Case Law Details
DCIT Vs Devi Iron & Power Pvt Ltd (ITAT Raipur)
ITAT Raipur held that addition as an unexplained cash credit u/s 68 of the Income Tax Act unsustainable in as much as the assessee company has duly discharged the onus of proving the identity and creditworthiness of the investor company.
Facts- Post search operations, during the course of the assessment proceedings, it was observed by the AO that the assessee company had during the year under consideration received share application money and share premium from a Kolkata-based investor company as well as an in-house company.
Accordingly, AO called upon the assessee to substantiate the identity and creditworthiness of the shareholders as well as the genuineness of the transaction of receipt of the share application money from the aforesaid share applicant companies.
AO after referring to the balance sheets of the aforesaid share applicant’s companies concluded that they did not have the creditworthiness to make investments of substantial amounts with the assessee company. Accordingly, AO held the same to be an unexplained cash credit u/s 68 of the Act.
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