2012 (12) TMI 1237 - AT - Income Tax

Summary

Issues Involved:
1. Addition u/s 68 for share application money.
2. Ignoring submissions and evidence by CIT(A).
3. Applicability of CIT Vs. Orissa Corporation Pvt. Ltd.
4. Applicability of Lovely Export case.
5. Right to amend grounds of appeal.

Summary:

1. Addition u/s 68 for share application money:

The assessee received share application money of Rs. 5,00,000/- from three companies: M/s Shimmer Marketing Pvt. Ltd. (Rs. 2,00,000/-), M/s Onyx Exim & Sales Pvt. Ltd. (Rs. 1,00,000/-), and M/s Shivam Softech Ltd. (Rs. 2,00,000/-). The AO added this amount u/s 68, citing failure to establish the creditworthiness and genuineness of the transactions. The AO noted that the bank statements of these companies showed meager balances, and the directors were not produced for examination.

2. Ignoring submissions and evidence by CIT(A):

The CIT(A) upheld the AO's addition, stating that the assessee failed to provide sufficient evidence to prove the identity, creditworthiness, and genuineness of the transactions. The CIT(A) emphasized that mere payment by account payee cheque does not make a transaction genuine. The CIT(A) relied on various case laws, including CIT v Durgaprasad More and ITO v K. Jayaraman, to support the decision.

3. Applicability of CIT Vs. Orissa Corporation Pvt. Ltd.:

The assessee argued that the decision in CIT Vs. Orissa Corporation Pvt. Ltd. should apply, where the Supreme Court held that if the assessee provides full particulars of creditors, the onus shifts to the Revenue. However, the CIT(A) distinguished this case, noting that the assessee failed to establish the identity and creditworthiness of the creditors.

4. Applicability of Lovely Export case:

The CIT(A) also distinguished the Lovely Export case, stating that it involved a public issue, whereas the present case involved private placement. The CIT(A) noted that in Lovely Export, the details were furnished to the AO, who failed to investigate further, whereas in the present case, the assessee did not provide sufficient details or produce the directors of the investing companies.

5. Right to amend grounds of appeal:

The assessee mentioned the right to make, add, delete, modify, or alter any grounds of appeal at the time of hearing. However, no additional grounds were raised during the hearing.

Conclusion:

The appeal was dismissed as the assessee failed to establish the identity, creditworthiness, and genuineness of the transactions related to the share application money. The CIT(A)'s decision to uphold the addition u/s 68 was found justified based on the evidence and case laws cited.