2023 (6) TMI 1482 - HC - Income Tax

Taxpayer Wins: Share Capital Transaction Scrutiny Passes Rigorous Evidential Test Under Section 68 Taxation Rules

Principal Commissioner of Income Tax, Central-2, Kolkata Versus M/s. Aastha Vincom Pvt. Ltd.

HC upheld ITAT's order deleting tax addition under Section 68 for share capital. Court found Tribunal conducted thorough factual examination, concluded ... Validity of Revision u/s 263 - Tribunal deleting the addition made u/s 68 - HELD THAT:- Tribunal has noted that the first assessment which was completed was a proceeding u/s 147 and the AO in terms of Explanation 3 of Section 147 has called for the details of copy of bank statement, details of investment, details of fresh share capital, details from income from other sources, copy of books of accounts, details of loans and advances and after all those were furnished by the assessee, the assessment was completed holding that the assessee has fully explained the transaction and has also discharged the onus cast upon him. Tribunal after noting as to how the first AO has proceeded, considered the correctness of the assessment order passed in pursuance to the direction issued u/s 263. Tribunal has noted that the second assessing officer failed to comply with the direction issued by the PCIT in its order dated 7th March, 2013 and merely by surmises and conjectures held that the assessment in the share capital, share premium was not genuine and that the assessee has not discharged the burden cast upon him. Tribunal has noted that the finding recorded by the first assessing officer was based on facts and after conducting enquiry and after also examining the documents which were produced. In the absence of any adverse material in hands of the second assessing officer, the Tribunal held that the first assessing officer could not have disturbed. Thus, Tribunal has examined the issue, we find that a thorough factual examination has been done and, therefore, we find that there is no question of law much less substantial question of law is arising for consideration in this appeal. The Calcutta High Court, in an appeal under Section 260A of the Income Tax Act, 1961, upheld the Income Tax Appellate Tribunal's order deleting the addition made under Section 68 regarding share capital and share premium for AY 2008-09. The key legal issue was whether the Tribunal was justified in not restoring the Assessing Officer's addition made pursuant to a direction under Section 263.The Court noted that the Tribunal conducted a 'thorough factual examination' of the assessment completed under Section 147 and found that the assessee had 'fully explained the transaction' and discharged the onus. The Tribunal observed that the second Assessing Officer, acting under Section 263, failed to comply with the Principal Commissioner's direction and relied on 'surmises and conjectures' without any adverse material, thus improperly disturbing the first assessment order.The High Court concluded that no substantial question of law arose, affirming that the Tribunal's factual findings were sound and that the first Assessing Officer's order could not be disturbed in the absence of contrary evidence. The appeal was accordingly dismissed.