I.T.A. No.424/Kol/2020

Parties Involved

Facts Summary

The assessee, M/s Jealous Commercial Pvt. Ltd., filed its return of income for the assessment year under consideration, raising total share capital of Rs. 9 lacs including share premium of Rs. 8,91,00,000/-. The assessee issued 90,000 shares with a face value of Rs. 10/- each and a premium of Rs. 990/- per share to 7 applicants. During the assessment proceedings, the assessee submitted documentation to support the share application money raised, including return of income, audited balance sheet, bank statement, confirmation from shareholders, and other relevant documents. Despite the submission of documents, the Assessing Officer (AO) issued summons under Section 131 of the Income Tax Act, 1961, requiring the directors of the assessee company to appear in person. The directors failed to appear, and the AO concluded that the identity, creditworthiness, and genuineness of the transaction were not proven, leading to an addition of Rs. 9 Crore as unexplained cash deposit under Section 68 of the Act. The assessee filed an appeal before the Commissioner of Income Tax (Appeals), which was allowed, holding that the assessee had substantiated the share transaction with supporting documents. The Revenue filed an appeal before the Tribunal, which was dismissed.…

Legal Issues

• 1. Whether the Ld. CIT(A) erred in deleting the addition of Rs. 9 Crore made u/s 68 as the assessee failed to substantiate the genuineness of the share transaction, identity, and creditworthiness of the shareholders.
• 2. Whether the Ld. CIT(A) was justified in treating the transaction through shares as beyond the ambit of Section 68 of the Income Tax Act, ignoring that the share tantamount to money here as a medium of exchange.
• 3. Whether the Ld. CIT(A) was justified in granting relief to the assessee without providing the opportunity to the AO for furnishing a remand report under Rule 46A(3) of the Income Tax Rules, 1962.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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