HHP Hospital Private Ltd Vs DCIT (ITAT Kolkata)
Documentary Evidence Trumps Suspicion – Share Capital from Group Companies Held Genuine – Tribunal Grants Relief – Non-Appearance of Directors Not Enough – Identity, Genuineness & Creditworthiness Proved – Addition u/s 68 Deleted- AO Cannot Doubt Transactions Solely for Non-Production of Directors – ITAT Kolkata
Assessee had filed its return declaring income of Rs. 37.06 lakh. During scrutiny, AO noticed that Assessee had received Rs. 1.92 crore share capital including premium from three group companies-Bircot Tracom Pvt. Ltd., Omnitech Industries Ltd. & Utpal Trading Pvt. Ltd. Though confirmations, financials & bank statements were filed & notices u/s 131 were responded to by the investor companies, AO rejected the explanation only because the directors of the investing companies did not appear personally. He treated the investments as unexplained cash credits u/s 68.
CIT(A) upheld the AO’s view, holding that the investing companies had meagre incomes & hence lacked creditworthiness. On further appeal, Assessee contended that all three companies were group concerns with common directors, transactions were through banking channels & adequate documentary evidence was furnished. It was argued that mere non-appearance of directors cannot render the investments non-genuine. Reliance was placed on Paradise Inland Shipping Pvt. Ltd. (SC), Orchid Industries (Bom HC) & Aastha Vincom Pvt. Ltd. (ITAT Kolkata).
