M/s. Kapil Solvex Pvt. Ltd. Vs. ACIT, Wardha Circle, Wardha

Parties Involved

Facts Summary

The assessee, M/s. Kapil Solvex Pvt. Ltd., is a company engaged in the business of running a solvent extraction plant at Nanded. It filed its return of income on 28.12.2009 declaring total income at Rs.6,908/-. The Assessing Officer reopened the assessment under section 147 of the Income Tax Act, 1961, due to the substantial amount of money received in cash premium and the lack of details justifying the premium received. The Assessing Officer made an addition of Rs.4,55,00,000/- to the total income of the assessee, considering the share application money along with the premium shown received by the assessee from six applicants as unexplained cash credits under section 68 of the Act. The CIT(A) deleted the addition on merit but upheld the validity of the reassessment proceedings. The Revenue appealed against the order of the CIT(A) before the Tribunal.…

Legal Issues

• 1. Whether the CIT(A) was correct in accepting the creditworthiness of the investors on the basis of financial statements for A.Y. 2007-08?
• 2. Whether the Assessing Officer was correct in enquiring into the source of investment of the shareholders?

Judgment Outcome

Decided in favour of Revenue.

Precedents Relied Upon

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