Entry in the Bank Statement cannot be treated as unexplained under section 68 of IT Act

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Facts, in brief, as per relevant orders are that e-return declaring income of ``32,780/- filed on 21.11.2006 by the assessee, engaged in the business of manufacturing and trading in home furnishing, after being processed u/s 143(1) of the Income-tax Act, 1961[hereinafter referred to as the ‘Act’], was selected for scrutiny with the service of a notice u/s 143(2) of the Act. During the course of assessment proceedings, the Assessing Officer[AO in short] noticed that the assessee claimed to have received share capital of ``10 lacs from M/s Melco Sales Pvt. Ltd. and ``5 lacs from M/s Poonam Corporation Ltd. In response to a notice u/s 133(6) of the Act ,M/s Melco Sales Private Ltd. Vide reply dated 27.11.2008 informed that they had purchased 10,000/- equity shares of ``10/- each at a premium of ``90/- per share of M/s Golden Home Furnishing Pvt. Ltd. for which payment was made through cheque no.134685 dated 02.03.2006 for ``5 lacs and cheque no.135103 dated 8.3.2006 for ``5 lacs drawn on ABN Amro Bank. However, the said company did not furnish their bank statement in support. Similarly M/s Poonam Corporation Limited informed that they had applied for equity shares of M/s Golden Home Furnishing Pvt. Ltd. For ``5 lacs during the financial year and payment was made through cheque no.858141 dated 23.02.2006 for ``5 lacs drawn on ABN Amro Bank. Later bank statements of both the aforesaid concerns were submitted by the AR of the assessee company along with a letter dated 18.12.2008. However, the AO did not accept the submissions of the assessee on the ground that the transactions did not match with the confirmations filed by the share applicants vis-à-vis submitted by the assessee company. It was pointed out that the assessee company informed that they had received subscription towards share capital through DDs. Moreover, the credit entry in the PNB a/c of the assessee reflected deposit of cheque no. 134685 dated 02.03.2006 for `5 lacs and cheque no.135103 dated 8.3.2006 for ``5 lacs while debit entry as per bank statement of M/s Melco Sales Pvt. Ltd. reflected DD issued. Likewise in the case of M/s Poonam Corporation Ltd., the assessee stated that the payment was made vide cheque no.858141 dated 23.02.2006 while the credit entry in the PNB account of the assessee company showed deposit of cheque no.858141 on 22.02.2006 a day earlier than the date of issue of cheque by M/s Poonam Corporation Ltd. In view of these discrepancies , the amount of ``10 lacs received from M/s Melco Sales Pvt. Ltd. and ``5 lacs from M/s Poonam Corporation Ltd., as share application ,remaining unverifiable, the AO added the same as income of the assessee from undisclosed sources in terms of the provisions of section 68 of Act.

Citation :
Income-tax Officer, Company Ward-12(2), Room no.337, C.R. Building, IP Estate, New Delhi (Appellant) V/s M/s Golden Home Furnishing Pvt. Ltd., 671, Katra Neel, New Delhi [PAN: AAACG 0463 A] (Respondent)