Case Law Details
Nimbus (India) Ltd. Vs DCIT (ITAT Delhi)
The issue under consideration is whether the addition made by the AO under section 68 by considering the the amount received as unexplained share capital and premium is justified?
In the present case, during the course of assessment proceedings, the AO noted that the assessee had issued 8% non-cumulative preferential shares of its companies at a premium. Therefore, he asked the assessee to furnish the details of share capital/share premium and source of investment. To verify the source of the investment of the companies, the AO obtained information under section 133(6) from the respective banks and noted that there were back to back transactions of same amount, i.e., credit and debit of the same amount on the same dates/following dates with several other deposits and withdrawals. AO Rejected the various explanations given by the assessee and made addition to the total income of the assessee being the amount of share capital and share premium of Rs. 15 crore received from M/s Pabla Leasing & Finance Pvt. Ltd., and received from M/s Cindy Goods & Supply Pvt. Ltd. CIT(A).
ITAT states that, section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its income of the previous year in which the same was received. In the facts of the present case, both the nature & source of the share capital received with premium were fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed before the ld AO. Accordingly, all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction were placed before the ld AO and the onus shifted to the ld AO to disprove the materials placed before him. Without doing so, the addition made by the ld AO is based on conjectures and surmises cannot be justified. At the cost of repetition, the addition was confirmed by the ld CIT(A) by making factually incorrect observations which are contrary to the facts recorded by the ld AO in the assessment order. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. Therefore, ITAT direct the ld AO to delete the addition made u/s 68 of the Act and consequently the grounds raised by the assessee are allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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its a good judgement