2013 (10) TMI 1468 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 40,00,000/- made u/s 68 of the Income Tax Act regarding alleged share application money.

Summary:

Issue 1: Deletion of Addition u/s 68

The Revenue appealed against the CIT(A)'s order deleting the addition of Rs. 40,00,000/- made u/s 68 concerning alleged share application money. The original assessment was framed u/s 115JB, and later reopened u/s 148, alleging accommodation entries from three corporate entities. During reassessment, the assessee provided various documents to justify the share application money, including share application forms, board resolutions, incorporation certificates, PAN details, and bank statements. However, the assessing officer added the amount u/s 68, citing failure to produce directors and lack of substantive evidence of investors' creditworthiness.

The CIT(A) deleted the addition, observing that the share capital was received through cheques from duly registered corporate entities with PAN numbers and regular income tax filings. The CIT(A) noted that the assessing officer did not conduct further inquiries or issue notices u/s 133(6) or 131. The CIT(A) relied on various judicial precedents, including the Supreme Court's decision in CIT vs. Lovely Export, which held that once the identity of shareholders is established, the share capital cannot be added as undisclosed income unless adverse evidence is present.

The Revenue argued that the assessee failed to produce the directors, justifying the addition. They relied on the Delhi High Court's decision in CIT Vs. Nova Promoters. The assessee countered by highlighting the voluminous evidence provided and the lack of inquiry by the assessing officer. The Tribunal noted that the assessing officer did not conduct any inquiry or issue summons/notices, and the evidence provided by the assessee was not rebutted. The Tribunal upheld the CIT(A)'s order, finding no infirmity and dismissing the Revenue's appeal.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the Rs. 40,00,000/- addition made u/s 68, citing the lack of inquiry and adverse evidence by the assessing officer.