×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.
This appeal by the assessee is directed against the order dated 18.12.2017 of ld. CIT (A)-2, Udaipur for the assessment year 2012-13. The assessee has raised the following grounds :-
“ 1. In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of the ld. AO in adding a sum of Rs. 1,14,91,500/- as unexplained cash credit u/s 68 of the Income Tax Act, 1961. The action of the ld. CIT (Appeals) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 1,14,91,500/-.
2. The assessee craves its right to add, amend or alter any of the grounds on or before the hearing.”
2. The assessee is a private limited company and engaged in the business of manufacturing and trading of copper wire and strips. The assessee filed its return of income on 30.09.2012 declaring total income of Rs. 10,75,533/-. During the scrutiny assessment proceedings, the AO noted that the assessee company has received share capital at very high premium from various concerns based at Calcutta. The details of the share applicants, their addresses and share application money received by the assessee as reproduced by the AO at page 5 are as under :-
To ascertain the creditworthiness and identity of the investors and genuineness of the transaction, the AO asked the assessee to produce the Directors of the above companies for examination. The assessee could not produce the directors for examination. The AO then issued notice under section 133(6) and called information from the companies. The notices issued under section 133(6) in respect of the companies were stated to have been received back undelivered. The replies from five companies were received by the A.O. along with some information. The AO noted that the returned income of the five companies is very less in comparison to the investment made by them in the shares of the assessee. Thus the AO has doubted the creditworthiness and genuineness of the transaction. The AO has also examined the Audit Reports of those five companies and found that there are huge non-current investment by these companies shown in the Balance Sheets but not having any income from those investments. Thus the AO observed that the investments must have been made with the motive to earn profit but when no income is earned then the same cannot be treated as genuine investment. Accordingly, the AO rejected the assessee’s explanation and evidence produced in support of the claim of proving the identity and creditworthiness of the applicants and genuineness of the transactions and consequently made the addition of the entire share application money of Rs. 1,14,91,500/- under section 68 of the IT Act. The assessee challenged the action of the AO before the ld. CIT (A) but could not succeed as the ld. CIT (A) after considering the notice issued by the AO under section 133(6) received back unserved held that the assessee has failed to discharge its onus to prove the identity, creditworthiness of the creditor and genuineness of the transaction.
3. Before us, the ld. A/R of the assessee has submitted that the assessee received share capital from 13 applicants, out of which 6 are individuals and 7 arecompanies. The ld. A/R has referred to the assessment order and submitted that though the AO has mentioned that the notices issued under section 133(6) were received back unserved, however, no details of date of notice and the parties to whom the notices were issued and received back are given. A very vague statement has been made at para 6 of the order. The ld. CIT (A) has given the details of the notices issued by the AO and also reproduced the copies of the returned envelopes in the impugned order. However, all these facts and records were not confronted with the assessee either during the assessment proceedings or during the appellate proceedings. The ld. A/R has further pointed out that the AO has given the details of the share applicants with heir addresses as provided by the assessee at page 5 whereas the notices were issued at wrong address. He has referred to the notices issued to M/s. Goodview Vintrade Pvt. Ltd. wherein the address written on the envelope is a wrong address at : 64, Saklat Place, 4th Floor, Kolkata-700072 whereas the correct address as provided by the assessee is : 6A, 4th Floor, Saklat Place, Kolkata-700072. The ld. A/R has referred to page no. 28 of the Paper Book to show that the correct address as given by the assessee is different. The assessee was very much available with the AO as per the ITR of the said company. However, the AO has issued the notice at wrong address. Similarly, in case of M/s. Trishna