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of <h1>Tax Appeal Success: Assessing Officer's Additions Deleted for Lack of Evidence</h1> <h3>Shilpa Polypack Pvt. Ltd. Versus The Income Tax Officer, Ward-2 (1) (2), Surat.</h3> Shilpa Polypack Pvt. Ltd. Versus The Income Tax Officer, Ward-2 (1) (2), Surat. - TMI Issues Involved:1. Addition of Rs. 80,00,000/- being share capital and share premium received from Supriya Fincom Pvt. Ltd.2. Addition of Rs. 24,000/- being accommodation entry commission on the above amount.Issue-wise Detailed Analysis:1. Addition of Rs. 80,00,000/-:The Assessing Officer (AO) found that the assessee received Rs. 1,38,60,000/- towards share premium and Rs. 1,40,000/- towards share capital from two companies, totaling Rs. 1,40,00,000/-. To verify the transactions, the AO issued notice u/s 133(6) to M/s Supriya Fincom Pvt. Ltd., but only partial compliance was made. The AO personally visited the given address and found no such company operating there. Further inquiries revealed that the company was managed by a known entry operator, Jivendra Mishra, who admitted to providing accommodation entries. The AO concluded that the investment was cash credit and made an addition u/s 68 of the Act.On appeal, the CIT(A) deleted the addition of Rs. 60,00,000/- related to M/s Empower India Ltd., as the AO did not make sufficient inquiries to establish the identity, creditworthiness, and genuineness of the transaction. However, the CIT(A) confirmed the addition of Rs. 80,00,000/- related to M/s Supriya Fincom Pvt. Ltd.The assessee argued that all transactions were supported by relevant documents, including share application forms, bank statements, and financial statements, proving the identity, creditworthiness, and genuineness of the transactions. The AO's main contention was the non-appearance of the directors of the share subscribers. However, the Tribunal noted that the assessee had provided sufficient documents to discharge its onus. The Tribunal cited several case laws, including the Supreme Court's decision in Lovely Exports, emphasizing that the AO should assess the credit in the hands of the creditor if dissatisfied with the source of funds.The Tribunal concluded that the assessee had fulfilled the requirements of section 68 by providing necessary documents and explanations. Therefore, the addition of Rs. 80,00,000/- made by the AO was deleted.2. Addition of Rs. 24,000/-:The AO observed that the assessee made a commission payment of Rs. 42,000/- at the rate of 0.30 paise per hundred rupees to the entry providers, which was not recorded in the books. The CIT(A) upheld the addition of Rs. 24,000/- related to the commission payment on the share capital/premium of Rs. 80,00,000/- from M/s Supriya Fincom Pvt. Ltd.Since the Tribunal deleted the addition of Rs. 80,00,000/-, the addition of Rs. 24,000/- being accommodation entry commission was also deleted as it was consequential in nature.Conclusion:The appeal filed by the assessee was allowed, and the additions of Rs. 80,00,000/- and Rs. 24,000/- made by the AO were deleted. The Tribunal emphasized that the assessee had discharged its onus by providing sufficient documents to prove the identity, creditworthiness, and genuineness of the transactions, and the AO failed to disprove the materials placed before him.
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