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TMI Blog2017 (12) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... Awasthy, JM Assessee by : Shri Nitin Chandrani Revenue by : Shri Mukesh Jha ORDER Per Vikas Awasthy, JM This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-4, Pune dated 25-01-2017 for the assessment year 2013-14. 2. The brief facts of the case as emanating from records are: The assessee company is engaged in the business of providing solutions in the field of information technology, agriculture products and allied industries. The assessee filed its return of income for the impugned assessment year on 18-09-2013 declaring total income of ₹ 13,34,620/-. During Financial Year 2012-13 no business activity was carried out by the assessee. The assessee earned income from interest on fixed deposits only. The case of assessee was selected for scrutiny under CASS and accordingly, statutory notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) was issued to the assessee on 10-09-2014. During the course of scrutiny assessment proceedings, the Assessing Officer observed that Balance Sheet of assessee company as on 31-03-2013 reflects share application money pending allotment to the tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re application money in Financial Year 2013-14 i.e. the period relevant to assessment year 2014-15. The ld. AR of assessee referred to the list of allottees of shares at pages B-33 to B-36 of the paper book and the return of allotment filed with Registrar of Companies in the prescribed form under the provisions of the Companies Act, 1956 at pages B-38 to B-41 of the paper book. The ld. AR contended that out of total share application money of ₹ 2,34,86,100/-, the assessee received share application money to the tune of ₹ 1,28,78,100/- in cash from 28 investors. The remaining amount of ₹ 1,06,08,000/- was received by the assessee through cheque. During the course of scrutiny assessment proceedings the assessee had furnished the list of persons from whom share application money was received and the mode of investments. The ld. AR pointed that the Assessing Officer while recording the facts of the case has erred in observing that entire share application money has been received in cash. The Assessing Officer and Commissioner of Income Tax (Appeals) have further erred in recording the fact that the assessee neither allotted the shares nor returned the money but has ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, etc. are not mentioned. The assessee has not discharged his onus in providing his genuineness of the investors. 6. The ld. AR controverting the submissions made by DR submitted that the assessee had given the list of investors and had also furnished 7/12 extracts of investors who had invested in cash. The cash investors are primarily farmers. The ld. AR submitted that the assessee is a public limited company and its accounts are subject to audit. The assessee received share application money of ₹ 89,999/- during Financial Year 2009-10 and ₹ 2,70,24,150/- in Financial Year 2010-11. Out of the total share application money of ₹ 2,71,14,149/-, the assessee repaid ₹ 1,58,000/- in Financial Year 2011-12 and ₹ 34,70,000/- in Financial Year 2012-13. Thus, the closing balance of share application money as per Audited Balance Sheet as on 31-03-2013 as relevant to assessment year under appeal was ₹ 2,34,86,149/-. The ld. AR contended that the findings of Assessing Officer are purely based on surmises and conjunctures. The Commissioner of Income Tax (Appeals) has upheld the same in mechanical manner without ascertaining true and correct facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. The documents on record and as per Departments own case, the share application money was received by the assessee much before the previous year under question. A bare perusal of section 68 shows that provisions of section 68 are attracted where any sum is found credited in the books of an assessee maintained for any previous year under consideration. Therefore, no addition can be made u/s. 68 in the assessment year under appeal when the share application money has been received in Financial Years 2009-10 and 2010-11. 11. The Hon ble Delhi High Court in the case of Commissioner of Income Tax Vs. Usha Stud Agricultural Farms Ltd. (supra) confirmed deleting of addition u/s. 68 where the credit balance in the accounts of assessee did not pertain to year under consideration. The Hon ble High Court upheld the action of Commissioner of Income Tax (Appeals) and Tribunal in deleting addition u/s. 68 where credit balance was reflected in the accounts of the assessee over the past four to five years and the same was not fresh credit entry in the books in the previous year under consideration. 12. Now, before dwelling on invoking provisions of section 41(1)(a), it would be ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability in a later year by way of remission or cessation of the liability. In such a case the section says that whatever benefit has arisen to the assessee in the later year by way of remission or cessation of the liability will be brought to tax in that year. The principle behind the section is simple. It is a provision intended to ensure that the assessee does not get away with a double benefit once by way of deduction in an earlier assessment year and again by not being taxed on the benefit received by him in a later year with reference to the liability earlier allowed as a deduction. The gist of the findings of Hon ble High Court is as under : Section 41(1) of the Income-tax Act, 1961, specifically deals with amounts that were allowed as deduction in past assessments as trading liabilities, which in a later year cease or are remitted by the creditors. If and when there is evidence in a particular later year to show that the liability has ceased or has been remitted, it can be brought to tax. In order to invoke the section, it must be first established that the assessee had obtained some benefit in respect of the trading liability which was earlier allowed as a deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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