2018 (11) TMI 1492 - HC - Income Tax

Addition made on account of unexplained credit and unexplained expenditure - Held that - We find that A.O. had made additions merely on the statement of Shri Praveen Kumar and Shri Uttam Singh Hinger, whereas, they have already retracted from the statement by way of specific affidavits filed by them. On the other hand, no other evidence was produced by the appellant herein to show that cash was paid by the Company to Shri Praveen Kumar Jain or any other person for accommodating the entries. In these circumstances, we find that the assessee succeeded in proving its identity and bonafide of the shares and the transactions. Thus, it being a pure question of fact, we find no reason to interfere in the impugned order.

Summary

Issues: Challenge to deletions of additions made by assessing officer by ITAT regarding unexplained income from share application money.

In this case, the primary issue revolved around the challenge to the deletions of additions made by the assessing officer regarding unexplained income from share application money. The assessee was required to prove the genuineness of the transactions related to share application money received from certain companies operated by Shri Praveen Kumar Jain. The assessing officer found that these companies were not genuinely conducting business activities and treated a specific amount as unexplained income. The Tribunal, however, deleted the addition made on account of unexplained credit and expenditure. The High Court analyzed the evidence and found that the companies were merely paper companies engaged in providing accommodation entries, lacking evidence of real trading activities. The Court considered whether the ITAT was justified in confirming the deletion of the addition on account of bogus share application money.

Upon reviewing the case, the High Court noted that the assessing officer had based the additions solely on the statements of individuals who later retracted their statements through affidavits. The appellant failed to produce any evidence demonstrating cash payments made for accommodating entries. The Court concluded that the appellant had successfully established the identity and legitimacy of the shares and transactions. As the issue primarily involved questions of fact, the Court found no grounds to interfere with the impugned order and dismissed the appeal accordingly.