Loading judgment…
Facts
The assessee filed its return of income for AY 2011-12. During scrutiny, the Assessing Officer made additions for foreign travel expenses, product development expenses, trademark expenses, domain expenses, bogus purchases, unexplained share capital, share premium, and share warrants. The assessee failed to appear for hearings.
Held
The Tribunal noted that the assessee did not appear for the hearings and proceeded ex-parte. The Tribunal found that the assessee failed to provide sufficient evidence for various expenses and also failed to establish the genuineness, creditworthiness, and identity of share subscribers for the unexplained credits.
Key Issues
Whether the disallowance of expenses for foreign travel, product development, trademark, and domain registration is justified. Whether additions for bogus purchases and unexplained share capital/premium/warrants are sustainable without proper evidence of genuineness and creditworthiness.
Sections Cited
37(1), 69C, 68, 56(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT
ORDER PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 31.07.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2011-12, raising following grounds:
1. On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance of Foreign Travelling Expenses of Rs.48,976 though the expenditure was incurred for the purpose of business.
2. On the facts and the circumstances of the case and in law, the On the facts and the circumstances of the case and in law, the On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance of Product learned CIT(A) erred in confirming the disallowance of Product learned CIT(A) erred in confirming the disallowance of Product Development Development Development Expenses Expenses Expenses of of of Rs.1,50,000 Rs.1,50,000 Rs.1,50,000 though though though the the the said said said expenditure was in the n expenditure was in the nature of revenue. The expenditure was in ature of revenue. The expenditure was in the nature of day to day expenses incurred for the purpose of the nature of day to day expenses incurred for the purpose of the nature of day to day expenses incurred for the purpose of business.
3. On the facts and the circumstances of the case and in law, the On the facts and the circumstances of the case and in law, the On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance Trade Mark learned CIT(A) erred in confirming the disallowance Trade Mark learned CIT(A) erred in confirming the disallowance Trade Mark Expenses of Rs Expenses of Rs.37,603 though the said expenditure was revenue .37,603 though the said expenditure was revenue nature.
On the facts and the circumstances of the case and in law, the On the facts and the circumstances of the case and in law, the On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance Domain learned CIT(A) erred in confirming the disallowance Domain learned CIT(A) erred in confirming the disallowance Domain Expenses of Rs.23,543 though the said expenditure was revenue Expenses of Rs.23,543 though the said expenditure was revenue Expenses of Rs.23,543 though the said expenditure was revenue nature 5. On the facts and the circumstances of the case and in law, the the facts and the circumstances of the case and in law, the the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of learned CIT(A) erred in confirming the addition on account of learned CIT(A) erred in confirming the addition on account of alleged bogus purchases of Rs.75,600 made by AO u/s 69C of the alleged bogus purchases of Rs.75,600 made by AO u/s 69C of the alleged bogus purchases of Rs.75,600 made by AO u/s 69C of the act though the purchases were genuine. act though the purchases were genuine. 6. a) On the facts and the circu a) On the facts and the circumstances of the case and in law, mstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of the learned CIT(A) erred in confirming the addition on account of the learned CIT(A) erred in confirming the addition on account of increase in Share Capital of Rs.50,55,980 under S.68) of the act increase in Share Capital of Rs.50,55,980 under S.68) of the act increase in Share Capital of Rs.50,55,980 under S.68) of the act though the appellant has proved sufficient documents explaining though the appellant has proved sufficient documents explaining though the appellant has proved sufficient documents explaining the credit worthiness and id the credit worthiness and identity of the applicants. b) The AO has erred in not considering the details submitted and b) The AO has erred in not considering the details submitted and b) The AO has erred in not considering the details submitted and has not given Remand report in spite of repeated request and has not given Remand report in spite of repeated request and has not given Remand report in spite of repeated request and direction of the CIT(A). The CIT(A) failed to have consider the full direction of the CIT(A). The CIT(A) failed to have consider the full direction of the CIT(A). The CIT(A) failed to have consider the full submission and documents filed. submission and documents filed. On facts and circumstances of the case and law provisions of facts and circumstances of the case and law provisions of facts and circumstances of the case and law provisions of S.68) are not applicable and hence no additions could have been S.68) are not applicable and hence no additions could have been S.68) are not applicable and hence no additions could have been made. 7. a) On the facts and the circumstances of the case and in law, On the facts and the circumstances of the case and in law, On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the learned CIT(A) erred in confirming the addition on on account of Share Premium of Rs.67,25,020 under S.56(1) of the act though Share Premium of Rs.67,25,020 under S.56(1) of the act though Share Premium of Rs.67,25,020 under S.56(1) of the act though the appellant has provided sufficient documents for charging the the appellant has provided sufficient documents for charging the the appellant has provided sufficient documents for charging the premium. b) The AO has erred in not considering the details submitted and b) The AO has erred in not considering the details submitted and b) The AO has erred in not considering the details submitted and has not given Remand report in spite of repeated req has not given Remand report in spite of repeated req has not given Remand report in spite of repeated request and direction of the CIT(A). The CIT(A) failed to have consider the full direction of the CIT(A). The CIT(A) failed to have consider the full direction of the CIT(A). The CIT(A) failed to have consider the full submission and documents filed. submission and documents filed.
c) On facts and circumstances of the case and law provisions of On facts and circumstances of the case and law provisions of On facts and circumstances of the case and law provisions of S.56(1) are not applicable and hence no additions could have been S.56(1) are not applicable and hence no additions could have been S.56(1) are not applicable and hence no additions could have been made. 8. a) On the facts and the circumstances of the case and in law, he facts and the circumstances of the case and in law, he facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of the learned CIT(A) erred in confirming the addition on account of the learned CIT(A) erred in confirming the addition on account of Share Warrant of Rs.90,00,000 issued to Bennet Coleman Co Ltd Share Warrant of Rs.90,00,000 issued to Bennet Coleman Co Ltd Share Warrant of Rs.90,00,000 issued to Bennet Coleman Co Ltd (Times of India) u/s 68 of the act. (Times of India) u/s 68 of the act. b) The learned CIT(A) was provided wi b) The learned CIT(A) was provided with full details, however th full details, however CIT(A) erred in not considering the details submitted. The CIT(A) CIT(A) erred in not considering the details submitted. The CIT(A) CIT(A) erred in not considering the details submitted. The CIT(A) failed to have consider the full submission and documents filed. failed to have consider the full submission and documents filed. failed to have consider the full submission and documents filed. On facts and circumstances of the case and law provisions of On facts and circumstances of the case and law provisions of On facts and circumstances of the case and law provisions of S.68 are not applicable to the facts of are not applicable to the facts of the case and hence no additions the case and hence no additions could have been been made.
At the outset, it is pertinent to record that despite due service At the outset, it is pertinent to record that despite due service At the outset, it is pertinent to record that despite due service of notice, neither did any authorised representative appear on of notice, neither did any authorised representative appear on of notice, neither did any authorised representative appear on behalf of the assessee nor was any application seeking adjournment behalf of the assessee nor was any application seeking adjournment behalf of the assessee nor was any application seeking adjournment filed. In these circumstances, and noting that the matter pertains to In these circumstances, and noting that the matter pertains to In these circumstances, and noting that the matter pertains to A.Y. 2012-13 and has already remained pending for considerable 13 and has already remained pending for considerable 13 and has already remained pending for considerable time, we are constrained to hold that the assessee is not interested time, we are constrained to hold that the assessee is not interested time, we are constrained to hold that the assessee is not interested in pursuing the appeal. We therefore proceed to adjudicate the in pursuing the appeal. We therefore proceed to adjudi in pursuing the appeal. We therefore proceed to adjudi appeal ex-parte qua the assessee, after hearing the submissions of the assessee, after hearing the submissions of the assessee, after hearing the submissions of the learned Departmental Representative (DR) and examining the the learned Departmental Representative (DR) and examining the the learned Departmental Representative (DR) and examining the record.
The facts in brief of The facts in brief of the case are that the assessee filed its the assessee filed its return of income for the year under consid return of income for the year under consideration on 30.09.2012 eration on 30.09.2012 declaring total income of Rs.8,56,032/ declaring total income of Rs.8,56,032/-. The return of income filed . The return of income filed by the assessee was selected for scrutiny. The assessee was mainly by the assessee was selected for scrutiny. The assessee was mainly by the assessee was selected for scrutiny. The assessee was mainly engaged in the manufacturing of cosmetics products. In the course engaged in the manufacturing of cosmetics products. In the course engaged in the manufacturing of cosmetics products. In the course of scrutiny, the Assessing Office of scrutiny, the Assessing Officer asked the assessee to furnish r asked the assessee to furnish details of various expenses inter details of various expenses inter-alia penalty of Rs.5,000/ alia penalty of Rs.5,000/-, foreign travelling expenses of Rs.48,976/ travelling expenses of Rs.48,976/-, product development expenses, , product development expenses, trade mark expenses, domain registration expenses purchase made trade mark expenses, domain registration expenses purchase made trade mark expenses, domain registration expenses purchase made from M/s Payal Enterpris from M/s Payal Enterprises expenses purchases made from the es expenses purchases made from the related party details of share application money etc. After related party details of share application money etc. After related party details of share application money etc. After considering the submission of the assessee, the Assessing Officer considering the submission of the assessee, the Assessing Officer considering the submission of the assessee, the Assessing Officer made following additions: additions:
Add Disallowance out of expenses Disallowance out of expenses 5000 as discussed in para (4) above as discussed in para (4) above Foreign Travel 48976 As discussed in para (5) above As discussed in para (5) above Out of Various Expenses Out of Various Expenses 211147.60 (-)1163343.40 As discussed in para (6) above As discussed in para (6) above Unexplained Expenditure Unexplained Expenditure 75600 As discussed in para (7) above As discussed in para (7) above Unexplained Cash Credits Unexplained Cash Credits 5055980 As discussed in para As discussed in para (9) above Unexplained Cash Credits Unexplained Cash Credits 9000000 As discussed in para (10) above As discussed in para (10) above Income from Other sources Income from Other sources 6725020 As discussed in para (8) As discussed in para (8) Taxable Total income Taxable Total income 22003256.60 Rounded off to 22003257 4. In relation to ground No. 1 of the In relation to ground No. 1 of the appeal, the learned CIT(A) he learned CIT(A) noted that the Director travelled to Dubai and Bangkok. The noted that the Director travelled to Dubai and Bangkok. The noted that the Director travelled to Dubai and Bangkok. The assessee failed to produce any material demonstrating that such assessee failed to produce any material demonstrating that such assessee failed to produce any material demonstrating that such travel was undertaken for business purposes. Apart from certain travel was undertaken for business purposes. Apart from certain travel was undertaken for business purposes. Apart from certain invoices, no evidence invoices, no evidence—such as meeting schedules, c such as meeting schedules, correspondence, or business reports— —was furnished either before the Assessing was furnished either before the Assessing Officer or before the CIT(A). In absence of any nexus with business, Officer or before the CIT(A). In absence of any nexus with business, Officer or before the CIT(A). In absence of any nexus with business, the learned CIT(A) confirmed the disallowance. Before us also, no the learned CIT(A) confirmed the disallowance. Before us also, the learned CIT(A) confirmed the disallowance. Before us also, material whatsoever material whatsoever has been placed to contradict the factual adict the factual findings of the learned CIT(A). We find no infirmity in his conclusion findings of the learned CIT(A). We find no infirmity in his conclusion findings of the learned CIT(A). We find no infirmity in his conclusion that the assessee failed to discharge its burden under section 37(1). that the assessee failed to discharge its burden under section 37(1). that the assessee failed to discharge its burden under section 37(1). The ground No. 1 of the appeal of the assessee is accordingly The ground No. 1 of the appeal of the assessee is accordingly The ground No. 1 of the appeal of the assessee is accordingly dismissed.
The ground No. 2 of The ground No. 2 of the appeal of the assessee relate to the appeal of the assessee relate to disallowance of product development expenses of Rs.1,50,000/-. disallowance of product development expenses of Rs.1,50,000/ disallowance of product development expenses of Rs.1,50,000/ The ground no. 3 relate to disallowance of trade mark expenses of The ground no. 3 relate to disallowance of trade mark expenses of The ground no. 3 relate to disallowance of trade mark expenses of Rs.37,603/- /-. The ground No. 4 relates to domain development . The ground No. 4 relates to domain development . The ground No. 4 relates to domain development expenses of Rs. Rs.23,543/ expenses of Rs. Rs.23,543/-. The Assessing Officer observed that The Assessing Officer observed that the assessee incurred ₹2,11,147/- towards product development, the assessee incurred towards product development, trademark trademark trademark charges, and charges, and charges, and domain domain domain registration. registration. registration. The The assessee The assessee assessee contended that the expenses improved product quality, yet no contended that the expenses improved product quality, yet no contended that the expenses improved product quality, yet no supporting evidence supporting evidence—such as reports, invoices explaining the invoices explaining the nature of services, or proof of business necessity nature of services, or proof of business necessity— —was furnished. Said arguments of the assessee were not accepted by the lower Said arguments of the assessee were not accepted by the lower Said arguments of the assessee were not accepted by the lower authorities. The learned CIT(A) sustained disallowance on this The learned CIT(A) sustained disallowance on this The learned CIT(A) sustained disallowance on this issue. Before us, as well, the assessee Before us, as well, the assessee has not produced any fresh has not produced any fresh evidence to establish the business necessity or revenue nature of evidence to establish the business necessity or revenue nature of evidence to establish the business necessity or revenue nature of these expenditures. Accordingly, we uphold the findings of the these expenditures. Accordingly, we uphold the findings of the these expenditures. Accordingly, we uphold the findings of the learned CIT(A) on this issue. learned CIT(A) on this issue. The ground No. 2 to 4 of appeal are The ground No. 2 to 4 of appeal are accordingly dismissed. accordingly dismissed.
The next ground in relation to addition on account of bogus ground in relation to addition on account of bogus ground in relation to addition on account of bogus purchases of Rs.75,600/ purchases of Rs.75,600/-. The facts in brief qua the issue in . The facts in brief qua the issue in dispute are that the Assessing Officer received information from the he Assessing Officer received information from the he Assessing Officer received information from the Investigation Wing indicating that M/s Payal Enterprises was Investigation Wing indicating that M/s Payal Enterprises was Investigation Wing indicating that M/s Payal Enterprises was involved in providing accommodation entries. A notice issued under providing accommodation entries. A notice issued under providing accommodation entries. A notice issued under section 133(6) to the said concern remained unserved. The assessee section 133(6) to the said concern remained unserved. The assessee section 133(6) to the said concern remained unserved. The assessee was informed of this fact but failed to furnish an alternative address was informed of this fact but failed to furnish an alternative address was informed of this fact but failed to furnish an alternative address or any corroborative evidence to establish receipt of goods. The or any corroborative evidence to establish receipt of goods. Th or any corroborative evidence to establish receipt of goods. Th learned CIT(A), noting absence of delivery proofs, transport learned CIT(A), noting absence of delivery proofs, transport learned CIT(A), noting absence of delivery proofs, transport documents, confirmations or discrepancies in stock records, rightly documents, confirmations or discrepancies in stock records, rightly documents, confirmations or discrepancies in stock records, rightly held that mere production of purchase bills is insufficient to held that mere production of purchase bills is insufficient to held that mere production of purchase bills is insufficient to establish genuineness. We concur that the assessee has failed to establish genuineness. We concur that the assessee has failed establish genuineness. We concur that the assessee has failed substantiate the purchases, and therefore, substantiate the purchases, and therefore, the addition of the addition of stands confirmed. ₹75,600/- stands confirmed
The ground 6 relate to share capital at Rs.50,55,980/ The ground 6 relate to share capital at Rs.50,55,980/ The ground 6 relate to share capital at Rs.50,55,980/-. The ground No. 7 relate to share premium of Rs.67,25,020/- and ground No. 7 relate to share premium of Rs.67,25,020/ ground No. 7 relate to share premium of Rs.67,25,020/ ground No. 8 relate to share warrant of Rs.90,00,000/-. The ground No. 8 relate to share warrant of Rs.90,00,000/ ground No. 8 relate to share warrant of Rs.90,00,000/ Assessing Officer made made addition of all these three credits u/s 68 of addition of all these three credits u/s 68 of the Act share premium has been additionally considered u/s 56(1) share premium has been additionally considered u/s 56(1) share premium has been additionally considered u/s 56(1) of the Act. The learned CIT(A), after analysing the assessment order The learned CIT(A), after analysing the assessment order The learned CIT(A), after analysing the assessment order and the evidence on record in meticulous detail from para 6.5 and the evidence on record in meticulous detail from para 6.5 and the evidence on record in meticulous detail from para 6.5 onwards, held that:
Only identity of some subscribers may have been Only identity of some subscribers may have been Only identity of some subscribers may have been established; However, creditworthiness and genuineness were wholly However, creditworthiness and genuineness were wholly However, creditworthiness and genuineness were wholly unproved;
Substantial judicial precedents relied upon by the assessee Substantial judicial precedents relied upon by the assessee Substantial judicial precedents relied upon by the assessee were distinguishable on facts; were distinguishable on facts; The AO had justifiably applied the test of human probabilities, The AO had justifiably applied the test of human probabilities, The AO had justifiably applied the test of human probabilities, especially in view of th especially in view of the assessee’s weak financial position and e assessee’s weak financial position and declining EPS; The high share premium was wholly unjustified in a company The high share premium was wholly unjustified in a company The high share premium was wholly unjustified in a company with insignificant business performance. with insignificant business performance. 7.1 The learned CIT(A) further relied on binding Supreme Court The learned CIT(A) further relied on binding Supreme Court The learned CIT(A) further relied on binding Supreme Court principles, including principles, including McDowell & Co., that empower tax authorities that empower tax authorities to pierce the corporate veil and examine the substance of to pierce the corporate veil and examine the substance of to pierce the corporate veil and examine the substance of transactions. He accordingly upheld the respective additions. The e accordingly upheld the respective additions. The e accordingly upheld the respective additions. The finding of the Ld. CIT(A) is reproduced as under: finding of the Ld. CIT(A) is reproduced as under:
“6.5 Ground No. 7 to 10 and Additional Grounds (i).: 6.5 Ground No. 7 to 10 and Additional Grounds (i).: 6.5 Ground No. 7 to 10 and Additional Grounds (i).: This ground pertains to the addition w.r.t. share capital raised during the year pertains to the addition w.r.t. share capital raised during the year pertains to the addition w.r.t. share capital raised during the year at significant premium despite the appellant company had at significant premium despite the appellant company had at significant premium despite the appellant company had submitted confirmations from major shareholders amounting to submitted confirmations from major shareholders amounting to submitted confirmations from major shareholders amounting to 86.96% along with the details of their address, PAN No., 86.96% along with the details of their address, PAN No., 86.96% along with the details of their address, PAN No., ledger accounts, photocopies of all shareholders. Vide para 8 of the accounts, photocopies of all shareholders. Vide para 8 of the accounts, photocopies of all shareholders. Vide para 8 of the assessment order the AO has noted that the appellant company assessment order the AO has noted that the appellant company assessment order the AO has noted that the appellant company raised share capital amounting to Rs. 50,55,980/ raised share capital amounting to Rs. 50,55,980/- at the premium at the premium of Rs. 67,25,020/ of Rs. 67,25,020/- during the year. Further, the appellant company the appellant company issued 5 share warrants of Rs. 18,00,000/ issued 5 share warrants of Rs. 18,00,000/- each amounting to Rs. each amounting to Rs. 90,00,000/-. Vide para 8.2 and 8.3 of the assessment order, the AO . Vide para 8.2 and 8.3 of the assessment order, the AO . Vide para 8.2 and 8.3 of the assessment order, the AO has discussed in detail including the names of 31 subscribers who has discussed in detail including the names of 31 subscribers who has discussed in detail including the names of 31 subscribers who have subscribed to the shares of the have subscribed to the shares of the company to the extent of Rs. company to the extent of Rs. 50,55,980/- at cumulative premium of Rs. 67,25,020/ at cumulative premium of Rs. 67,25,020/ at cumulative premium of Rs. 67,25,020/-. Vide para 8.4 to 8.33 and further para 9 to 11 elaborate details have been 8.4 to 8.33 and further para 9 to 11 elaborate details have been 8.4 to 8.33 and further para 9 to 11 elaborate details have been discussed by the AO completely establishing absence of the 3 discussed by the AO completely establishing absence of the 3 discussed by the AO completely establishing absence of the 3 conditions as envisaged in sec 68 of conditions as envisaged in sec 68 of the Income Tax Act, 1961, the Income Tax Act, 1961, including regarding share warrants so issued. The AO has gone at including regarding share warrants so issued. The AO has gone at including regarding share warrants so issued. The AO has gone at length to establish that the appellant failed to establish all the three length to establish that the appellant failed to establish all the three length to establish that the appellant failed to establish all the three elements i.e. genuineness, creditworthiness and the identity of the elements i.e. genuineness, creditworthiness and the identity of the elements i.e. genuineness, creditworthiness and the identity of the share subscribers. I ha share subscribers. I have perused the documents filed by the ve perused the documents filed by the appellant before the AO as well as the documents submitted during appellant before the AO as well as the documents submitted during appellant before the AO as well as the documents submitted during the appellate proceedings and I observed that at best only identity the appellate proceedings and I observed that at best only identity the appellate proceedings and I observed that at best only identity appears to have established by the appellant. The appellant has appears to have established by the appellant. The appellant has appears to have established by the appellant. The appellant has squarely failed to e squarely failed to establish the other 2 limbs of the relevant legal stablish the other 2 limbs of the relevant legal principles i.e. genuineness and creditworthiness of the share principles i.e. genuineness and creditworthiness of the share principles i.e. genuineness and creditworthiness of the share subscribers. Mere production of share application forms or certain subscribers. Mere production of share application forms or certain subscribers. Mere production of share application forms or certain documents/evidences pertaining to these transactions does not documents/evidences pertaining to these transactions does not documents/evidences pertaining to these transactions does not merely assist th merely assist the appellant. (ii). It is further observed that both the appellant and the AO have (ii). It is further observed that both the appellant and the AO have (ii). It is further observed that both the appellant and the AO have cited judgments delivered by superior appellate forums. The AO cited judgments delivered by superior appellate forums. The AO cited judgments delivered by superior appellate forums. The AO primarily relies on the cases like McDowells [1985] 154 ITR 148 primarily relies on the cases like McDowells [1985] 154 ITR 148 primarily relies on the cases like McDowells [1985] 154 ITR 148 (SC), Azaadi Bachao Andolan & others v/s Union (SC), Azaadi Bachao Andolan & others v/s Union of India 256 ITR of India 256 ITR 563, Bhopal Fire & General Insurance Limited v/s Commissioner of 563, Bhopal Fire & General Insurance Limited v/s Commissioner of 563, Bhopal Fire & General Insurance Limited v/s Commissioner of Income Tax [1964] 53 ITR 108 and several others. Similarly, the Income Tax [1964] 53 ITR 108 and several others. Similarly, the Income Tax [1964] 53 ITR 108 and several others. Similarly, the appellant has primarily relied upon the case of Lovely Exports Pvt. appellant has primarily relied upon the case of Lovely Exports Pvt. appellant has primarily relied upon the case of Lovely Exports Pvt. Ltd. 216 CTR 195 and certain decisions of Ltd. 216 CTR 195 and certain decisions of various High Courts and various High Courts and various benches of ITAT. While the judgments cited by the Appellant various benches of ITAT. While the judgments cited by the Appellant various benches of ITAT. While the judgments cited by the Appellant do bear some thematic relevance to the issues involved particularly do bear some thematic relevance to the issues involved particularly do bear some thematic relevance to the issues involved particularly on the aspect of procedural fairness on the aspect of procedural fairness-their applicability to the present their applicability to the present case stands materially d case stands materially diluted in view of the specific and iluted in view of the specific and comprehensive factual matrix brought out by the Assessing Officer. comprehensive factual matrix brought out by the Assessing Officer. comprehensive factual matrix brought out by the Assessing Officer. The assessment order, spanning various paragraphs, incorporates The assessment order, spanning various paragraphs, incorporates The assessment order, spanning various paragraphs, incorporates detailed analysis of financial records, reasoning, circumstances and detailed analysis of financial records, reasoning, circumstances and detailed analysis of financial records, reasoning, circumstances and findings which go bey findings which go beyond mere reliance placed by the appellant. ond mere reliance placed by the appellant. Furthermore, the Assessing Officer has relied upon binding Furthermore, the Assessing Officer has relied upon binding Furthermore, the Assessing Officer has relied upon binding decisions of the Hon'ble Supreme Court decisions of the Hon'ble Supreme Court-including McDowell & Co., including McDowell & Co.,- which have upheld the authority of the tax department to pierce the which have upheld the authority of the tax department to pierce the which have upheld the authority of the tax department to pierce the veil of form and exam veil of form and examine the substance of a transaction based on ine the substance of a transaction based on surrounding surrounding surrounding circumstances circumstances circumstances and and and preponderance preponderance preponderance of of of human human human probability. Therefore, the legal propositions advanced by the probability. Therefore, the legal propositions advanced by the probability. Therefore, the legal propositions advanced by the Appellant, though not without academic merit, do not sufficiently Appellant, though not without academic merit, do not sufficiently Appellant, though not without academic merit, do not sufficiently dislodge the cogent findings r dislodge the cogent findings recorded in the assessment order ecorded in the assessment order based on a broader evidentiary foundation. Various superior based on a broader evidentiary foundation. Various superior based on a broader evidentiary foundation. Various superior appellate forums have held in various cases that establishing appellate forums have held in various cases that establishing appellate forums have held in various cases that establishing subscriptions through banking channels or submitting names, PAN subscriptions through banking channels or submitting names, PAN subscriptions through banking channels or submitting names, PAN numbers or ITRs of the subscribers/inv numbers or ITRs of the subscribers/investors is not sufficient to estors is not sufficient to establish the other 2 limbs of the mandated requirements. establish the other 2 limbs of the mandated requirements. establish the other 2 limbs of the mandated requirements. Regarding the arguments with respect to the diluted EPS and Regarding the arguments with respect to the diluted EPS and Regarding the arguments with respect to the diluted EPS and applicability of section 56 it may be seen that it defies reason as to applicability of section 56 it may be seen that it defies reason as to applicability of section 56 it may be seen that it defies reason as to why the subscriber would invest at such why the subscriber would invest at such a large premium in a a large premium in a consistently loss making company or in a company showing meager consistently loss making company or in a company showing meager consistently loss making company or in a company showing meager profits. The AO's remarks with respect to consistently decreasing profits. The AO's remarks with respect to consistently decreasing profits. The AO's remarks with respect to consistently decreasing EPS since last 4 years (from AY 2008 EPS since last 4 years (from AY 2008-09 till AY 2011 09 till AY 2011-12) as tabulated in para 8.12 (a) is consistent wit tabulated in para 8.12 (a) is consistent with the records and h the records and supports his findings. supports his findings. (iii). Having considered the same at length, I find that the arguments (iii). Having considered the same at length, I find that the arguments (iii). Having considered the same at length, I find that the arguments taken by the appellant are not able to assail the findings recorded taken by the appellant are not able to assail the findings recorded taken by the appellant are not able to assail the findings recorded by the AO in detail and the judicial pronouncements relied upon by by the AO in detail and the judicial pronouncements relied upon by by the AO in detail and the judicial pronouncements relied upon by the AO exhibit more applicability than that relied upon by the hibit more applicability than that relied upon by the hibit more applicability than that relied upon by the appellant. Accordingly, I am constrained to dismiss the relevant appellant. Accordingly, I am constrained to dismiss the relevant appellant. Accordingly, I am constrained to dismiss the relevant grounds of appeal and to confirm the additions on account of grounds of appeal and to confirm the additions on account of grounds of appeal and to confirm the additions on account of unexplained cash credit being share capital to the extent of Rs. unexplained cash credit being share capital to the extent of Rs. unexplained cash credit being share capital to the extent of Rs. 50,55,980/- share premium to the extent of Rs. 67,25,020/ share premium to the extent of Rs. 67,25,020/-, and share premium to the extent of Rs. 67,25,020/ share share share warrants warrants warrants to to to the the the extent extent extent of of of Rs. Rs. Rs. 90,00,000/- 90,00,000/ 90,00,000/ are hereby confirmed. confirmed.” 7.2 After going through the findings of the learned CIT(A), we find After going through the findings of the learned CIT(A), we find After going through the findings of the learned CIT(A), we find that the order is cogent, reasoned, and supported by both facts cogent, reasoned, and supported by both facts cogent, reasoned, and supported by both facts and law. No rebuttal material has been placed before us to dispute these No rebuttal material has been placed before us to dispute these No rebuttal material has been placed before us to dispute these findings.
8. Having regard to the totality of the facts of the case, and in Having regard to the totality of the facts of the case, and in Having regard to the totality of the facts of the case, and in absence of any contrary evidence filed by the assessee before us, we absence of any contrary evidence filed by the assessee before us, we absence of any contrary evidence filed by the assessee before us, we find no infirmity in the detailed and find no infirmity in the detailed and well-reasoned order of the reasoned order of the learned CIT(A). The assessee has not discharged its burden under learned CIT(A). The assessee has not discharged its burden under learned CIT(A). The assessee has not discharged its burden under section 68 nor established the business purpose of various section 68 nor established the business purpose of various section 68 nor established the business purpose of various expenditures.
9.The respective grounds of appeal are accordingly dismissed. The respective grounds of appeal are accordingly dismissed. The respective grounds of appeal are accordingly dismissed.
In the result, the appe In the result, the appeal of the assessee is dismissed. al of the assessee is dismissed.
Order pronounced in the open Court on ounced in the open Court on 26/11/2025. /11/2025.