TaxTMI 
TaxTMI 
2023 (1) TMI 1545
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....any event the Ld. Commissioner (Appeals) erred is not appreciating that the said cash credit did not result in any generation of asset or accretion of funds to the appellant company. The corresponding amount covered by the cash credit has not even been received during the year and hence addition is unwarranted. 5. The Ld. CIT Appeals failed to consider that the appellant has fully explained the nature and source and furnished all relevant details relating to the accounting entry of share application moneys and as such the addition is erroneous. On the facts of the case no addition is warranted. Addition of Rs. 10,00,000 u/s. 68: 6. The Ld. Commissioner (Appeals) erred in upholding the addition of Rs. 10,00,000 as unexplained cash credit in the name of Ranjan Agarwal u/s 68 of the Income Tax Act. 7. The Ld. CIT Appeals failed to appreciate that the said amount was received in the Asst. Year 2009-2010 as loan and during Asst. Year 2010-2011 (year under appeal) the same loan was transferred as Share Application Money. Therefore. the addition of the said sum of Rs. 10,00,000 as unexplained cash credit u/s. 68 is erroneous as no funds were received du....
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....rabad :. Rs. 80,00,000/- Summons u/s. 131 were issued to all the share applicants. In response to summons, Mr. Hema Kedia Proprietrix of M/s. Tanay Agro Food Product is sought an adjournment initially. Meanwhile, on learning that she is assessed with ITO, Ward -7(3), Hyderabad, enquiries were made with ITO, Ward-7(3) and copies of balance sheet, details of investments were obtained from him as flied by Mrs. Hema Kedia. Verification of the information received from the ITQ, Ward-7(3) reveals. that the assessee's name as a debtor or the so called money as an investment of Share Application Money was not appearing in the balance sheet of Mrs. Hema Kedia, Therefore, it is very clear that the so called "hare application money purported to have been received and credited to the account of Mrs. Hema Kedia, Prop: M/s. Tanay Agro Food Products is nothing but a bogus entry. As can be seen from the bank account statement of M/s. Tanay Agro Food Products, the date on which the amount realized by the assessee-company pertains to F.Y. 2010-11 relevant to A.Y 2011-12. The AR of the assessee, when confronted, stated that, N.rs. Hema Kedia gave the cheque on the last day of F.Y. 2009-1....
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.... the same reveals that an amount of Rs. 11,23,856/- was simply stated as "Outstanding Liabilities 2009-10" without giving any bifurcation regarding nature of such liabilities etc. Therefore in the absence of full details the same amount is added back u/s. 68, as the same can be categorized as unascertained liability. Addition on this ground u/s 68: Rs. 11,23,856/-. " 3. Feeling aggrieved by the order passed by the assessing officer, assessee filed appeal before the Ld. CIT(A). However, the Ld. CIT(A) had also not granted the relief to the assessee, the reasons and the finding of the Ld. CIT(A) while disposing of the appeal are as under :- "7.3 The submissions of the appellant have been carefully considered. The submissions were submitted before me are found to be repetition of already submitted before the Assessing Officer. The appellant has not filed any new information before me. The contention of the appellant is not based on any evidence and are rejected by following reasons : ● The appellant has justified the genuineness and creditworthiness of Smt. Herr-a Kedia, as she has given in cheque payment. The contention of the appellant that mere writing....
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....plication Money' from Smt. Ranjana Agarwal. Accordingly, summons u/s.131 were issued to Smt. Ranjana Agarwal. In response, Smt. Ranjana Agarwal, Hyderabad, on 04.03.2013, stated that during the F.Y. 2004-05 she has given unsecured loan of Rs. 10,00,000/- to M/s. Agarwal Agri & Steel Pvt Ltd. The Assessing Officer asked specifically about the investment of share application money during the F.Y. 2009-10 in M/s. Agarwal Industries Pvt Ltd, Smt. Ranjana Agarwal stated that she has not invested any amount and categorically denied the claim of assessee-company. In view of this, the Assessing Officer treated the entire share application money of Rs. 10,00,000/- invested by Smt. Ranjana Agarwal as Unexplained cash credit in the hands/books of the assessee-company. 8.2 Before me, the appellant submitted that the loan was borrowed from Mrs. Ranjana Agarwal in the FY 2004-05 of Rs.30,00,000/-. This amount was lent by her to another company called M/s. Agarwal Agri & Steel Private limited. This has nothing to do with the appellant company. The appellant submitted that they have also received a further sum of Rs.10 Lakhs as unsecured loan from one Mr. Ranjan Agarwal in the FY 2008....
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....ssment proceedings, the Assessing Officer noticed that the assessee has interest receipts of Rs.8,29,45,204/_ during the year. On reconciliation with Form 26AS, it was noticed that the interest receipts are Rs.8,42,63,499/-. Hence, there was a difference of Rs.23,18,295/- in the interest receipt and Form 26AS. In view of this, the Assessing Officer has made an addition of Rs.23,18,295/- to the income returned. 9.2 Before me, the appellant submitted as under: a. The interest in Form 26AS may not tally/reconcile with the actual interest for several factors. The appellant submitted that the Interest on fixed deposits was reduced when it was withdrawn premature. Whereas in the TDS returns filed by the banks, the interest shown without taking into consideration the reversal of interest on pre-closure of term deposits at a later date. The appellant submitted there were many instances of such premature/pre-closure of term deposits. b. Reconciliation of the entire difference and details of reversal of interest was filed before the Assessing Officer on 28th March, 2013. But the Assessing Officer preferred to remain silent in the assessment order and finds it conve....
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....on 28th March 2011 to Mrs. Hema Kedia. 5.2. It was a submission of the Ld.AR that the above explanation was furnished by the assessee before the CIT(A) however he has not accepted it and the additions were made in the hands of assessee. The contention of the Ld.AR before us is that no money has been received by the assessee in the year under consideration, hence, no addition could be made in the hands of the assessee as income of the assessee. Further it was the contention of the assessee that the money was received by the assessee only on 30th August 2010 which is nor relevant to assessment year under consideration and therefore, no addition can be made. It was also contended that once the assessee in the appellate proceedings had produced the deposit slip, the certificate from the bank and the confirmation letter from the husband of Mrs. Hema Kedia, no addition can be made in the hands of the assessee as assessee had proved the identity, the creditworthiness and genuineness of the transactions made by Mrs. Hema Kedia. 5.3. In support of the case of the assessee, the AR of the assessee had filed the following written synopsis to the following effect; - 1. A Cheque w....
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....st High Court's ruling that where assessee had failed to give list of persons who 'advanced cash to him along with their confirmation in` respect of huge amount cash deposited in its bank account, Assessing Officer was justified in adding said amount to assessee's taxable income under section 68 NDR Promoters Pvt. Ltd. Vs. PCIT Supreme Court 2016 (2019) 69 taxmann.com 53 (SC)/(2019) 266 Taxman 93 (SC) SLP dismissed against High Court ruling that where Assessing Officer made additions to assessee's income under section 68 in respect of amount received as share capital from several companies, in view of fact that all of these companies were maintained by one person who was engaged in providing accommodation entries through paper companies and all such companies were located at same address, impugned addition was justified PCIT Vs NRA Iron & Steel (P.) Ltd. Supreme Court 2019 (2019) 103 taxmann.com 48 [2019] 262 Taxman 74 (SC)/[2019] 412 ITR 161 (SC) Where assessee received share capital/premium, however there was failure of assessee to establish creditworthiness of investor companies, Assessing Officer was ju....
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....hat it does not bear the nature of income. The department is not at this stage required to prove anything. Devi Prasad Vishwanath [1969] 72 ITR 68 AO is not under burden to show the source: When there is an unexplained cash credit it is open to ITO to hold that it is income of assessee and no further burden lies on ITO to show that income is from any particular source. It is for the assessee to prove that even if the cash credit represents income it is income from a source which has already been taxed. There is nothing in law which prevents the ITO in an appropriate case in taxing both the cash credit and the business income estimated by him after rejecting unreliable books of account. 7. We have heard the rival contentions of the parties and perused the material available on record. It is the admitted case of the assessee before us that the assessee had received a cheque for Rs. 5,25,00,000/- dt. 29.03.2010 from Smt. Hema Kedia towards Share Application Money. It is also the admitted case of the assessee that, subsequently the assessee had received a request from the Smt. Hema Kedia, for not to presenting the cheque as she had to arrange the....
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....essee expressed his difficulty stating that the transactions related to the earlier years and has not kept any record. Further, the Assessing Officer had also mentioned that as Ms. Smt. Hema Kedia did not appear pursuant to the notice u/s 131 of the Act. Hence, the Assessing Officer of the assessee retrieved the information from the Assessing Officer of Smt. Hema Kedia and it was noticed by the Assessing Officer that she had not made any investment of share application money in her balance-sheet. Therefore, the Assessing Officer was not satisfied with the explanation given by the assessee and hence, confirmed the additions. 10. The explanation given by the assessee before the ld. CIT(A) was that the cheque dt.29.03.2010 was given by Ms. Hema Kedia for the share application money and cheque was presented with the State Bank of Hyderabad on 28.08.2010 which was encashed on 30.08.2010. Further, the husband of Ms. Hema Kedia namely, Umesh Kedia had informed vide communication dated 07.03.2013 that a cheque was given in the month of March 2010 and they had asked the company not to present the cheque till the fund is arranged. This explanation was given by the assessee by way of addit....
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.... cheque was received in the assessment year 2011-12, therefore, the addition, if any, was required to be made in that year only. It was also the contention that since no real income arose in A.Y. 2010-11, therefore, no addition can be made under section 68 of the Act. 15. In this regard, it is settled proposition of law that the real income theory is not applicable in the context of section 68 of the I.T Act, 1961 which relates to special provision relating to the credit entries made in the books of accounts of the assessee and failure of the assessee to given a satisfactory explanation thereto. In that scenario, the credit made in the books of accounts may be charged as income of the assessee for that previous year. This is a deeming provision and it does not deal with the real income. This provision is anti abuse / anti evasion provision and therefore, the real income theory has to give way to this specific anti abuse provision deeming provision as by virtue of statutes sought to brought to tax by way of a deeming income. In view of the above, we do not find any merit in the submission of ld.AR and accordingly, we confirm the addition made by the lower authorities to the exten....
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.....04.2013 produced before Ld. Commissioner (Appeals)proves his existence, address and Income Tax PAN Number. The loan was given in the F.Y2008-2009 vide Cheque No. 708584 dt.24.03.2009 drawn on ICICI Bank. This loan was encashed in the preceding year 2008-2009 itself Therefore this transaction does not appear in the bank statement of the financial year 2009-2010 (Asst. Year 2010-11). 22. During the FY 2009-10 this amount which was given as loan is transferred to Share Application Money. The Ld. Commissioner (Appeals) having taken the letter dt. 21.04.2013 of Shri Ranjan Agarwal on record has not called for any further particulars or sought any clarifications. She has straight away dismissed the appeal on this issue on grounds untenable." 17. Per contra, the ld. DR relied upon the order passed by the lower authorities. He had also issued that the Assessing Officer had issued notice to Ms. Ranjan Agarwal u/s 131. However, she had refused to have invested any amount and categorically denied the claim of the assessee company. As Smt. Ranjan Agarwal has categorically denied, therefore, the entire amount had been added as unexplained cash credit in the books of accounts of the....
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.... share applicant, then that information alone was required to be tested on the anvil of law. In the present case, the lower authorities have verified the information and thereafter, recorded the finding and that no such investment was made by Smt. Ranjana Agarwal. The case of the assessee before the ld. CIT(A) was contrary to its case before the Assessing Officer, as the assessee had changed its version and submitted that the investment was made not by Smt. Ranjana Agarwal but by Mr. Ranjan Agarwal. In our view, there could be any confusion or doubt in the minds of the assessee, which is a company, as the records of the company are required to be maintained in accordance with the law. Such records include the record of share and share application and the money received for that purposes. In the present case, it is difficult to accept that assessee without knowing the actual share holder / share applicant, had credited the amount in its books of accounts, against the share application. 21. The conduct of the assessee is approbate and reprobate which is impermissible. This proposition is supported by the decision of Hon'ble Bombay High Court reported at 214 ITR 210 (Bom.) in t....