2023 (1) TMI 167 - AT - Income Tax

Addition u/s 68 - unexplained cash credits of share capital and share premium received during the year - HELD THAT - The company having secured such huge magnitude of share capital and share premium must be having proper business set up. Statutory notice u/s. 143(2) of the Act duly served upon the assessee and when the case of the assessee was selected for scrutiny, there was no proper compliance. The assessee failed to produce the alleged parties who had subscribed to the equity shares of the assessee company and did not file any documentary evidence to explain the share capital and share premium of Rs. 11.72 cr. received by it during the year. Assessee failed to file necessary details to explain the source of alleged sum and also unable to prove identity and creditworthiness of the cash creditors as well as genuineness of the transaction. Assessee company has miserably failed to explain the source of alleged share capital and share premium. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details at any stage. Consistently escaping from appearing/producing the documents and alleged parties before the AO and the appellate authority( CIT-A) and non appearance before us indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium and, therefore, the provisions of section 68 have rightly been invoked by ld. AO treating the alleged sum as the unaccounted income of assessee, which seems to be routed in the books through bogus/accommodation entry in the form of share capital and security premium. Therefore, we find no infirmity in the finding of the ld. CIT(A) confirming the addition u/s. 68 - This ground of assessee s appeal is dismissed. Disallowance u/s. 14A - HELD THAT - On perusal of order passed u/s.144 of the Act, we notice that said disallowance was made as there was no satisfactory submission/explanation. We thus fail to find any infirmity in the findings of the ld. CIT(A). Therefore, we dismiss raised by the assessee.

Summary

Issues:
1. Ex parte order due to non-appearance of the assessee.
2. Addition of Rs. 11,72,00,000/- u/s. 68 of the Income Tax Act.
3. Disallowance of expenses amounting to Rs. 14,147/- u/s. 14A of the Act.

Issue 1: Ex parte order due to non-appearance of the assessee:
The appellant's appeal for the assessment year 2012-13 was directed against the order passed by the Commissioner of Income-tax, Appeals. Despite multiple hearing notices, the appellant did not appear, leading to an ex parte decision by the Tribunal to adjudicate the appeal based on available material and with the assistance of the Departmental Representative. The appellant's absence was deemed as lack of interest in prosecuting the appeal, resulting in the dismissal of the appeal due to non-compliance.

Issue 2: Addition of Rs. 11,72,00,000/- u/s. 68 of the Income Tax Act:
The appellant challenged the addition made by the Assessing Officer under section 68 of the Act for unexplained share capital and share premium. The Tribunal observed discrepancies in the appellant's ability to procure substantial share capital and premium while offering minimal income. Lack of cooperation, failure to produce necessary evidence, and inability to prove the source and genuineness of the funds raised suspicions. The Tribunal upheld the addition, invoking section 68, as the appellant failed to provide a plausible explanation, indicating possible involvement in unaccounted income through bogus entries.

Issue 3: Disallowance of expenses amounting to Rs. 14,147/- u/s. 14A of the Act:
The Tribunal noted that the disallowance under section 14A was justified due to the lack of satisfactory submissions or explanations from the appellant. The decision to dismiss the appellant's challenge on this ground was based on the absence of compelling reasons to overturn the Commissioner's findings. Therefore, the Tribunal upheld the disallowance, as the appellant failed to provide sufficient evidence or reasoning to support their claim.

In conclusion, the Tribunal dismissed the appellant's appeal, upholding the ex parte order due to non-appearance, confirming the addition of Rs. 11,72,00,000/- under section 68 of the Act, and sustaining the disallowance of expenses amounting to Rs. 14,147/- under section 14A. The decision was based on the lack of cooperation, failure to provide credible explanations, and the absence of substantial evidence to substantiate the appellant's claims.