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2019 (5) TMI 883 - AT - Income TaxAddition u/s. 68 of unexplained cash credit - share capital/premium - revenue contends during the course of hearing AO had rightly made the impugned addition as the assessee failed to prove the identity, genuineness and creditworthiness of its shareholders/investors/subscribers in issue - HELD THAT - Revenue takes us through CIT(A) s findings deleting the impugned addition and submits that the AO could not verify the assessee s investor parties/subscribers during the course of assessment and therefore the CIT(A) ought not to have deleted the impugned addition in absence of such a vital factual verification. The assessee fails to dispute this clinching fact that the AO had not enable to verify the investor parties/subscribers for the purpose of genuineness and creditworthiness of the share capital/premium in issue. As relying on ITO V/s Primeline Sales P.Ltd 2019 (1) TMI 1562 - ITAT KOLKATA we restore the matter back to the Assessing Officer for fresh adjudication after affording adequate opportunity of hearing to the assessee. - Revenue s appeal is allowed for statistical purpose
Issues Involved:
1. Deletion of addition under Section 68 of the Income Tax Act, 1961 concerning unexplained cash credit related to share capital/premium. Issue-wise Detailed Analysis: 1. Deletion of Addition under Section 68: The Revenue's appeal challenges the CIT(A)'s decision to delete the addition of ?12,78,67,165/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961. The AO had added this amount as unexplained cash credit, questioning the genuineness and creditworthiness of the share capital and premium received by the assessee. CIT(A)'s Findings: - The CIT(A) observed that the assessee had raised equity share capital of ?12,39,00,000/- along with a share premium and had received ?40,00,000/- as share application money pending allotment. - The AO doubted the genuineness of the share capital and the creditworthiness of the share applicants, considering them bogus and an attempt to introduce black money. - The CIT(A) noted that each share subscriber was regularly assessed to income tax, and their investments were reflected in their audited books of accounts and income tax returns. - The assessee had provided full details of each share applicant, and the AO had issued notices under Section 133(6) to these applicants. The responses received were not considered by the AO. - The CIT(A) emphasized that the share applicants had disclosed their Permanent Account Numbers, submitted audit reports, financial statements, and bank account details from which payments were made to the assessee, proving their identity and the genuineness of the transactions. - The CIT(A) concluded that the assessee had discharged its burden under Section 68 by providing adequate evidence of the identity, genuineness, and creditworthiness of the share applicants. The AO's addition was based on extraneous parameters and not on the evidence provided. Reference to Judicial Precedents: - The CIT(A) referred to the Supreme Court's decision in CIT vs. Lovely Exports Ltd., which held that if share application money is received from alleged bogus shareholders whose names are given to the AO, the Department is free to reopen their individual assessments. Tribunal's Decision: - The Tribunal noted the Revenue's contention that the AO could not verify the assessee's investor parties/subscribers during the assessment. - The Tribunal referred to its decision in ITO V/s Primeline Sales P. Ltd., where a similar issue was restored to the AO due to lack of verification. - The Tribunal observed that the AO had not given adequate opportunity to examine all the details filed before the CIT(A) and that new evidence was brought on record. - Following the precedent, the Tribunal set aside the orders of the lower authorities and restored the matter to the AO for fresh adjudication after giving the assessee proper and sufficient opportunity of being heard. Conclusion: - The Revenue's appeal was allowed for statistical purposes, and the matter was remanded back to the AO for a fresh assessment, ensuring that the assessee is given adequate opportunity to present its case.
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