Revenue's Appeal Dismissed in Share Application Money Addition Case

The appeal by the Revenue against the addition of Rs. 2,00,00,000 under section 68 of the Income Tax Act, 1961 was dismissed. The CIT(A) allowed the appeal of the assessee, citing the genuineness of the share application money accepted in the previous scrutiny assessment and the lack of incriminating evidence found during the search. The Tribunal upheld the CIT(A)'s decision, stating that no incriminating material related to the share application money was found during the search. The appeal was dismissed, following the judgment of the Hon'ble Delhi High Court in the case of Kabul Chawla.

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Issues:
- Addition of Rs. 2,00,00,000 under section 68 of the Income Tax Act, 1961 on account of bogus share application money/share premium received by the assessee company.

Analysis:
1. The appeal was filed by the Revenue against the order passed by CIT(A)-III, New Delhi, deleting the addition of Rs. 2,00,00,000 made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The assessee company was formed for software development and search and seizure action was initiated on the assessee group. The original return of income was filed by the assessee, and later, notice under section 153A was issued. The Assessing Officer made the addition, and the assessee appealed before the CIT(A).

2. The CIT(A) allowed the appeal of the assessee based on the genuineness of the share application money accepted in the previous scrutiny assessment and the lack of incriminating evidence found during the search at the appellant's premises. The CIT(A) held that the addition of Rs. 2,00,00,000 was liable to be deleted, and the appeal was allowed.

3. During the hearing, the Ld. AR submitted that the case is covered by the judgment of CIT Vs. Kabul Chawla. The High Court held that in the absence of incriminating material found during the search, no additions could be made to the income already assessed. The Ld. DR relied on the earlier order but the Tribunal found no incriminating document or material related to the property, supporting the CIT(A)'s findings.

4. The Tribunal concluded that there was no incriminating material found during the search related to the impugned share application money. The order of the CIT(A) was upheld, citing the judgment of the Hon'ble Delhi High Court in the case of Kabul Chawla. The appeal by the Revenue was dismissed, and the order was pronounced on 20th October 2016.

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