M/S. SURAJ LIMITED,AHMEDABAD vs. THE DCIT, CENTRAL CIRCLE-1(3), AHMEDABAD

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ITSSA 517/AHD/2019Status: DisposedITAT Ahmedabad06 November 2024AY 2014-1523 pages
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What did the Tribunal hold?

The Tribunal held that the CIT(A) was correct in deleting the addition of Rs. 6,41,90,000/- made on account of unexplained share application money under Section 68. The Tribunal found that the share application money was received in FY 2006-07 (AY 2007-08) and not in AY 2014-15, as evidenced by RBI filings and Form FC-GPR. The agreement dated 02/05/2013 between Shri Ashok T. Shah and Mr. Eric Huysentruit of Bsurinvest did not indicate any undisclosed payment by the assessee company; it merely detailed Bsurinvest's intention to divest its holdings. The sale of shares was conducted through a registered broker, with payment directly remitted to Bsurinvest, and the AO provided no evidence of undisclosed financial dealings by the assessee. The Tribunal also noted the AO's incorrect reading of a bank statement entry. The documentary evidence, including board resolutions, bank statements, and RBI compliance certificates, demonstrated legitimate channels and proper recording of funds. The Tribunal concurred with the CIT(A) that the AO's allegations lacked substantive evidence. Consequently, Revenue's Ground No. 8 was dismissed. The Tribunal did not provide a specific finding on the genuineness of purchases or the unexplained investment, as the operative part of the judgment focused on the share application money deletion. The assessee's appeal was allowed, and the revenue's appeal was dismissed.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, heard cross-appeals filed by M/s. Suraj Ltd. (Assessee) and the DCIT-ACIT (Revenue) for Assessment Year 2014-15. These appeals challenged an order passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad, which partly allowed the assessee's appeal against an assessment order under Section 143(3) read with Section 153B(1)(b) of the Income-tax Act, 1961. The Assessing Officer (AO) had made additions of Rs. 300,00,000/- for unaccounted investments, Rs. 641,90,000/- for share application money, and Rs. 376,03,586/- for bogus purchases. The CIT(A) deleted the additions for unaccounted investments and share application money, and restricted the bogus purchases addition to Rs. 45,12,430/-.

What were the issues?

The Tribunal had to decide the following issues: 1. Whether the purchases of raw materials amounting to Rs. 3,76,03,586/- from Shah Foils Ltd., Sunrise Stainless Pvt. Ltd., and Sunrise Tradewings Pvt. Ltd. were genuine, and if not, to what extent the addition should be sustained (Assessee's Grounds 1-4, Revenue's Grounds 1-6). - Assessee argued that the purchases were actual and genuine, supported by evidence, and that the CIT(A) erred in confirming additions based on third-party statements without cross-examination and without finding incriminating material during the search. - Revenue argued that the CIT(A) erred in restricting the addition to 12% of bogus purchases, ignoring statements from directors of Shah Foils Ltd. and Ashok T. Shah, Chairman of the assessee company, which indicated only invoices were provided without goods, and that the entire purchases were bogus. 2. Whether the addition of Rs. 3,00,00,000/- on account of unexplained investment was correctly deleted by the CIT(A) (Revenue's Ground 7). - Revenue argued that the CIT(A) erred in deleting this addition without appreciating the facts and circumstances brought on record by the AO. 3. Whether the addition of Rs. 6,41,90,000/- on account of unexplained share application money was correctly deleted by the CIT(A) (Revenue's Ground 8). - Revenue argued that the CIT(A) erred in deleting this addition without appreciating the facts and circumstances brought on record by the AO. Revenue's grounds 9 and 10 were considered generic.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 153A,Section 153B(1)(b),Section 68,Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ A ” BENCH, AHMEDABAD

Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR

For Appellant: Shri Jignesh Parikh, AR
Hearing: 30/10/2024Pronounced: 06/11/2024

आदेश की �ितिलिप अ ेिषत/Copy of the Order forwarded to : अपीलाथ" / The Appellant 1. �#थ" / The Respondent. 2. संबंिधत आयकर आयु% / Concerned CIT 3. आयकर आयु% अपील 4. ( ) / The CIT(A)-11, Ahmedabad िवभागीय �ितिनिध आयकर अपीलीय अिधकरण राजोकट/DR,ITAT, Ahmedabad, 5. , , गाड* फाईल / 6. Guard file.

आदेशानुसार/ BY ORDER, स#ािपत �ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad

1.

Date of dictation (word processed by Hon’ble AM in his laptop) : 04.11.2024 04.11.2024 2. Date on which the typed draft is placed before the : Dictating Member. 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating : Member for pronouncement. 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the : 6.11.24 Sr.P.S./P.S. 7. Date on which the file goes to the Bench Clerk. : 6.11.24 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar : for signature on the order. 10. Date of Despatch of the Order :

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