M/S VARDHMAN POLYTEX LTD.,LUDHIANA vs. DCIT, C-1, LUDHIANA

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ITA 759/CHANDI/2019Status: DisposedITAT Chandigarh18 August 2025AY 2015-16Bench: SHRI LALIET KUMAR (Judicial Member), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)4 pages

AI SummaryAllowed

Facts

The assessee, M/s Vardhman Polytex Ltd., issued 21.82 Lacs equity shares to M/s Altfort Merchants Pvt. Ltd. (AMPL) at a premium. The Assessing Officer (AO) added Rs.218.20 Lacs under Section 68, alleging that the assessee failed to prove the 'source of source' of the investment, despite accepting share premium from the same entity in the current and preceding years. The CIT(A) confirmed this addition.

Held

The Tribunal held that the addition under Section 68 was unsustainable because the assessee, being a public listed entity, is not required to prove the 'source of source' of share capital. The immediate source of investment was not doubted, and the share premium from the same investor was accepted by the AO. Furthermore, no independent inquiry was conducted by the AO. Therefore, the addition of Rs.218.20 Lacs was deleted, and the AO was directed to recompute the income.

Key Issues

Whether an addition under Section 68 for share capital is valid when the assessee is a public listed company, has provided initial documentary evidence, and the share premium from the same investor has been accepted by the AO without further inquiry.

Sections Cited

143(3), 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH

Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

(िनधा�रण वष� / Assessment Year: 2015-16) M/s Vardhman Polytex Ltd DCIT Central Circle -1 Vardhman Park, Chandigarh Road Ludhiana.141001 बनाम/ Vs. Ludhiana. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACV-5821-H (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri Ashish Aggarwal (CA) – Ld. AR ��थ�कीओरसे/Respondent by : Smt. Priyanka Dhar (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 04-08-2025 घोषणाकीतारीख /Date of Pronouncement : 18-08-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 arises out of an order of learned Commissioner of Income Tax (Appeals)-1, Ludhiana [CIT(A)] dated 06-03-2019 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 30-12-2017. The sole grievance of the assessee is confirmation of addition of Rs.218.20 Lacs u/s 68. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

The impugned addition stem from the fact that the assessee issued 21.82 Lacs number of equity share to M/s Altfort Merchants Pvt. Ltd. (AMPL) on 15-12-2014. The shares were issued on face value of Rs.10/- each with a premium of Rs.45/- per share. In terms of requirements of Sec.68, the assessee furnished address, PAN of AMPL alongwith its Auditor Report, financial statements for FYs 2013- 14 to 2015-16. The return of income of AMPL was also furnished for AY 2015-16. The assessee also furnished detailed note on source of source of said investment by AMPL which has been extracted on Page 49 of the assessment order. The assessee stated that the issue price was fixed as per SEBI norms. However, Ld. AO rejected the same on the allegation that no information was provided by the assessee on source of source of investment in share capital. However, similar transaction of shares issued to Shri Adish Oswal was duly accepted by Ld. AO. Finally, the share capital of Rs.218.20 Lacs was added u/s 68. Pertinently, the share premium received from this entity was duly been accepted by Ld. AO. The Ld. CIT(A), referring the various judicial decisions, confirmed the impugned addition against which the assessee is in further appeal before us.

Having considered factual matrix, we are of the considered opinion that the impugned addition is not sustainable for multiple reasons. Firstly, the assessee is a public listed entity and in terms of Sec.68, it is not required to prove the source of source of share capital. The immediate source of investment has not been doubted by any of the lower authorities in the present case. The assessee has filed sufficient documentary evidences (as enumerated in preceding para-2) to prove the immediate source of the impugned investments. Secondly, it also emerges that part of the investment has been received by the assessee in preceding year which has duly been accepted. Further, the source of share premium as invested by AMPL, in this year as well as in preceding year, has also been accepted by Ld. AO. M/s AMPL has paid substantial premium of Rs.981.90 Lacs which has been accepted whereas the genuineness of share capital of Rs.218.20 Lacs has not been accepted. The same is quite contrary in itself. Thirdly, no independent enquiry has been conducted by Ld. AO from the investor entity to ascertain the genuineness of the transaction. In the absence of any contrary findings on record, the impugned addition would have no legs to stand. For all these reasons, we delete the impugned addition of Rs.218.20 Lacs. The Ld. AO is directed to recompute the income of the assessee.