2022 (11) TMI 192 - AT - Income Tax

Tribunal Upholds Addition for Unexplained Share Capital: COVID-19 Delay Condoned

Diksha AD Consultants Pvt. Ltd. Versus I.T.O. Ward 3 (3), Kolkata

The Tribunal condoned the delay in filing the appeal due to COVID-19 restrictions and admitted it for adjudication. However, the addition of Rs. ... Addition u/s 68 - share capital along with premium raised by the assessee during the year unexplained - HELD THAT:- We notice that the assessee company had offered Nil income for the AY 2012-13. The assessee company has been able to procure share capital/share premium - Statutory notices u/s. 143(2) & 142(1) of the Act duly served upon the assessee and duly complied. Assessee failed to satisfy the ld.AO about identity & creditworthiness of shareholders and genuineness of the transaction. Even after providing sufficient opportunity none had appeared either before the CIT(A) even before us. The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity & creditworthiness of the cash creditors as well as genuineness of the transaction as per section 68 - The assessee company has miserably failed to explain the source of alleged cash credit. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details. Consistently escaping from appearing before the appellate authority(ld.CIT-A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium. If the assessee is unable to explain the alleged cash credit and consistent escaped, the provisions of section 68 of the Act are rightly invoked by ld.AO. Thus, we are of the view that the assessee has routed its unaccounted income in the books of account in the form of share capital by arranging bogus share capital and share premium through accommodation entry provider and shell companies. Therefore no infirmity in the finding of the ld. CIT(A) confirming the addition made u/s. 68 - All the grounds of appeal raised by the assessee are dismissed. Issues:Delay in filing appeal due to COVID-19 restrictions and other reasonable cause; Confirmation of addition under sec. 68 of the Income Tax Act, 1961 for unexplained share capital/premium.Analysis:1. Delay in filing appeal: The appeal was found to be time-barred by 745 days, with the assessee filing a condonation application citing COVID-19 restrictions and a change in the working system of the Income Tax Department as reasons for the delay. The delay was attributed to the office assistant not bringing the order to the management's knowledge, leading to the appeal being filed late. The Tribunal, considering the circumstances, condoned the delay and admitted the appeal for adjudication based on the exclusion of the limitation period between 15.03.2020 and 28.02.2022 as per a judgment of the Hon'ble Supreme Court.2. Confirmation of addition under sec. 68: The assessee raised grounds challenging the addition of Rs. 1,22,00,000 under sec. 68 of the Income Tax Act, 1961 for unexplained share capital/premium. The AO added this amount as unexplained cash credits due to lack of satisfactory replies from the assessee during scrutiny. The CIT(A) confirmed the addition as the assessee failed to appear and provide necessary details to explain the source of the alleged cash credit. The Tribunal noted that the assessee was unable to prove the identity and creditworthiness of shareholders or the genuineness of the transaction. Despite multiple opportunities, the assessee did not provide satisfactory explanations. The Tribunal concluded that the assessee had routed unaccounted income through bogus share capital and premium, leading to the confirmation of the addition under sec. 68.In conclusion, the Tribunal dismissed all grounds of appeal raised by the assessee and upheld the addition of Rs. 1,22,00,000 under sec. 68 of the Income Tax Act, 1961. The appeal was ultimately dismissed, and the decision was pronounced in open court on 31.10.2022.