2013 (6) TMI 349

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..... he facts and in the circumstances of the case, the ld. CIT(A) has erred in relying on the decision of the Hon'ble Supreme Court in the case of M/s Lovely Exports Pvt. Ltd. to the facts of the case whereas in that case no finding had been reached by any authority that the share application transactions were sham and a cover for accommodation entries received by the assessee i.e., a garb under which the money of the beneficiary assessee company is introduced in the form of sale of share to the entry provider." 2. The facts are that the assessee sold shares of M/s Mordi Textile & Processors Ltd. @ Rs. 10/- per share. The AO got information that the transactions were in the nature of accommodation entries under which the sale price was inflate .....

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..... es transactions of shares of M/s Mordi Textile but unacceptable as the valuation of the shares of M/s Mordi Textile & Processors for the F.Y. 2000-01 comes to Rs. 6.91 for which it paid Rs. 10/- per share. It is thus apparent that the assessee company had chosen the sale and purchase of unquoted shares as a medium of not only accepting but providing accommodation entries. In view of the foregoing, assessee's sales transactions of shares of M/s Mordi Textiles and Processors AO is limited to treated as sham transactions to receive accommodation entries to the tune of Rs. 39,53,000/-, which is treated as unexplained cash credits and added to its income u/s 68 of the I.T.Act, 1961." 3. It was submitted before the ld. CIT(Appeals) that the asse .....

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..... d an equivalent amount as undisclosed income. This would have resulted into no addition. However, it is stressed that the shares were purchase @ Rs. 10/- per share and also sold at Rs. 10/- per share, leading to no loss or profit in the transaction. Similar other sales have been accepted by the AO at Rs. 10/- per share. Therefore, there is no reason to make any addition as the whole of the amount stands included in the sale proceeds in the books of account. 6. We have considered the facts of the case and submissions made before us. We agree with the ld. counsel that if sale consideration was actually Rs. 6.98 per share, the AO ought to have given reduction in the sale proceeds computed at this rate before making any addition of the alleged .....

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