Case Law Details
ASR Wines [P] Ltd Vs ITO (ITAT Delhi)
Conclusion: Where AO was of the view that a shareholder of assessee-company had no means to make the subscription of share capital, AO could have asked the source of investment from the shareholder and if the source was not properly explained, addition could have been made in the hands of shareholder as unexplained income but no addition could be made u/s 68 in the hands of assessee-company since it had discharged the initial onus cast upon it by virtue of provisions of section 68.
Held: During the course of scrutiny assessment proceedings, AO noticed that assessee had shown share application money. Assessee was asked to furnish the details of share application money received, along with their confirmations and copy of their bank accounts. After considering the reply of assessee, AO found that a share holder who invested share application money of Rs. 4.35 lakhs during the F.Y. 2009-10, had also deposited share application money of Rs. 8.50 lakhs in F.Y. 2011-12. Accordingly, notice u/s 133(6) was issued to shareholder for confirming the transaction of share application money of Rs. 8.50 lakhs. But AO was not convinced with the explanation given by the said shareholder, therefore, he insisted for his presence. Assessee filed a detailed reply explaining the source from where that shareholder withdrew the amount for investing the same as share application money but showed its inability to produce that shareholder. Hence, AO was of firm belief that the said shareholder had no job work and he was hand to mouth and hence share application money received by him was added under section 68. It was held when AO was fully aware that shareholder had made investment of Rs. 8.50 lakhs as share application money with assessee-company, nothing could have prevented AO to ask the source of investment from the shareholder. If the source was not properly explained, addition could have been made in the hands of shareholder as unexplained income. Thus, addition could not be made u/s 68 in the hands of assessee-company since it had discharged the initial onus cast upon it by virtue of provisions of section 68.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] – Ghaziabad dated 02.03.2017 pertaining to assessment year 201 2-13.
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