2016 (5) TMI 1422 - HC - Income Tax

Addition u/s 68 - unaccounted money belonging to the assessee company - Held that - AO has made the addition on suspicion which is based on the statements of third party Shri Aseem Kumar Gupta, admittedly, recorded in the back of the assessee. It has come on record that the share application money of ₹ 50,00,000/- was received from Moderate Credit Corporation Ltd., a listed company. It is not disputed before this court that the investment made was received by account payee cheque and the same was refunded by an account payee cheque when the company dropped its project. In the considered opinion of this court, in absence of any cogent evidence on record establishing that the money shown to have received as share application money, was as a matter of fact, unaccounted money belonging to the assessee company, the finding arrived at by the AO, which is based on suspicion, has rightly been held not sustainable in the eyes of law. - Decided in favour of assessee

Summary

Issues:
Appeal against ITAT order deleting addition under Section 68 of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the ITAT order that dismissed the Revenue's appeal against the CIT(A) order deleting the addition of ?75,00,000 made by the AO under Section 68 of the Income Tax Act, 1961. The AO had added the amount as the share application money received by the assessee company, suspecting it to be unaccounted money. The AO's decision was based on the statements of a third party, Shri Aseem Kumar Gupta, recorded behind the back of the company.

The CIT(A) allowed the appeal by the assessee, noting that the investment and refund of the share application money were made through regular banking channels and were verifiable from the appellant company's bank accounts. The CIT(A) found no evidence to prove that the money received was unaccounted for or that any cash transactions occurred between the assessee company and the share applicant company. Consequently, the addition made by the AO was ordered to be deleted.

The ITAT upheld the CIT(A)'s decision, stating that the AO's addition was based on suspicion and lacked concrete evidence to prove that the share application money was unaccounted for. The ITAT found the CIT(A)'s decision to be factual and not capricious or perverse. Therefore, the High Court concluded that no substantial question of law arose for consideration in the appeal and dismissed it.

In summary, the High Court held that the addition made by the AO was not sustainable in the eyes of the law as there was no concrete evidence to establish that the share application money was unaccounted for. The decision of the CIT(A), affirmed by the ITAT, was found to be based on facts and not erroneous. Consequently, the appeal against the ITAT order deleting the addition under Section 68 of the Income Tax Act was dismissed.