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2023 (1) TMI 653 - AT - Income TaxAddition u/s 68 - unexplained credit on accounts of sum credited in the books of accounts of the assessee who received share capital and share premium - whether the addition u/s. 68 can be made when the assessee has not received any amount from the alleged party in the year under consideration? - HELD THAT - Once the amount is not received in the year under consideration, there cannot be any sum found credited in the year under consideration as required for the purpose of section 68 of the Act. Hence, the addition made by the AO u/s. 68 of the Act in respect of M/s. Jaycee Industries Ltd. deserves to be deleted and accordingly, the ground of appeal of the revenue is dismissed.
Issues Involved:
Appeal against deletion of addition under section 68 of the Income Tax Act for unexplained credit from a party without creditworthiness. Analysis: Issue 1: Addition under Section 68 of the Act The appeal was filed by the Revenue challenging the deletion of the addition of Rs. 1,99,75,000 made under section 68 of the Income Tax Act. The Assessing Officer had added this amount as unexplained credit in the books of accounts of the assessee received from a specific party. The Revenue contended that the party did not have the required creditworthiness, thus justifying the addition. The ld. CIT(A) had deleted this addition, leading to the appeal. Issue 2: Facts and Proceedings The assessee had filed its return of income for the relevant year, which was later reopened by the Assessing Officer under section 147 of the Act. Subsequently, the Assessing Officer made an addition of Rs. 3,13,35,000 as share capital and share premium received from various parties under section 68 of the Act. The ld. CIT(A) deleted this addition based on the satisfaction of tests prescribed under section 68 by the assessee, leading to the Revenue's appeal against the deletion of a specific amount. Issue 3: Share Capital and Premium from a Specific Party The specific issue revolved around the share application money of Rs. 1,99,75,000 received from a particular party in a previous assessment year. The Assessing Officer doubted the creditworthiness of this party based on its financials, leading to the addition under section 68. However, the ld. CIT(A) observed that the share allotment was made in the current assessment year, and since the amount was received in earlier years, no addition under section 68 was warranted for the current year. Issue 4: Arguments and Decision The Departmental Representative argued in favor of upholding the addition under section 68 due to the alleged party's lack of creditworthiness. On the other hand, the assessee's counsel highlighted the scrutiny carried out in the previous year and the responses received from the party in question. The ld. CIT(A) emphasized that if the amount was received in previous years and only allotment was made in the current year, no addition under section 68 was justified. The Tribunal concurred with the ld. CIT(A) and dismissed the Revenue's appeal, holding that no sum was credited in the current year, thus negating the need for the addition under section 68. In conclusion, the Tribunal upheld the decision of the ld. CIT(A) and dismissed the appeal of the Revenue, emphasizing that when the amount was not received in the current year, no addition under section 68 was warranted.
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