Appeal allowed in tax case involving unexplained cash credit under IT Act The appeal was allowed for statistical purposes, and the order was pronounced on August 09, 2019. The case involved the addition of share application ...
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Appeal allowed in tax case involving unexplained cash credit under IT Act
The appeal was allowed for statistical purposes, and the order was pronounced on August 09, 2019. The case involved the addition of share application money as unexplained cash credit under section 68 of the Income Tax Act, 1961. The Assessing Officer had treated the share application money as unexplained cash credit due to non-cooperation from the directors of share-subscribing companies. The CIT(Appeals) upheld the addition citing lack of creditworthiness of the share applicant companies. The Tribunal directed a fresh consideration, requiring the assessee to provide necessary cooperation and evidence for an expedited assessment.
Issues: Addition of share application money as unexplained cash credit under section 68 of the Income Tax Act, 1961.
Analysis: The appeal was filed against the order confirming the addition of Rs. 129.43 crores as unexplained cash credit by treating share application money as such under section 68. The assessee, a company engaged in investment and trading in shares, received a substantial amount of share application money during the year. The Assessing Officer issued summons under section 131 to verify the amount but faced non-compliance from the directors of share-subscribing companies. Consequently, the Assessing Officer held the cash credits unexplained, leading to the addition in the assessment completed under section 143(3).
During the appellate proceedings, the assessee contended that the addition was unjustified as the relevant documentary evidence was not filed due to non-cooperation from the share subscribers. The CIT(Appeals) upheld the addition, noting the lack of creditworthiness of the share applicant companies and nominal nature of the transactions. The Tribunal, after hearing both sides, found it fair to give the assessee another opportunity to substantiate its case. The matter was thus sent back to the Assessing Officer for fresh consideration, with the assessee required to provide necessary cooperation and evidence for expedited assessment.
In conclusion, the appeal was treated as allowed for statistical purposes, and the order was pronounced in the open court on August 09, 2019.
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