TMI Blog2015 (11) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... "all ingredients of Section 68 stands satisfied as far as the receipt of share application money by the Assessee company is concerned." Accordingly, the CIT(A) deleted the additions on this account. ITAT relied on CIT v. Lovely Exports (P) Limited [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - Decided against revenue. Unexplained increase in sundry creditors - CIT(A) deleted the addition confirmed by ITAT - Held that:- The increase in sundry debtors was interlinked with the increase in the sundry creditors and both were on account of the "pure business transaction of purchases and sale of share." The CIT(A) was satisfied that the increase in sundry creditors stands fully explained and established by the Assessee. The ITAT, while observin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the effect of the credit entry passed for the closing stock which necessarily had to be routed through the profit and loss account. Since no adverse comment has been made by the auditor and since the same method of accounting had been followed by the Assessee in the earlier as well as the subsequent year, the CIT (A) concluded that there was no justification for the addition. - Decided against revenue. - ITA No. 1869/2010 - - - Dated:- 5-10-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr Kamal Sawhney, Senior Standing Counsel With Mr Ragvendra Singh, Junior Standing Counsel With Mr Shikhar Garg, Adv For the Respondent : None ORDER 1. This appeal by the Revenue under Section 260A of the Income Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber 1997 disclosing a net loss of ₹ 3,93,28,695. The Assessing Officer ('AO') processed the return under Section 143 (1) (a) of the Act. The AO noted that there has been an increase in the share capital during the year under the head 'Share Application Money' from Rs. Nil as on 31st March 1996 to ₹ 13,27,50,000 as on 31st March 1997. Since no details or confirmation from the share Applicants or proofs of identity or creditworthiness was furnished, the entire amount was added under Section 68 of the Act to the income of the Assessee. 4. The Commissioner of Income Tax (Appeals) ['CIT (A)'], in an order dated 28th February 2005, noted that the learned counsel for the Assessee has furnished details of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished. The CIT (A) noted the submission of the Assessee that the increase in sundry creditors and sundry debtors are on account of the business transactions in the course of Assessee's stock broking business. Here again it was noted by the CIT(A) that the AO, in his remand report, did not doubt the increase in the sundry debtors while making an addition for the sundry creditors. He observed that the increase in sundry debtors was interlinked with the increase in the sundry creditors and both were on account of the pure business transaction of purchases and sale of share. The CIT(A) was satisfied that the increase in sundry creditors stands fully explained and established by the Assessee. The ITAT, while observing that there is no pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock. Therefore, the effect of the closing stock stands automatically considered and reflected in the accounts. The Assessee had declared a loss on trading in shares. With the Assessee having followed the mercantile system of accounting, it is not possible for it to show the closing stock in trade in the balance sheet without taking into account the effect of the credit entry passed for the closing stock which necessarily had to be routed through the profit and loss account. Since no adverse comment has been made by the auditor and since the same method of accounting had been followed by the Assessee in the earlier as well as the subsequent year, the CIT (A) concluded that there was no justification for the addition. 9. The ITAT affirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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