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

The Tribunal condoned the delay in filing the appeal due to COVID-19 restrictions and admitted it for adjudication. However, the addition of Rs. 1,22,00,000 under sec. 68 of the Income Tax Act, 1961 for unexplained share capital/premium was confirmed. The Tribunal found that the assessee failed to prove the identity and creditworthiness of shareholders or the genuineness of the transaction, leading to the conclusion that unaccounted income was routed through bogus share capital and premium. Consequently, the appeal was dismissed, and the addition under sec. 68 was upheld.

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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.

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