2023 (3) TMI 1395 - AT - Income Tax

Addition u/s 68 - undisclosed income which has been introduced in the garb of share capital/share premium - CIT(A) deleted addition - HELD THAT - As going through the entire contents of the paper book and after perusing the facts on record, we do not find any strength in the ratio given by the ld. CIT(A), hence, owing to the absence of the pertinent facts, we deem it proper to remand the matter to the file of the Assessing Officer to inquire into the issue afresh and pass a speaking order after affording due opportunity to the assessee. Appeal of the assessee is Revenue for statistical purpose.

Summary

Issues Involved:

1. Deletion of addition of Rs.3,00,00,000/- by CIT(A) u/s 68 of the I.T. Act, 1961.
2. Failure to establish identity, creditworthiness, and genuineness of transactions.
3. Relevance of previous judgments and legal precedents.

Summary:

1. Deletion of Addition of Rs.3,00,00,000/- by CIT(A) u/s 68 of the I.T. Act, 1961:
The Revenue challenged the CIT(A)'s order, which deleted the addition of Rs.3,00,00,000/- made by the AO u/s 68 on account of undisclosed income introduced as share capital/share premium from M/s Bhavani Portfolio Pvt. Ltd. and M/s Thar Steels P. Ltd. The AO contended that the assessee failed to establish the physical identity and creditworthiness of the concerned parties and the genuineness of transactions.

2. Failure to Establish Identity, Creditworthiness, and Genuineness of Transactions:
The AO argued that the addresses of the alleged shareholders were the same as those where a search operation u/s 132 was conducted, raising doubts about the transactions. Despite submitting confirmations, bank statements, and other documents, the AO was not satisfied and insisted on producing the directors of the shareholder companies, which the assessee failed to do. Consequently, the AO made an addition of Rs.3,00,00,000/-.

3. Relevance of Previous Judgments and Legal Precedents:
The assessee relied on various judgments, including CIT vs. Lovely Exports Pvt. Ltd. [2008] 216 CTR 195 (SC), which held that if share application money is received from alleged bogus shareholders whose names are given to the AO, the Department is free to reopen their individual assessments. The CIT(A) also referred to judgments like CIT vs. Oasis Hospitalities Pvt. Ltd. and CIT vs. Value Capital Services (P) Ltd. 307 ITR 334 (Delhi), emphasizing that once the assessee provides necessary documents like PAN, bank statements, and other details, the onus shifts to the AO to scrutinize and verify these documents.

Conclusion:
The ITAT, after hearing arguments and reviewing the facts, found the CIT(A)'s ratio lacking strength and remanded the matter to the AO for fresh inquiry and a speaking order after affording due opportunity to the assessee.

Order Pronounced in the Open Court on 01/03/2023.