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14-05-2019, Moira Steel, Section 68, 14A, 133(6), Tribunal Indore

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1 week 2 days ago #9443 by amit
Section - 68, 14A, 133(6)
Order Date - 14-05-2019
Favouring - Revenue
Court - Tribunal Indore
Appellant - Moira Steel Ltd
Respondent - DCIT
Citation - 519Taxpundit206
Appeal No. - ITA No.893/Ind/2016
Asstt. Year - 2007-08



The above captioned appeal is filed at the instance of assessee pertaining to Assessment Year 2007-08 and is directed against the orders of Ld. Commissioner of Income Tax (Appeals)-I (in short ‘Ld.CIT(A)’], Indore dated 25.05.2016 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 09.12.2009 framed by DCIT, Circle-1(1), Indore.

2. Assessee has raised following grounds of appeal;

Assessment Year 2000-01

1. That the learned CIT(A) erred in law and facts of the case and confirmed the addition made by Assessing Officer an account of unexplained share application money. The addition made and confirmed by CIT is wrong and illegal on the facts of the cases.

2. The appellant craves leave to add, alter and/or amend any of the ground at or before hearing.

3. Brief facts of the case as culled out from the records are that the assessee is a limited company engaged in trading and manufacturing of steel Ingots. E-return was filed on 31.10.2007 declaring NIL income after claiming set of carried forward losses. Case selected for scrutiny assessment followed by serving of notices u/s 143(2) and 142(1)(ii) of the Act. Ld. A.O noticed that during the year assessee received share application money of Rs.50,00,000/- from two companies namely Rolled Gold Industries Ltd (Rs. 20,00,000/-) and BPO Finance & Investments Pvt. Ltd (Rs.30,00,000/-). Assessee was asked to furnish necessary documents to prove the identity, genuineness and creditworthiness of the cash creditors. Submissions were made by the assessee along with the details but it could not find favour from the Ld. AO as he was of the view that the genuineness and creditworthiness of both the share applicants are not proved as they have meager fixed assets, no regular business and transactions in the bank statement reflects that maximum inflow and outflow are of amounts which have no nexus with the turnover of the companies. In view of these observations addition u/s 68 of the Act was made at Rs.50,00,000/- and disallowance was also made u/s 14A of the Act at Rs.1,66,845/-. Income assessed at Rs. NIL after allowing set off of brought forward business loss to the extent of Rs.1,35, 22,601/-. Aggrieved assessee preferred appeal before Ld. CIT(A) and partly succeeded as the disallowance u/s 14A was deleted whereas addition made u/s 68 of the Act for unexplained share application money at Rs.50,00,000/- confirmed.

4. Now the assessee is in appeal before the Tribunal raising sole issue of addition of Rs.50,00,000/- made u/s 68 of the Act for unexplained share application money received from two companies.

5. Ld. Counsel for the assessee submitted that necessary details in the form of balance sheet, share application form, Board resolution, bank statement, PAN number have been filed in the case of Rolled Gold Industries Ltd. In the case of BPO Finance & Investment Pvt. Ltd, income tax returns, share application forms, board resolution, registration certificate as NBFC, bank statement and balance sheet have been filed. These documents are sufficient enough to prove the identity, genuineness and creditworthiness of the cash creditors and therefore no addition was called for u/s 68 of the Act. Ld. Counsel for the assessee further referred to the following written submissions;

“The assessee company had received share application money at Rs. 30 Lacs and Rs. 20 Lacs respectively was received from Rolled Gold Industries Ltd & BPO Finance & Investments Pvt. Ltd. In order to satisfy the identity, genuineness and creditworthiness of these share applicants various details and documents were submitted as mentioned above. The said documents were overlooked by the AO and he passed the assessment order without even commenting on the documents submitted by assessee. And further Ld. CIT(A) also erred in facts of the case by not properly looking into the details given by assessee and commenting on the same.

It may kindly be appreciated that the assessee very well proved the identity of the assessee by submitting their PAN and Income Tax Returns. Theirgenuineness and creditworthiness were also been established through the Bank Accounts, Board Resolutions, Share Application Forms, Audited Balance Sheets, etc.

In case of Rolled Gold Industries Ltd., Ld. AO observed that the directors of the companies did not appeared personally on issue of summons. In this regards, it is submitted that though they have not appeared personally but all the documents required by them were duly furnished from time to time with the AO. They have duly filed their replies along with ITRs and final accounts which itself proves their own identity and the identity of the company as well of which they are the

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