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Issues Involved: Appeal against addition of share application money as unexplained cash credit u/s 68 and disallowance of salary paid to relatives of Directors.
Addition of Share Application Money: The assessee, engaged in manufacturing, received share application money from 15 persons totaling to Rs. 20,48,500, not assessed to tax. Assessee provided confirmations and proofs of creditworthiness, but AO treated the sum as income u/s 68. CIT(A) confirmed, stating failure to discharge onus. Assessee argued share applicants admitted payments, citing court decisions. Tribunal noted courts' view that if share applicants admit payments, no further inquiry is needed into creditworthiness. Relying on precedents, Tribunal allowed the ground, holding section 68 requirements satisfied. Disallowance of Salary to Directors' Relatives: Assessee paid Rs. 3,00,000 as salary to Directors' relatives, justifying their roles but providing no evidence. AO and CIT(A) disallowed the amount due to lack of proof of services rendered. Tribunal upheld the disallowance, stating without evidence of services, the claim for business expenses cannot be accepted. In conclusion, the appeal was partly allowed, with the addition of share application money under section 68 being deleted, but the disallowance of salary to Directors' relatives being upheld.
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