DCIT Vs Giri Prime Housing Properties Private Limited (ITAT Mumbai)
The Revenue appealed against the order of the CIT(A)/NFAC deleting an addition of ₹4.10 crore made under Section 68 of the Income-tax Act, 1961 on account of share capital and share premium received by the assessee from six investor companies. The Assessing Officer (AO), while completing the assessment under Section 143(3), had observed that the assessee had issued shares at a high premium despite having no operational income, no fixed assets and substantial increases in share capital and reserves. After examining the financial statements, bank accounts and other records of the investor companies, the AO concluded that the investors had negligible business income, insignificant bank balances, funds sourced mainly through loans or share premium, and immediately transferred funds in round figures. The AO treated the investor companies as shell or accommodation entry providers and added ₹4.10 crore as unexplained cash credit under Section 68.
The CIT(A) deleted the addition after observing that the assessee had furnished documents such as bank statements, income-tax returns, share application forms, confirmations, Form No. 2, board resolutions and financial statements to establish the identity, creditworthiness and genuineness of the investors. The CIT(A) held that the AO had not conducted independent enquiries by issuing notices under Section 133(6) or summons under Section 131 and concluded that the burden had shifted to the AO after the assessee produced the primary documents. Relying on various judicial precedents, the CIT(A) directed deletion of the addition.
