TaxTMI 
TaxTMI 
2025 (9) TMI 704
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....nd also confirming the additions made by the AO. 2. The assessee company is engaged in trading and distribution business. The return of income filed by the assessee was processed u/s 143(1) of the Act. Subsequently, the AO received information from the investigation wing that they have conducted search in Pravin Kumar Jain group of cases and found out that they were providing only accommodation entries, inter alia, in the form of giving share application money. The investigation wing also reported that the assessee is one of the beneficiaries of the accommodation entries. Accordingly, the AO reopened the assessment of the year under consideration by issuing notice u/s 147 of the Act. 3. The AO noticed that the assessee has received sh....
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....xplained expenditure u/s 69C of the Act. 5. The assessee had incurred business promotion expenses of Rs. 2,86,875/- and it related to a hotel bill towards food bill. Since the assessee did not declare any income during the year, the AO disallowed the above said expenses claimed by the assessee. 6. Before Ld CIT(A), the assessee challenged the validity of reopening of assessment and also the various additions made by the AO. However, the Ld CIT(A) dismissed the appeal of the assessee and hence the assessee has filed this appeal. 7. We heard the parties and perused the record. The first issue relates to the addition of share application money of Rs. 75.00 lakhs made u/s 68 of the Act. Under the provisions of sec.68 of the Act, it is ....
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....f the Act, as held by Hon'ble jurisdictional Bombay High Court in the case of CIT vs. Goa Sponge and Power ltd (ITXA No.16 of 2012)(Bom). 9. However, we notice that the AO has primarily placed reliance on the report given by the Investigation wing. The AO has specifically observed in para 11 of the assessment order that the revenue is not doubting the receipt of share application money, but he is having doubt on the genuineness of transactions. When the assessee has received the share application money through banking channels and the said payments are duly reflected in the financial statements of these three companies and also in the financial statement of the assessee company, in our view, there is no scope for doubting the genuineness....
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....n that the assessee did not carry on any business activity. The Ld CIT(A) further observed that the hotel bill does not mention the purpose of expenditure as "Investor Meet". 14. We heard the parties on this issue and perused the record. The settled proposition of law that any expenditure incurred after setting up of business is allowable as business expenditure, even if no revenue is generated. We notice that it is not the case of the tax authorities that the business of the assessee was not set up. In the absence of such a finding, in our view, the disallowance of entire hotel expenses is not justified, when the assessee has stated that it has been incurred towards investor meet. We notice that the AO has not disproved this submission ....