Identity of Company can’t be suspected merely because Director not Found: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ), in M/s. Prayag Polytech Pvt. Ltd v. ACIT held that Revenue cannot suspect the identity of a Company for confirming the additions under the Income Tax Act merely because the Director could not found.

In the instant case, the assessee received share application money for issue and allotment of 6000 shares at the face value of Rs. 10 and share premium of Rs. 240/-. During the assessment proceedings, AO issued a summons u/s 131 to the Director of M/s. Kangaroo Financial Services, with whom assessee received the money and also sent Income Tax Inspector from where it was gathered that the Director of the Company does not live in the said address and people of the nearby place were not aware of such company. It was concluded that the assessee was unable to substantiate the genuineness of the transactions and accordingly after relying upon various decisions he has made the addition of Rs. 15 Lacs u/s 68 after detail discussion.

After considering the rival submissions, the bench held that the evidences which have been furnished by the assessee have not been discussed; and if the Director has not been found then it cannot be said that identity of the company is not established especially in wake of income tax records and share allotment form and other host of documents.

Allowing the appeal of the assessee, the Tribunal bench comprising of Judicial Member Amit Shukla and Accountant Member B.R.R Kumar held that “If in the inquiry, by the ITI it was found that on the said addressee the company of the Director was not traceable, then AO should have confronted to the assessee and assessee should have been given the opportunity to produce the concerned person from the said company. Even the Ld. CIT (A) in his order though sought for the remand report but has not given the mandate to the AO to confront the same to the assessee.”

To Read the full text of the Order CLICK HERE