ITO Vs Cygnus Developers (I)Pvt. Ltd. (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT) Kolkata has dismissed an appeal filed by the Revenue, thereby upholding the Commissioner of Income Tax (Appeals) [CIT(A)]’s decision to delete an addition of Rs. 54,00,000/- made under Section 68 of the Income Tax Act. The dispute centered on the genuineness of share application money received by Cygnus Developers (I) Pvt. Ltd. from three investor companies for the Assessment Year (A.Y.) 2005-06.
The Tribunal’s order, pronounced on March 2, 2016, emphasized the assessee’s provision of comprehensive documentary evidence and the fact that the investor companies were themselves assessed to income tax, reiterating established judicial principles regarding the discharge of onus in such cases.
The Assessment and Initial Disallowance
Cygnus Developers (I) Pvt. Ltd., a company engaged in the business of dealing in shares, received share application money totaling Rs. 54,00,000/- during A.Y. 2005-06. The funds came from three entities: M/s. Shree Shyam Trexim Pvt. Ltd. (Rs. 31,00,000/-), M/s. Navalco Commodities Pvt. Ltd. (Rs. 7,00,000/-), and M/s. Jewellock Trexim Pvt. Ltd. (Rs. 16,00,000/-).
During the assessment proceedings, the Assessing Officer (AO) scrutinised these receipts, calling upon the assessee to prove the identity and creditworthiness of the three investor companies, as well as the genuineness of the transactions.
