2019 (11) TMI 867 - AT - Income Tax

Assessments completed u/s 153A - Addition u/s 68 - unexplained cash credit - HELD THAT - As decided in own case 2019 (5) TMI 850 - ITAT KOLKATA addition by treating the share application money as unexplained cash credit u/s 68 was made by the Assessing Officer in the assessment completed u/s 153A on the basis of Bank account found during the course of search and since the said Bank account as well as the transactions reflected therein were duly disclosed by the assessee in its return of income originally filed for the year under consideration, we find ourselves in agreement with the contention of the assessee that the same cannot be treated as incriminating material found during the course of search. The addition made by AO u/s 68 and confirmed by the ld. CIT(Appeals) thus was not based on any incriminating material found during the course of search and the same, in our opinion, is not sustainable being outside the scope of section 153A - Decided in favour of assessee.

Summary

Issues:
Addition made by Assessing Officer on share application money under section 68 for assessment years 2010-11 & 2011-12.

Analysis:
The appeals filed by the assessee were against orders passed by the Commissioner of Income Tax (Appeals) regarding addition of share application money under section 68. The Assessing Officer and CIT(Appeals) held that the transactions were not satisfactorily explained by the assessee. The assessee failed to prove the identity, capacity, and genuineness of the share applicants despite opportunities given. The Assessing Officer raised concerns about the lack of income generation activity, high premium on shares, and the involvement of shell companies as share applicants. The CIT(Appeals) confirmed the additions based on incriminating documents and lack of creditworthiness of the share contributors.

The Tribunal noted that a similar issue was resolved in the assessee's favor for a different assessment year, where the addition was deleted. The Tribunal emphasized the importance of incriminating material found during the search for invoking section 153A. It was highlighted that in the absence of such material, additions under section 68 were unsustainable. Citing relevant case laws, the Tribunal concluded that the additions made by the Assessing Officer and confirmed by the CIT(Appeals) were not sustainable due to the lack of incriminating evidence related to share capital issues.

Based on the similarity of facts and arguments to the previous case, the Tribunal followed its earlier decision and deleted the additions made on share application money under section 68 for the assessment years 2010-11 & 2011-12. Consequently, both appeals of the assessee were allowed, and the orders were pronounced in favor of the assessee on November 15, 2019.