2023 (8) TMI 277 - AT - Income Tax

Addition u/s 68 - bogus share capital - HELD THAT - As assessee had failed to prove either before the A.O. or before the CIT(A) regarding the genuineness of transaction relating to fresh share capital of Rs. 5,00,000/-. Apart from the same, there is no material before us to show that the transaction relating to fresh share capital are genuine. Thus, we find no error or infirmity the order of the CIT(A), accordingly, the grounds of Appeal of the assessee are dismissed.

Summary

Issues Involved:
1. Legality of additions made outside the search material u/s 153A.
2. Tenability of the order due to the group's liquidation status.
3. Contradiction in the assessment of the investment as genuine by the same A.O.

Summary:

Issue 1: Legality of Additions Made Outside the Search Material u/s 153A
The assessee contended that the Ld. CIT(A) erred in confirming the addition made by the A.O. consequent upon the search carried out on 01.06.2012, arguing that assessments framed u/s 153A should be based on incriminating material found during the search. The Tribunal found that the assessee failed to file any return of income in compliance with the notice issued u/s 153A and other subsequent notices. The A.O. completed the assessment based on information available on record, including data from a hard disc seized during the search, and made an addition of Rs. 5,00,000/- u/s 68 as unexplained share capital. The Tribunal upheld the CIT(A)'s decision, stating that the assessee did not discharge its onus to prove the genuineness of the share capital transaction.

Issue 2: Tenability of the Order Due to the Group's Liquidation Status
The assessee claimed that the group company was under liquidation, and the records were inaccessible, which hindered their ability to produce evidence before the CIT(A). The Tribunal noted that despite multiple opportunities, the assessee did not furnish any details or evidence to substantiate their claims. The Tribunal found that the A.O. had sufficient information from the MCA site and the hard disc seized during the search to make the addition. The Tribunal concluded that the assessee's liquidation status did not justify the failure to comply with the notices and provide the necessary details.

Issue 3: Contradiction in the Assessment of the Investment as Genuine by the Same A.O.
The assessee argued that the investment made by Shri Mahdoom Bava Bahrudeen Nooral in the assessee company was held as genuine in his assessment, so it could not be termed as unexplained in the assessee's case. The Tribunal found no material to show that the transaction relating to fresh share capital was genuine. The Tribunal upheld the CIT(A)'s decision, stating that the assessee failed to prove the genuineness of the transaction and dismissed the grounds of appeal.

Conclusion:
The Tribunal dismissed the appeal, confirming the addition of Rs. 5,00,000/- u/s 68 as unexplained share capital and found no error or infirmity in the order of the CIT(A). The initiation of penalty u/s 271(1)(c) and 271(1)(b) was deemed premature as no order had been passed by the A.O. in this regard. The appeal was dismissed in its entirety.