2012 (1) TMI 206 - AT - Income Tax

Summary

Issues Involved:
The issues involved in this case are the deletion of addition of share application money u/s 68 of the IT Act and the establishment of the genuineness of transactions regarding the increase in share capital.

Deletion of Addition of Share Application Money:
The appellant, a limited company engaged in manufacturing and sale of paper products, received share application money during the assessment year. The Assessing Officer made an addition of Rs. 70,000,000/- on the appellant's income u/s 68 of the IT Act as the identity of the share applicants could not be established. The appellant contended that it had received share application money from different investors, but the departmental officers in Lucknow and Agra reported that no such companies existed at the given addresses. The Assessing Officer required the appellant to produce the M.D./C.E.O. of these companies for examination, but no such person was produced. The Ld. Commissioner of Income Tax (Appeals) observed that the appellant had furnished adequate details during assessment proceedings to substantiate the increase in share capital. The Ld. Commissioner held that the onus had shifted from the appellant to the Assessing Officer, who failed to show any discrepancy in the evidence provided. Consequently, the Ld. Commissioner decided the issue in favor of the appellant.

Establishment of Genuineness of Transactions:
The ITAT Delhi found that the identity of the share holders was not established, as the departmental officers could not locate the share applicant companies at the given addresses. The documents relied upon by the Ld. Commissioner of Income Tax (Appeals) were not scrutinized by the Assessing Officer, and the premium at which the shares were issued was not examined by the authorities below. Therefore, the ITAT Delhi remitted the matter to the file of the Assessing Officer for a fresh consideration. The ITAT Delhi allowed the appeal filed by the Revenue for statistical purposes, emphasizing the need for a thorough examination of the documents and the premium at which the shares were issued.

Separate Judgement:
The order was pronounced by the ITAT Delhi on 31/1/2012.