2022 (1) TMI 984 - AT - Income Tax

Addition u/s 68 - unexplained share application money received and loan obtained - HELD THAT - All evidences proved the genuineness and creditworthiness of the investors. Moreover, the addition was made on the basis of the statement of Mr. Praveen Kumar Jain but Praveen Kumar Jain had retracted from his statement. Therefore addition can not be made on the basis of statement with has been retracted. Non genuine loans u/s 68 - As assessee has filed the copy of ledger account , confirmation, PAN bank statement, ITR and audited annual accounts both the lenders which are also available in the paper book which showed the transactions in question are proved by the assessee. In this regard, we also place reliance upon the decision of CIT Vs. A.L. Lalpuria Construction Pvt. Ltd 2013 (10) TMI 316 - RAJASTHAN HIGH COURT and PCIT Vs. Texraj Reality Pvt. Ltd. 2018 (7) TMI 1561 - GUJARAT HIGH COURT The assessee has given the sufficient documentary proofs to prove the transactions which areon record. The Hon ble ITAT in the case of Diwali Capital Finance Pvt. Ltd. 2019 (1) TMI 681 - ITAT MUMBAI and Blue Stock Investment Pvt. Ltd. 2018 (10) TMI 1633 - ITAT MUMBAI has held that the sufficient evidences have been given by the assessee qua the money raised , the no the addition towards the loan/share application money could be made - Decided in favour of assessee.

Issues Involved:
1. Reopening of assessment under Section 147 of the Income Tax Act.
2. Addition of ?45,00,000/- under Section 68 in respect of share application money received from M/s. Alka Diamond Industries Ltd.
3. Addition of ?41,34,000/- under Section 68 in respect of loan obtained from M/s. Topcare Trading Co. Pvt. Ltd.
4. Addition of ?1,00,00,000/- under Section 68 in respect of loan obtained from M/s. New Tree Mercantile Co. Pvt. Ltd.

Detailed Analysis:

Issue No. 1: Reopening of Assessment Under Section 147
At the time of argument, this issue was not pressed by the representative of the assessee. Therefore, this issue was decided in favor of the revenue against the assessee, being not pressed.

Issue No. 2: Addition of ?45,00,000/- Under Section 68 for Share Application Money
The assessee challenged the addition of ?45,00,000/- received as share application money from M/s. Alka Diamond Industries Ltd. The assessee argued that sufficient proofs/documents were provided to prove the genuineness and creditworthiness of the parties. The CIT(A) had dismissed the appeal, but the assessee contended that the order was incorrect. The ITAT noted that the assessee had filed copies of ledger accounts, confirmation of share application money, bank statements, income tax returns, and audited financial statements of M/s. Alka Diamond Industries Ltd. These documents proved the genuineness and creditworthiness of the investors. Additionally, the addition was based on a statement from Mr. Praveen Kumar Jain, which he had retracted. The ITAT referenced similar cases where transactions were deemed genuine under similar circumstances (Diwali Capital & Finance Private Ltd. Vs. DCIT and DCIT Vs. Blue Stock Investment Pvt. Ltd.). Consequently, the ITAT set aside the order of the CIT(A) and directed the AO to delete the addition, allowing the ground in favor of the assessee.

Issue No. 3 & 4: Addition of ?1,41,34,000/- Under Section 68 for Non-Genuine Loans
The assessee contested the addition of ?1,41,34,000/- towards non-genuine loans, which included ?41,34,000/- from M/s. Topcare Trading Co. Pvt. Ltd. and ?1,00,00,000/- from M/s. New Tree Mercantile Co. Pvt. Ltd. The assessee argued that all necessary documents proving the creditworthiness and genuineness of the loans were provided, and reliance on Mr. Praveen Kumar Jain’s retracted statement was unjustified. The ITAT noted that the assessee had filed ledger accounts, confirmations, PAN details, bank statements, income tax returns, and audited annual accounts of the lenders. These documents substantiated the transactions. The ITAT referenced decisions from CIT Vs. A.L. Lalpuria Construction Pvt. Ltd. and PCIT Vs. Texraj Reality Pvt. Ltd., which supported the assessee’s claim. The ITAT concluded that sufficient documentary proofs were provided, and no addition towards the loans/share application money could be made. Thus, the ITAT set aside the findings of the CIT(A) and allowed the claims of the assessee, deleting the additions.

Conclusion:
The appeal filed by the assessee was allowed, with the ITAT directing the deletion of the additions made by the AO under Section 68 concerning share application money and loans. The decision was pronounced in the open court on 18/11/2021.

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