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2023 (1) TMI 896 - AT - Income TaxUnexplained credit u/s 68 - unexplained share premium and share capital - HELD THAT:- In respect of all the parties/investors, they are regularly filing the return of income and the copies of the same are also brought on record. Assessee has also furnished the share application form, copy of the investors companies, bank account statement, showing the debit entry, copy of the acknowledgment of the return of income for AY 2015-16 along with the computation of income, copy of the auditor report, balance sheet and trading profit and loss account as on 31/03/2015 and the copy of the shares certificate of investors company issued by the assessee company. The assessee has produced every document to prove the identities of the parties and the creditworthiness of the parties along with genuineness of the transaction as required u/s 68 o We find no merit in the argument of the Ld. DR to hold that the assessee has failed to establish the ingredients of Section 68 of the Act. The Hon'ble Supreme Court in the case of CIT Vs. Lovely Export Pvt. Ltd. [2008 (1) TMI 575 - SC ORDER] observed that even if the share capital money is received by the assessee from alleged bogus share holders, whose names are given to the A.O. The Department is free to proceed to reopen their individual assessment in accordance with law. But cannot regarded undisclosed income of the assessee Company. In the present case apart from giving the details of the investors, the assessee has substantially provided materials to prove the genuineness of the share holders apart from giving the Pan Card, name and ROC details. Therefore, we delete the addition made u/s 68 of the Act. Accordingly, the Ground No. 2 of the Assessee is allowed. Enhancement of income by CIT AR argued that the Ld.CIT(A) enhanced the income without giving a mandatory notice as required u/s 250(1) - HELD THAT:- In our opinion, when the CIT(A) deem it fit to enhance the assessed income, shall give mandatory notice u/s 250(1) - In the present case, the Ld. DR has not brought anything on record to prove that the CIT(A) has issued notice u/s 250(1) of the Act before enhancing the income of the assessee. Therefore, the action of the Ld.CIT(A) in enhancing the income of the assessee is found to be erroneous. Therefore, Ground No. 3, 5 & 6 of the assessee requires to be allowed. Enhancing the income invoking Section 56(2) (viib) - rejecting valuation method taken by the assessee - value of the shares issued to the parties are very high in comparison to fair market value of such shares - HELD THAT:- We are inclined to follow the ratio laid down in the case of Cinestan Entertainment P. Ltd.[2019 (6) TMI 1367 - ITAT DELHI] and hold that the Ld. A.O and CIT(A) has committed an error in rejected the valuation done by the assessee from prescribed expert as per the prescribed method. We inclined to allow the Ground No. 4 of the assessee by deleting the addition made by the Lower Authorities.
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