No investment made outside  books of Accounts: ITAT deletes Income Tax Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench, while deleting the Income Tax Addition, held that no investment has been made by the assessee outside the books of account. The assessee, Direct Trading Co. P. Ltd., after filing the return of income, was selected for scrutiny assessment. During the course of the scrutiny assessment proceedings, the AO noticed that the assessee received a share premium of Rs.2,034,000/-. The assessee was asked to justify the share premium received by it.

In its reply, the assessee claimed that the issue of shares at a premium is a prerogative of the directors of the company who decide the premium, and it is the wisdom of the shareholder whether he wants to subscribe to the shares at a premium or not. During the proceedings, the assessee failed to explain the source of credit entries in its books in the form of share capital of Rs.22.60 lacs and share premium of Rs.2.03 crores credited in its books of accounts in terms of section 68 of the Act and completed assessment by making an addition of Rs.2,30,22,000/-.

Aggrieved, the assessee filed a further appeal before the CIT(A) who allowed the appeal and deleted the addition. Thereafter, the revenue filed a second appeal before the tribunal. The Tribunal observed that the CIT(A) has examined each and every director before deleting the addition, and the revenue could not point out any error or infirmity in the findings of the CIT(A).

Further observed that the assessee has explained the investment duly reflected in its bank statement, and such reflection in the bank statements has not been doubted by the AO. Therefore, it cannot be said that the investments have been made outside the books of accounts. The AO has not mentioned any investment which is outside the books of accounts.

After reviewing the facts and records, the two-member bench of M. Balaganesh (Accountant Member) and Anubhav Sharma (Judicial Member) deleted the Income Tax addition because no investment has been made by the assessee outside the books of account. Therefore, the bench dismissed the appeal of the revenue. Vivek Kumar Upadhyay counsel appeared for revenue. Ved Jain, counsel appeared for revenue.

Keywords: investment,  outside,   books , Accounts:, ITAT,  deletes,  Income Tax , Addition

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