Case Law Details
ITO Vs Express Tradelink Pvt Ltd (ITAT Kolkata)
ITAT Kolkata held that addition u/s. 68 of the Income Tax Act towards unexplained share application money is unsustainable as assessee has successfully discharged the burden of proof primarily casted upon it, however, AO failed to conduct independent inquires.
Facts- The assessee is a private limited company and is engaged in the business of share dealing and investments. During the course of proceedings, AO noted that the assessee has failed to explain the sum of Rs. Rs. 7,26,50,000/- received towards share capital and share premium and added the said sum u/s 68 of the Act. AO made further addition of Rs.42,450/- on account of undisclosed income and disallowance u/s 14A of the Act of Rs.20,434/-.
CIT(A) deleted the impugned additions made u/s. 68 of the Act. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Hon’ble Supreme Court in the case of PCIT vs. NRA Iron & Steel (P) Ltd. has held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the same. However, AO in this case has not made any independent enquiry to verify the genuineness of the transactions.
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