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2023 (3) TMI 1184 - AT - Income TaxAssessment u/s 153A - Second round of appeal before ITAT - unexplained source of source of Share Capital and Share Premium u/s 68 - proof of adverse material found during the course of search or post search inquiries to establish that the assessee has received any bogus share capital or share premium - HELD THAT - ITAT in its order in the first round had come to a conclusion that there was no material found by the AO in the first round which can be said to be cogent enough to fasten the liability of bogus share capital or share premium upon the assessee. Furthermore, subsequent to the first round of proceedings before the AO and CIT(A), there was a search and seizure activity. The provisions of the Act clearly provide that in such eventuality, all the assessment proceedings shall abate and fresh assessment will be done by the AO u/s 153A of the Act. As already noted by the ITAT, no adverse material was found during the course of search or post search that the assessee had received any bogus share capital or share premium. ITAT had only given Revenue a chance to go through the material and to link them with the assessee. AO has not found any adverse material pursuant to the directions of the ITAT and ld. CIT (A) is correct in holding that pursuant to the remand of the ITAT, AO has not done anything but copy and paste its earlier order. No infirmity in the order of the ld. CIT (A) in complying with earlier ITAT direction that if nothing adverse is found subsequent to the remand the addition shall stand deleted. Accordingly, we uphold the same.Appeal of the Revenue stands dismissed.
Issues Involved:
1. Deletion of addition on account of unexplained source of Share Capital and Share Premium under Section 68 of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Deletion of Addition on Account of Unexplained Source of Share Capital and Share Premium under Section 68 of the Income Tax Act, 1961: This appeal by the Revenue is directed against the order of the ld. CIT (Appeals)-26, New Delhi dated 05.01.2021 for the assessment year 2009-10. The grounds of appeal taken by the Revenue read as under: "1. On facts and circumstances of the case and in law the Ld. CIT (A) has erred deleting the addition of Rs.2,25,00,000/- made by AO on account of unexplained source of Share Capital and Share Premium u/s 68 of the Income Tax Act, 1961. 2. (a) The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts." This is the second round of appeal before the ITAT. In the first round, the ITAT had remanded the matter to the file of AO with certain directions. The facts of the case in the first round appreciated by the ITAT are as follows: The assessee, a company engaged in the business of land, filed its return of income declaring a total income of Rs.5,63,003/-. During the assessment proceedings, the AO observed that the assessee company received share capital of Rs.2,25,00,000/- including share premium of Rs.1,96,00,000/- on the sale of 45,000 shares. The AO found that the companies from which share premium was received were not doing any real business and were engaged in providing accommodation entries. The AO, therefore, added Rs.2,25,00,000/- to the total income of the assessee under Section 68 of the IT Act. Before the Ld. CIT (A), the assessee submitted that it had furnished the names and addresses of the shareholders and proved their identity, creditworthiness, and genuineness of the transaction by filing the necessary documents. The Ld. CIT (A) deleted the addition, observing that the assessee had discharged its onus to prove the receipt of share capital money from identified and existing persons who invested amounts out of their own bank accounts and confirmed the investment directly to the AO. In the second round, the ITAT noted the Revenue's grounds of appeal and the chronology of events. The ITAT observed that the AO made an addition of Rs.2.25 crores being share capital and share premium received by the assessee from four parties, invoking the provisions of Section 68 of the IT Act. The Ld. CIT (A) deleted the addition, and the ITAT found that the assessee had discharged the onus cast on it. The ITAT noted that subsequent to the order passed by the CIT (A), a search under Section 132 of the IT Act was conducted at the premises of the assessee. During post-search inquiries, the four persons confirmed investments made by them in the shares of the assessee company. The AO, in the order passed under Section 153A/143(3), accepted the returned income and did not make any addition on account of share capital and share premium. The ITAT restored the issue to the file of the AO with the direction to go through the inquiries conducted by the investigation wing of the department and the inquiry conducted by the AO in the 153A proceedings. If nothing adverse was found, the AO was directed to delete the addition. Consequent upon the ITAT's direction, the AO issued a notice under Section 142(1) and examined the details filed by the assessee. The AO noted that the details filed were the same as those filed during the assessment proceedings under Section 143(3) and search proceedings before the Investigation Wing. The AO concluded that the share capital/share premium amounting to Rs.2,25,00,000/- was treated as unexplained credit under Section 68 of the IT Act. The ld. CIT (A) observed that the AO had not referred to any inquiries made during the assessment proceedings under Section 153A and that there were no adverse findings regarding the share capital during the search or post-search investigations. The ld. CIT (A) held that the addition made by the AO was not sustainable and deleted the addition. Against this order, the Revenue appealed before the ITAT. The ITAT noted that the AO had not found any fresh material to support the case of the Revenue other than what was already considered in the first round. The ITAT upheld the order of the ld. CIT (A), noting that the AO had not found any adverse material pursuant to the directions of the ITAT. In conclusion, the ITAT held that the addition of Rs.2,25,00,000/- made by the AO on account of share capital including share premium under Section 68 was not sustainable and dismissed the appeal of the Revenue. Order pronounced in the open court on this 21st day of November, 2022.
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