Case Law Details
Sanmin Trading & Holding Pvt. Ltd. Vs ITO (ITAT Kolkata)
The issue under consideration is whether addition made u/s 68 on the ground that the share capital received is seen not a genuine credit is justified in law?
ITAT states that section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature & source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax assessments u/s 143(3) were placed on record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. The documents filed by the assessee directly with the AO in response to a direct enquiry, prove the identity and creditworthiness of the applicant for share and as similar applicant for share from this very share holder has been accepted as genuine by the AO in the immediately preceding assessment year, and the addition in question, in our view, cannot be sustained. Hence, ITAT delete the same.
FULL TEXT OF THE ITAT JUDGEMENT
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