2021 (3) TMI 506 - AT - Income Tax

Addition u/s 68 - unexplained share application money received - HELD THAT - During the course of assessment proceedings assessee has filed various evidences such as confirmations from these parties income tax returns annual accounts and bank statements to prove the genuineness of the transactions and identity and creditworthiness of the investors however the Assessing Officer has not conducted any further inquiry to bring on record evidences to the contrary or to disprove the evidences as filed by the assessee. We note that though the Assessing Officer has issued show cause notices under Section 133(6) of the Act which was returned unserved the assessee has filed confirmations along with evidences of three of the investors before the Assessing Officer. We have perused the order of the learned CIT(A) carefully and find that the learned CIT(A) has dealt with each and every relevant aspect of the matter in detail and as such the learned CIT(A) has rightly deleted the addition on the ground that the Assessing Officer has relied upon the statement of Shri Pravin Kumar Jain which has been retracted later and therefore the same cannot be the basis for addition under Section 68 - Decided against revenue.

Summary

Issues:
Deletion of unexplained share application money under Section 68 of the Income Tax Act, 1961.

Analysis:
The Revenue appealed against the deletion of ?1,90,00,000 as unexplained share application money received by the assessee for Assessment Year 2009-10. The case was reopened based on information from the Investigation wing regarding bogus share application entries. The Assessing Officer added ?1,90,00,000 under Section 68 of the Act, citing failure to prove identity, creditworthiness of lenders, and genuineness of the transaction. In the appellate proceedings, the CIT(A) noted that the assessee provided all necessary documents to establish the identities, creditworthiness of investors, and genuineness of transactions. The CIT(A) highlighted that the Assessing Officer's reliance on a retracted statement and lack of evidence to disprove the genuineness of transactions were unjustified. Citing relevant case laws, the CIT(A) ruled in favor of the assessee, leading to the deletion of the addition.

The ITAT Mumbai found that the assessee received ?1,90,00,000 as share application money from four parties. Despite the assessee submitting confirmations, income tax returns, annual accounts, and bank statements to prove the transactions' authenticity, the Assessing Officer failed to provide contradictory evidence. The ITAT noted that the CIT(A) thoroughly addressed all aspects and correctly considered the unreliability of the retracted statement in justifying the deletion. Upholding the CIT(A)'s decision based on relevant case laws, the ITAT dismissed the Revenue's appeal, affirming the deletion of the addition.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the addition of ?1,90,00,000 as unexplained share application money. The ITAT emphasized the lack of contradictory evidence from the Assessing Officer despite the assessee's submission of substantial proof. Relying on the CIT(A)'s detailed analysis and relevant legal precedents, the ITAT dismissed the Revenue's appeal, affirming the deletion of the disputed amount.