2024 (10) TMI 849 - AT - Income Tax

Addition u/s 68 - Bogus share capital - addition u/s 115BE - share capital introduced by the director of the company - onus to prove - HELD THAT - In the remand proceedings the assessee has discharged its onus in accordance with provisions of section 68 of the act. With respect to the genuineness, it is the director of the company who is also the major shareholder, has been allotted the shares, therefore, the genuineness of the transaction cannot be doubted. It is not the case where a stranger is depositing money with the company as a shareholder. In the remand report also the learned assessing officer has not drawn any adverse inference with respect to the evidences submitted by the assessee, by the depositor, by the persons who deposited money with the depositor to prove the source of source. Therefore, we do not find any infirmity in the order of the CIT A in deleting the above addition for the reason that identity, creditworthiness of the person and genuineness of the transaction is established. DR also did not show us any evidence about any of the three ingredients adversely. Accordingly we do not find that CIT A has erred in deleting the addition u/s 68 with respect to the share capital in the name of diector. Decided in favour of assessee. Admission of additional evidence under Rule 46A - assessee submitted that it was a Covid period and assessee could not submit the details because the office of the assessee was situated in a containment zone declared by the government of Maharashtra - HELD THAT - We find that when the assessee was prevented by sufficient cause to produce necessary details before the assessing officer, the appellate authorities are empowered to admit such additional evidence in the proper administration of justice. Claim of the assessee is not disputed that office of the assessee was situated in containment zone declared by the government of Maharashtra. Therefore we do not find any infirmity in the order of the CIT A in admitting the additional evidences. It is also not the case of the revenue that after admitting the additional evidence the assessing officer was not given any opportunity to rebut the same - Therefore, ground number 1 of the appeal is dismissed. Addition u/s 68 on account of loan received from NVPL - CIT(A) deleted addition - HELD THAT - CIT-A on consideration of the remand report wherein the assessing officer himself has accepted the fact of the transaction because of overwhelming evidences produced by the assessee - CIT-A has correctly deleted the addition where the assessee has proved with respect to the sum credited as a loan such as identity and creditworthiness of the depositor as well as the genuineness of the transaction. No such evidences are produced before us by the learned departmental representative to show that the view taken by CIT-A and the assessing officer in the remand report are incorrect or even remotely suggest the addition. Decided in favour of assessee.

Summary

Issues Involved:
1. Admission of additional evidence under Rule 46A.
2. Deletion of addition under Section 68 regarding share capital.
3. Deletion of addition under Section 68 regarding unsecured loan.
4. Validity of the assessment order under Section 144B.

Issue-wise Detailed Analysis:

1. Admission of Additional Evidence under Rule 46A:
The Revenue challenged the admission of additional evidence by the CIT(A), arguing that the conditions under Rule 46A were not satisfied. The assessee contended that due to the COVID-19 pandemic and the resultant lockdown, they were unable to furnish necessary documents during the assessment proceedings as their office was located in a containment zone. The CIT(A) admitted the additional evidence, noting the lockdown as a sufficient cause for the delay and directed the Assessing Officer (AO) to furnish a remand report. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee was prevented by sufficient cause from producing the evidence earlier, and that the AO was given ample opportunity to examine the additional evidence.

2. Deletion of Addition under Section 68 Regarding Share Capital:
The Revenue contested the deletion of an addition of Rs. 24,99,99,000 made under Section 68, arguing that the assessee failed to prove the genuineness and creditworthiness of the creditor. The CIT(A) found that the assessee had submitted comprehensive evidence, including bank statements, income tax returns, and confirmations from the director who introduced the share capital. The director had borrowed funds from other parties, which were then invested in the assessee company. The Tribunal noted that the assessee had adequately demonstrated the identity, creditworthiness, and genuineness of the transactions. The AO had verified these details during the remand proceedings, and no adverse findings were reported. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the addition.

3. Deletion of Addition under Section 68 Regarding Unsecured Loan:
The Revenue also challenged the deletion of an addition of Rs. 198,10,59,501 related to an unsecured loan from Nisiddh Vision Pvt. Ltd. The CIT(A) noted that the assessee provided detailed evidence, including confirmations, bank statements, and income tax returns of the lender and the source of funds. The lender had received funds from nine different entities, and the AO verified these details during the remand proceedings. The Tribunal found that the assessee had sufficiently established the identity, creditworthiness, and genuineness of the transactions. The Tribunal also noted that the loan was repaid in subsequent years, and the AO had not raised any adverse comments in the remand report. Thus, the Tribunal upheld the CIT(A)'s decision to delete the addition.

4. Validity of the Assessment Order under Section 144B:
The assessee filed a cross-objection challenging the validity of the assessment order, claiming non-compliance with Section 144B(9). However, during the proceedings, the assessee's representative chose not to press this objection, acknowledging that the relevant provision had been omitted as of April 1, 2021, and the assessment order was passed on April 21, 2021. Consequently, the Tribunal dismissed the cross-objection.

Conclusion:
The Tribunal dismissed the appeal filed by the Revenue and the cross-objection by the assessee, thereby upholding the CIT(A)'s decisions regarding the admission of additional evidence and the deletion of additions under Section 68. The Tribunal found no infirmity in the CIT(A)'s order and concluded that the assessee had adequately demonstrated the identity, creditworthiness, and genuineness of the transactions in question.