2014 (7) TMI 1103 - AT - Income Tax

Unexplained income - Assessee was unable to explain the share application money received by it - Exemption to Scheduled Tribe of North Eastern Region - Exemption under section 10(26) - Held that - A perusal of the facts in the case of Shri Motilal Jain and Shri Gulab Chand Jain shows that before the assessing authority in the course of original assessment proceedings, one balance-sheet had been produced. In the course of the assessment proceedings under sect ion 143(3) read with section 263, which is the assessment under challenged, another balance-sheet had been produced. - In respect of Smt. Preety Dkhar and Smt. Phool Dkhar, though both have stated that they are Tribal of North East Region and their incomes are exempt under section 10(26) of the Act, no evidence whatsoever has been produced to substantiate any of their claims. Nothing whatsoever was produced so that they belong to Scheduled Tribe in the North East Region. Nothing has been produced to show that they had money to make the investment in the share application of the assessee. In these circumstances, the issue of the share application money in the case of Shri Gulab Chand Jain and Shri Motilal Jain is restored to the file of the Assessing Officer for re-adjudication after personal verification and examination of Shri Gulab Chand Jain and Shri Motilal Jain. In respect of the addition deleted by the ld. CIT(Appeals) in the case of Smt. Preety Dkhar and Smt. Phool Dkhar, the order of the ld. CIT(Appeals) is reversed and that of the Assessing Officer restored in so far as no evidence whatsoever has been produced to show that Shri Preety Dkhar and Smt. Phool Dkhar belong to Scheduled Tribe of North Eastern Region or that they had sources to make the investment in share application. - Decided partly in favour of Revenue.

Summary

Issues Involved:
Appeal against order of ld. Commissioner of Income Tax (Appeals) regarding share application money received by the assessee from four persons for the assessment year 2000-01.

Detailed Analysis:

1. Share Application Money Received:
The appeal was filed by the revenue challenging the order of the ld. Commissioner of Income Tax (Appeals) concerning the share application money received by the assessee from four individuals. The revenue contended that the share application money was received from individuals based in Guwahati, and an enquiry was conducted by the JDIT (Investigation) to verify the sources of funds of these individuals. The investigation revealed that two individuals were low-paid employees, and the other two claimed exemption under section 10(26) of the Income Tax Act. The ld. CIT(Appeals) deleted the addition in the case of two individuals, citing lack of evidence to prove their investments were not from their own funds.

2. Arguments and Counter-Arguments:
During the proceedings, the revenue argued that the share application money was bogus, as the addresses of the share applicants were from Guwahati, and all four individuals responded to letters sent to different addresses from Guwahati. On the other hand, the assessee produced evidence before the ld. CIT(Appeals) to support the sources of funds, including confirmation from the companies involved. The ld. CIT(Appeals) accepted the evidence presented by the assessee and deleted the addition made by the assessing officer.

3. Decision and Rationale:
Upon considering the submissions, the Tribunal noted discrepancies in the evidence presented by the parties. In the case of two individuals, discrepancies were found in the balance sheets produced during the assessment proceedings. Additionally, no concrete evidence was provided to substantiate the claims of exemption under section 10(26) for the other two individuals. As a result, the Tribunal partially allowed the appeal of the revenue, restoring the issue of share application money in the case of two individuals for re-adjudication and reversing the deletion made by the ld. CIT(Appeals) for the other two individuals due to lack of evidence.

This detailed analysis of the legal judgment highlights the issues involved, the arguments presented by the parties, and the Tribunal's decision based on the evidence and legal provisions cited during the proceedings.