2022 (2) TMI 473 - AT - Income Tax

Addition u/s 68 - unexplained share application money received - HELD THAT - CIT(A) has rightly deleted the addition for unexplained share application money in light of the relevant fact and material which remains uncontroverted by the Ld. DR. We, thus confirm the finding of Ld. CIT(A) deleting addition made by the ld. AO u/s 68 of the Act. Ground No.1 raised by the revenue stands dismiss. TDS u/s 40(a)(ia) - non-deduction of tax at source on expenditure towards commission and discount - HELD THAT - In this figure commission and brokerage on sales was ₹ 26,18,864/- and discount on sales was ₹ 25,99,994/-. We also find that assessee has filed complete details of discount and sales with name and address and has been consistently giving such type of discount on sales is the regular course of business. There is no dispute with regard to the claim of commission of ₹ 26,18,864/-. Under these given facts and circumstances, we find that the addition made by the ld. AO at ₹ 19,70,098/- was merely on surmises and conjectures and was not supported by any material fact or evidence. Thus, there seems no reason to interfere in the finding of Ld. CIT(A) deleted the addition u/s 40(a)(ia) of the Act. Accordingly, ground raised by the revenue stands dismissed. Disallowance of legal and professional expenses - HELD THAT - We find that the legal and professional charges have been claimed which have increased during the year as compared to the preceding year. The amount in dispute which has been given to six professional. All the details of the professional services provided by these six professional have been filed before us. Tax has been deducted at source on prevailing rates of TDS. The alleged amount received by six professional have been offered to tax in their respective return of income. Under these facts and circumstances of the case there remains no reason to question the genuineness of the expenditure claimed by the assessee and ld. CIT(A) has rightly appreciated the fact of this issue and deleted the disallowance correctly. - Decided in favour of assessee.

Summary

Issues Involved:

1. Deletion of addition under Section 68 of the Income Tax Act, 1961 for unexplained share application money.
2. Deletion of addition under Section 40(a)(ia) of the Income Tax Act, 1961 for non-deduction of tax at source on commission and discount expenses.
3. Deletion of disallowance of legal and professional expenses.

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 68 for Unexplained Share Application Money:

The Revenue challenged the deletion of ?1,31,50,000 added by the Assessing Officer (AO) under Section 68 of the Income Tax Act for unexplained share application money received from three individuals. The Tribunal noted that the assessee provided various documents to prove the identity, creditworthiness, and genuineness of the transactions. For Shri Jayvant N. Patel, the assessee submitted a passport, a certificate from a UK accountant, and a bank statement showing the transaction through an NRE account. For Smt. Snehlata Rupramka, the assessee provided a confirmation, PAN, bank account details, and income tax return showing substantial income. For Smt. Anjali Baijal, the assessee submitted a confirmation, passport, and a certificate from UK financial advisors. The Tribunal observed that similar additions were deleted in previous assessments, including those involving the same share applicants. The Tribunal upheld the CIT(A)'s decision to delete the addition, confirming that the assessee had discharged its onus under Section 68.

2. Deletion of Addition under Section 40(a)(ia) for Non-Deduction of Tax at Source:

The Revenue contested the deletion of ?19,70,098 added by the AO under Section 40(a)(ia) for non-deduction of tax at source on commission and discount expenses. The AO had disallowed the amount assuming that the entire expenditure of ?52,26,858 represented commission, based on TDS deductions. The CIT(A) found that the assessee had provided details of commission and discount expenses separately and that the discount was an integral part of the business, not subject to TDS. The Tribunal noted that the AO's addition was based on presumptions and lacked material evidence. The Tribunal upheld the CIT(A)'s finding, confirming that the disallowance was unjustified and based on mere assumptions.

3. Deletion of Disallowance of Legal and Professional Expenses:

The Revenue challenged the deletion of ?16,08,000 disallowed by the AO for legal and professional expenses. The AO had disallowed the amount due to the lack of specific details such as contracts, PAN, and addresses of the professionals. The CIT(A) observed that the assessee had provided sufficient details, including addresses, IT returns, and TDS certificates, during the appeal. The Tribunal noted that the AO had not found any deficiencies in the books of accounts and that the expenses were incurred for business purposes. The Tribunal upheld the CIT(A)'s decision, confirming that the disallowance was not justified and that the expenses were legitimate business expenditures.

Conclusion:

The Tribunal dismissed the Revenue's appeal, confirming the CIT(A)'s decisions on all three issues. The Tribunal found that the assessee had provided sufficient evidence to support the deletions and disallowances made by the AO were based on presumptions and lacked material evidence. The order was pronounced on 30.11.2021.