Unexplained Cash credits: Sec 68 does not apply when purchase of share is under barter system

IN THE INCOME TAX APPELLATE TRIBUNAL

The Relevant Text of the Order as follows :

22. The various other decisions relied on by the ld. Counsel for the assessee in the paper book also supports the case of the assessee that provisions of section 68 are not applicable in a case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and, instead, considerations were settled through issuance of shares to the respective parties. In other words, provisions of section 68 of the Act does not apply to cases of purchase of shares and allotment of shares when the purchase and allotment are under a barter system. In this view of the matter, we do not find any infirmity in the order of the CIT(A) in deleting the addition of Rs.6,75,00,000 /- (wrongly typed in the grounds as Rs.6,76,00,000/-). Therefore, the ground of appeal No.1 raised by the Revenue is dismissed.

23. So far as ground of appeal No.2 of the Revenue is concerned, we find, the AO made addition of Rs.8,50,000/- u/s 68 of the Act on the ground that the same is shown in the name of M/s Wamil Clothing Pvt. Ltd. and the summons issued u/s 131 was received back unserved. We find, the order of the AO is very cryptic on this issue and the ld.CIT(A) has not at all given any finding on this issue. Considering the totality of the facts and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate its case and decide the issue as per fact and law. We hold and direct accordingly. The second ground raised by the Revenue is accordingly allowed for statistical purposes.

24. Ground No.3 being general in nature is dismissed.

25. In the result, the appeal filed by the Revenue is partly allowed for statistical purposes.