Inter Publicity Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Introduction: The recent order from ITAT Mumbai, dated 17/10/2023, in the case of Inter Publicity Pvt. Ltd. vs. DCIT sheds light on the assessment year 2014-15. The appeal addresses concerns about additions under section 68 of the Income Tax Act related to share application money.
Detailed Analysis: The order discusses the background, search operations, and assessments conducted on the assessee. It outlines the details of share capital received during the relevant year and the subsequent investigations initiated by the AO. The AO raised concerns about the creditworthiness of the subscriber companies, leading to the addition under section 68.
The assessee, in response, submitted various documents such as certificates of incorporation, PAN numbers, balance sheets, bank statements, and more, demonstrating the identity, genuineness, and creditworthiness of the subscribers. The AO, however, rejected these contentions, relying on statements made during the search operation.
The ITAT’s detailed analysis highlights the importance of the assessee’s initial burden to establish the three key factors – identity, genuineness, and creditworthiness. The order emphasizes the admissibility of documents furnished by the assessee, including certificates of incorporation, PAN, and bank statements, as evidence to prove the legitimacy of transactions.
The ITAT discredits the AO’s reliance on statements made during the search, emphasizing the subsequent retractions and the detailed documents submitted by the assessee. The order underscores the AO’s failure to find faults in the evidence provided and dismisses the reliance on investigation reports without contradictory material.
Conclusion: The ITAT’s conclusion, dated 17/10/2023, states that the addition under section 68 in the hands of the assessee was not justified. Both the protective and substantive additions are directed to be deleted. The case highlights the significance of documentary evidence in disproving additions and reinforces the burden-shifting nature of section 68 assessments.
This order sets a precedent for cases where the assessee diligently provides comprehensive documentation, proving the legitimacy of transactions, thereby preventing unjust additions under section 68 of the Income Tax Act.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These cross appeals are directed against the order dated 12-03-2021 passed by Ld CIT(A)-52, Mumbai and they relate to the assessment year 2014-15. The assessee is aggrieved by the decision of Ld CIT(A) in partially confirming the addition to the extent of Rs.50.00 lakhs made by the AO u/s 68 of the Act in respect of share application money received from M/s Zenstar Marketing P Ltd. The revenue is aggrieved by the decision of Ld CIT(A) in granting relief of addition made u/s 68 of the Act both on substantive basis and protective basis.
2. The facts relating to the cases are stated in brief. The assessee herein is engaged in the business of advertising in print, electronic media, hoarding and creative art work. It belongs to Gauti Group. The assessee along with other group concerns/family members was subjected to search operations under section 132 of the Act on 09-03-2015 by the Investigation wing of the Income tax department. Consequent thereto, the assessments were completed in the hands of the assessee for the above said year under section 143(3) read with section 153A of the Act.
3. The Kolkata investigation wing of the department had reported that many paper companies are indulging in providing accommodation entries in the form of share capital/share premium to various beneficiaries. It was noticed by the department that the assessee’s group has received share capital/share premium from such paper companies. The details of the share capital received by the assessee during the year under consideration herein are given below:-
