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Facts
The assessee received Rs. 3,42,00,000/- as share application money. The AO added this amount under section 68 as unexplained cash credit, and the CIT(A) upheld this addition.
Held
The Tribunal held that since the subscriber company had settled its tax dues under the VSVS scheme concerning the investment made in the assessee company, the addition in the hands of the assessee was not justified.
Key Issues
Justification for addition of share application money under Section 68 when the subscriber has settled taxes on the investment.
Sections Cited
68, 147, 143(3), 131
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Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 15.10.2025 for the AY 2012-13.
The only issue raised by the assessee is against the confirmation of addition ofRs.3,42,00,000/- as made by the ld. AO u/s 68 of the Income-tax Act, 1961 (the Act) in respect of share application money received from M/s Lovely Properties Pvt. ltd.
After hearing the rival contentions and perusing the materials available on record, we find that during the course of assessment
In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO.
We note that in the case of the subscriber i.e. M/s Lovely properties Pvt. Ltd. the assessment was framed u/s 147/143(3) of the Act vide order dated 26.10.2019, wherein the addition was made u/s 68 of the Act of ₹3,32,37,000/- out of which the investment was made in the assessee company. The copy of the order is available from page no.35 to 37 of the Paper Book. We also note that the said subscriber has gone into VSVS Scheme and paid the due taxes on the said amount and the fact was also brought to the notice of ld. CIT (A) during appellate proceedings and the ld. CIT (A) in para no.4.3 recorded the finding to this effect but finally, dismissed the appeal of the assessee. In our opinion, once the amount of investment made in the assessee company by the subscriber has been settled in the VSVS scheme and due taxes were paid, then there is no question of adding back the amount of share capital share/premium in the hands of the assessee. consequently, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition.
Order pronounced on 26.02.2026.