TaxTMI 
TaxTMI 
2026 (7) TMI 1392
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....ee participated in the assessment proceedings. 3. During the assessment proceedings, the AO observed that the assessee has raised share application money during the year under consideration, which was at Rs. 3,00,77,861.38 as at 31.03.2016 and which increased to Rs. 3,18,58,700.38 as at 31st March, 2017, while the assessee was not doing any business during the year under consideration as per reply dated 03.10.2019 submitted by the assessee itself, details of share application money raised by the assessee are as under: S. No. Particulars Opening Balance (In Rs.) Transaction during the year Closing Balance In Rs. Debit In Rs. Credit In Rs. 1 Amit Chadha 17,42,890 17,42,890 2 Anil Kumar Chadha 2,44,000 2,44,000 3 Komal Chawla 31,44,000 50,000 31,94,000 4 Manik Chawla 14,33,408.41 90,000 13,43,408.41 5 Nitin Chawla 13,27,180 13,27,180 6 Om Pramash Chawla 1,38,020 1,38,020 7 Seema Chadha 34,110 34,110 8 PalcoPlast Pvt. Ltd. 31,54,480 &n....
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....r the following purposes: i) Repayment of secured loan taken against and for land & building; ii) Repairs & renovation of business premises. iii) Repayable of old dues payable to outside parties. 3.1.4 The party ledger was also submitted by the assessee before the AO, but the AO observed that the assessee has misreported the income under the wrong heads as it was shown as share application money despite the fact that there was no business activities carried on by the assessee. Later on the assessee requested to treat the same as unsecured loans. The AO observed that it is not prudent for any business houses to receive share application money when there is no business carried on by the assessee. The AO observed that no prospectus was issued by the assessee for raising share application money. The AO in the concluding para 3.2 observed that the assessee has not submitted the confirmation from the parties concerned. The AO made the addition by invoking the provisions of section 68 of the Act, wherein the AO made the additions to the tune of Rs. 17,80,839/- as unexplained money received during the year and added the same to the income of the assessee. 3....
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....ve also observed that assessee has claimed that it was undertaking expansion of its business till financial year ended on 31st March, 2014, but however, in the financial year ending 31st March, 2015, the assessee business has to discontinue due to being heavy pollution industry. Since then business is lying closed. I have observed that the assessee company was having share application money as at 31st March, 2016 of Rs. 3,00,77,861/-, which increased to Rs. 3,18,58,700.38 as at 31st March, 2017. The assessee received share application money of Rs. 23,49,364/- from four parties during the year under consideration, and has repaid Rs. 5,68,525/- to three parties as tabulated below:- S. No. Particulars Opening Balance (In Rs.) Transaction during the year Closing Balance In Rs. Debit In Rs. Credit In Rs. 1 Amit Chadha 17,42,890 17,42,890 2 Anil Kumar Chadha 2,44,000 2,44,000 3 Komal Chawla 31,44,000 50,000 31,94,000 4 Manik Chawla 14,33,408.41 90,000 13,43,408.41 5 Nitin Chawla 13,27,180 13,27,180 6 Om Prama....
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....mine taxable income under the 1961 Act, and are not proceedings under the Companies Act, SEBI, Securities Contract Regulation Act etc. The authorities below proceeded to make addition u/s. 68 on account of suspicion, conjectures and surmises. The authorities below has not brought on record any cogent incriminating material to rebut the initial onus u/s. 68 which stood discharged by the assessee. The AO has concluded that since the business stood discontinued, there is no need to raise share application money, in my considered view, it is the businessman who has to decide the manner in which his business needs to be organized keeping in view commercial expediency, and not for the Revenue to sit on the arm chair of businessmen to decide as to the manner in which businesses are to be run by the assessee, unless the purpose of such organizing is malafide in order to evade taxes. Reference is drawn to the decision of Hon'ble Supreme Court in the case of S A Builders (2007) 288 ITR 1(SC). In my considered view keeping in view facts and circumstances of the case, there is no justification for making additions of Rs. 17,80,839/- u/s. 68 of the 1961 Act, and I hereby direct to delete the sa....
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....r the head 'Income from business or profession. The AO has brought to tax under the head income merely on the ground that the tax has to be deducted by the lessee u/s. 194-I of the 1961 Act. 4.4 The Ld. Sr. DR relied upon the orders of the authorities below. 4.5 I have considered rival submissions and perused the materials available on record. The assessee was engaged in running of business of dyeing and printing of cloth at its factory at Khuskhera Industrial Area, Bhiwadi, Rajasthan. Due to restriction on heavy pollution industry, it has to discontinue its business operations during the year ended on 31st March, 2015. I have observed that the assessee is claiming that it has let out the entire industrial unit consisting of factory land & building, electrical and other machinery set up to operate assessee's factory, office premises and office set up, and water pollution and other equipments, on rental basis for which the assessee received rent of Rs. 11,00,000/- during the year under consideration. It is pertinent to mention that the business of the assessee being dying and printing of cloth at its factory at Bhiwadi stood closed as back as in the financial year ended 31st M....
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....e assessee is also aggrieved by disallowing of the business loss of Rs. 8,24,305/- by the AO as was claimed by the assessee in its return of income filed with the revenue, and which was set aside by the Ld. CIT(A) while adjudicating first appeal to the file of the AO to verify the record and, accordingly, adjudicate the same. Before me, the assessee submitted that the Ld. CIT(A) remitted the matter to the file of the AO but the AO has not adjudicated the same. It is a faceless assessment and AO be directed to allow the losses. 5.2. The Ld. Sr. DR relied upon the order of the authorities below. 5.3. I have considered the rival contention and perused the materials available on record. Admittedly the assessee has discontinued the business operation since financial year ending on 31st March, 2015 due to restriction on heavy pollution industry. There is no business activities carried out by the assessee during the year under consideration. Infact, there is supervening impossibility of carrying out its business of dying and printing of cloth at its factory owing to pollution restrictions. There is no Government/Court Order which allowed carrying out such activity, and hence there i....