Sunshine Metals & Alloys Vs ITO (ITAT Mumbai)
Section 68 Bogus share capital- Assessee has furnished the Name, Address, PAN no and Share Application Form to prove that the shares were allotted to the applicants. The assessee has also furnished its bank statement to show that the money was received through banking channels and there were no immediate withdrawals from the banks which shows that the share application amounts have not been returned back to these parties in cash. Thus, the assessee has discharged the primary onus cast upon it to prove the identity, capacity and genuineness of transactions.
FULL TEXT OF THE ITAT JUDGMENT
This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax-8, Mumbai [in short CIT(A)], in appeal No. CIT(A)-8/Cir.4/121/2012-13, order dated 28.02.2014. The Assessment was framed by the Income Tax Officer, Ward-4(3)4), Mumbai (in short ‘ITO/ AO’) for the A.Y. 2008-09 vide order dated 08-11-2012 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. At the outset, the learned Counsel for the assessee stated that he is not interested in prosecuting the issue of reopening, which is raised by way of ground No.2 which reads as under: –
“2. Reopening of the assessment under section 147 of the Income Tax Act, 1961 is bad in law-
a. The ld. CIT(A) erred in confirming the action of the ld. AO in reopening the Assessment under section 147 of the Act without having any new tangible material in his possession to show that any income has escaped assessment. The Appellant, therefore, prays that reopening of assessment on the same set of facts during the original assessment amounts to change of opinion. The Appellant, therefore, prays that the notice issued under section 148 of the Act as well as subsequent proceedings are void-ab-initio and the same may be quashed.
b. The ld. CIT(A) further erred in confirming the action of the Ld. AO. in issuing notice under section 148 of the Act without recording proper and valid reasons to show that any income has escaped assessment. The Appellant, therefore, prays that reopening of its assessment is bad-in-law and the same may be quashed.”
3. As the learned Counsel for the assessee has not pressed this issue and want to withdraw under instructions of the assessee, the learned Departmental Representative was asked and he has not objected. Hence, we dismiss this issue of re-opening as withdrawn.
4. The next issue on merits is as regards to the order of CIT(A) confirming the action of the AO in treating the share application money as unexplained cash credit under section 68 of the Act. For this assessee has raised the following ground No. 3: –
“3. Treating the share application money as unexplained cash credit under section 68 of the Act – Rs.35,00,000/-
a. The ld. CIT(A) erred in confirming the action of the ld. AO in treating the share application money received amounting to Rs.35,00,000/- as unexplained cash credit under section 68 of the Act without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the addition of Rs.35,00,000/- under section 68 of the Act is not at all justified and the same may be deleted.
b. The Ld. CIT(A) failed to appreciate that the Appellant has discharged the primary onus cast upon it to prove the identity, capacity and creditworthiness of the share applicant by furnishing the P.A. Nos. and share application forms. The Appellant, therefore, prays that treating the share application money amounting to Rs.35,00,000/- as undisclosed income of the Appellant under section 68 of the Act is not at all justified and the same may be deleted.
c. The Ld. CIT(A) further failed to appreciate that the share applicant has appeared before the 14. AO during the course of remand proceedings confirming the transaction. Hence, treating the amount of Rs.35,00,000/- as unexplained cash credit under section 68 of the Act is not at all justified and the me may be deleted.”
5. Briefly stated facts are that the assessee has received a sum of ₹ 35 lacs as share application money including share premium as under: –
