Vardhman Polytex Ltd. Vs DCIT (ITAT Chandigarh)
Listed Company Not Bound to Prove Investor’s Source- Contradiction Exposed-AO Accepts Share Premium but Rejects Capital: ITAT Deletes Addition
Assessee, Vardhman Polytex Ltd., Ludhiana, is a public listed company. It issued 21.82 lakh equity shares to M/s Altfort Merchants Pvt. Ltd. (AMPL) at ₹55 each (₹10 FV + ₹45 premium) on 15.12.2014. AO treated the share capital of ₹218.20 lakh as unexplained cash credit u/s 68, while accepting the share premium of ₹981.90 lakh received from the same investor. CIT(A) upheld the addition, citing lack of proof of “source of source.”
Assessee’s Stand
- Furnished PAN, address, auditor’s report, financial statements, and ITR of AMPL.
- Provided detailed note on source of investment by AMPL.
- Highlighted inconsistency: AO accepted premium from same investor but rejected share capital.
- Argued that as a listed company, it is not required to prove “source of source” u/s 68.
Tribunal’s Findings
Tribunal held that addition is not sustainable for these reasons:
1) Assessee is a public listed entity & in terms of Sec.68, it is not required to prove the source of source of share capital. The immediate source of investment has not been doubted. Assessee has filed sufficient documentary evidences to prove the immediate source of the impugned investments.
