2019 (8) TMI 1558 - AT - Income Tax

Appeal allowed in tax case involving unexplained cash credit under IT Act

The appeal was allowed for statistical purposes, and the order was pronounced on August 09, 2019. The case involved the addition of share application ... Unexplained cash credit under section 68 - compliance with summons under section 131 - creditworthiness of share subscribers - opportunity to produce evidence on remand - assessment to be decided afresh in accordance with lawUnexplained cash credit under section 68 - compliance with summons under section 131 - creditworthiness of share subscribers - opportunity to produce evidence on remand - Addition of share application money including premium treated as unexplained cash credit under section 68 remanded for fresh adjudication after affording the assessee an opportunity to produce directors and documents - HELD THAT: - The Assessing Officer made the addition treating receipt of share application money including premium as unexplained cash credits since the directors of the share-subscribing companies did not fully comply with summons issued under section 131 and did not furnish required documents; the CIT(A) confirmed the addition on the basis that creditworthiness of the share applicants was not established and transactions appeared nominal. The Tribunal, noting that the assessee sought another opportunity to produce the directors and relevant documentary evidence and that the Assessing Officer had not had the benefit of such evidence, considered it fair and in the interest of justice to remit the matter. The Tribunal directed that the matter be restored to the file of the Assessing Officer for fresh decision in accordance with law after giving one more opportunity to the assessee to substantiate its case; the assessee was directed to cooperate and comply, and the remand was accepted without objection from the Departmental Representative.Matter restored to the Assessing Officer for fresh adjudication in accordance with law after giving the assessee one more opportunity to produce the directors of the share-subscribing companies and the required documentary evidence; appeal treated as allowed for statistical purposes.Final Conclusion: The Tribunal set aside the order of the CIT(A) confirming the addition under section 68 and remitted the issue to the Assessing Officer for fresh decision after granting the assessee one more opportunity to produce the directors and documents and to substantiate its case; the appeal is treated as allowed for statistical purposes. Issues:Addition of share application money as unexplained cash credit under section 68 of the Income Tax Act, 1961.Analysis:The appeal was filed against the order confirming the addition of Rs. 129.43 crores as unexplained cash credit by treating share application money as such under section 68. The assessee, a company engaged in investment and trading in shares, received a substantial amount of share application money during the year. The Assessing Officer issued summons under section 131 to verify the amount but faced non-compliance from the directors of share-subscribing companies. Consequently, the Assessing Officer held the cash credits unexplained, leading to the addition in the assessment completed under section 143(3).During the appellate proceedings, the assessee contended that the addition was unjustified as the relevant documentary evidence was not filed due to non-cooperation from the share subscribers. The CIT(Appeals) upheld the addition, noting the lack of creditworthiness of the share applicant companies and nominal nature of the transactions. The Tribunal, after hearing both sides, found it fair to give the assessee another opportunity to substantiate its case. The matter was thus sent back to the Assessing Officer for fresh consideration, with the assessee required to provide necessary cooperation and evidence for expedited assessment.In conclusion, the appeal was treated as allowed for statistical purposes, and the order was pronounced in the open court on August 09, 2019.