ITO Vs DSR Impex Pvt. Ltd. (ITAT Kolkata)
The issue under consideration is whether the addition u/s 68 is justified in case of issuance of shares in exchange of shares?
ITAT states that, the ld. AO had erroneously invoked the provisions of section 68 of the Act to the facts of the instant case, which, in our considered opinion, are not at all applicable herein. This is a simple case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and instead the consideration was settled through issuance of shares to the respective parties. Moreover, in the balance sheet of the assessee company in the schedule to share capital, it is very clearly mentioned by way of note that the fresh share capital was raised during the year for consideration other than cash. Hence ITAT hold that provision of section 68 of the Act are not applicable in the instant case and accordingly the entire addition deserves to be deleted which has rightly been done by the ld. CIT(A) which does not require any interference. Accordingly, grounds raised by the revenue are dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
The captioned appeal filed by the Revenue, pertaining to assessment year 2012-13, is directed against the order passed by the Commissioner of Income Tax (Appeal)-23, Kolkata in appeal no. 265/CIT(A)-23/Wd-6(1)/16-17, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the “Act”) dated 23/03/2015.
2. At the time of hearing none appeared on behalf of assessee in spite of issuance of notice for hearing more than one occasion and Ld. Departmental Representative(DR), was present for the assessee Revenue. In the absence of any appearance by the assessee, the appeal is being disposed of ex parte qua the assessee, after hearing Ld. DR for the Revenue on merits in terms of Rule 24 of the Income Tax Appellate, Tribunal, Rules, 1963.
3. The grounds of appeal raised by the Revenue reads as follows:
1. That on the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting addition of Rs. 5,20,00,000/- received on account of alleged share capital and share premium u/s.68 of the I.T.Act which has been made merely on the assessee’s submission.
2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in accepting the thorugh investigation/enquiry made by the AO during assessment proceedings before conclusively reached at the view of alleged share capital and share premium which could not be substantiated by the assessee.
3. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in violating of Rule-46A of the I.T..Rules,1962 for remitting the same before the AO for further investigation and enquiry.
4. That on the facts and in the circumstances of the case, the Ld CIT(A) has erred in law in accepting the fact that the assessee had failed to satisfy the genuineness and authenticity of cash credit.
5. That on the facts and circumstances of the case, it is humbly requested to set aside the order of Ld.ClT(A) and restore back the assessment order passed by the AO.
6. ‘That the assessee craves for leave to add, delete amend or modify any ground before or at the time of appellate proceedings.
4. Facts of the case which can be stated quite shortly are as follows: During the previous year assessee company issued shares against the debt due to the share holders companies on account of the purchases of investments.There is no receipt of cash or any money by the assessee. The fact was stated before the AO, together with the details of investments purchased against allotment of shares. The shares were so allotted to such sellers of investments, were in terms of agreement entered into by the assessee with such companies respectively. The copies of the agreement so executed with each of the shareholders were furnished before AO. The entries in the books of the assessee were passed through the journal entries only and no cash or bank transaction was recorded in the books. The extract of books of accounts with journal entries was furnished before AO. The details and particulars of journal entries are as follows:-
