Concealment of Income

[pradip shah]

When the assessee has furnished during assessment proceedings, the details of Share Application Money as well as Unsecured Loans received by the company, which could not be substaniated further in assessment ans as such have been added as income U/s 68. Thereafter on such additions concealment penalty also have been levied. Is there any strong submission for this or case law to be submitted in defence before CIT appeals so that the penalty is deleted.

[DEV KUMAR KOTHARI]

Why and in which circumstances it could nto be substantiated is important?

 

A share applicant or a loan creditor might have made undisclosed investment and for that reason he may not come forward  before the AO of company. For undisclosed investment by share hodler or debenture holder or loan creditor, the recipient of money cannot be assumed to ahve earned undisclsoed income warranting addition u/s 68.

AI Summary

Concealment of income risk: penalties contestable where unexplained share application money and loans reflect third party non cooperation. When a company cannot substantiate received share application money and unsecured loans, additions may be made as unexplained income and concealment penalty levied; however, if non production of contributors arises from contributors' undisclosed investments and non cooperation, the recipient should not automatically be presumed to have undisclosed income, and a defence should stress origin of funds and third party responsibility.