Tribunal deletes additions on share application money for 2010-11 & 2011-12

The Tribunal allowed the appeals of the assessee, deleting the additions made on share application money under section 68 for the assessment years 2010-11 & 2011-12. The Tribunal found that the additions were not sustainable due to the lack of incriminating evidence related to share capital issues, similar to a previous case where the addition was deleted. The orders were pronounced in favor of the assessee on November 15, 2019.

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Issues:
Addition made by Assessing Officer on share application money under section 68 for assessment years 2010-11 & 2011-12.

Analysis:
The appeals filed by the assessee were against orders passed by the Commissioner of Income Tax (Appeals) regarding addition of share application money under section 68. The Assessing Officer and CIT(Appeals) held that the transactions were not satisfactorily explained by the assessee. The assessee failed to prove the identity, capacity, and genuineness of the share applicants despite opportunities given. The Assessing Officer raised concerns about the lack of income generation activity, high premium on shares, and the involvement of shell companies as share applicants. The CIT(Appeals) confirmed the additions based on incriminating documents and lack of creditworthiness of the share contributors.

The Tribunal noted that a similar issue was resolved in the assessee's favor for a different assessment year, where the addition was deleted. The Tribunal emphasized the importance of incriminating material found during the search for invoking section 153A. It was highlighted that in the absence of such material, additions under section 68 were unsustainable. Citing relevant case laws, the Tribunal concluded that the additions made by the Assessing Officer and confirmed by the CIT(Appeals) were not sustainable due to the lack of incriminating evidence related to share capital issues.

Based on the similarity of facts and arguments to the previous case, the Tribunal followed its earlier decision and deleted the additions made on share application money under section 68 for the assessment years 2010-11 & 2011-12. Consequently, both appeals of the assessee were allowed, and the orders were pronounced in favor of the assessee on November 15, 2019.

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