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2024 (5) TMI 233 - HC - Income TaxAddition u/s 68 - unexplained share application money - genuineness and creditworthiness of the share capital subscription challenged - ITAT deleted addition - Revenue has challenged the order of the ITAT as it failed to appreciate that the Director, Tushar Kumar, had clearly admitted the receipt of the accommodation entries by the respondent-assessee and the respondent-assessee had failed to substantiate genuineness and creditworthiness of the share capital subscription - HELD THAT - With regard to the first contention relating to the genuineness and creditworthiness of the share capital subscription, the ITAT has noticed that the CIT(A) had duly recorded its satisfaction relating to identity, genuineness and creditworthiness of the amounts received along with confirmations, address, cheque number and PAN and therefore, the ITAT declined to interfere with the order of CIT(A) in deleting the addition. We may allude to the order of ITAT, wherein, while affirming the deletion of additions carried out by CIT(A) towards unexplained share application money under Section 68 held that CIT (A) has duly satisfied himself as the assessee and the parties could provide documents relating to identity, genuineness and creditworthiness of the amounts received along with confirmations, address, cheque number and PAN. Hence, we decline to interfere with the order of the ld. CIT (A). Finance received from M/s Arha Buildcon Pvt. Ltd., the ITAT, in our view, has correctly delved into the facts to come to the conclusion that there have been direct finance arrangements between M/s Arha Buildcon Pvt. Ltd. and the respondent-assessee. ITAT had rendered a finding of fact with respect to the statement and held it to be factually incorrect observing that the bank statement of the assessee reflects the amounts received and paid with regard to M/s Arha Buildcon Pvt. Ltd. Receipt from each of 48 flats concerning Bhagwanti CGHS ITAT has made a categorical finding that the addition was made on theoretical premise on the basis of presumptions and there was no evidence gathered, collected or investigated by the Revenue to support the addition. ITAT has examined the facts in great detail. It may be noted that the ITAT is the final arbiter of the facts and appeal can be entertained by the High Court only if any substantial question of law arises. A conspectus of the proposed substantial questions of law signify that they only relate to the findings of fact and the order of the ITAT cannot be construed in any manner to be ex-facie perverse. Thus no substantial question(s) of law arises for our consideration. Unexplained investment in properties - Cash component of the consideration paid by assessee for Two projects - ITAT deleted addition - HELD THAT - ITAT has held that there was no scope to treat the amount as paid in cash to be brought under unexplained investment under Section 69 of the Act and came to a conclusion that there was no material to corroborate the addition as made by the AO. Addition of unexplained investment in Kashipur land for the project designated as GTM Kashipur-II, the ITAT, in our view, has correctly delved into the facts to come to the conclusion that the nature and contents of the seized material do not reflect any unexplained investment in the land purchased at Kashipur and the addition has been made on a presumptive basis. Amounts received from Haryana CGHS and the alleged illegal link between the respondent-assessee and Haryana CGHS, the ITAT, after analysing the facts has held that there was no link between the respondent-assessee and Haryana CGHS and it was not a benami concern of the respondent-assessee company. Undisclosed investment in Wings CGHS for taking its control via an MoU, the ITAT, after carefully analysing the facts, held that the MoU cannot be treated as executed since during the search itself, it was conveyed that Tushar Kumar did not want to enter into an agreement with Ajay Jain as per the MoU and the said MoU was also not signed by Tushar Kumar. Unexplained investment in the shares of M/s. Sargam Estate Pvt. Ltd ., the ITAT concurred with the findings as returned by the CIT(A) in deleting the additions as share capital remained constant as at 31.03.2007 and as at 31.03.2006. The share application money as at 31.03.2006 was Rs. 32,18,000/- which was refunded to the assessee company after receipt of fresh share application money of Rs. 53,86,000/- by M/s Sargam Estate Pvt. Ltd. Instead of enquiring, the source of application money, the AO brought to tax the amount of share application money refunded to the assessee by M/s Sargam Estate Pvt. Ltd. Hence, the addition made has been rightly deleted by the ld. CIT (A). Unexplained advertisement expenditure , ITAT again concurred with the findings rendered by the CIT(A) in deleting the additions as the total expenditure debited on account of advertisement was Rs. 3.19 Cr. as against Rs. 2.85 Cr. alleged by the Assessing Officer. Undisclosed investment in the stock of jewellery ITAT held that since there is a panchnama drawn in the case of M/s GTM Jewellery Mart Pvt. Ltd., stock inventory was made in the said company and keeping in view the fact that M/s GTM Jewellery Mart Pvt. Ltd. is a separate assessable entity, keeping in view the fact that the difference is due to difference in price but not in quantity, we hold that the addition cannot be made in the hands of the assessee in the instant year. Thus ITAT has minutely examined and marshaled the facts. It cannot be gainsaid that the proposed substantial questions of law are merely based on the findings of fact by the ITAT. The order of the ITAT on the concerned issues which stand raised before us, in our opinion, does not suffer from any perversity as claimed by the Revenue. Revenue appeal dismissed.
Issues Involved:
1. Addition on account of bogus share application money. 2. Addition on account of raising funds from Bhagwanti CGHS. 3. Addition on account of unexplained investment in properties. 4. Addition on account of unexplained investment in GTM Kashipur-II project. 5. Addition on account of undisclosed cash receipts from Haryana CGHS. 6. Addition on account of undisclosed expenditure for acquiring rights in Wings CGHS. 7. Addition on account of unexplained investment in shares of M/s. Sargam Estate Pvt. Ltd. 8. Addition on account of unexplained advertisement expenditure. 9. Addition on account of undisclosed investment in jewellery. Summary: 1. Addition on account of bogus share application money: The ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 2 crores made by the AO u/s 68 of the Income Tax Act, 1961. The ITAT found that the CIT(A) had duly recorded satisfaction regarding the identity, genuineness, and creditworthiness of the amounts received, supported by confirmations, address, cheque number, and PAN. 2. Addition on account of raising funds from Bhagwanti CGHS: The ITAT deleted the addition of Rs. 1,92,00,000/- made by the AO, stating that the addition was based on theoretical premises and presumptions without any evidence. The ITAT noted that the society confirmed the cost escalation and no evidence of payment of Rs. 4 lacs per flat to the assessee was found. 3. Addition on account of unexplained investment in properties: The ITAT found no material to corroborate the AO's addition of Rs. 3,01,00,000/- and Rs. 3,84,00,000/- for the GTM Forest and Hills Project, Dehradun. The ITAT concluded that the amounts mentioned in the seized material were mere estimates and not actual payments. 4. Addition on account of unexplained investment in GTM Kashipur-II project: The ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 90,34,300/-, finding that the land was purchased by M/s Sargam Estate Pvt. Ltd., and no evidence of cash payment by the assessee was found. The addition was based on presumptions without any supporting evidence. 5. Addition on account of undisclosed cash receipts from Haryana CGHS: The ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 1,25,00,000/-, finding no link between the respondent-assessee and Haryana CGHS. The society was a separate legal entity, and no evidence of cash payments to the assessee was found. 6. Addition on account of undisclosed expenditure for acquiring rights in Wings CGHS: The ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 1,80,00,000/-, finding that the MoU was not executed, and no evidence of cash payment by the assessee was found. The addition was based on presumptions without any supporting evidence. 7. Addition on account of unexplained investment in shares of M/s. Sargam Estate Pvt. Ltd.: The ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 34,78,000/-, finding that the share application money was refunded to the assessee, and no unexplained investment was made. 8. Addition on account of unexplained advertisement expenditure: The ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 34,65,559/-, finding that the advertisement expenses were duly recorded in the books of account and paid by account payee cheques. The AO's addition was based on incomplete consideration of the expenses. 9. Addition on account of undisclosed investment in jewellery: The ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 4,27,22,971/-, finding that the jewellery belonged to M/s GTM Jewellery Mart Pvt. Ltd., a separate assessable entity. The addition was based on the difference in valuation prices, not on the quantity of jewellery. Conclusion: The High Court found that the ITAT's findings were based on detailed examination of facts and did not suffer from any perversity. Consequently, no substantial question of law arose, and the appeals were dismissed.
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