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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
आदेश / O R D E R
PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of the CIT(A)-2, Bhopal dated 27.2.2016 pertaining to the
[ ] [M/s. Righill Electricals Pvt. Ltd., Bhopal] assessment year 2004-05. The assessee has raised following grounds of appeal:
1. “That on the facts and in the circumstances of the case of the assessee the learned CIT(A) was not justified in confirming addition of Rs.20,00,000/- with regards to receipt of share capital from M/s. Preswell Industries Ltd. specially when the director of the company had appeared before the AO and have confirmed the transaction.
2. That on the facts and in the circumstances of the case of the assessee the learned CIT(A) was not justified in confirming addition of Rs.10,00,000/- with regards to receipt of share capital from M/s. Sab Computing P Ltd. specially when the assessment of the relevant period in the case of the share holder was completed u/s 153C of the Act. 3. That on the facts and in the circumstances of the case the learned CIT(A) was not justified in confirming the addition of Rs.70,00,000/- u/s 68.” 2. The facts giving rise to the present appeal are that the assessee filed its return of income declaring income of Rs.7,61,660/- on 31.10.2004. This is second round of litigation. In the earlier round, the matter travelled up to this Tribunal. This Tribunal was pleased to sustain reopening of the assessment. However, on merit matter was restored to the A.O. for deciding afresh as per law. In pursuant to the said directions, assessing officer again made addition of Rs.70 lakhs in respect of the share
[ ] [M/s. Righill Electricals Pvt. Ltd., Bhopal] application money received from Shrereevar Overseas Ltd., Nanadan Mercantile Pvt. Ltd. & Presswell Industries Ltd.
Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A) who after considering the submissions sustained the addition. The only effective ground in this appeal is sustaining addition of Rs.70 lakhs. Ld. Counsel for the assessee reiterated the submissions as made in the written submissions, which are reproduced as under:
[ ] [M/s. Righill Electricals Pvt. Ltd., Bhopal] [ ] [M/s. Righill Electricals Pvt. Ltd., Bhopal] [ ] [M/s. Righill Electricals Pvt. Ltd., Bhopal]
On the contrary, Ld. D.R. opposed the submissions and supported the order of the A.O.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The A.O. was directed to make
[ ] [M/s. Righill Electricals Pvt. Ltd., Bhopal] enquiry to verify the veracity of transactions in question.
The objections of the A.O. with regard to the explanation of the assessee are reproduced as under:
[ ] [M/s. Righill Electricals Pvt. Ltd., Bhopal]
6. We do not see any infirmity into the assessment order.
Admittedly, the assessee could not explain as to why these shares were brought back at such a lower price. We are of the considered view the genuineness of any transaction is to be decided on the basis of the surrounding circumstances. There is no dispute so far the contention that a decision for allotment of share by the assessee is 8
[ ] [M/s. Righill Electricals Pvt. Ltd., Bhopal] purely in its domain. The consideration of transaction on the stand point of taxability would be certainly subject to scrutiny by the assessing authority. The transactions made in cash remains under dark without any record. The assessee therefore has to offer a logical explanation that such transaction(s) is bonafide and not a device to evade tax. The certain transactions where shares have been purchased at a high premium and sold within a short time at a throw away price, such transaction could cause suspicion, hence, it is incumbent upon the transacting parties to dispel such suspicion by placing material evidence before the A.O. In the absence of such explanation, A.O. would be justified to make addition.
Merely, the identity of the parties, in our view would not be sufficient to come to conclusion that the transaction of receiving share capital was genuine and no undisclosed consideration had exchanged hands. In the present case,
[ ] [M/s. Righill Electricals Pvt. Ltd., Bhopal] the explanation offered by the assessee is without supported by the material evidence to prove the genuineness of the shares being sold back to the directors of assessee company at a very lower price. Our view is also fortified by the judgements of the Hon'ble Delhi High Court in the case of CIT Vs. D.K. Garg (2017) 84 Taxmann.com 257 (Delhi), CIT Vs. Ultra Modern Exports Pvt. Ltd. (2013)
40 Taxmann.com 458 (Del), Seema Jain Vs. ACIT Circle- 59(1), New Delhi (2018) 96 taxmann.com 307 (Delhi) and rendered in the case of CIT Vs. Nova Promoters & Finlease (P) Ltd.(2012) 18 Taxmann.com 217 (Del.) Hence, no interference is called for. Grounds raised by the assessee are dismissed.
In the result, appeal filed by the assessee is dismissed. Order was pronounced in the open court on 13 .02.2019.