No sec. 68 additions if all transactions were made through banks and share applicants were assessed to tax

Section 68 of the Income-tax Act, 1961 - Cash credit (Share application money) - Assessment year 2004-05 - Assessing Officer made addition under section 68 on account of amount received for share capital, its premium and amount paid as commission for arranging it on basis of statement made by third parties who were related to purchasing companies stating that these companies were engaged in providing accommodation entries in lieu of commission - However, said third party statement was made behind back of assessee and no opportunity of being heard or cross-examining third parties was provided to assessee - Assessing Officer could not bring any material to disapprove genuineness of confirmation and affidavits filed by assessee - Further, all transaction were through account payee cheques, all these companies had PAN numbers and were regularly assessed to tax - Investor companies were registered under Companies Act and Form No. 2 for allotment was also filed - Whether appellate authorities could not be said to have erred in deleting addition - Held, yes [Paras 8 and 9] [In favour of assessee]

Refer:[2014] 44 taxmann.com 460 (Rajasthan)
HIGH COURT OF RAJASTHAN
Commissioner of Income-tax, Central, Jaipur
v.
Supertech Diamond Tools (P.) Ltd.