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2021 (6) TMI 843 - AT - Income TaxAddition u/s 68 - failure to establish the identity and creditworthiness of the three companies from whom the assessee had receive application money - HELD THAT - In the present case, the assessee has furnished each and every detail of the share applicant companies in response to the queries raised by the AO during the assessment proceedings and even during the appellate proceedings. In our considered view the assessee has prima facie discharged the onus of establishing identity and creditworthiness of the aforesaid three companies and further in establishing the genuineness of the transaction. Since, the assessee has discharged the primary onus, we find merit in the contention of the Ld. Counsel that the Ld. CIT(A) has wrongly affirmed the action of the AO and conformed the addition made u/s. 68 - So far as the cases relied upon by the department are concerned, the same are distinguishable on facts and the evidence on record. We therefore, set aside the impugned order passed by the Ld. CIT(A) and allow the appeal of the assessee. Accordingly, we direct the AO to delete the addition made u/s.68. Appeal of the assessee is allowed.
Issues Involved:
1. Legality and justification of the order passed by the CIT(A). 2. Confirmation of addition of ?15,00,000/- under Section 68 of the Income Tax Act, 1961 for share application money received from M/s. Simplex Trading and Agencies Ltd. 3. Confirmation of addition of ?15,00,000/- under Section 68 of the Income Tax Act, 1961 for share application money received from M/s. Zinnia Sales Pvt. Ltd. 4. Confirmation of addition of ?15,00,000/- under Section 68 of the Income Tax Act, 1961 for share application money received from M/s. Daisy Suppliers Pvt. Ltd. 5. Excessiveness of the addition confirmed by the CIT(A). Detailed Analysis: 1. Legality and Justification of the Order Passed by the CIT(A): The assessee challenged the assessment order before the CIT(A) on the grounds that the action of the AO was arbitrary and bad in law. However, the CIT(A) dismissed the appeal and confirmed the addition made by the AO. The assessee contended that the CIT(A) affirmed the AO’s action without considering the evidence adduced to establish the identity and creditworthiness of the companies and the genuineness of the transactions. 2. Confirmation of Addition of ?15,00,000/- Under Section 68 for Share Application Money Received from M/s. Simplex Trading and Agencies Ltd.: The assessee submitted that M/s. Simplex Trading & Agencies Ltd. is a listed company on the Bombay Stock Exchange. The assessee received ?15,00,000/- from the said company towards share application money through RTGS. The assessee provided various documents, including the certificate of incorporation, memorandum of association, annual report, PAN card, ITR, bank statement, and confirmation to establish the identity of the company. The revenue from operations and other income of the company amounted to ?4,67,83,754/- for the period ended 31/03/2013. 3. Confirmation of Addition of ?15,00,000/- Under Section 68 for Share Application Money Received from M/s. Zinnia Sales Pvt. Ltd.: The assessee received ?15,00,000/- from Zinnia Sales Pvt. Ltd. as share application money through three cheques. The assessee provided documents, including PAN, balance sheet, confirmation, source of funds, ITR, and share certificate, to prove the identity and creditworthiness of the company and the genuineness of the transaction. The revenue from operations of the company during the assessment year was ?206.08 Lacs, and the net worth was ?1379.70 Lacs. 4. Confirmation of Addition of ?15,00,000/- Under Section 68 for Share Application Money Received from M/s. Daisy Suppliers Pvt. Ltd.: The assessee received ?15,00,000/- from M/s. Daisy Suppliers Pvt. Ltd. through three cheques towards share application money. The assessee provided documents, including PAN card, ITR, bank statement, and jurisdiction details of the company. The net worth of the company during the assessment year was ?1744.05 Lacs, and the revenue from operations was ?248.86 Lacs. 5. Excessiveness of the Addition Confirmed by the CIT(A): The assessee argued that the CIT(A) confirmed the addition of ?45,00,000/- under Section 68 of the Act without appreciating the documentary evidence on record. The assessee had provided comprehensive details and explanations to prove the identity and creditworthiness of the companies and the genuineness of the transactions. The Tribunal found that the assessee had prima facie discharged the onus of establishing the identity and creditworthiness of the companies and the genuineness of the transactions. Conclusion: The Tribunal concluded that the assessee had furnished sufficient documentary evidence to establish the identity and creditworthiness of the companies and the genuineness of the transactions. The Tribunal found merit in the contention of the assessee that the CIT(A) had wrongly affirmed the action of the AO and confirmed the addition made under Section 68 of the Act. The Tribunal set aside the impugned order passed by the CIT(A) and allowed the appeal of the assessee, directing the AO to delete the addition of ?45,00,000/- made under Section 68 of the Act. Order Pronounced on 14/06/2021.
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