Tribunal upholds CIT(A) decision on share application money & cash deposits. Genuine sources verified. Appeal dismissed.

The Tribunal upheld the CIT(A)'s decision to delete additions made by the AO regarding share application money and undisclosed cash deposits. The share application money was deemed genuine as it was received through proper banking channels with verified details of the applicants. The cash deposits were explained as proceeds from legitimate cash sales and bank withdrawals, supported by verified records. Both the revenue's appeal and the assessee's cross-objection were dismissed, affirming the CIT(A)'s actions based on factual findings.

---

---

Issues Involved:
1. Addition of share application money as unexplained cash credit.
2. Addition of undisclosed cash deposit.

Issue-wise Detailed Analysis:

1. Addition of Share Application Money as Unexplained Cash Credit:

The primary issue in this appeal by the revenue was the deletion by the CIT(A) of the addition made by the AO on account of share application money amounting to Rs.1,49,40,000/-. The AO had added Rs.63.40 lacs as share capital and Rs.96,00,000/- as share premium received by the assessee from different share applicants as unexplained cash credit under section 68 of the Income Tax Act, 1961. The assessee had issued 634000 equity shares of Rs.10/- each at a premium of Rs.15/- each, resulting in an increase in share capital and share premium. During the assessment proceedings, the assessee provided details of the share applicants, including their identities, PAN, and jurisdiction details, and confirmed that the share application money was received through account payee cheques. The AO, in his remand report, verified these details and confirmed their correctness after physical verification of the share applicants' existence and business activities. The CIT(A) deleted the addition based on the AO's remand report, which stated that the share application money appeared to be correct. The Tribunal confirmed the CIT(A)'s order, noting that the share application money was received through normal banking channels, and the AO had accepted the genuineness of the companies and the receipt of the share application money and premium.

2. Addition of Undisclosed Cash Deposit:

The second issue was the addition of Rs.75,05,400/- as undisclosed cash deposit. The AO noted that the assessee had deposited cash into the bank on various dates, which he considered undisclosed income. The assessee explained that it was engaged in the business of trading in iron and steel, with total sales amounting to Rs.13,09,98,510/-, out of which cash sales were Rs.24,22,505/-. The assessee claimed that the cash deposits were from cash sales and withdrawals from the bank. The AO, in his remand report, verified the cash sales and withdrawals and found them to be genuine. The CIT(A) deleted the addition based on the AO's remand report, which confirmed the source of the cash deposits. The Tribunal upheld the CIT(A)'s order, noting that the assessee had correlated the withdrawals with the cash deposits and cash sales.

Conclusion:

The Tribunal dismissed both the revenue's appeal and the assessee's cross-objection, confirming that the CIT(A) had rightly deleted the additions based on the factual remand reports of the AO. The order was pronounced in the open court on 04.05.2016.

---