Tribunal allows appeal, directs deletion of addition under IT Act.

The Tribunal allowed the assessee's appeal in part, directing the AO to delete the addition of Rs. 2,96,48,700/- under Section 68 of the Income-tax Act, 1961. The disallowance of Rs. 9,77,970/- on account of foreign travel expenses was dismissed as not pressed. The Tribunal emphasized that non-compliance with notices under Section 133(6) cannot be the sole basis for making an addition under Section 68, and highlighted the duty of the Revenue to investigate without harassing the assessee unnecessarily.

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Issues Involved:
1. Addition of Rs. 2,96,48,700/- under Section 68 of the Income-tax Act, 1961.
2. Disallowance of Rs. 9,77,970/- on account of foreign travel expenses.

Issue-wise Detailed Analysis:

1. Addition of Rs. 2,96,48,700/- under Section 68 of the Income-tax Act, 1961:

The assessee challenged the addition of Rs. 2,96,48,700/- made by the Assessing Officer (AO) under Section 68 of the Income-tax Act, 1961, which was confirmed by the CIT(A). The addition pertained to the share premium and share application money received by the assessee. The AO had issued notices under Section 133(6) to two companies, which were returned unserved. Consequently, the AO concluded that the assessee had not discharged the primary onus under Section 68 and made the addition.

The assessee argued that it had provided complete details and evidence, including confirmations, income tax particulars, bank statements, and audited financial statements of the shareholder companies. The assessee contended that no inquiries were made by the AO from the shareholders or the Registrar of Companies. The assessee relied on various judicial decisions to support its case.

The Tribunal noted that the assessee had furnished comprehensive details, including the name and address of the investors, PAN, income tax jurisdiction, details of amounts received, confirmations, share application forms, share certificates, bank statements, ROC data, and income tax returns with audited financial statements. The Tribunal observed that the sole basis for the AO's addition was the non-service of notices under Section 133(6).

The Tribunal referred to the Delhi High Court's decision in PCIT Vs. Radius Industries, which held that non-compliance with notices under Section 133(6) cannot be the sole basis for making an addition under Section 68. The Tribunal also cited the Delhi High Court's decision in CIT Vs. Kamadhenu Steel and Alloys Ltd, which emphasized the duty of the Revenue to investigate and not harass the assessee unnecessarily.

The Tribunal found that the investors had confirmed their investments, and there was no material to suggest that the investments were made from the assessee's funds. The investors were corporate entities assessed to tax and had made investments through banking channels. The Tribunal concluded that the assessee had discharged the primary onus under Section 68 and directed the AO to delete the addition of Rs. 2,96,48,700/-.

2. Disallowance of Rs. 9,77,970/- on account of foreign travel expenses:

The assessee also challenged the disallowance of Rs. 9,77,970/- on account of foreign travel expenses. The AO had made the disallowance, which was upheld by the CIT(A). However, the Tribunal's order does not provide a detailed analysis or discussion on this issue. It appears that the Tribunal did not address this issue separately.

Conclusion:

The appeal of the assessee was partly allowed. The Tribunal directed the AO to delete the addition of Rs. 2,96,48,700/- under Section 68 of the Income-tax Act, 1961. The other grounds, including the disallowance of foreign travel expenses, were dismissed as not pressed. The order was pronounced in the open court on 11.07.2022.

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