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Income Tax Appellate Tribunal, HYDERABAD ‘ A ‘ BENCH, HYDERABAD.
Before: SHRI S.S. GODARA & SHRI LAXMI PRASAD SAHU
O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2014-15 arises from the Commissioner of Income Tax (Appeals)-1, Hyderabad order dt.25.03.2017 passed in case No.0536/2016-17/ITO-17(3)/CIT(A)-1/Hyd/2019-20 in proceedings under Section 143(3) of Income Tax Act, 1961 (‘the Act’).
Heard both the parties. Case file perused.
The assessee's sole substantive grievance challenges correctness of both the lower authorities’ action adding of unexplained share capital of Rs.1,15,66,200 u/s.68 of the Act. It transpires during the course of hearing that the assessee had claimed to have raised the same from various investors/cotton growers in its regular business of processing and sale of agro products including cotton. The Assessing Officer’s assessment order dt.31.122.2015 attributed the assessee's failure in respect of 42 of such investors in the light of their meagre land holdings vis-à-vis the investment made. All this made him to add the impugned sum(s) as unexplained share capital u/s. 68 of the Act.
The assessee preferred appeal before the CIT(A). It further filed additional evidence(s) as well. The CIT(A) issued corresponding directions to the field authorities. The Assessing Officer filed his remand report dt.22.6.2018 on the ground reiterating the earlier findings that the share capital of impugned 42 parties was disproportionate to their land holdings. The CIT(A) has thereafter confirmed the impugned addition as under :
“ 10.3 During the appeal proceedings, the appellant submitted additional evidence. Hence, a remand report was called from the Assessing Officer on 15-
We have given our thoughtful consideration to the rival pleadings. Suffice to say, it is not in dispute that both the lower authorities decline to accept the assessee's share capital of Rs.1,15,66,200 out of the total sum of Rs.3,40,72,000 in involving 42 investors. It is an admitted fact that of these 42 parties have duly filed confirmations both in the course of assessment as well as remand proceedings.
The assessee has also submitted a detailed paper book before us running into more than 200 pages comprising of all the details of the said 42 investor parties. We make it clear that this is not the Revenue’s case that the assessee had failed to prove identity of investors in the course of factual verification. The Assessing Officer as well as CIT(A) have observed that the said investors land holdings are very much disproportionate to the corresponding share capital money. Learned department representative failed to indicate the so called disproportionate investment qua the share capital investors’ land holdings. In other words, apart from merely making sweeping remarks, neither the Assessing Officer nor the CIT(A) have examined the assessee's detailed evidences as well as the confirmations from all the remaining parties on merits. We thus conclude in this factual matrix that the impugned unexplained share capital addition of Rs.1,15,66,200 made in respect of the assessee's 42 investor parties does not deserve to be upheld. The same is directed to be deleted for this precise reason only.
All other pleadings of assessee are rendered infructuous.
This assessee's appeal is allowed in above terms. Order pronounced in the open court on 23rd April, 2021.