Section 68 of Income Tax Act, 1961—unexplained cash credit— In the instant case, appeal is preferred by revenue against the order of CIT and the solitary issue involved therein relates to the deletion by the Ld. CIT(A) of the addition of Rs. 9,85,00,000/- made by the AO on account of share capital and share premium by treating the same as unexplained cash credit u/s 68 of the act.

Held that— It is observed that its shares were issued by the assessee company during the year under consideration at premium to certain companies in lieu of the shares held by the said companies and there was thus no inflow of cash involved in these transactions. The said transactions were entered into in the books of account of the assessee company by way of journal entries and it did not involve any credit to the cash amount.

when the cash did not pass at any stage and since the respective parties did not receive cash nor did pay any cash, there was no real credit of cash in the cash book and the question of inclusion of the amount of the entry as unexplained cash credit could not arise.

In our opinion, the ratio of this decision of the Hon’ble Jurisdictional High Court in the case of Jatia Investment Co. (supra) is squarely applicable in the facts of the present case and the Ld. CIT(A) was fully justified in deleting the addition made by the AO u/s 68 by holding that the said provision was not applicable.[ITO, WARD – 5 (3) KOLKATA VERSUS M/S. BHAGWAT MARCOM PVT. LTD.][2019] 16 ITCD Online (23) [ITAT KOLKATA]