2024 (2) TMI 216 - AT - Income Tax

Addition u/s 68 - Bogus share transaction - as per AO identity, creditworthiness and genuineness of the transaction has been established - CIT(A) deleted addition - HELD THAT - We observe that the assessee discharged its initial burden by filing various evidences in the form of confirmations, bank statements, share application forms, addresses, PAN numbers to prove the identity, genuineness and creditworthiness of the share holders. CIT (A) considering all the evidences on record and the remand report and the rejoinder concluded that the share holders are genuine and assessee has proved the identity, genuineness and creditworthiness of the share holders and accordingly the addition made u/s 68 of the Act has been deleted. We further observe that the entire expenses which were debited to profit and loss account and was disallowed by AO were deleted by the ld. CIT (Appeals) on appreciation of evidences furnished before him and it is the finding of the CIT (A) that majority of expenses are towards salary paid and they were through banking channels. As observed that the expenses on advertisement, electricity, telephone, computer repair and maintenance, bank charges etc. were all paid through ICICI Bank and IndusInd Bank. All the above findings of the ld. CIT (A) have not been rebutted by the Revenue. We see no infirmity in the order passed by the ld. CIT (A) in deleting the above additions/disallowances. Appeal of the Revenue is dismissed.

Summary

Issues Involved:

1. Addition of Rs. 1,33,32,875/- under section 68 of the Income Tax Act, 1961.
2. Disallowance of expenses of Rs. 53,36,782/- claimed in the profit and loss account.

Summary of Judgment:

1. Addition under Section 68 of the Income Tax Act, 1961:

The Revenue appealed against the order of the CIT (Appeals) which deleted the addition of Rs. 1,33,32,875/-. The Assessing Officer had made this addition under section 68 of the Income Tax Act, 1961, being the share capital/share premium, due to the assessee's failure to appear or provide information. The CIT (Appeals) admitted additional evidence submitted by the assessee and called for a remand report from the Assessing Officer. The CIT (Appeals) concluded that the assessee had received share application money from various parties, and the identity, creditworthiness, and genuineness of these transactions were established through confirmations, bank statements, PAN cards, and other supporting documents. Consequently, the addition of Rs. 1,32,32,875/- was deleted.

2. Disallowance of Expenses:

The Assessing Officer disallowed expenses of Rs. 53,36,782/- claimed in the profit and loss account due to lack of details. During the appellate proceedings, the assessee provided detailed ledger accounts of these expenses, which were forwarded to the Assessing Officer for examination. The CIT (Appeals) found that these expenses were incurred for business purposes, such as salary payments, advertisement, electricity, and rent, all paid through banking channels. The CIT (Appeals) held that these expenses were allowable and deleted the disallowance.

Conclusion:

The ITAT Delhi upheld the findings of the CIT (Appeals) that the assessee had discharged its initial burden of proving the identity, genuineness, and creditworthiness of the shareholders, and that the expenses claimed were genuine and incurred for business purposes. The appeal of the Revenue was dismissed.