2023 (6) TMI 1362 - HC - Income Tax

Addition u/s 68 on share capital and premium - absence of identity of the creditors genuineness and creditworthiness of the entire transaction - ITAT deleted the addition - only reason for making the addition in the hands of the assessee the director of the assessee company did not respond to the summons issued by the assessing officer u/s 131 - HELD THAT - Non appearance of the director cannot be made a ground for addition in the hands of the assessee under Section 68 of the Act when other evidence relating to the raising of share capital qua the share subscriber were available on record as furnished by the assessee and also cross verified by the assessing officer pursuant to the enquiry conducted in response to the notices issued under Section 133(6) of the Act. Tribunal also referred to the decision of this Court in the case of Crystal Networks Pvt. Ltd. Vs. CIT 2010 (7) TMI 841 - KOLKATA HIGH COURT Thus we find that there is no question of law much less substantial question of law arising for consideration in this appeal.

Summary

Issues involved:
The appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 against the order passed by the Income Tax Appellate Tribunal regarding the addition of share capital and premium in the assessment year 2012-13.

Issue 1: Addition of share capital and premium

The Court considered whether the Income Tax Appellate Tribunal erred in law in deleting the addition of Rs.4,67,50,000 made by the Assessing Officer due to lack of identity of creditors, genuineness, and creditworthiness of the transaction. The Tribunal thoroughly examined the genuinity of the transaction related to raising share capital. The assessee provided detailed information regarding share capital and premium, including names, addresses, PAN numbers of investors, share allotment advice, share application forms, bank statements, money receipts, and various forms. The assessing officer verified the transaction by issuing notices to investors under Section 133(6), and the investors responded with necessary details such as source of funds, income tax returns, and audited financial statements. Despite the director of the assessee company not appearing in response to a summons, the Tribunal held that the non-appearance cannot be a basis for addition under Section 68 when other evidence regarding share capital was available and verified. The Tribunal also referred to a previous decision in the case of Crystal Networks Pvt. Ltd. Vs. CIT.

The Court concluded that no substantial question of law arose for consideration in the appeal, leading to the dismissal of the appeal and application.