2022 (8) TMI 204 - AT - Income Tax

Addition u/s 68 - addition under share application money and declaring the same as unsecured loan - addition made as the assessee has not discharged the onus - CIT-A deleted the addition - HELD THAT - The assessee has produced details of notarized confirmation, ITRs and also the bank statement evidencing the payment to assessee company in respect of Mr. Hardeep Singh Nagra, Hrbinder Singh Athwal, Sh. Anil Shama, Sh. S. P. Dham, Syed Arshad. As also seen that the above named share holders, were holding the shares in assesses company even before the year under consideration and such shareholding forms part of opening balance of the Assessee as found by the CIT (A), which has not been disputed by the DR. Further, the identity of above assets, genuineness and creditworthiness had also been accepted in those years. Therefore in our opinion, the assessee has produced enough supporting evidence to substantiate the genuineness of the creditors and has successfully discharge its onus. In so far as, Mr. Syed Arshad is concerned, the said transaction is between the shareholders inter-se, such transfer has not resulted any increase in the share capital nor resulted in any fresh infusion of funds and the transaction has got no relation to the assessee company and such transaction does not resulting in any amount being credited in the Assessment Year 2008-09 in the books of accounts of the Company. AO has committed an error in disallowing the share application money in the name of Mr. Syed Arshad, which has been rightly deleted by the CIT (A). - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of share application money
2. Admission of fresh evidence by CIT(A)

Disallowance of Share Application Money:
The Revenue filed an appeal against the orders of the Ld. Commissioner of Income Tax (Appeals) for the assessment year 2008-09. The Assessing Officer had made additions to the total income of the assessee, engaged in car rental services, including disallowance of share application money. The CIT(A) partly allowed the appeal by deleting the addition of Rs. 4,38,86,460 related to share application money. The Revenue challenged this deletion, arguing that the assessee failed to provide sufficient evidence to substantiate the genuineness of the creditors. The Revenue contended that the CIT(A) erred in admitting fresh evidence submitted by the assessee. The Revenue's grounds for appeal highlighted the lack of supporting evidence from the assessee to justify the deletion of the addition.

Admission of Fresh Evidence by CIT(A):
The Revenue contended that the CIT(A) erred in admitting fresh evidence submitted by the assessee, emphasizing that the assessee failed to produce enough supporting evidence to substantiate the genuineness of the creditors. The Revenue argued that despite repeated opportunities provided to the assessee to submit evidence, no satisfactory proof was presented. On the other hand, the assessee's representative defended the CIT(A)'s decision, stating that detailed notarized confirmations, income tax returns, and bank statements of the shareholders were provided to support the genuineness of the transactions. The representative argued that certain transactions were between shareholders and did not result in an increase in share capital or fresh infusion of funds, justifying the deletion of the addition by the CIT(A).

In the judgment, the Tribunal analyzed the evidence presented by both parties. The Tribunal noted that the CIT(A) admitted additional evidence produced by the assessee and considered it in reaching a decision. The Tribunal observed that the assessee had provided notarized confirmations, income tax returns, and bank statements of the shareholders, demonstrating the genuineness of the transactions. The Tribunal also highlighted that certain shareholding existed before the relevant assessment year, forming part of the opening balance, and the identity, genuineness, and creditworthiness of the shareholders had been accepted in previous years. The Tribunal concluded that the assessee had presented sufficient supporting evidence to establish the genuineness of the creditors and had fulfilled its burden of proof. Additionally, the Tribunal determined that certain transactions, like those involving Mr. Syed Arshad, did not impact the assessee's income for the assessment year in question. Consequently, the Tribunal dismissed the Revenue's appeal, finding no merit in the grounds raised and upholding the CIT(A)'s decision to delete the addition related to share application money.

The judgment, delivered by the ITAT Delhi, emphasized the importance of providing substantial evidence to substantiate claims during assessment proceedings. It highlighted the significance of considering all available evidence, including additional documentation, to arrive at a just conclusion. The Tribunal's detailed analysis of the evidence presented by both parties underscored the necessity for thorough documentation to support financial transactions and decisions, ultimately shaping the outcome of the appeal.