ITAT upholds AO's decision on non-genuine share capital under section 68

The Appellate Tribunal ITAT Ahmedabad upheld the AO's decision to add Rs. 45,00,000 as non-genuine share capital under section 68, dismissing the appellant's appeal. The issue of disallowance of administrative expenses amounting to Rs. 8,625 was dismissed as not pressed by the appellant.

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Issues Involved:
1. Addition of Rs. 45,00,000 of Share Capital under section 68.
2. Disallowance of administrative expenses of Rs. 8,625.

Issue 1: Addition of Rs. 45,00,000 of Share Capital under section 68:
The appellant, a company previously known as KGMS Financial services P Ltd., changed its name to Aagam Shares and commodities. The appellant declared a total income of Rs. 24,60,420 for the Assessment Year 2007-08, which was later determined at Rs. 69,69,045 by the Assessing Officer (AO). The AO observed that the appellant received fresh capital of Rs. 45 lacs against the allotment of 45000 equity shares at a premium of Rs. 90 per share. Further investigations revealed discrepancies in the share transactions, leading to the conclusion that the share capital introduced was non-genuine. The AO made an addition of Rs. 45 lacs under section 68 of the Income Tax Act. The CIT(A) upheld the AO's decision, considering the statements of involved parties and the appellant's admission that the share capital was bogus. The appellant contended that the admission was made under certain conditions, and no penalty should be levied. However, the Tribunal found the appellant's arguments unconvincing, stating that the concession was not about the legal position but the facts. As a result, the Tribunal dismissed the appeal, upholding the addition of Rs. 45 lacs as share capital.

Issue 2: Disallowance of Administrative Expenses of Rs. 8,625:
The appellant did not press Ground No. 2 concerning the disallowance of administrative expenses amounting to Rs. 8,625 due to the smallness of the amount. Consequently, Ground No. 2 was dismissed as not pressed. This issue was not further pursued or contested during the proceedings.

In conclusion, the Appellate Tribunal ITAT Ahmedabad, in the judgment dated 07/07/2016, addressed the issues of addition of Rs. 45,00,000 of Share Capital under section 68 and the disallowance of administrative expenses of Rs. 8,625. The Tribunal upheld the AO's decision regarding the non-genuine nature of the share capital introduced by the appellant, dismissing the appeal. The issue of administrative expenses was dismissed as not pressed by the appellant.

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