The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench held that addition under section 68 of the Income Tax Act,1961 on the assessee company is not sustainable when the onus was discharged with sufficient evidence.
The appellant was represented by Shri Aseem Thakkar and the respondent was represented by Shri Atul Pandey.
The assessee appealed against the order of the Commissioner of Income Tax (Appeals)-2, Ahmedabad (‘CIT(A)’ in short), dated 24.02.2016 arising in the assessment order dated 22.12.2011 passed by the Assessing Officer (AO) under s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (the Act) concerning AY.
In an investigation, Shri Rupang Shah stated that the statement given before the Investigation Wing in the case of the assessee, M/s. Goldfinch Jewellery Ltd. was correct. He had received an amount of Rs.25,00,000/- in cash from Shri Mahendrabhai shah and was given accommodation entry for allotment of shares capital of assessee, M/s. Goldfinch Jewellery Ltd.
The AO addedan amount of Rs.25,00,000/-to the income of the assessee company as the transactions made by the assessee were not proved as genuine and penalty proceedings u/s. 271(1)(c) of the I.T. Act is initiated for concealing the particulars of income.
CIT(A) confirmed the action of the AO on the ground that the assessee has introduced share capital in fictitious names and in the names of companies and entities who were not having financial capabilities over such investment.
It was admitted that they had made investments in shares in the assessee company were made after receipt of the cash from the assessee company through one of their Directors.
In the case of CIT vs. Lovely Exports (P.) Ltd, wherein Apex Court has held that “if the share application money is received by the assessee from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their assessments, bythe law, but this allotment of share money cannot be recorded as undisclosed income of the assessee.”
It was observed thatthe assessee company has discharged its onus by providing a share application form, Bank details, PAN Numbers, return of income and audited balance sheet and other relevant details but lower authorities failed to appreciate the submitted by the assessee.
A Coram consisting of Shri Mahavir Prasad, Judicial Member & Shri Waseem Ahmed, Accountant Member deleted the addition made by the lower authorities that cannot be made in the hands of the assessee company. The appeals filed by the assessee are allowed.
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