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Issues Involved:
The judgment involves the challenge against the addition made u/s. 68 of the Income-tax Act, 1961 by the Assessing Officer, relating to share application money received pending allotment by the assessee company engaged in the business of manufacturing jewelry for the assessment year 2006-07. Assessing Officer's Addition u/s. 68: The Assessing Officer observed discrepancies in the details provided by the assessee regarding the share application money received pending allotment. Despite submission of various documents, including a foreign inward remittance certificate, the Balance Sheet of the alleged investor, SPSA, was not provided. The Assessing Officer issued a show-cause notice, and upon non-compliance, treated the amount as income u/s. 68. The CIT(A) upheld this addition, emphasizing the failure to prove the creditworthiness of SPSA through the Balance Sheet. Arguments Before CIT(A) and Tribunal: Before the CIT(A), the assessee highlighted SPSA's tax compliance in Switzerland and submitted evidence supporting the creditworthiness of SPSA. The CIT(A) upheld the addition, noting the absence of conclusive proof of creditworthiness. However, before the Tribunal, the assessee presented the audited Balance Sheets of SPSA for 2006 and 2007, establishing its net worth and creditworthiness. Tribunal's Decision: The Tribunal admitted the additional evidence of SPSA's Balance Sheets, which aligned with earlier figures provided. It concluded that the creditworthiness of SPSA was now substantiated, meeting the criteria of identity, creditworthiness, and genuineness of the transaction. Consequently, the addition u/s. 68 was deemed unwarranted, and the Assessing Officer was directed to delete the addition, allowing the assessee's appeal. Conclusion: The Tribunal's decision favored the assessee, overturning the addition made by the Assessing Officer u/s. 68 based on the subsequent submission of SPSA's audited Balance Sheets, which validated the creditworthiness of the investor.
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