9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (5) TMI 853 - AT - Income TaxAddition u/s 68 - unexplained share capital addition - HELD THAT - It is not in dispute that both the lower authorities decline to accept the assessee's share capital in involving 42 investors. It is an admitted fact that of these 42 parties have duly filed confirmations both in the course of assessment as well as remand proceedings. The assessee has also submitted a detailed paper book before us running into more than 200 pages comprising of all the details of the said 42 investor parties. This is not the Revenue's case that the assessee had failed to prove identity of investors in the course of factual verification. The Assessing Officer as well as CIT(A) have observed that the said investors land holdings are very much disproportionate to the corresponding share capital money. Learned department representative failed to indicate the so called disproportionate investment qua the share capital investors' land holdings Apart from merely making sweeping remarks, neither the Assessing Officer nor the CIT(A) have examined the assessee's detailed evidences as well as the confirmations from all the remaining parties on merits. We thus conclude in this factual matrix that the impugned unexplained share capital addition made in respect of the assessee's 42 investor parties does not deserve to be upheld. The same is directed to be deleted for this precise reason only. - Decided in favour of assessee.
Issues Involved:
1. Addition of unexplained share capital under Section 68 of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Addition of unexplained share capital under Section 68 of the Income Tax Act, 1961: The primary issue in this case revolves around the addition of unexplained share capital amounting to ?1,15,66,200 under Section 68 of the Income Tax Act, 1961. The assessee claimed to have raised this amount from various investors/cotton growers as part of its regular business activities involving the processing and sale of agro products, including cotton. The Assessing Officer (AO) questioned the genuineness of this share capital during the assessment proceedings, particularly focusing on 42 investors whose investments appeared disproportionate to their land holdings. As a result, the AO treated the sum as unexplained share capital under Section 68 of the Act. The assessee appealed against this addition before the Commissioner of Income Tax (Appeals) [CIT(A)], presenting additional evidence to support its claim. The CIT(A) directed the field authorities to verify these additional documents. The AO reiterated his earlier findings in a remand report, emphasizing that the investments made by the 42 parties were disproportionate to their land holdings. Consequently, the CIT(A) confirmed the addition, stating that the share applicants' sources of income were not adequately proven, and their creditworthiness was not established due to the lack of PAN and other supporting evidence. The assessee contested this decision, arguing that the AO had not disputed the receipt of the application money from the 42 investors but had only focused on the disproportionate land holdings. The assessee provided various documents, including a list of shareholders, copies of land pattadar passbooks, and confirmation letters from the investors, to establish the identity, creditworthiness, and genuineness of the transactions. The assessee also cited several judicial precedents to support its case, including decisions from the ITAT Hyderabad and the Supreme Court of India. Upon careful consideration of the facts, assessment order, remand report, and submissions, the appellate tribunal concluded that the lower authorities had failed to provide concrete evidence to disprove the genuineness of the share capital. The tribunal noted that the identity of the investors was not in dispute and that the assessee had furnished detailed evidence, including confirmations from the investors. The tribunal found that the AO and CIT(A) had merely made sweeping remarks without examining the detailed evidence provided by the assessee. In conclusion, the tribunal directed the deletion of the unexplained share capital addition of ?1,15,66,200, stating that the addition did not deserve to be upheld based on the provided factual matrix. As a result, the assessee's appeal was allowed, and all other pleadings were rendered infructuous. Order Pronouncement: The order was pronounced in the open court on 23rd April 2021, allowing the assessee's appeal.
|
