2022 (6) TMI 1159 - AT - Income Tax

ITAT allows appeal, deletes addition under Section 68 of Income Tax Act.

D.J. Stock Broking Pvt. Ltd. Versus ITO, Ward-1 (1) (4), Ahmedabad

D.J. Stock Broking Pvt. Ltd. Versus ITO, Ward-1 (1) (4), Ahmedabad - TMI Issues Involved:1. Validity of reassessment proceedings.2. Addition of Share Capital Money under Section 68 of the Income Tax Act.3. Disallowance under Section 14A of the Income Tax Act.4. Computation of total income and interest under Sections 234B and 234C of the Income Tax Act.Detailed Analysis:1. Validity of Reassessment Proceedings:The assessee challenged the reassessment proceedings initiated by the Assessing Officer (AO) under Section 147 of the Income Tax Act for the assessment year 2011-12. The AO initiated reassessment proceedings based on findings during the assessment proceedings for the assessment year 2012-13, where it was noted that the assessee had accepted share application money amounting to Rs. 3,87,72,000/-. The AO added this amount under Section 68 of the Act, as the assessee failed to prove the creditworthiness and genuineness of the transactions.2. Addition of Share Capital Money under Section 68 of the Income Tax Act:The AO made an addition of Rs. 1,59,53,000/- as unexplained share application money under Section 68 of the Act, received from Maars Software International Ltd. and Shri Anil Jain. The AO held that the genuineness of the transaction and the creditworthiness of the parties were not established. The CIT(A) confirmed this addition, agreeing with the AO's findings that the parties involved did not have the capacity to invest such amounts and did not respond to notices issued under Section 133(6) of the Act.3. Disallowance under Section 14A of the Income Tax Act:The assessee did not press ground number 3 related to the disallowance under Section 14A of the Act, leading to its dismissal as not pressed.4. Computation of Total Income and Interest under Sections 234B and 234C of the Income Tax Act:The assessee contended that the correct total income and income tax should be computed, and interest under Sections 234B and 234C should be recomputed as per law, with proper credit for prepaid taxes. This ground was general and did not require specific adjudication.Judgment:Reassessment Proceedings:The reassessment proceedings were initiated based on findings from the assessment year 2012-13. The ITAT noted that the Ahmedabad ITAT, in the assessee's own case for the assessment year 2012-13, had deleted the additions made under Section 68 for the same parties (Maars Software International Ltd. and Shri Anil Jain). Since the reassessment for the assessment year 2011-12 was based on these additions, the ITAT followed the earlier decision and deleted the addition of Rs. 1,59,53,000/- under Section 68 of the Act.Addition of Share Capital Money:The ITAT observed that the AO's conclusions were without supporting evidence, and the identity of the share applicants had been demonstrated by the assessee. The AO did not conduct further inquiries after receiving responses to notices under Section 133(6). The ITAT concluded that the AO's inference was not based on evidence and deleted the addition of Rs. 1,59,53,000/-.Disallowance under Section 14A:Ground number 3 related to the disallowance under Section 14A was dismissed as not pressed by the assessee.Computation of Total Income and Interest:The other grounds of appeal were general and did not require specific adjudication.Conclusion:The ITAT allowed the assessee's appeal in part, specifically deleting the addition of Rs. 1,59,53,000/- under Section 68 of the Act. The other grounds were either dismissed or did not require specific adjudication. The order was pronounced in the open court on 24-06-2022.