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2023 (4) TMI 692 - AT - Income TaxAddition u/s 68 - Unexplained credit - Bogus share capital and share premium - onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions - HELD THAT:- We notice that the alleged sum was found credited in the books of accounts maintained by the assessee. Second part of the Section is that the assessee offers no explanation about the nature and source thereof but the same is not applicable in the instant case since the assessee has offered the explanation about the nature and source by filing complete documentary evidences to prove the identity and creditworthiness of the share subscribers and the genuineness of the transaction. Now, the third part is that if the explanation offered by the assessee is not satisfactory in the opinion of ld. AO now, for ld. AO has to express his opinion of having not satisfied and the same needs to be supported by specific observation rebutting the explanation offered by the assessee. But the same is completely absent in the instant case. Assessee has provided sufficient explanation with all documentary evidences but ld. AO made no efforts to examine those details and found some fault/discrepancy in the same. AO ought to have appreciated that the share subscribers are private limited companies and were having sufficient share capital, reserve and surplus in their regular books of accounts and out of such available funds the alleged share subscribers have invested in the assessee company. In our considered view, ld. AO failed to cross this hurdle as provided under the provisions of Section 68 of the Act before making the addition. We under the given facts and circumstances of the case most importantly that the year under appeal is AY 2008-09 and the proviso to Section 68 of the Act specifically brought in for examining the share application money/share premium received in the case of the companies has been brought into the Income Tax Act w.e.f. 01.04.2013, are of the considered view that prior to this amendment if the assessee had offered sufficient explanation about the nature and source of the alleged sum credited in the books which in this case is share capital and share premium and has discharged its onus by providing complete documentary evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction and ld. AO failed to record any discrepancy in such details, no addition u/s 68 called for. We thus, set aside the finding of ld. CIT(A), delete the addition made u/s 68 of the Act and allow the effective grounds of appeal in ground raised by the assessee.
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