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Issues Involved:
The judgment involves the issue of addition of unexplained cash credit u/s 68 of the Income Tax Act, 1961 based on share application money received by the assessee company from various entities. Summary of Judgment: Issue 1: Addition of Unexplained Cash Credit u/s 68 of the IT Act The Appellate Tribunal upheld the addition of Rs. 1,67,50,000 as unexplained cash credit u/s 68 of the IT Act, based on the AO's findings that the share application money received by the assessee company was not adequately explained. The AO observed a complex movement of cash through different bank accounts, leading to the share application money reaching the assessee company. Despite the assessee providing documentary evidence, the AO found discrepancies and lack of authentication in the documents submitted. The AO concluded that the share application money was non-genuine and treated it as unexplained cash credit u/s 68 of the IT Act. Issue 2: Appellant's Contention and Legal Arguments During the appeal, the appellant contended that the AO's approach was biased and lacked proper justification. The appellant argued that under section 68 of the IT Act, the assessee is only required to prove the source of the cash credit and not the ultimate source. Citing legal precedents, the appellant emphasized the need to establish the genuine existence of the share applicants and the source of funds, which were duly supported by documentary evidence. The appellant also highlighted that the share applicants had disclosed assets exceeding the share application money, indicating the legitimacy of the transactions. Issue 3: Tribunal's Decision and Legal Precedents After considering the arguments and case laws presented by both parties, the Tribunal referred to the Supreme Court's decision in CIT vs. Lovely Exports (P) Ltd. and the Chattisgarh High Court's ruling in ACIT vs. Venkateshwar Ispat Pvt. Ltd. The Tribunal noted that the appellant had provided names, addresses, and evidence of share applicants and their payments from respective bank accounts. Relying on the legal precedents, the Tribunal concluded that the addition made by the AO and upheld by the CIT(A) was not justified. The Tribunal held that the share application money, if received from alleged bogus shareholders, should not be considered as undisclosed income of the assessee company. Conclusion: In light of the legal principles established by the Supreme Court and High Courts, the Tribunal allowed the appeal filed by the assessee, thereby deleting the addition of Rs. 1,67,50,000 as unexplained cash credit u/s 68 of the IT Act. The Tribunal emphasized the importance of proving the genuine existence of share applicants and their source of funds to avoid unjustified additions. This summary provides a detailed overview of the judgment, including the issues involved, the arguments presented, and the Tribunal's decision based on legal precedents and interpretations of the IT Act.
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