2019 (4) TMI 778 - AT - Income Tax

Admission of additional evidences - no justification for non submission of details before AO - HELD THAT - Ld. CIT(A) directed the AO to examine the evidences and submit his comments and accordingly, the AO has submitted its Report vide letter dated 28.7.2017 has submitted that the assessee has failed to specify any of the circumstances mentioned in Rule 46A of the I.T. Rules from Clauses (a) to (d). Further the assessee has not given justification before the Ld. CIT(A) as to why it failed to submit the evidences before the AO which he intends to submit before the Ld. CIT(A), therefore, in the absence of any such justification, Ld. CIT(A) has rightly dismissed the request of the assessee for admitting the additional evidences, which does not need any interference on my part, hence, I uphold the action of the Ld. CIT(A) on the issue of dispute and reject the ground (A) raised by the assessee. Disallowance of expenses - HELD THAT - Details and vouchers have not been linked to verify the genuineness and quantum and the bills and vouchers are a few only. Hence, CIT(A) has rightly held that expenses as made by the AP appears to be reasonable and appropriate and therefore, the addition was correctly confirmed by CIT(A), which does not need any interference on my part, hence, uphold the action of the CIT(A) on the issue of dispute and reject the ground raised by the assessee. Addition on account of share capital and share premium - Addition u/s 68 - HELD THAT - In the appellate proceedings, the assessee has also filed additional evidences in the form of share valuation report dated 20.3.2014 alongwith confirmation from the share holder namely Mr. Subhash Chander Randeva but with no confirmation from the creditors, hence, the additional evidences have not been admitted, as aforesaid. CIT(A) has rightly held that in the absence of any explanation to the nature and source of the credits and genuineness of transaction, he confirmed the addition of ₹ 22,00,000/-, which does not need any interference on my part, hence, uphold the action of the CIT(A) on the issue of dispute and reject the ground (D) raised by the assessee. Appeal of the Assessee is dismissed.

Summary

Issues:
1. Admission of additional evidence request by the assessee.
2. Disallowance of expenses amounting to ?6,85,115.
3. Addition of ?22,00,000 on account of share capital and share premium.

Admission of Additional Evidence Request:
The assessee filed an appeal against the Ld. CIT(A)'s order, claiming that the Ld. CIT(A) erred in dismissing the request for admission of additional evidence. The assessee submitted various documents, including share application certificates, bank statements, and KYC of shareholder, but failed to provide reasons for not furnishing these before the AO. The Ld. CIT(A) dismissed the request for additional evidence, citing the assessee's failure to justify the delay in submission. The ITAT upheld the Ld. CIT(A)'s decision, stating that the assessee did not provide sufficient justification, thereby rejecting the ground raised by the assessee.

Disallowance of Expenses:
The AO added ?6,85,115 as expenses due to the assessee's failure to provide complete details and vouchers to verify the genuineness of the expenses claimed. The ITAT concurred with the Ld. CIT(A)'s decision to confirm the addition, noting that the expenses lacked proper verification and linkage to bills and vouchers. The ITAT upheld the Ld. CIT(A)'s decision, stating that the addition was correctly confirmed as the expenses appeared reasonable and appropriate.

Addition of Share Capital and Share Premium:
The AO added ?22,00,000 as unexplained credit under section 68 of the Act, as the assessee failed to prove the identity, creditworthiness, and genuineness of the share capital and premium received. The assessee submitted a share valuation report and confirmation from a shareholder, but not from creditors. The ITAT agreed with the Ld. CIT(A)'s decision to confirm the addition, as the assessee did not explain the nature and source of the credits adequately. The ITAT upheld the Ld. CIT(A)'s decision, rejecting the ground raised by the assessee.

In conclusion, the ITAT dismissed the assessee's appeal, upholding the decisions of the Ld. CIT(A) on all three issues raised by the assessee. The judgment highlighted the importance of providing complete and justifiable evidence to support claims and the burden of proof on the assessee to establish the legitimacy of transactions and expenses.