2023 (5) TMI 737 - AT - Income Tax

Assessment u/s 153A - Unexplained share capital and share premium - unexplained cash credit u/s. 68 - HELD THAT - As the additions made are not based on any incriminating material found during the search and seizure operation conducted in case of the Assessee and moreover, the additions are not based on any conclusive evidence brought on record to demonstrate that investors did not have any creditworthiness or the transactions are not genuine, we do not find any compelling reason to disturb the factual finding of ld. Commissioner (Appeals), while deleting the addition. Addition u/s 68 - AY 2015-16 - As the investments in share capital and share premium, which were added as income of the Assessee u/s. 68 of the Act in the impugned assessment year, were made in preceding assessment years. The investments made were converted into equity shares in the impugned assessment year. However, considering the fact that the credit entries relevant to the investment in share capital and share premium do not relate to the impugned assessment year, provisions of section 68 of the Act cannot be invoked in the year under consideration. All the appeals filed by the Revenue are dismissed.

Summary

Issues involved:
The judgment deals with appeals by the Revenue regarding deletion of addition made on account of unexplained share capital and share premium for assessment years 2011-12, 2012-13, 2014-15, and 2015-16.

For assessment years 2011-12, 2012-13, and 2014-15:
The appeals involve the common issue of deletion of addition made of various amounts on account of unexplained share capital and share premium. The Assessing Officer added back the share application money and share premium received by the assessee as unexplained cash credit under section 68 of the Act. The Commissioner (Appeals) deleted the additions citing lack of adverse corroborating evidence and failure of the Assessing Officer to examine the evidences furnished by the assessee.

For assessment year 2015-16:
The dispute pertains to the deletion of addition made under section 68 of the Act. The investments in share capital and share premium, which were added as income of the assessee in the impugned assessment year, were made in preceding assessment years. The investments made were converted into equity shares in the impugned assessment year, and the provisions of section 68 of the Act cannot be invoked for the year under consideration.

The judgment emphasizes that the additions made were not based on any incriminating material found during the search and seizure operation conducted in the case of the assessee. The Assessing Officer relied on a statement from a third party without factual examination of the evidences furnished by the assessee. The Commissioner (Appeals) noted that the Assessing Officer did not bring any material on record to controvert the claim of the assessee or falsify the evidences furnished.

The Tribunal dismissed the appeals filed by the Revenue for all the assessment years, upholding the decisions of the Commissioner (Appeals) to delete the additions based on lack of conclusive evidence and failure to establish the lack of creditworthiness or genuineness of the transactions.