Addition u/s 68 towards sale of shares unsustainable as investment in shares not disputed

Lalita Bajaj Vs DCIT (ITAT Delhi)

ITAT Delhi held that addition under section 68 of the Income Tax Act towards sale of shares by the assessee unsustainable as such transaction cannot be alleged as unexplained/ bogus when department has not disputed investment in shares.

Facts- The assessee has sold 3,50,000/- shares of RNB Infrastructure Pvt. Ltd. @10% which were acquired by the assessee at the very same price, i.e., @10 per share. AO made addition by observing that the explanation submitted by the assessee was baseless as the impugned amount remained unexplained credit and the explanation of the assessee was not found to be sustainable to the satisfaction of the AO, therefore, the AO made the addition u/s 68 of the Act.

CIT(A) dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.

Conclusion- Held that in these case issue was of alleging the allotment of Shares by assessee company against share application money and share premium and the AO made addition under section 68 of the Act by holding that the identity and creditworthiness of investor and genuineness of transactions could not be established by the share application and premium recipient assessee company. But in the present case, the assessee has not received any share application money or premium from the investor but the impugned transaction in the present case pertains to sale of investment/shares by the assessee to the other entities and such transaction cannot be alleged as unexplained or bogus particularly when the Department has not disputed the investment in shares of RNB Infrastructure Pvt. Ltd. by the assessee during the earlier period of time i.e. in the A.Y. 2008-09 in the year of investment by the assessee. Therefore, we respectfully note that the benefit of case laws relied by CIT(A) having distinct and dissimilar facts and circumstances are not available for the Revenue in the present case.

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