Tribunal upholds deletion of share application money addition under sec. 68 for AY 2002-03

The Tribunal upheld the CIT(Appeals)' decision to delete the addition of share application money under sec. 68 for assessment year 2002-03. The Tribunal found that the Assessing Officer relied more on a statement from an individual unrelated to the assessee rather than the documentary evidence provided. As the evidence met the requirements of sec. 68, the Tribunal dismissed the revenue's appeal, affirming the deletion of the addition.

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Issues involved: Appeal against deletion of addition of share application money u/s 68 for assessment year 2002-03.

Summary:

1. Addition of Share Application Money:
The revenue appealed against the deletion of the addition of Rs. 10,20,000 made by the Assessing Officer under sec. 68 of the Income-tax Act, 1961. The revenue contended that the assessee failed to explain the share application money and the commission incurred for arranging this accommodation entry. The assessee received Rs. 10 lacs from four concerns, and the Assessing Officer reopened the assessment based on information received from the Investigation Wing.

2. Reassessment Proceedings:
The Assessing Officer directed the assessee to prove the identity of the applicants, their creditworthiness, and the genuineness of the transactions. Despite the assessee providing confirmation, PAN, and bank statements, the Assessing Officer relied on a statement from Shri Mahesh Garg, a person involved in accommodation entries business, to make the addition and estimate an expenditure for arranging such entries.

3. Appeal before CIT(Appeals):
The assessee challenged the reopening of the assessment and the additions on merit before the CIT(Appeals). The assessee submitted various documents to substantiate the genuineness of the share application money received. The CIT(Appeals) examined the facts and circumstances and deleted the addition based on the evidence presented.

4. Tribunal's Decision:
Upon careful review of the record, the Tribunal noted that the Assessing Officer gave more weight to Shri Mahesh Garg's statement than the documentary evidence provided by the assessee. The Tribunal emphasized that the statement was not recorded in the assessment proceedings of the assessee and Shri Mahesh Garg was not associated with the assessee. Therefore, the Tribunal upheld the CIT(Appeals)' decision to delete the addition, as the documentary evidence fulfilled the conditions required by sec. 68 of the Income-tax Act, 1961.

5. Conclusion:
The Tribunal dismissed the revenue's appeal, affirming the decision of the CIT(Appeals) to delete the addition of share application money. The decision was pronounced in the open court on 20.05.2011.

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