2020 (2) TMI 65 - AT - Income Tax

Tribunal allows assessee's appeals for fresh examination of tax issues

Aerens Projects & Infrastructure Pvt. Ltd. Versus ACIT, Central Circle-9, New Delhi.

Aerens Projects & Infrastructure Pvt. Ltd. Versus ACIT, Central Circle-9, New Delhi. - TMI Issues Involved:1. Addition of share capital and share premium as unexplained credit.2. Addition of advances received against property as unexplained credit.3. Disallowance of loss claimed in income tax return.4. Addition of interest on unsecured loans.Detailed Analysis:1. Addition of Share Capital and Share Premium as Unexplained Credit:The first issue pertains to the addition of Rs. 4.85 crores as unexplained credit under Section 68 of the Income Tax Act, 1961. The Assessing Officer (AO) made the addition after the assessee failed to prove the genuineness of the transaction and the creditworthiness of the parties. The CIT(A) upheld this addition. The assessee argued that adequate opportunity to cross-examine the persons who admitted to providing accommodation entries was not given. The Tribunal found that the lower authorities did not consider the subsequent decisions of the Supreme Court and Delhi High Court, which elaborated on the issue of share capital at high premium to bogus companies. Therefore, the Tribunal restored the matter to the AO for a fresh examination, giving the assessee one final opportunity to substantiate its case by producing the directors of the investor companies.2. Addition of Advances Received Against Property as Unexplained Credit:The second issue involved the addition of advances received against property amounting to Rs. 25.94 crores, Rs. 9.80 crores, and Rs. 2 crores for the assessment years 2008-09, 2010-11, and 2011-12, respectively. The AO made these additions on the grounds that the advances were received from bogus companies. Despite the assessee's request, cross-examination of the persons whose statements were recorded was not allowed. The Tribunal noted that there was no proper representation before the CIT(A), who dismissed the appeal due to non-appearance by the assessee. Therefore, the Tribunal restored the issues to the AO, directing the assessee to substantiate its case by producing the directors of the companies who gave the advances.3. Disallowance of Loss Claimed in Income Tax Return:For the assessment years 2008-09, 2010-11, and 2011-12, the AO disallowed the loss claimed by the assessee, amounting to Rs. 35,94,413/-, on the grounds that the assessee could not substantiate the loss with evidence. The CIT(A) upheld the AO's decision. The Tribunal found that the CIT(A) dismissed the appeal due to non-appearance by the assessee without deciding the issue on merit. Therefore, the Tribunal restored the issue to the AO, directing the assessee to substantiate its case.4. Addition of Interest on Unsecured Loans:The fourth issue involved the addition of Rs. 44,41,958/- as interest on unsecured loans for the assessment year 2015-16. The AO made this addition because the assessee failed to furnish details about the purpose of the interest paid and the persons to whom it was paid. The CIT(A) upheld the AO's decision without deciding the issue on merit, dismissing the appeal due to non-appearance by the assessee. The Tribunal restored the issue to the CIT(A) with directions to pass a speaking order on merit after giving the assessee an opportunity to substantiate its case.Conclusion:The Tribunal allowed all the appeals filed by the assessee for statistical purposes, restoring the issues to the AO or CIT(A) for fresh examination and providing the assessee an opportunity to substantiate its case. The decision was pronounced in the open court on 30.12.2019.