The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that addition under Section 68 of the Income Tax Act, 1961 should not be made, when authenticity/genuineness of share application money received from various investors are fully explained.
The Assessee, Trinity Global Enterprises Ltd.issued 1500000 shares o f Rs.10 each on a premium of Rs.50/- per share and received Rs.90 ,00,000/- during the year . The assessee was asked to file the details o f increase in share capital and share premiums vide notice u/s 142(1) o f the Income Tax Act,
The assessee had filed its reply vide letter dated 14.05 .2013 stating that the company received a share application/share premium money of Rs.90,00 ,000/- for 150000 equity shares from various companies and issued the share of Rs.10/- each on premium o f R s.50/- per share .
However the AO held that the assessee company failed to furnish confirmation of share money and share premium money received during the course o f proceedings. After verify the authenticity/genuineness o f the transaction and source of investment AO treated the amount of share application received o f Rs.90,00 ,000/- u/s 68 o f the Income Tax Act, 1961
Aggrieved, the assessee filed an appeal before the ld. CIT(A) who affirmed the order of the Assessing Officer.Therefore the assessee filed another appeal before the tribunal.
Counsel for the assessee argued that the assessee has duly furnished confirmation in three cases hence , the observation o f the Assessing Officer that there has been failure on the part of the assessee to file the confirmation is not correct.
Further the counsel argued that purchases and transactions which were inquired by the Revenue pertain to the A.Y. 2009-10 , A.Y. 2010-11 but not for the A.Y . 2011-12 which is the instant year .
Counsel for the revenue supported the order of lower authorities.
It was observed to rely upon the decision of Al An’am Agro Foods (P.) Ltd. Vs. CIT that since identity of shareholders stood proved on record , amount o f share application money could not be added to income of assessee.
After reviewing the submissions of both parties the two-member bench of Dr. B. R. R. Kumar,( Accountant Member ) and Yogesh Kumar US, ( Judicial Member ) deleted the addition made under Section 68 of the Income Tax Act and confirmed that Authenticity/Genuineness Share Application Money received from various investors are fully explained by the assessee.
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