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Issues involved: Appeal against deletion of addition u/s 68 of the Income-tax Act, 1961 regarding share capital and share premium.
The judgment pertains to an appeal filed by the Revenue challenging the deletion of an addition of Rs. 9,00,000 made by the Assessing Officer u/s 68 of the Income-tax Act, 1961. The issue revolved around the genuineness of funds related to share capital and share premium. The Revenue contended that physical identity of the share applicants needed to be established, which was not done in this case. The Appellate Tribunal proceeded ex parte as the assessee did not appear for the hearing. The assessee, a private limited company, raised a total capital of Rs. 1,93,00,000 during the relevant year, out of which Rs. 38,60,000 was share capital and Rs. 1,54,40,000 was share premium. The Assessing Officer treated a portion of the funds as unexplained credit under Section 68 due to the inability to produce the person controlling a specific entity from which funds were received. The Appellate Tribunal considered the arguments presented by the Revenue and examined the material on record. It was noted that the assessee had provided confirmations, PAN, address, bank details, and income tax return copies of the entity from which the funds were received. The Tribunal highlighted that information was gathered directly from the concerned entity under Section 133(6), confirming the transaction. Relying on relevant judicial decisions, including those of the High Court, the Tribunal agreed with the CIT(A) that the assessee had discharged the burden of proving the cash credit in its books of account, leading to the deletion of the addition. The Tribunal emphasized the importance of the creditor affirming the transaction directly to the Assessing Officer, similar to the facts in a previous Apex Court case. It was noted that the assessee's case was even stronger than the precedent, as the creditor was found at the address and confirmed the transaction in response to the notice issued. Consequently, the Tribunal found no reason to interfere with the CIT(A)'s order and upheld the deletion of the addition. Ultimately, the appeal of the Revenue was dismissed, affirming the decision of the lower authorities. Decision pronounced in the open Court on 25th May, 2012.
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