2015 (9) TMI 1732 - AT - Income Tax

Reopening of assessment u/s 147 - Unexplained share capital - HELD THAT - Reopening of the assessment, it is to be noted that AO in the reasons has mentioned a sum from 9 parties. Wherein the amount in the case of Kuberco Sales Pvt. Ltd and M/s Shriniwas Leasing Finance has been mentioned twice - the assessee has not received any share capital from M/s VR Traders and M/s Shriniwas Leasing Finance. Therefore the correct amount from five parties. This factual aspect has been confirmed by the CIT(A) and the same was not denied by the DR. This shows non-application of mind by AO at the time of reopening of the assessment and hence reopening is bad in law. Thus, the Navodaya Case will not be applicable in the present case as the assessee has given the substantial evidence during the course of original assessment along with confirmation to the AO. The same was ignored by the AO. Hence, on this issue the Ground No. 1 of the Revenue is dismissed. CIT(A) upheld the contention of the assessee that assessee has not received any share capital from M/s VR Traders and M/s Shriniwas Leasing Finance. It also held that the amount in the case of Kuberco Sales Pvt. Ltd. And M/s Shriniwas Leasing Finance has been mentioned twice. Accordingly the CIT(A) held that the disputed amount of the share capital on the basis of which addition has been made by the AO comes - CIT(A) after examination of the evidences and the various judgments further held that assessee has discharged its onus and AO has not brought any material to discredit the evidences submitted by the assessee. Hence CIT(A) rightly deleted the addition made on merit. - Decided against revenue.

Summary

Issues:
1. Reopening of assessment under section 148
2. Addition of Rs.45,00,000 as unexplained credit under section 68 of the IT Act, 1961

Reopening of assessment under section 148:
The appeal was filed by the Revenue against the order passed by CIT(A) for Assessment Year 2004-2005. The Revenue raised the issue of the correctness of the AO's action in reopening the proceedings under section 148. The assessee submitted detailed replies and evidence regarding share application money received during the year. The AO completed the assessment but later reopened it, alleging receipt of accommodation entry of Rs.45,00,000. The CIT(A) quashed the reopening, stating that the assessee had submitted sufficient evidence during the original assessment. The Tribunal found discrepancies in the AO's reasons for reopening, confirming the correct amount received and supporting the CIT(A)'s decision to dismiss the Revenue's appeal on this ground.

Addition of Rs.45,00,000 as unexplained credit under section 68 of the IT Act, 1961:
The AO added Rs.45,00,000 as unexplained credit, alleging lack of explanation from the assessee. The Revenue argued that the genuineness and creditworthiness of the capital providers were not proven, citing relevant case laws. The AR contended that the assessee had provided detailed evidence during the original assessment, challenging the applicability of certain case laws. The Tribunal examined all evidence and judgments submitted. It found discrepancies in the recorded amount and confirmed that the disputed amount was Rs.25,00,000, not Rs.45,00,000. The CIT(A) upheld the assessee's position, stating that the AO failed to discredit the evidence provided. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO. Thus, the appeal of the Revenue was dismissed.

In conclusion, the Tribunal's judgment addressed the issues of reopening the assessment under section 148 and the addition of unexplained credit under section 68 of the IT Act, 1961. The Tribunal found discrepancies in the AO's actions and confirmed the correctness of the amount received by the assessee. It upheld the CIT(A)'s decision to dismiss the Revenue's appeal based on the evidence provided by the assessee and the failure of the AO to discredit it.