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2019 (6) TMI 853 - AT - Income Tax
Addition u/s 68 on account of share capital - assessee failed to prove the creditworthiness of the share holders who have invested in the company - notices under section 131 to the subscribers unserved - HELD THAT:- Assessee has filed sufficient documents e.g. Permanent Account Numbers, bank statements, etc. to establish the identities and creditworthiness of the two share applicants. The copies of the bank statements of the share subscribers wherein the transactions are reflected as well as the fact that they are assessed to income tax establish the creditworthiness of the parties concerned while the genuineness of the transaction is borne out by the fact that the transactions were through banking channels. On going through the assessment order, it is seen that the assessing officer has not been able to rebut or find any discrepancy about the documents submitted by the assessee. If that be the case, the Assessing Officer cannot make addition u/s 68 in the hands of the appellant company.
In case AO had any doubt about the shareholders, nothing stopped him from taking appropriate action or proceeding against these shareholders. It is a case where the assessee has been able to meet the requirements to justify its case. If the notices issued by the A.O. to the share subscribers were not complied with or came back unserved, this could not be held against the assessee, which had discharged the initial onus which lay upon it by proving the identity of the share applicants and the genuineness of the transactions - Decided in favour of assessee
Addition u/s. 14A u/s 8D - no dissatisfaction has been recorded by assessee - HELD THAT:- Before invoking the provisions of Section 14A, AO has first of all to record his or her dissatisfaction with the claim of the assessee as regards the expenditure shown (or not shown at all) by the assessee in relation to income which does not form part of the total income. However, in the assessment order, no such dissatisfaction has been recorded and the AO has mechanically applied Section 14A/Rule 8D to make the disallowance, which is not sustainable in the eyes of law. Therefore, addition in dispute is not warranted - CIT(A) has rightly directed the AO to delete the addition - Decided in favour of assessee.