2024 (6) TMI 1195 - AT - Income Tax

Addition of share capital as unexplained cash credit u/s 68 - CIT (A) arrived at a conclusion that subscriber had simply submitted the documents but did not appear for examination on oath and creditworthiness could not be proved - CIT (A) also observed that investigation of the AO was deliberately resisted by the assessee and the share subscribing companies by resorting to approach of non-compliance thus sustained the additions so made by the AO and dismissed the appeal of the assessee. HELD THAT - As none appeared to represent the assessee and substantiate the claim made by it. From the perusal of the authorities below we observe that assessee has been contesting that it had made all the submissions in support of the transaction in which additions have been made which have not been considered. It is a fact on record that notices issued for fixing the hearing have been returned unserved which have also been issued on the latest address mentioned in the letter head which was used for filing the application for adjournment dated 06.10.2023. Nothing has been placed on record by the assessee which has been claimed to be furnished before the authorities below in support of its transactions. In absence of such material we do not find any reason to interfere with the observations and findings arrived at by the authorities below. Accordingly grounds taken by the assessee are dismissed.

Issues Involved:
- Confirmation of addition of share capital as unexplained cash credit under section 68
- Doubting the value of share premium amount
- Addition under section 14A for disallowance of expenses
- Non-appearance of the assessee in the appeal proceedings

Analysis:

Confirmation of addition of share capital as unexplained cash credit under section 68:
The appeal was filed against the order of the Ld. CIT (A) confirming the addition of share capital including premium as unexplained cash credit under section 68 of the Income-tax Act, 1961. The assessee contended that all necessary details and evidences were provided to establish the identity, creditworthiness, and genuineness of the transactions. The Assessing Officer (AO) had issued notices under section 133(6) to verify the details, but the AO made the addition without substantial evidence. The Appellate Tribunal noted that the assessee failed to appear on multiple occasions, and attempts to connect with them were unsuccessful. The Tribunal, with the assistance of the Ld. Sr. DR ex parte, upheld the addition of the unexplained credit due to lack of cooperation and evidence from the assessee.

Doubting the value of share premium amount:
The Ld. CIT (A) doubted the value of the share premium amount determined by the assessee for issuing shares. The assessee argued that the provisions of section 56(2)(viib) were not applicable for the assessment year in question, and the source of source requirement under section 68 was not met. However, the Ld. CIT (A) found that the share subscribing companies were shell entities used for bogus transactions. The Ld. CIT (A) observed deliberate resistance to the investigation by the assessee and the share subscribing companies, leading to the sustenance of additions made by the AO.

Addition under section 14A for disallowance of expenses:
The AO made an addition under section 14A for disallowance of expenses amounting to Rs. 24,480, as the assessee had made investments in equity shares without disallowing any amount suo moto. The Ld. CIT (A) upheld this addition, despite the assessee's claim of no exempt income earned during the relevant year. The Tribunal found no reason to interfere with the findings of the authorities below regarding this addition.

Non-appearance of the assessee in the appeal proceedings:
The Tribunal noted that the assessee did not appear for the appeal proceedings despite multiple opportunities and attempts to contact. The Tribunal considered the submissions made by the assessee but found a lack of material evidence to support their claims. As a result, the Tribunal dismissed the appeal due to the absence of the assessee and the failure to provide substantial evidence to counter the additions made by the authorities below.

In conclusion, the appeal was dismissed by the Tribunal, affirming the additions made by the authorities below due to the lack of cooperation, non-appearance, and insufficient evidence provided by the assessee to substantiate their claims.

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