Landmark Worldwide Breakthrough Technologies Pvt. Ltd. Vs DCIT (ITAT Mumbai)
No Fresh Share Premium, No Section 68 Addition: ITAT Deletes ₹1.38 Crore Addition Based on Opening Balance
The Mumbai ITAT deleted an addition of ₹1.38 crore under Section 68, holding that no addition could be made when there was no fresh receipt of share capital or share premium during the relevant assessment year. The AO had treated the amount as unexplained cash credit alleging failure of the assessee to establish identity, creditworthiness and genuineness of investors.
Before the Tribunal, the assessee demonstrated through audited balance sheets that the alleged share premium was merely an opening balance carried forward from earlier years, and both the opening and closing balances of the share premium account remained identical during the relevant year. The increase had actually occurred in earlier financial years and stood duly reflected in audited accounts already on record with the Department.
The ITAT observed that the very genesis of the addition was factually incorrect, since there was no transaction of receipt of share application money or increase in share premium during the year under consideration. It criticised the CIT(A) for dismissing the appeal merely on the basis of alleged non-compliance before the AO without examining the core factual contention supported by audited financial statements.
Holding that Section 68 cannot be invoked in absence of any credit entry during the year, the Tribunal directed deletion of the addition, subject to factual verification of audited accounts produced before it.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
