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2024 (3) TMI 726 - ITAT DELHIAddition u/s 68 - buyback was not genuine and added back the buyback amount as unexplained income - CIT(A) deleted the addition and allowed the benefit of exemption u/s 10(34A) - HELD THAT:- AO’s show-cause notice was issued on 23.09.2021 and reply was sought latest by next date i.e. 24.09.2021. The assessee did respond by furnishing reply by letter dated 24.09.2021. This is not fair. Reasonable opportunity to the assessee is a must. Secondly, the facts have not been marshalled and appreciated in right perspective. Admittedly, AO incorporated in the assessment order only some contents of the reply dated 24.09.2021 furnished by the assessee to his show- cause notice dated 23.09.2021 and hastened to conclude that buyback was not genuine and added back the buyback amount as unexplained income u/s 68 of the Act. This is not correct. CIT(A) has given clear finding that the identity of UMS is established; genuineness of transaction is also proved as buyback was carried out as per the procedure prescribed under the Companies Act and approval from the Registrar of Companies was also taken; income distribution tax on buyback u/s 115QA was duly paid; the creditworthiness is established from the financials of UMS i.e. Balance Sheet at 31.03.2017, 30.11.2017 and 31.03.2018 of UMS and Knaup Management Services Pvt. Ltd. (“KMS”) which is 100% wholly owned subsidiaries of UMS and lastly, Valuation Report of UMS and KMS etc. under Rule 11UA of the Income Tax Rules, 1962. We endorse the findings of the Ld. CIT(A) that income arising to the assessee shares-holder as a result of buyback is exempt u/s 10(34A) of the Act by virtue of amendment brought on the statute book by the Finance Act, 2013 w.e.f. 01.04.2014. Accordingly, we sustain the order of the Ld. CIT(A) and reject the appeal of the Revenue.
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