in the assessment folder including that of the assessment done under section 147 of the Income Tax Act and produced in the course of the hearing before the Bench.
The two-member pane comprising Sanjay Garg (Judicial) and Girish Agrawal (Accountant) held that the addition made by the assessing officer in respect of share capital and share premium raised by the assessee was not as per the law and liable to be deleted while allowing the appeal filed by the assessee.
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