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2016 (5) TMI 57 - AT - Income TaxAddition u/s 68 - Held that - Assessing Officer was not satisfied with the submissions of the assessee, he pointed out some discrepancy in the balance-sheet of M/s. Buniyaad Chemicals Ltd. and treated the amount of shares capital as unexplained cash credit under section 68 of the Act, and added the same to the income of the assessee. But before doing so, the Assessing Officer neither provided an opportunity of cross- examination of his witness, as was demanded by the assessee, nor he brought on record any other adverse material to controvert the evidences placed on record by the assessee. It is worth noting here that the Assessing Officer had made direct inquiries with M/s. Buniyaad Chemicals under section 133(6), in response to which confirmation was filed by the said company. But the learned Assessing Officer preferred to rely upon the statement of Mr. Mukesh Choksi and disregarded all the evidences filed by the assessee as well as evidences collected by him directly from the shareholder company which confirmed the claim of the assessee. Thus we find that in the peculiar facts and circumstances of this case, the addition made by the Assessing Officer is not sustainable as per the law and the same is directed to be deleted. - Decided in favour of assessee
Issues Involved:
1. Addition of share application money as unexplained cash credit under section 68 of the Income-tax Act, 1961. 2. Reopening of the assessment under section 147 of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Addition of Share Application Money as Unexplained Cash Credit under Section 68: Facts and Arguments: - The assessee challenged the addition of Rs. 55,25,000 as unexplained cash credit under section 68 of the Income-tax Act, 1961. - The original assessment was completed under section 143(3) on October 21, 2009, accepting the returned income. - The assessment was reopened on the grounds that the share capital receipt from M/s. Buniyaad Chemicals Ltd. was bogus. - The assessee provided detailed submissions and evidence, including bank statements, confirmation of purchase of shares, balance sheets, and other documentary evidence to substantiate the genuineness of the transactions. Assessing Officer's (AO) Position: - The AO relied on the "statement" of Mr. Mukesh Choksi, which suggested that the share capital was an accommodation entry. - The AO disregarded the evidence submitted by the assessee and treated the share capital as unexplained cash credit. Commissioner of Income-tax (Appeals) [CIT(A)] Position: - The CIT(A) upheld the AO's decision, endorsing the observations and confirming the addition. Tribunal's Analysis: - The Tribunal noted that the assessee had submitted all necessary evidence to prove the identity, creditworthiness, and genuineness of the share capital received. - The Tribunal emphasized that the AO made the addition based on a general and vague "statement" of Mr. Mukesh Choksi, without any specific reference to the assessee-company. - The Tribunal referred to several judgments, including CIT v. Lovely Exports P. Ltd. and ACIT v. Krishna Sheet Processors Pvt. Ltd., which supported the assessee's position. - The Tribunal highlighted that the AO did not provide the opportunity for cross-examination of Mr. Mukesh Choksi and did not bring any contrary evidence to negate the assessee's submissions. Conclusion: - The Tribunal found that the addition made by the AO was not sustainable as per law. - The Tribunal directed the deletion of the addition of Rs. 55,25,000 as unexplained cash credit under section 68. 2. Reopening of the Assessment under Section 147: Facts and Arguments: - The assessee argued that the reopening of the assessment under section 147 was not justified as the conditions prescribed under the section were not satisfied. Tribunal's Analysis: - Since the Tribunal provided relief on the merits of the case regarding the addition under section 68, it refrained from deciding on the issue of reopening under section 147. Conclusion: - The Tribunal did not make a specific ruling on the reopening of the assessment under section 147 due to the relief granted on the primary issue. Final Judgment: - The appeal of the assessee was partly allowed, and the addition of Rs. 55,25,000 as unexplained cash credit under section 68 was directed to be deleted. - The order was pronounced in the open court on November 30, 2015.
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