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2023 (4) TMI 74 - ITAT RAIPURAddition u/s 68 - unexplained cash credit - Unexplained share application money received - HELD THAT:- Except for raising allegations in the thin air the department had failed to lead any iota of evidence which would persuade us to conclude that it was the unaccounted money of the assessee company which was routed back to its coffers in the garb of share application money through the investor company. Onus cast upon the assessee company for proving the nature and source of the share application money a/w the additional burden cast upon it as per the “first proviso” to section 68 stands duly discharged. Accordingly, not being able to persuade ourselves to subscribe to the view taken by the lower authorities who had dubbed the share application money received by the assessee company as an unexplained cash credit u/s.68 we herein set- aside the order of the CIT(Appeals) and vacate the said addition. Thus, the Ground of appeal No.1 raised by the assessee is allowed in terms of our aforesaid observations. Addition u/s. 56(2)(viib) - Issue of additional shares at premium while splitting the existing shares - AO assessed the excess amount of Rs.15/- per share so received by the assessee as its income u/s. 56(2)(viib) - HELD THAT:- As the provisions of Sec. 56(2)(vii) were introduced as an antiabuse measure to prevent laundering of unaccounted money in the garb of gifts after abolition of Gift Tax Act, therefore, there is no justifiable reason to depart from the understanding that the said provisions were in the nature of counter evasion mechanism to prevent laundering of unaccounted money. What in effect transpires is that a share gets split (in the same proportion for all the shareholders). As observed by the Tribunal in its aforesaid order, such allotment of additional shares would be akin to changing a one thousand rupee note for two five hundreds rupee notes. Accordingly, as stated by the Ld. AR, and, rightly so, the provisions of section 56(2)(viib) of the Act in the backdrop of the facts of the case before us could not have been triggered. Though the aforesaid issue was specifically raised by the assesee before the CIT(Appeals) however, the latter had failed to adjudicate the same. In all fairness, instead of restoring the issue to the file of the CIT(Appeals) for fresh adjudication which would only add to the pending litigation, we have taken a call and adjudicated the aforesaid issue - vacate the disallowance made by the A.O u/s. 56(2)(viib) - Thus, the Ground of appeal No.2 raised in appeal by the assessee is allowed.
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