Addition u/s 68 unsustainable as onus with respect to receipt of share application money discharged

Yizumi Precision Machinery (India) Private Limited Vs ACIT (ITAT Ahmedabad)

ITAT Ahmedabad held that the assessee has discharged the onus cast under section 68 of the Act with respect to receipt of share application money. Accordingly, addition under section 68 of the Income Tax Act not sustained.

Facts- The assessee company is subsidiary of M/s Guandong Yuzumi Precision Machinery Ltd Co of China in which 10% shares also held by a person of Indian resident namely Shri Ramesh Vardhan. AO invoked the provisions of section 68 of the Income Tax Act for the credit of share application money received from Shri Ramesh Vardhan for Rs. 1,23,39,500. AO further found that the assessee was required to furnish ITR and computation of income for last 3 years, but the assessee only furnishes ITR for 2 years whereas no detail was furnished regarding genuineness of transaction.

But the assessee only furnishes ITR for 2 years whereas no detail was furnished regarding genuineness of transaction. The AO accordingly held that the assessee failed to discharge the onus cast under section 68 of the Act.

AO as per direction of DRP treated the partial amount of 68,83,170/- as unexplained credit under section 68 of the Act against which the assessee is in appeal before us.

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