M/s. Baba Bhootnath Trade & Commerce Ltd. Vs ITO (ITAT Kolkata)
Conclusion: Since assessee had explained both the nature & source of share capital received with premium and also submitted PAN details, bank account statements, audited financial statements and Income Tax acknowledgments to prove the identity, creditworthiness and genuineness of the share applicants, therefore, addition under section 68 was unjustified.
Held:
Assessee issued part of the equity shares during the year at a premium and the total share capital and share premium received during the financial year was Rs 2,04,00,000/-. AO proceeded to treat the entire share capital and share premium received as unexplained cash credit and added the same to the total income of assessee. It was held section 68 provided that if any sum found credited in the year in respect of which assessee failed to explain the nature and source should be assessed as its income of the previous year in which the same was received. In the facts of the present case, both the nature & source of share capital received with premium were fully explained by assessee. Assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants by filing PAN details, bank account statements, audited financial statements and Income Tax acknowledgments and the investors had shown the source of source & personally appeared before the AO in response to s. 131 summons. Thus addition was unjustified.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal of the assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals) -16, Kolkata [in short ld CITA] in Appeal No.703/CIT(A)-16/W-9(2)/2015-16 dated 20.02.2017 against the order of assessment framed by Learned Income Tax Officer, Ward 9(2), Kolkata [in short the ld AO] u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) on 29.03.2015 for the Assessment Year 2012-13.
2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in deleting the addition made towards share capital u/s 68 of the Act in the facts and circumstances of the case.
3. The brief facts of this issue are that the assessee issued part of the equity shares during the year at a premium and the total share capital and share premium received during the financial year 2011-12 was Rs 2,04,00,000/-. The assessee allotted shares to the following persons:-
