ITAT Holds Share Capital Addition Unsustainable Where Assessee Furnished ITR:

The appeal was filed by Pax Travels Private Limited against the order of the CIT(A), Kolkata-27, concerning the addition of Rs 20 lakh under Section 68 of the Income Tax Act, 1961, relating to share application money received from M/s Evergreen Barter Private Limited. During the relevant year, the assessee had raised Rs 1.10 crore as share application or share subscription money from three companies. The assessee had issued 11,000 equity shares at a face value of Rs 10 per share with a premium of Rs 990 per share.

The assessee had originally filed its return declaring nil income, which was processed under Section 143(1). Subsequently, the assessment was reopened under Section 147, and notice under Section 148 was issued. However, the AO treated the Rs 20 lakh received from Evergreen Barter Pvt. Ltd. as unexplained cash credit under Section 68.

Before the Tribunal, the assessee submitted that M/s Evergreen Barter Pvt. Ltd. had subsequently changed its name to M/s PPJ Heavy Gear Private Limited and was amalgamated with M/s Prabhu Projects Private Limited. The assessee had placed the relevant amalgamation order and corporate records before the authorities.

The Tribunal further noted that the records demonstrated that the company concerned existed in the MCA records and that the necessary documents corroborating the receipt of money had been placed before the lower authorities. Therefore, the very basis on which the CIT(A) had sustained the addition was found to be incorrect.

Accordingly, the Tribunal set aside the order of the CIT(A) on the issue and directed the AO to delete the Rs 20 lakh addition under Section 68.