2023 (7) TMI 1203 - AT - Income Tax

Disallowance u/s 68 - Bogus share capital and Share Premium received - HELD THAT - As against the share application money received from five investors - As investors were found to be existing in their given addresses and the respective persons of those companies appeared before DDIT Investigation and confirmed the fact of depositing share application money with the assessee company. Assessee further submitted copies of the audited accounts and bank statements of these investors before the A.O. CIT(A) correctly deleted the additions. Share application money invested by M/s. Balram Vinimay Pvt. Ltd . - As after verification of the same and copies of the audited accounts and bank statements and the share application money has been transferred to the assessee company through banking channels. CIT(A) deleted the additions made by the Assessing officer and also following Supreme Court judgment in the case of Lovely Exports (P.) Ltd. 2008 (1) TMI 575 - SC ORDER . Unsecured loan received from M/s. Jeenma Business Pvt. Ltd. - CIT(A) deleted the addition by holding that the assessee proved the genuineness of the transaction. Before us, the Ld. Sr. D.R. could not produce any contra evidences, which warrant confirming the addition made by the A.O. In the absence of the same, we have no hesitation in confirming the order of Ld. CIT(A) who deleted the additions u/s. 68. Decided against revenue.

Summary

Issues Involved:
1. Addition on account of share capital and share premium under Section 68 of the Income Tax Act.
2. Addition on account of unsecured loan under Section 68 of the Income Tax Act.

Summary:

1. Addition on Account of Share Capital and Share Premium:
The Revenue filed an appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which deleted the addition of Rs. 1,70,00,000/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act. The AO had disallowed the share capital and share premium introduced by the assessee, deeming them non-genuine due to the failure to establish the identity, creditworthiness, and genuineness of the transactions. The CIT(A) found that four out of the five investor companies were existing at the given addresses and had confirmed the share application money. The CIT(A) relied on the Supreme Court decision in the case of Lovely Exports Pvt. Ltd., which held that if the share applicants are identified and their existence is confirmed, no addition can be made under Section 68. For the fifth company, Balram Vinimay Pvt. Ltd., the CIT(A) admitted additional evidence showing the company's change of address and subsequent amalgamation with Minda Capital Ltd., thus deleting the addition.

2. Addition on Account of Unsecured Loan:
The AO disallowed an unsecured loan of Rs. 1,00,82,664/- from M/s. Jeenma Business Pvt. Ltd., treating it as non-genuine due to the lack of full address, confirmation, and other documentary evidence. The CIT(A) admitted additional evidence provided by the assessee during the appellate proceedings, including the incorporation certificate, return of income, assessment order, ledger account, confirmation of account, and bank statements. The CIT(A) found that the assessee had proved the identity, creditworthiness, and genuineness of the transaction, relying on judicial precedents, and deleted the addition.

Conclusion:
The Tribunal upheld the CIT(A)'s order, confirming the deletion of additions made on account of share capital, share premium, and unsecured loan under Section 68 of the Income Tax Act. The Tribunal relied on the Supreme Court judgments in the cases of Lovely Exports Pvt. Ltd., Adamine Construction (P.) Ltd., Godavari Tie-up (P.) Ltd., and Rohtak Chain Co. (P.) Ltd., which support the assessee's position. The appeal filed by the Revenue was dismissed.