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2023 (3) TMI 359 - AT - Income TaxAddition u/s 68 - unexplained cash credit in the form of share capital and share premium - HELD THAT - As decided in the recent decision in the case of ITO vs. Mainak Suppliers Pvt. Ltd. 2023 (2) TMI 506 - ITAT KOLKATA we find that assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions. Accordingly, considering these facts and in the light of the judicial precedents referred above, we find no reason to interfere with the fact-based findings given by the Ld. CIT(A) and uphold his decision to delete the addition made by the Ld. AO towards share capital and share premium u/s. 68 of the Act. Accordingly, grounds taken by the revenue in this respect are dismissed. Addition for unexplained cash seized during the course of search - CIT- A deleted the addition - HELD THAT - As examined the audited balance sheet and find that the alleged cash seized by the Revenue authorities is duly recorded in the financial statement and is part of the cash in hand available with the assessee in the due course of business. Thus, we fail to find any infirmity in the finding of ld. CIT(A). Appeal of revenue dismissed.
Issues Involved:
1. Deletion of addition made under Section 68 of the Income Tax Act for unexplained cash credit in the form of share capital and share premium. 2. Deletion of addition for unexplained cash seized during the course of search. Issue-wise Detailed Analysis: 1. Deletion of Addition under Section 68 of the Income Tax Act: The Revenue challenged the deletion of additions made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, which pertains to unexplained cash credits in the form of share capital and share premium. The AO had added Rs. 10 Crore for AY 2011-12 and Rs. 3.20 Crore for AY 2012-13, suspecting these amounts as unexplained cash credits. The Tribunal noted that the assessee had issued equity shares at a face value of Rs. 10/- with a share premium of Rs. 40/- from various applicants. The AO had treated these amounts as unexplained due to non-compliance with Section 133(6) notices and the improbability of such investments in a small, unknown company. However, the Commissioner of Income Tax (Appeals) [CIT(A)] found that the assessee had provided sufficient documentary evidence, including bank statements, PAN details, and financial statements of the investor companies. The CIT(A) observed that no inquiries were made by the AO despite the details being furnished during the assessment proceedings. The CIT(A) concluded that the identity and creditworthiness of the share applicants and the genuineness of the transactions were established, thus not covered under Section 68. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee had discharged its burden of proof by providing complete details to explain the credit received. The Tribunal also noted that the AO's findings were based on conjectures and lacked merit. The Tribunal cited several judicial precedents supporting the view that once the assessee provides details regarding the identity, genuineness, and creditworthiness of the share applicants, the burden shifts to the Revenue to prove otherwise. 2. Deletion of Addition for Unexplained Cash Seized During Search: The Revenue also challenged the deletion of an addition of Rs. 28 lakh made by the AO towards cash seized during a search operation. The AO had treated this amount as unexplained cash. The Tribunal noted that the assessee had shown the seized cash in its balance sheet and claimed it was duly accounted for in the books of accounts. The CIT(A) observed that the cash was part of the cash in hand of the assessee company and was duly reflected in the audited balance sheet. The CIT(A) concluded that the nature and source of the seized cash were explained, and thus, the addition made by the AO was deleted. The Tribunal upheld the CIT(A)'s decision, noting that the findings were unrebutted by the Revenue. The Tribunal confirmed that the seized cash was part of the cash in hand available with the assessee in the due course of business, as reflected in the financial statements. Conclusion: The appeals filed by the Revenue for AY 2011-12 and AY 2012-13 were dismissed. The Tribunal found no infirmity in the CIT(A)'s decisions to delete the additions made under Section 68 for unexplained cash credits and the addition for unexplained cash seized during the search operation.
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