DCIT Vs Truform Techno Products Pvt. Ltd (ITAT Ahmedabad)
Rs. 2.99 Cr Share Capital Addition Quashed – AO Cannot Demand Source of Source for A.Y. 2009-10-Loans from Director & Companies Accepted
Revenue filed two appeals against CIT(A)’s orders deleting additions u/s 68 in respect of share capital, share premium & loans, while Assessee filed CO challenging validity of reopening u/s 147.
Assessee had issued 5,99,000 shares of Rs.10 each at a premium of Rs.40, raising Rs.2.99 crore. AO added the entire sum u/s 68, doubting genuineness & creditworthiness of 4 corporate & 14 individual investors. CIT(A), on detailed examination of PAN, bank statements, ITRs, audited accounts & confirmations, held that identity, genuineness & creditworthiness were proved. AO had not made independent enquiries & wrongly insisted on “source of source” which was not required for A.Y. 2009-10. Relying on CIT Vs Lovely Exports (P.) Ltd. (SC), CIT(A) deleted addition.
ITAT upheld CIT(A), holding that corporate investors had sufficient balances duly reflected in audited accounts & assessment orders, and individual investors’ PAN, returns & confirmations proved genuineness. Reference to Companies Act s.78(2) was irrelevant as AO’s addition was only u/s 68. Thus, deletion of Rs.2.99 crore was confirmed. Cross Objection of Assessee challenging reopening was dismissed as infructuous since relief on merits was granted.
