2012 (11) TMI 1115 - AT - Income Tax

Tribunal upholds deletion of Rs. 10 lakh addition under section 68 of Income Tax Act

The Tribunal dismissed the revenue's appeal, upholding the Ld CIT(A)'s decision to delete the addition of Rs. 10,00,000 under section 68 of the Income Tax ... Additions u/s 68 - introduction of unaccounted money in the books of accounts - Held that:- The assessee had accepted share application money through banking channel and had filed details regarding the companies. - AO without going into the documents and without conducting any enquiry rejected the details and made the addition - CIT(A) has rightly deleted the additions - Decision in the case of Goel Sons Golden Estate Pvt. Ltd. [2013 (4) TMI 571 - DELHI HIGH COURT] followed - Decided against the revenue. Issues:1. Addition of Rs. 10,00,000 made under section 68 of the Income Tax Act, 1961.2. Application of judicial precedents in determining the genuineness of share application money.3. Sufficiency of evidence provided by the appellant to prove the share capital transaction.Issue 1: Addition of Rs. 10,00,000 under section 68:The case involved an appeal by the revenue against the order of the Ld CIT(A) deleting the addition of Rs. 10,00,000 made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The Assessing Officer had added back the amount as not genuine due to the involvement of companies previously identified as entry operators. The appellant argued that the amount was received through proper banking channels, recorded in the books, and supported by various documents. The Ld CIT(A) found that the share applicant was a separate legal entity, the money passed through banking channels, and the appellant provided sufficient evidence to establish the genuineness of the transaction. The Ld CIT(A) held that the addition was not sustainable based on the evidence provided.Issue 2: Application of judicial precedents:The appellant relied on various judicial pronouncements to support their case, including the judgment in CIT v. Lovely Exports and other cases. The Ld CIT(A) considered these precedents and found that the evidence furnished by the appellant was in line with the principles laid down in those cases. The Ld CIT(A) noted that courts are liberal with reference to share capital applied by private limited companies and found the evidence provided by the appellant to be sufficient. The Ld CIT(A) concluded that the addition made by the Assessing Officer was not sustainable based on the judicial pronouncements and the evidence presented.Issue 3: Sufficiency of evidence to prove share capital transaction:The appellant submitted various documents during the assessment proceedings to prove the identity and creditworthiness of the applicants and the genuineness of the transaction. The Ld CIT(A) observed that the Assessing Officer did not conduct any investigation during the assessment proceedings and passed the order based on information received from the Investigation Wing. The Ld CIT(A) found that the evidence provided by the appellant, including confirmation letters, bank statements, and other supporting documents, was sufficient to establish the genuineness of the share capital transaction. The Tribunal, after considering the submissions and the judgment of the Hon'ble High Court in a similar case, upheld the decision of the Ld CIT(A) to delete the addition.In conclusion, the Tribunal dismissed the revenue's appeal, holding that the case of the appellant was squarely covered by the judicial precedents cited and that the Ld CIT(A) had rightly deleted the addition of Rs. 10,00,000. The Tribunal found no reason to interfere with the order of the Ld CIT(A) based on the evidence provided and the application of relevant legal principles.