×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
12-04-2019, One City Promoters, Section 131, 68, Tribunal Delhi
This appeal by the assessee is directed against order dated 27/01/2015 passed by the Ld. Commissioner of Income-tax (Appeals)-7, New Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2010-11 raising following grounds:
1. The CIT(A) has grossly erred on facts and in law in upholding the assessment order assessing the income at Rs 1,23,82,730/- . The additions made by the AO and upheld by the CIT(A) are illegal, unjust and bad in law.
2. The AO & CIT(A) has grossly erred on facts and in law in passing the orders without giving a sufficient and proper opportunity to the assessee to be heard. The orders are passed in violation of principles of natural justice.
3. The CIT(A) has grossly erred on facts and in law in upholding the addition of Rs 1,15,00,000/- received by the appellant on account of share application money from three different investor companies.
4. That the CIT(A) has failed to appreciate the fact that the assessee has discharged its burden of proof qua the identity, creditworthiness and genuineness of the transactions and the AO has not been able to prove anything against the assessee and the addition is merely on assumptions.
5. That in view of the facts and circumstances of the case and in law , the various observations made by the AO and C1T(A) are factually incorrect , illegal , bad in law and contrary to facts on record and based on mere guesswork and surmises and conjectures .
6. The additions made and the observations made are unjust, unlawful and based on mere surmises and conjunctures. The additions made cannot be justified by any material on record and additions are also excessive.
7. The explanation given in th evidence produced, material placed that has been made available on record has not been properly considered and judicially interpre ed and the same do not justify the additions/ allowances made.
8. That the assessee reserves the right to add , amend, alter the grounds of appeal.
2. The briefly stated facts of the case are that the assessee filed return of income on 15/10/2010 declaring total income ofRs.8,80,730/-. The case was selected for the scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short ‘the Act’) was issued and complied with. The Assessing Officer observed that share application money along with share premium of Rs.1,15,00,000/- from following 3 parties was received by the assessee during the year under consideration:
2.1 The Assessing Officer asked the assessee to produce principal officers of the above share applicant companies but the assessee failed to produce them. The Assessing Officer issued summon under section 131 of the Act at the addresses provided asking the principal officers of the companies to attend before him. However, the summons returned unserved in case of 2 companies. In case of M/s Arrow Equity Private Limited though the summon did not return, however no one attended on behalf of the said company. Subsequent to the date for appearing before the Assessing Officer, documents containing Ledger Accounts of the assessee in their books, copy of bank statement of relevant period, copy of the balance sheet and profit and loss account etc. related to these companies were received in the office of the Assessing Officer. In view of the facts, the Assessing Officer, was of the opinion that the assessee has failed to discharge its onus under section 68 of the Act. The Ld. Assessing Officer relied on the decision of the Hon’ble Delhi High Court in the case of CIT Vs. NR Portfolio Private Limited, (2013) 214 Taxman 0408 and CIT Vs. Nipun Builder Private Limited  350 ITR 407 and made addition. of Rs.1,15,02,000/-. On further appeal, the Ld. CIT(A) observed as under:
“6.5. Before me in appellate proceedings, the appellant stated that the companies M/'s Golden Equity (P) Ltd. and Tavishi Holdings (P) Ltd. had changed their address. It is important to note that the appellant at no point of time has stated that the share appellants can be produced.
6.6. The documents produced before the AO were shown to me. From the document, I find that the appellant has not given copies of its bank account or given cheque details to show that the share capital was given out of its corpus and that enough funds were available in the account to give towards share capital. The creditworthiness of the share Applicants is not proved nor the genuineness of the transaction.
I am quoting several case laws below which are all applicable on the facts of the case and which support my decision.
6.7 I shall now quote Sec. 68:
“Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sum so credited maybe charged to income tax as the income of the assessee of that previous year."
6.8. Thus from the plain reading of the section it is seen that if there is any amount which is found credited in the books of the appellant and the appellant does not offer any explanation about the nature and source of the amount so credited or the explanation offered by the appellant is not satisfactory in the eyes of the AO, the sum so credited may be charged to income tax as income for that years.
6.9. Section 68 is very widely worded and the AO is not precluded from making an enquiry as to the nature and source of a sum credited in the books of account of the appellant company even if the same is credited as receipt of share application money. Where, therefore, an appellant company represents that it has issued shares on receipt of share application money, then the amount so received would be credited in the books of account of the appellant. In such a case, the AO would be entitled to enquire, and it would indeed be his duty to do so, whether the alleged shareholders do in fact exist or not.”
2.2 The Ld. CIT(A) further relied on the following decisions: