Income Tax Addition u/s 68 of the Income Tax Act,1961 is not permissible when the assessee furnished all evidence proving the identity and creditworthiness of the investors, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) upheld the order of the CIT(A).
M/s KDG Projects Pvt. Ltd, the assessee was selected for scrutiny under CASS and statutory notices were duly issued and served upon the assessee. The return of income was duly filed declaring total income of Rs. 19,88,060/-. The company was incorporated on 20.12.2005 and in FY 2011-12 issued equity shares to various private limited companies at a high premium.
The AO called upon the assessee to furnish various details/evidence/information which was duly furnished by the assesseeaboutan increase in share capital and added the entire share capital and share premium of Rs. 3,15,00,000/- to the income of the assessee on the ground that genuineness and creditworthiness were not proved.
It was contended that the appellate order was passed after a detailed analysis and examination of all the evidence and factual findings of facts have been recorded by the CIT(A) to the effect that the genuineness of the transactions and creditworthiness of the parties were fully proved.
The ITAT bench of Shri Sanjay Garg, Judicial Member & Shri Rajesh Kumar, Accountant Member observed that the AO had made the addition merely on the ground that the shares were issued at a veryhighpremium without any justification and the CIT(A) has passeda very reasoned and speaking order after following the various decisions as cited (supra) after taking in account the evidence of 9 investor companies comprising ITRs acknowledgements, audited accounts, share application forms, PAN cards, bank statements, audited accounts, source of funds for making investments etc.
It was observed by the ITAT that the AO has made the addition that no compliance was made to the summons issued to the assessee as well as the investors which cannot be the basis for making an additionas the assessee has filed all the necessary documents before the authorities below proving the identities, creditworthiness of the investors and genuineness of the transactions.
The assessee has furnished all the evidence proving the identity and creditworthiness of the investors and the genuineness of the transactions. In light of the ratio laid down in the decisions, the ITAT upheld the order of CIT(A) bydismissing the appeal of the revenue.
Shri Manish Tiwari appeared on behalf of the appellant and Smt. Ranu Biswas appeared on behalf of the respondent.
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