ITO Vs Goverdhan Transport Company Pvt. Ltd. (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal (ITAT), Delhi, was filed by the Revenue against the order of the National Faceless Appeal Centre (NFAC) for Assessment Year 2014–15, concerning deletion of addition made under Section 68 of the Income-tax Act on account of share capital.
The Assessing Officer (AO) had added ₹6.66 crore as unexplained cash credits, holding that the assessee failed to establish the identity, genuineness, and creditworthiness of 36 shareholders who had subscribed to equity shares. The AO treated the transactions as accommodation entries, noting that some shareholders did not appear in response to summons and that there were concerns regarding cash deposits in bank accounts of related parties at the level of “source of source.”
On appeal, the Commissioner (Appeals) partly allowed relief, sustaining only ₹30.42 lakh and deleting the remaining addition. The Revenue challenged this relief, arguing that the CIT(A) failed to properly verify the source of funds and ignored non-compliance with summons.
Before the Tribunal, the assessee submitted that shares had been duly allotted and most shareholders were existing investors. It was pointed out that several shareholders appeared and recorded statements, while others submitted documentary evidence. The assessee also clarified that shareholders had not invested from cash deposits in their own accounts, and any cash deposits related to “source of source” were supported by evidence such as sale deeds, bank statements, fixed deposit maturity records, loan confirmations, gift declarations, and land records.
