2015 (11) TMI 61 - AT - Income Tax

ITAT upholds assessee's claims on share application money under Income Tax Act

Income Tax Officer – 10 (2) (1), Mumbai Versus M/s. Deep Darshan Properties Pvt. Ltd. and Others

Income Tax Officer – 10 (2) (1), Mumbai Versus M/s. Deep Darshan Properties Pvt. Ltd. and Others - TMI Issues:- Appeal against deletion of addition under section 68 of the Income Tax Act in respect of share application money.- Failure to discharge the onus to prove credit entries of share application money.Analysis:1. The appeals involved different assesses of the same group challenging the orders of CIT(A) regarding the addition of share application money under section 68 of the Income Tax Act. The ITAT Mumbai decided to dispose of all appeals through a common order for convenience.2. In the case of M/s. Deep Darshan Properties P. Ltd., the Revenue appealed against the deletion of an addition of Rs. 35,00,000 under section 68 of the Income Tax Act related to share application money. The Revenue argued that the CIT(A) erred in not appreciating the failure of the assessee to prove the credit entries of share application money as required by law.3. The assessee, engaged in financial services, received share capital subscription from various companies floated by Mr. Mukesh Choksi. The Investigation Wing revealed that these companies received cash from corporate entities and issued cheques to the assessee. The Assessing Officer added Rs. 35 lacs under section 68 based on this information.4. The CIT(A) upheld the order of reopening but allowed the appeal on merit, citing various case laws. The Revenue opposed, claiming the CIT(A) erred in deleting the addition without the assessee proving the credit entries. The Authorized Representative supported the CIT(A) order, citing relevant case laws.5. The ITAT analyzed the evidence and found that the assessee had established the identity and creditworthiness of the share holders by providing necessary documents. The ITAT referred to a similar case where the ITAT Jaipur Bench ruled in favor of the assessee, emphasizing the importance of providing details of alleged bogus shareholders to the Assessing Officer for further action.6. The ITAT concluded that the assessee had fulfilled its onus by establishing the identity and creditworthiness of the share holders through various documents. The Assessing Officer failed to counter the evidence presented by the assessee, leading to the dismissal of the Revenue's appeal.7. Similar issues arose in appeals related to other companies, and the CIT(A) had deleted the additions based on similar reasoning. The ITAT upheld the CIT(A) orders for all the assessees, granting relief based on reasoned findings.8. Consequently, all appeals filed by the Revenue were dismissed, and the decisions were pronounced in the open court on September 28, 2015. The ITAT upheld the CIT(A) orders for all the companies involved in the appeals.9. A corrigendum was issued to rectify a typographical error in the order related to the name of Mr. Mukesh C. Choksi.