Tax Tribunal Upholds CIT(A)'s Decision on Share Premium, Directs Reissuance of Notice

The Tribunal dismissed the Revenue's appeal as the tax effect was below the prescribed threshold. The CIT(A)'s deletion of the addition of Rs. 39,00,000/- under Section 68 was upheld, as the genuineness of share premium transactions was substantiated. However, the confirmation of the addition of Rs. 10,00,000/- due to an unserved notice was set aside for proper verification, as the correct address was provided during proceedings. The AO was directed to reissue the notice to the correct address. The assessee's appeal was allowed for statistical purposes.

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Issues Involved:
1. Deletion of addition under Section 68 by CIT(A) for Rs. 39,00,000/- without proving creditworthiness and genuineness of transactions.
2. Confirmation of addition of Rs. 10,00,000/- by CIT(A) due to unserved notice.

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 68 by CIT(A) for Rs. 39,00,000/-:

The Revenue challenged the deletion of the addition of Rs. 39,00,000/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act. The AO had added the amount as unexplained cash credits, questioning the genuineness of the share premium received by the assessee from two companies, M/s. Diamention Mercantiles Pvt. Ltd. and M/s. Giltedge Vincom Pvt. Ltd. The CIT(A) deleted this addition, accepting the assessee's evidence substantiating the genuineness of the transactions, including receipt of share application money through banking channels. The Tribunal noted that the tax effect in the Revenue’s appeal does not exceed Rs. 20,00,000/- as per CBDT Circular No. 3/2018, which prescribes a threshold limit for filing appeals. Consequently, the Tribunal dismissed the Revenue's appeal as not maintainable.

2. Confirmation of Addition of Rs. 10,00,000/- by CIT(A) Due to Unserved Notice:

The assessee contested the confirmation of the addition of Rs. 10,00,000/- by the CIT(A), which was made by the AO on account of share application money received from M/s. N.R. Vincom Pvt. Ltd. The AO's notice under Section 133(6) to verify the transaction was returned unserved, leading to the addition. The assessee argued that the notice was sent to an incorrect address and provided the correct address during the proceedings. The Tribunal noted that the correct address was indeed provided by the assessee and was available in the records. The CIT(A) confirmed the addition, citing the assessee's failure to provide the correct address initially, rendering the documents unverifiable. However, the Tribunal found that the AO should have reissued the notice to the correct address provided by the assessee. Therefore, the Tribunal set aside this issue to the AO for proper enquiry and verification, considering the correct address.

Conclusion:

The Tribunal dismissed the Revenue's appeal due to the tax effect being below the prescribed threshold and allowed the assessee's appeal for statistical purposes, directing the AO to conduct a proper verification of the share application money received from M/s. N.R. Vincom Pvt. Ltd. using the correct address. The order was pronounced in the open court on 24/09/2018.

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