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of <h1>Tribunal allows appeal, overturns addition of unexplained share capital.</h1> <h3>Aahar Suppliers Pvt. Ltd. Versus ITO, Ward-9 (1), Kolkata</h3> Aahar Suppliers Pvt. Ltd. Versus ITO, Ward-9 (1), Kolkata - TMI Issues:The only issue raised is against the confirmation of addition of Rs. 2,24,28,434/- by the Ld. CIT(A) as made by the AO on account of share capital/share premium being unexplained u/s 68 of the Act.Details of Judgment:Issue 1: Addition of Share Capital/Share Premium u/s 68 of the Act- The assessee filed return of income declaring a total income of Rs. 3,235/- and issued equity shares raising share capital/share premium of Rs. 2,24,28,434/.- The AO observed lack of compliance with summons u/s 131 by directors of share subscribers, leading to addition of unexplained investments.- The Ld. CIT(A) upheld the addition due to failure in proving identity, creditworthiness, and genuineness of transactions.- The assessee argued that all evidences were furnished and share subscribers confirmed investments, questioning the basis of addition.- The Tribunal found that despite non-compliance with summons u/s 131, both the assessee and share subscribers provided necessary documents proving identity and creditworthiness.- Citing precedents, the Tribunal held that non-compliance with summons alone cannot justify addition without pointing out deficiencies in documents.- Relying on decisions emphasizing examination of all evidence, the Tribunal set aside the Ld. CIT(A)'s order and directed deletion of the addition.- The appeal of the assessee was allowed, and the order was pronounced on 1st August, 2023.This judgment highlights the importance of substantiating share capital/share premium transactions under section 68 of the Act with proper documentation and evidence to establish identity, creditworthiness, and genuineness, even if there is non-compliance with summons, to avoid unjustified additions.
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