Sustainable Spinning and Commodities Pvt. Ltd. Vs ACIT (ITAT Ahmedabad)
ITAT Ahmedabad held that addition u/s. 68 of the Income Tax Act towards unexplained cash credit set aside as no additions made in the hands of investors confirms genuineness of investor and hence investment cannot be stated as bogus in hands of company.
Facts- During the assessment process, AO noted that the assessee company had a substantial increase in share capital amounting to Rs. 10,00,20,000/- and further the assessee company repaid unsecured loans totaling to Rs. 6,22,80,570/- during the financial year. AO was of the view that the inability of the assessee and its shareholders to provide satisfactory evidence led to the inference that the share capital raised was unexplained cash credit u/s. 68 of the Income Tax Act, which was accordingly added to the total income of the assessee. Consequently, the assessed income was determined as a figure of Rs. 3,77,39,430/-, and penalty proceedings were initiated u/s. 271AAC of the Income Tax Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that no additions have been made in the hands of the four investors, regarding the source of their investment during the course of scrutiny assessments in their respective hands. We are therefore, of the considered view that that if the investments had indeed been confirmed as genuine in the assessments of the respective investors, there would be little justification for the AO/CIT(A) to classify these same investments as bogus in the hands of the company receiving the share capital.
