Tanish Agriscience Private Limited Vs ITO (ITAT Delhi)
Share Capital Without Fresh Money, Cash Deposits From Old Debtors: Two Section 68 Additions Deleted
Two additions in a pesticide trader’s assessment
Tanish Agriscience Private Limited, a trader in agricultural pesticides, declared income of ₹12,84,380 for assessment year 2017–18. Following scrutiny, the Assessing Officer (AO) made several additions. Two of them reached the Delhi ITAT: ₹49 lakh for an increase in share capital and ₹1,46,49,950 for cash deposits associated with the demonetisation period. The CIT(A) had upheld both.
The two additions raised different questions under Section 68. Had fresh, unexplained money entered the company when its share capital increased? And were the bank deposits new income, or collections against sales and debtors already reflected in its books? The Tribunal accepted the company’s explanations and deleted both additions.
The ₹49 lakh share capital increase
The AO saw that paid-up share capital had risen from ₹1 lakh to ₹50 lakh. He asked for subscriber details, confirmations and bank statements. According to the assessment order, the company did not furnish the requested material despite repeated notices. Near the end of the assessment, it stated that 4,90,000 shares of ₹10 each had been issued by converting outstanding loans from directors and their relatives. The AO found the explanation inadequately supported and treated ₹49 lakh as an unexplained credit.
