2022 (11) TMI 667 - AT - Income Tax

Addition u/s 68 - share application money and premium claimed as received during the concerned period unexplained - identity, creditworthiness of shareholders and the genuineness of the transactions were unexplained at stage of assessment proceedings - HELD THAT - As noted from the perusal of the two summons issued u/s. 131 that there was no such requirement from the ld. AO to produce the director of the shareholder companies. It was only the director of the assessee who were called for personal attendance and produce the required details and documents which were complied by the assessee. The shareholder company is one of the group companies having a common director namely Shri Raj Kumar Gupta. We note that all these verifiable facts have been duly considered by the CIT(A) and has granted relief after his due verification and examination - we do not find any reason to interfere with the findings given by the ld. CIT(A) who upheld the deletion of addition made by the Ld. AO - Accordingly, the grounds raised by the revenue are dismissed.

Issues Involved:
Appeal against order of Ld. CIT(A) regarding addition made towards share application money and premium claimed as received during the concerned period.

Analysis:
1. The appeal filed by the revenue challenged the order of Ld. CIT(A) regarding the relief granted for the addition made towards share application money and premium claimed during the relevant period. The grounds of appeal raised by the revenue questioned the treatment of the credit entry in the books and the deletion of the addition due to unexplained identity and creditworthiness of shareholders.

2. The facts of the case revealed that the assessee received share application money and premium during the year, leading the Ld. AO to treat the credited sum as bogus under section 68 of the Income-tax Act, 1961. The AO's concerns regarding the genuineness of the transaction and the identity of shareholders were not adequately addressed by the assessee, resulting in the addition to the total income.

3. During the first appeal, the assessee provided detailed explanations and documents to support the transaction, including the acceptance of an advance from a group company and the issuance of equity shares in lieu of repayment. The assessee emphasized the common directorship between the companies and the compliance with legal requirements for the share issue.

4. The Ld. CIT(A) considered the submissions, documents, and assessment order, concluding that there was no fresh credit entry during the concerned period and that the share issue price was agreed upon with legal compliance. The non-production of directors of the shareholder company was also addressed, noting the absence of a requirement to produce such directors in the summons.

5. The revenue contended that the addition should not have been deleted, citing discrepancies in the shareholding pattern and the failure to establish the genuineness of the transaction. However, the Ld. Counsel for the assessee reiterated the explanations and demonstrated the compliance with legal procedures and the advance received from the group company.

6. The Tribunal reviewed the facts, including the advance received, share issuance, and compliance with summons requirements. Finding no reason to interfere with the Ld. CIT(A)'s findings, the Tribunal dismissed the revenue's appeal, upholding the deletion of the addition made by the Ld. AO. The decision was based on the verifiable facts and corroborative material presented during the proceedings.

In conclusion, the Tribunal's decision favored the assessee, emphasizing the compliance with legal requirements, the absence of fresh credit entry, and the supportive documentation provided, leading to the dismissal of the revenue's appeal.

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