ITO Vs Blisswood Green Infrastructure and Developers Pvt. Ltd. (ITAT Delhi)
Conclusion:
Addition under section 68 on account of bogus share capital was unjustified as the identity and creditworthiness of share subscribers and genuineness of receipt of share capital stood established and non-production of directors of subscriber companies could not be a sole ground to make addition.
Held:
Assessee company was engaged in the business of real estate agents, dealers in land, plots, buildings etc. and also in generation of power through wind mill and agricultural activity. In the assessment proceedings, AO noticed that assessee had claimed to have received share capital/premium. AO, after scrutiny of details, however, made an addition u/s 68 as bogus share capital and after setting off of brought forward losses, the assessment was completed. It was held investing companies were regularly filing income-tax returns and were properly registered with RoC. No instance of any cash deposit in bank accounts of investing company was pointed out and investment had been made through banking channel. Assessee could at most request directors of investor companies to appear before AO, but had no power to compel them to do so. Thus, it was for department to enforce their attendance and on failure to take action against them as per law. Thus, addition under section 68 was not justified as identity and creditworthiness of share subscribers and genuineness of receipt of share capital stood established.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the Revenue is directed against the order of ld. CIT(A)-2, New Delhi dated 24.06.2016 for the assessment year 2012-13 on the following grounds :
“1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,30,00,000/- made u/s. 68 of the I.T. Act, on account of unexplained credits in the form of share capital/share premium during the year.
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee had discharged the onus of proving the identity and creditworthiness of the share subscribers and the genuineness of the subscription.”
2. Briefly stated, some primary facts of the case are that the assessee company, incorporated on 14.02.2006, was engaged in the business of real estate agents, dealers in land, plots, buildings etc. and also in generation of power through wind mill and agricultural activity. The return of income was filed on 28.09.2012 at an income of Rs, 66,95,817/- and after setting off of brought forward losses, the income was taken as NIL. In the assessment proceedings, the Assessing Officer noticed that the assessee had claimed to have received share capital/premium amounting to Rs.2,69,00,000/- as follows :
