ITAT deleted addition as payments were well accounted

1. The assessee company received share application money/share capital from many persons/companies. AO held that receipt of Share application money/share capital was an arranged affair. The other observation of the AO was that the genuineness and credit worthiness of the transaction remained unproved.An addition of Rs.1,32,00,000/- was made u/s 68 out of Rs. 1,32,01,980 being share application money/share capital received in F.Y. 2003-04.

2. CIT(A) deleted the addition.

3. On appeal, the ITAT inter alia held as under:

4. We find that the assessee has furnished the details including the ward/circle where the share applicants/ investing companies were assessed to income tax and discharged the onus cast on it. All the amounts were received through Banking channels by way of cheques issued in favour of the Assessee Company towards share application money / share capital. Both M/ s Mahanivesh India Ltd. and M/s Geefcee Finance Ltd. are Public Limited companies and the investment in the shares of the assessee company were duly reflected in their books of account as seen from the schedule to the respective balance sheets furnished. The AO conducted inquires with regard to the sources of funds before issuing cheques to the appellant by M/s Mahanivesh India Ltd., and M/s Geefcee Finance Ltd. We find that the AO observed that the transactions are not genuine. But the fact remains that the said two companies are Public Limited companies and they have invested in many other companies. The AO in the assessment order reproduced extensively the notings of order sheet, questioners issued and replies furnished by the appellant. The AO observed that the facts of the case are distinguishable from the facts of the cases which were considered by the various judicial fora. It is more or less settled position of law that once identity is established, the better course suggested by the judicial authorities is to reopen the assessments of share applicants. In respect of share applicants other than M/ s Mahanivesh India Ltd. and M/s Geefcee Finance Ltd., nothing adverse was brought on record. The law of evidence mandates that if the best evidence is not placed before the court, an adverse inference can be drawn against the person who ought to have produced it. Asstated above the assessee has produced possible/best evidence to support its claim. The assessee cannot be fastened with, tax liability for failing to do an impossible/unjustified act of production of directors of investing companies after lapse of 5/6 years. If there is any discrepancy in the books of accounts maintained by the investing companies, there isa case for reopening of the assessment of the respective shareholders/investing companies. The assessee cannot be penalized for the mistakes/faults committed by the share holders. The AO has not found any discrepancy in the books of account and bank accounts maintained by the assessee.

5. In the background of the aforesaid discussions, we find that Ld. CIT(A) has discussed each and every aspect of the issue in dispute and has passed a well reasoned order which does not need any interference on our part, hence, we uphold the same and dismiss the ground nos. 1 to 1.10 raised by the Revenue."