2025 (2) TMI 831 - AT - Income Tax

Addition u/s.68 - funds received by assessee from SPPL have been added by doubting the genuineness of the transaction - HELD THAT - Assessee has duly explained the nature of transaction and has also gone to the extent of explaining the source of source with corroborative documentary evidence including assessment order passed in the case of SPPL whereby Department accepted the share application money received by SPPL from its promoter i.e. the Malaysian company. In respect of part of funds as received in the subsequent year assessee has explained it by way of bank reconciliation statement duly corroborated by entries in the bank statement both of the assessee and that of SPPL. All the stated documentary evidences are placed on record in the paper book. As SPPL itself assessed by the Department for the transaction having a direct bearing on the addition made in the hands of the assessee we unhesitatingly delete the addition in the hands of assessee u/s.68. Appeal of the assessee is allowed.

Summary

The appeal filed by the assessee challenged the order of the Ld. CIT(A), National Faceless Appeal Centre (NFAC), regarding the reassessment proceedings and the addition of Rs. 89,50,000 made under section 68 of the Income-tax Act. The core issue revolved around the validity of the reassessment proceedings and the source of funds received by the assessee from SanSam Polymers Pvt. Ltd. (SPPL). The Assessing Officer doubted the genuineness of the transaction and held that the submissions made by the assessee regarding the unsecured loan amount were not tenable.The assessee explained that SPPL had paid a deposit of Rs. 89,50,000 to the assessee, out of which Rs. 56,50,000 was credited before 31.03.2011. The remaining amount was credited in the next financial year. The assessee provided documentary evidence to establish the genuineness of the transaction, including details of the relationship between SPPL and Forte International (M) Sdn Bhd, the Malaysian company. The assessment order of SPPL for the same assessment year was also submitted to demonstrate that the Department had accepted the share application money received by SPPL from the Malaysian company.The Senior DR relied on the orders of the authorities below, while the Tribunal considered the documentary evidence provided by both the assessee and SPPL. The Tribunal noted that SPPL had been assessed by the Department for a similar transaction involving the Malaysian company, which supported the genuineness of the transaction with the assessee. Based on the corroborative documentary evidence and the acceptance of the share application money by SPPL, the Tribunal deleted the addition made by the Assessing Officer under section 68.The Tribunal concluded that the addition in the hands of the assessee under section 68 was unjustified, considering the factual position and the documentary evidence provided. As a result, the appeal of the assessee was allowed, and the legal grounds raised by the assessee were not adjudicated upon due to the deletion of the addition.In summary, the Tribunal found in favor of the assessee, concluding that the addition made by the Assessing Officer was unwarranted based on the evidence presented, particularly the acceptance of the share application money by SPPL in a similar transaction. The Tribunal emphasized the importance of corroborative documentary evidence in establishing the genuineness of transactions and upheld the appeal of the assessee.