COMMISSIONER OF INCOME TAX-I, vs. ANAND PROPERTY FINANCE LTD.

PDF · subscribers
TAXAP/1071/2008HC GujaratGJHC24041278200813 June 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal had not committed any error in confirming the deletion of the addition. The Tribunal's observation that only in one isolated case was notice not served was noted. The Court found that all share applicants who were served were found to be genuine, and there was no complaint about them not depositing the share application money with the company. The reasoning was that the department had not brought on record any material to demonstrate that any of the share applicants were non-existent or had not claimed to have paid the share application money. Therefore, the addition made by the AO was not justified. The ratio decidendi is that once the assessee furnishes names and addresses of share applicants and the department fails to establish their non-genuineness or non-existence after due inquiry, the addition under Section 68 on account of unexplained share capital is unsustainable. The operative direction was to dismiss the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax-I, is in appeal against an order of the Income Tax Appellate Tribunal (ITAT). The appeal concerns assessment year(s) not specified in the judgment. The ITAT had confirmed an order passed by the CIT(A) which deleted an addition of Rs. 71,62,200/-. This addition was made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, on account of unexplained share capital. The AO's disallowance was primarily based on the assessee's failure to provide PAN details of all investors. The total share application money received by the respondent-company, Anand Property Finance Ltd., was Rs. 1.42 crores.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the addition of Rs. 71,62,200/- under Section 68 of the Income Tax Act, 1961, in respect of unexplained share capital? Assessee's Contentions: The judgment does not record specific arguments made by the assessee before the High Court. However, the ITAT's observations, confirmed by the High Court, indicate that the assessee had furnished the names and addresses of share applicants, and notices issued under Section 133(6) were duly served on them, except in a couple of isolated cases. The ITAT also noted that the department had not produced material to show that any share applicant was non-existent or had not claimed to have paid the share application money. Revenue's Contentions: The Revenue's primary contention, as reflected in the framed question, is that the ITAT erred in confirming the deletion of the addition. The AO's disallowance was based on the assessee's inability to supply PAN details of all investors, implying a lack of genuineness of the share capital.

Which sections of the Income-tax Act were involved?

Section 68,Section 133(6)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/1071/2008 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 1071 of 2008 ========================================================== COMMISSIONER OF INCOME TAX-I, Versus ANAND PROPERTY FINANCE LTD. ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 RULE SERVED(64) for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 13/06/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1.

Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal. Following question was framed at the time of admission of the appeal. “Whether the Appellate Tribunal is right in law and on facts in confirming order passed by the CIT (A) deleting the addition of Rs. 71,62,200/- u/s. 68 of the Act in respect of unexplained share capital?”

2.

The issue pertains to genuineness of share application money received by the respondent-company. Out of the total of Rs. 1.42 crores (rounded off) of share application money, the Assessing Officer disbelieved genuineness of Rs. 71.62 lacs (rounded off) and added the same as the income of the assessee from other sources. This was primarily on the ground C/TAXAP/1071/2008 ORDER that the assessee had not been able to supply PAN details of all investors. CIT (A) however, deleted the addition noting that names and addresses of the share applicants were furnished. Notices u/s. 133(6) of the Income Tax Act were duly served on them except in couple of isolated cases. The Tribunal further observed that the department, after making an inquiry from the share applicants, had not brought on record any material to show that any of the share applicants were non-existent or had not claimed to have paid the share application money.

3.

Such being the position, we do not think the Tribunal committed any error. The Tribunal noted that only in one isolated case, the notice could not be served. The record would suggest that all the share applicants, who were served, were found to be genuine and there was no complaint about not depositing share application money with the company.

4.

In the result, the question is answered against the Revenue. Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) JYOTI V. JANI

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →