Shankar Traders & Distributors Pvt Ltd Vs ITO (ITAT Kolkata)
Conclusion: Where assessee had successfully discharged the burden of proof primarily casted upon it to explain the identity and creditworthiness of all the alleged thirteens share applicants / shareholder and genuineness of the share transactions and correctness of such details had not been disputed by Revenue Authorities except making general observations, no addition u/s 68 was justified.
Held: Assessee was a private limited company registered as a non-banking finance company (NBFC) with the RBI, engaged in providing loans, advances, and dealing in shares and securities. During the assessment, AO reviewed the financials and observed that company had issued equity shares, receiving ₹4,60,000 as share capital and ₹2,25,40,000 as security premium. AO, noting the low revenue and profits, concluded that assessee could not justify such a large share premium. As a result, AO made an addition of ₹2,30,00,000 under Section 68 and ₹1010 under Section 14A, assessing the income at ₹2,29,68,322. CIT(A) upheld the addition, concluding that the assessee had failed to establish the identity, capacity, and genuineness of the transactions. It was determined that the share applicants lacked the financial capacity to justify the substantial share premium, and the assessee had not adequately discharged its burden of proof. On appeal. It was held that assessee had successfully discharged the burden of proof primarily casted upon it to explain the identity and creditworthiness of all the alleged thirteens share applicants / shareholder and genuineness of the share transactions and correctness of such details had not been disputed by Revenue Authorities except making general observations. Therefore, no addition u/s 68 was justified.
