The Income Tax Appellate Tribunal ( ITAT ) Kolkata Bench observed that the assessing officer could not point out deficiency in documents ,therefore no addition under section 68 of Income Tax Act,1961
The assessee,Manju Credit Pvt. Ltd. received the total amount of Rs.230 lacs, Rs.118.50 lacs in the preceding year which was duly accounted and reported in its audited balance sheet as on 31.03.2011 as “Share application money pending allotment”.
Out of this amount of Rs.118.50 lacs received in the preceding year, Rs.10 lacs was returned by the assessee. Shares have been issued and allotted to all the eighteen share subscribing companies on two different dates during the impugned year.
AO in the course of assessment proceedings directed the assessee to produce the director of the assessee and also the directors of the allottee companies along with relevant documentary evidence and details. By applying the test of human probability, the Assessing officer made an addition of Rs.230 lacs u/s. 68 of the Income Tax Act.The aggrieved assessee went to appeal before the Tribunal.
Under section 68 of Income Tax Act ,any sum found credited in the books of a taxpayer, for which he offers no explanation about the nature and source ,in the opinion of the Assessing Officer, may be charged to Income-Tax as the income of the taxpayer of that year.
The counsel for the appellant submitted that the amount of Rs.118.50 lacs has not been received in the accounting year relevant to AY 2012-13, AO has wrongly treated it as unexplained cash credit received during the year for the purpose of making addition u/s 68 of the Income Tax Act.
He further stated that the assessee has explained the source and nature of receipts of funds and has brought on record all the documentary evidence in this respect Counsel referred to a chart placed in the paper book, giving details of share application money received in the two financial years, relevant to AY 2011-12 and AY 2012-13
The Counsel on behalf of Revenue contended that that assessee’s own income has been infused in the guise of share capital through the allottee companies by layering the transactions to make a non-genuine transaction appear as a genuine one.
The bench consisted of the judicial member Sonjoy sarma, Girish agrawal( accountant member) observed that assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions towards sum of Rs.121.50 lacs received during the impugned year and we set aside the order of the CIT(A) and direct the AO to delete the addition made towards share capital and share premium u/s. 68 of the Income Tax Act.
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