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of <h1>High Court upholds deletion of unexplained share application money additions under Section 68</h1> <h3>CIT-1 Jaipur Versus M/s Shalimar Buildcon Pvt Ltd</h3> The High Court ruled in favor of the assessee, upholding the Tribunal's decision to delete additions of unexplained share application money under Section ... Unexplained share application money under Section 68 - Held that:- The issue is squarely covered by the decision of this Court in Commissioner of Income Tax, Jaipur-II, Jaipur vs. M/s Hotel Gaudavan Pvt. Ltd. [2017 (4) TMI 1328 - RAJASTHAN HIGH COURT] which is covered by the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Lovely Exports (P) Ltd., (2008 (1) TMI 575 - SUPREME COURT OF INDIA), and the decision of this Court in the case of Commissioner of Income Tax vs. M/s VTC Leasing & Finance Ltd.[2017 (1) TMI 1567 - RAJASTHAN HIGH COURT]. - Decided in favour of assessee Issues:1. Appeal against Tribunal's judgment partially allowing the assessee's appeal.2. Deletion of addition of unexplained share application money under Section 68.3. Application of precedents Commissioner of Income Tax vs. Lovely Exports (P) Ltd. and Commissioner of Income Tax vs. M/s VTC Leasing & Finance Ltd.Analysis:1. The appellant challenged the Tribunal's decision partially allowing the assessee's appeal. The High Court framed a question of law regarding the deletion of additions of Rs. 45,00,000 and Rs. 1,10,00,000 made by the Assessing Officer and confirmed by the CIT(A) on account of unexplained share application money under Section 68. The issue revolved around whether the Tribunal was justified in deleting these additions obtained through undisclosed accommodation entries from B.C. Purohit & Company group after paying a commission.2. The respondent's counsel argued that the matter was settled by previous judgments. Referring to the decision in Commissioner of Income Tax, Jaipur-II, Jaipur vs. M/s Hotel Gaudavan Pvt. Ltd., dated 25th April, 2017, which was supported by the Supreme Court's ruling in Commissioner of Income Tax vs. Lovely Exports (P) Ltd. and the High Court's decision in Commissioner of Income Tax vs. M/s VTC Leasing & Finance Ltd., the counsel contended that the issue was in favor of the assessee based on established legal precedents.3. Consequently, the High Court ruled in favor of the assessee and against the department, upholding the Tribunal's decision to delete the additions. The appeals were dismissed based on the application of the legal principles derived from the aforementioned judgments, providing clarity on the treatment of unexplained share application money under Section 68 in cases involving accommodation entries.
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