2014 (1) TMI 1629 - AT - Income Tax

Disallowance u/s 68 - share application money - Held that - There is a dazzling line drawn between the cases in which addition u/s 68 on account of share application money etc. can and cannot be made. Where the AO properly enquires into the matter and reaches the conclusion on appreciation of the evidence adduced by the assessee that the transactions were not genuine, the addition is called for. If on the other hand, the AO simply brushes aside the assessee s explanation without any cogent reason and makes the addition in a mechanical manner, no addition is warranted. In our considered opinion, the extant case falls under the second category. Here also, the Assessing Officer did not make any effort to enquire into the matter. No summons u/s 131 were issued to the share applicants. No enquiry worth the name was conducted, but the addition was made in a routine manner. Respectfully following the judgment in Fair Finvest Ltd. (2012 (12) TMI 170 - DELHI HIGH COURT), we hold that the ld. CIT(A) was fully justified in deleting this addition. Initiation of the re-assessment proceedings - Assessing Officer received information from DI (Investigation) about the accommodation entries received by the assessee. Initially, it was argued by the ld. AR that all the necessary details in this regard were furnished to the Assessing Officer who examined the issue at length before passing the order u/s 143(3). On being called upon to invite our attention towards such original order passed u/s 143(3), the ld. AR expressed his inability by stating that he did not have a copy of such order. It can be seen from our file also that no copy of such assessment order has been filed. In such a situation, we are left with no option but to presume that either no assessment order u/s 143(3) was originally passed or if at all any such assessment order was passed, no enquiry about such share application money was conducted. This brings us to a position that the Assessing Officer initiated the present reassessment proceedings on the basis of specific information received from DI(Inv.) about the assessee receiving accommodation entries. In such circumstances, there can be no fetters on the power of the Assessing Officer to initiate re-assessment proceedings. - Decided partly in favour of Revenue.

Summary

Issues:
1. Delay in filing Revenue's appeal
2. Deletion of addition of share application money
3. Initiation of re-assessment proceedings
4. Charging of interest u/s 234 B

1. Delay in filing Revenue's appeal:
The Revenue's appeal was delayed by two days, but a condonation application was submitted and accepted. The appeal was admitted for disposal on merits.

2. Deletion of addition of share application money:
The appeal focused on the deletion of an addition of Rs. 15,52,725 made by the AO under section 68 for share application money. The assessee received Rs. 31 lacs as share application money, duly disclosed in the balance sheet. All amounts were received through demand drafts or cheques, reflected in the bank account, with details provided. The CIT(A) deleted the addition, noting the money was reflected in the books and all relevant details were submitted. The Tribunal agreed, emphasizing the genuineness of the transactions and the assessee's compliance with section 68 requirements. The AO's lack of enquiry led to the deletion of the addition.

3. Initiation of re-assessment proceedings:
Re-assessment was initiated based on information about accommodation entries received by the assessee. The AO's lack of enquiry during the original assessment raised concerns. The Tribunal upheld the initiation of re-assessment proceedings, emphasizing the power of the AO to act on specific information received.

4. Charging of interest u/s 234 B:
The ground related to charging interest u/s 234 B was considered consequential and was partly allowed in favor of the assessee.

In conclusion, the Tribunal dismissed the Revenue's appeal, upheld the deletion of the addition of share application money, supported the initiation of re-assessment proceedings, and partly allowed the assessee's contention on the charging of interest u/s 234 B. The judgment provided clarity on the necessity of proper enquiry by the AO and compliance with legal requirements in such cases.