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2022 (5) TMI 366 - AT - Income TaxUnexplained cash credit u/s 68 - case was selected for limited scrutiny through CASS to verify whether the funds received in the form of share premium are from disclosed sources and have been correctly offered to tax - A.O. was not satisfied with the arguments advanced by the assessee and noted that the share premium so received by the assessee is nothing but an accommodation entry and implies that the whole transaction is a sham one - CIT(A) held that the assessee failed to prove on record any evidence to justify the basis of share premium charged in excess of its face value and held that the share premium received in excess of the face value should be held as income of the appellant under section 56 (2) (viib) on protective basis - HELD THAT:- As relying on MANTRAM COMMODITIES PVT. LTD. VERSUS ITO, WARD 1 (5) FARIDABAD [2021 (3) TMI 459 - ITAT DELHI] CIT(A) was not justified in making the addition on protective basis by invoking the provisions of Section 56(2)(vii)(b) of the I.T. Act, 1961. Addition u/s 68 - Assessee has filed the details such as P & L A/c, balance-sheet, bank statements, confirmation letters, PAN, copy of acknowledgment of return, Memorandum and Articles of Association of Companies etc.to substantiate the identity and creditworthiness of the share applicants and genuineness of the transaction. Nothing has been brought on record to negate the various evidences filed by the assessee. A perusal of the audited balance-sheet of these Investor Companies shows that these companies are having sufficient capital and reserves to make the investment in the assessee company and the entire transactions have been made through banking channel. Merely because the Investor Companies have shown meager income during the impugned assessment year, the same in my opinion, cannot be a ground to doubt the creditworthiness of the said company especially when the said company is having sufficient funds in its account in shape of share capital and free reserves. Since the assessee in the instant case has proved the identity of the investors and filed sufficient details to substantiate the creditworthiness and genuineness of the transaction, therefore, hold that the Ld. CIT(A) was not justified in confirming the addition made by the A.O. under section 68 - therefore, set aside the Order of the Ld. CIT(A) and delete the addition. Grounds raised by the assessee are allowed.
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