DCIT Vs CDS Infra Projects Limited (ITAT Delhi)
No addition u/s 68 of income tax act 1961 in case of Share Capital Subscription if assessee submitted proper evidence for source of funds
In the present case, the A.O. has incorrectly applied the section 68 of the I.T. Act. On the facts and circumstances of the case, the appellant has undisputedly received the subscription money of Rs. 25,00,00,000/- and no unaccounted cash money is involved. Therefore, even if the share subscription money received by the appellant has the genesis of the unauthorized diversion of funds by M/s CDS- NKC(JV), still addition u/s 68 is uncalled for. Support is derived from the judgment of the Hon’ble Delhi High Court in the case of CIT v/s Value Capital Services (P) Ltd. reported in 307 ITR 334(Delhi).
On the facts of the present case, it is observed that even the Ld. A.O. has not alleged that unaccounted fund/money of the appellant is involved in procuring the share subscription money. The appellant has also furnished the confirmation of advance given by M/s CDS-NKC (JV) to /s O.P Gupta & Sons P.Ltd. and M/s Chandra Global Finance Ltd., duly signed by all the parties. The A.O. has not rejected the said confirmation letter/ledger. Therefore, there is no justification for making an addition u/s 68 of the I.T. Act even if there is an unauthorized diversion of funds by M/s CDS- NKC (JV). Transaction between M/s CDS-NKC (JV) and NHAI is a contractual business transaction, if any violation of terms & conditions of the contract is made by M/s CDS-NKC (JV), then it may attract penal provision as entailed in the contract but certainly, it would not make the transaction non-genuine and would not attract section 68 of 1.T. Act to make addition of Rs. 25,00,00,000/-.
