Megapix Vanijya Pvt. Ltd Vs ITO (ITAT Kolkata)
ITAT Kolkata held that addition under section 68 of the Income Tax Act as unexplained cash credit not sustainable since identity, creditworthiness and genuineness of the transaction relating to the share capital sufficiently established.
Facts- During scrutiny assessment, AO noted that the assessee company had received share capital amounting to Rs.2,62,00,000/-. However, AO questioned the genuineness of the transaction and issued summons u/s 131 of the Act to the director of the assessee company and to the share-subscribers. Although, the share-subscribers submitted various details in response to the summons, however, director of the assessee company did not appear before AO for personal deposition on a specified date. Consequently, AO deemed the responses as insufficient and, therefore, an addition of Rs.2,62,00,000/- was made to the income of the assessee u/s 68 of the Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Apex Court in the case of CIT vs Lovely Exports (P) Ltd. has held that once company proves the existence and authenticity of shareholders, it had discharged its burden u/s 68 of the Act.
Held that the addition made by the Assessing Officer of Rs.2,62,00,000/- as unexplained cash credit u/s 68 of the Act is unsustainable since the assessee has sufficiently established the identity, creditworthiness and genuineness of the transaction relating to the share capital received during the relevant financial year. We, therefore, direct the Assessing Officer to delete the addition of Rs.2,62,00,000/- u/s 68 of the Act in the hands of the assessee.
