Case Law Details
DCIT Vs Mahalaxmi TMT Pvt. Ltd. (ITAT Pune)
AO found that the assessee company was established dated 10 August 2004 i.e. during the financial year 2004-05 corresponding to the assessment year 2005-06 and it did not carry out any business activity till the year under consideration. Conversely, it has issued shares at a premium of ₹ 90 per share aggregating to ₹ 36 crores as well as it has received share application money for the amount as discussed above. Accordingly, the AO had a doubt on the genuineness of the share capital, share premium and share application money and AO treated the sum of ₹ 37,02,25,000/- as unexplained cash credit under section 68 of the Act and added the same to the total income of the assessee.
Admittedly, in the case on hand, the assessee has discharged its onus by furnishing the necessary details such as a confirmation of the parties, copy of ITR-V, copy of bank statement of parties along with their balance sheet, share certificate, MOA, AOA etc. in support of identity of the parties and genuineness of transaction and credit worthiness of the parties. These details of the parties are available on pages 16 to 161 of the paper book. Similarly, there is also no dispute to the fact that all the transactions were carried out through the banking channel. What is the inference that flows from a cumulative consideration of all the aforesaid contending facts is that the assessee has discharged its onus imposed under section 68 of the Act. The details filed by the assessee were cross verified by the Revenue from the respective parties and no infirmity was pointed out in the same except doubting the credit worthiness of the parties on the reasoning that these parties are earning lower income/ incurring the losses/ capital was insufficient for such investment. Accordingly the AO had a suspicion that the investors as discussed above were acting as the conduit for converting the unaccounted money of the assessee in the guise of share capital /share application money and premium on shares. Conversely the AO has not brought anything on record suggesting amount credited in the books of assessee does not belongs to respective parties but the same belongs to the assessee. Now we proceed to look into the facts of each investors which invested money in the company in the form of share capital along with share premium.
Admittedly, the assessee in the case on hand has sufficiently furnished the details of the parties such as confirmation of parties, copy of ITR, copy of bank statement of parties along with their balance sheet, share certificate, etc. so as to prove identity and creditworthiness of parties and genuineness of transactions and, further, all transactions were carried out through banking channel, impugned addition made on account such share capital and premium under section 68 was unjustified.
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