2017 (4) TMI 1328 - HC - Income Tax

Addition u/s 68 - genuineness of transaction could not be proved - Held that - This Court in the case of Commissioner of Income Tax vs. M/s VTC Leasing & Finance Ltd. 2017 (1) TMI 1567 - RAJASTHAN HIGH COURT on identical issue answered that Tribunal was justified in deleting the addition made by the Assessing Officer on account of unexplained share capital under Section 68 of the Act. - Decided in favour of assessee

Summary

Issues:
Challenge to Tribunal's judgment and order regarding addition made by AO under section 68 of the IT Act.

Analysis:
The appellant challenged the Tribunal's decision dismissing the appeal of both the assessee and the department. The High Court framed a substantial question of law regarding the ITAT's alleged perverse and illegal action in deleting an addition of ?1.89 crore made by the Assessing Officer under section 68 of the IT Act, despite the lack of proof of transaction genuineness. The respondent relied on a previous decision of the Court in a similar case where an addition made by the Assessing Officer was deleted by the Tribunal. However, the High Court referred to the Supreme Court's judgment in the case of Commissioner of Income Tax vs. Lovely Exports (P) Ltd., emphasizing that if share application money is received from alleged bogus shareholders, the department can proceed to re-open their individual assessments. Consequently, the High Court ruled in favor of the assessee and against the department, ultimately dismissing the appeal.