2022 (1) TMI 1150 - AT - Income Tax

Tribunal confirms CIT(A) decision on unexplained money, dismisses Revenue appeal

ACIT, Central Circle-3 New Delhi Versus Jotindra Steel & Tubes Ltd.

ACIT, Central Circle-3 New Delhi Versus Jotindra Steel & Tubes Ltd. - [2022] 94 ITR (Trib) 359 (ITAT [Del]) Issues Involved:1. Addition on account of unexplained share application money.2. Addition on account of unexplained cash.3. Addition on account of unexplained share application money received from non-genuine parties.Issue-wise Detailed Analysis:1. Addition on account of unexplained share application money:The Assessing Officer (AO) made an addition of Rs. 6 crores under Section 68 of the IT Act, asserting that the share application money received by the assessee was unaccounted income. The AO noted that the companies involved were dormant with nil business activities and the transactions did not reflect genuine business activities. The AO argued that the assessee failed to prove the identity, creditworthiness of the persons, and the genuineness of the transaction.The CIT(A) deleted the addition, referencing his own decision in the case of Maurya Udyog Ltd. for AY 2013-14, where similar additions were made and subsequently deleted. The Tribunal upheld the CIT(A)'s order, noting that the facts of the case were identical to those in Maurya Udyog Ltd., where the Tribunal had dismissed the Revenue's appeal. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's ground on this issue.2. Addition on account of unexplained cash:The AO made an addition of Rs. 1,14,75,000/- based on incriminating documents found during search operations, which indicated cash payments from the Amrapali group to the Mauria group. The AO proportionately attributed the cash to Mauria Udyog Ltd., Bihariji Ispat Udyog Ltd., and Jotindra Steel & Tubes Ltd. based on their turnover with the Amrapali group.The CIT(A) deleted the addition, referring to his decision in the case of Bihariji Ispat Udyog Ltd. for AY 2013-14, where similar additions were made and subsequently deleted. The Tribunal upheld the CIT(A)'s order, noting that the facts were identical to those in Maurya Udyog Ltd., where the Tribunal had dismissed the Revenue's appeal. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's ground on this issue.3. Addition on account of unexplained share application money received from non-genuine parties:The AO made an addition of Rs. 13,01,395/- on the grounds that the assessee failed to prove the identity, creditworthiness of the share applicants, and the genuineness of the transaction. The assessee had received the amount due to foreign exchange fluctuation from the same parties who had remitted share application money in AY 2010-11.The CIT(A) deleted the addition, noting that the identity and creditworthiness of the share applicants and the genuineness of the transaction were established through various documents, including KYC particulars, inward remittance certificates, and RBI compliance. The Tribunal upheld the CIT(A)'s order, finding no infirmity in the deletion of the addition and dismissed the Revenue's ground on this issue.Conclusion:The Tribunal dismissed the Revenue's appeal on all grounds, upholding the CIT(A)'s order in deleting the additions made by the AO on account of unexplained share application money, unexplained cash, and unexplained share application money received from non-genuine parties. The Tribunal found that the CIT(A) had rightly deleted the additions based on detailed analysis and precedents from similar cases.