ITO Vs Livros Publishing Pvt. Ltd. (ITAT Delhi)
ITAT Delhi upholds deletion of ₹4 Cr addition u/s 68 – Share application money received through banking channel cannot be treated as unexplained merely on investigation report – Entry-provider tag can’t replace evidence
Revenue filed appeal against the order of CIT(A), Meerut dated 28.08.2020 deleting addition of ₹4,00,00,000 made by AO u/s 68 on account of share capital & premium received from M/s Apoorva Leasing Finance & Investment Co. Ltd., alleged to be part of Jain brothers’ accommodation entry group.
Assessee, engaged in publishing, had issued 1,60,000 equity shares of ₹10 each at a premium of ₹245 per share to the said investor company. AO, relying upon Investigation Wing reports pertaining to Shri Surendra Kumar Jain & Shri Virendra Kumar Jain, held that the investor was an entry provider. He observed that the investor company had no creditworthiness, received matching deposits before issuing cheques, & failed to substantiate the source of its funds. AO concluded that the entire share capital & premium of ₹4 crore represented assessee’s own unaccounted money routed through bogus entries.
Before CIT(A), Assessee furnished full documentary evidences including PAN, bank statements, ROC master data, audited accounts, & income-tax returns of the investor company. It also pointed out that the investor was a listed & ISO-certified NBFC regularly assessed to tax. CIT(A) held that identity & genuineness stood established as the investment was made entirely through banking channels, & there was no cash deposit or evidence that the money emanated from Assessee. AO had not even confronted the investigation report to Assessee or conducted any independent inquiry. CIT(A) therefore deleted the addition.
