PRINCIPAL C.I.T. UDAIPUR vs. M/S SHUBH MINES PVT. LTD.

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ITA/96/2015HC RajasthanRJHC01022445201503 May 20164 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the Assessing Officer's addition was based on suspicion, relying on the statement of a third party recorded behind the assessee's back. It was noted that the share application money of Rs. 50,00,000/- was received from Moderate Credit Corporation Ltd., a listed company, via account payee cheque, and was refunded by account payee cheque when the company's project was dropped. The Tribunal found no cogent evidence on record to establish that the money received was unaccounted money belonging to the assessee company. Therefore, the AO's finding, based on suspicion, was rightly held unsustainable. The findings of the CIT(A), affirmed by the ITAT, were considered findings of fact that were neither capricious nor perverse. Consequently, no substantial question of law arose for consideration.

What were the facts?

The assessee, M/s. Shubh Mines Pvt. Ltd., received share application money of Rs. 75,00,000/- during the previous year relevant to assessment year 2006-07, including Rs. 50,00,000/- from Moderate Credit Corporation Limited. The Assessing Officer (AO) made an addition of Rs. 75,00,000/- under Section 68 of the Income Tax Act, 1961, suspecting it to be a bogus entry based on the statement of Shri Aseem Kumar Gupta. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, finding the investment and refund were through banking channels and the third-party statement unreliable. The Income Tax Appellate Tribunal (ITAT) dismissed the Revenue's appeal, leading to the present appeal by the Principal Commissioner of Income Tax, Udaipur.

What were the issues?

1. Whether the addition of Rs. 75,00,000/- made by the Assessing Officer under Section 68 of the Income Tax Act, 1961, is justified, considering the investment was received and refunded through banking channels and based on a third-party statement recorded behind the assessee's back. Assessee's Contention: The judgment does not record specific contentions for the assessee before the ITAT or the High Court, other than the findings of the lower appellate authorities which were affirmed. Revenue's Contention: The Revenue contended that the case involved a bogus entry for share capital money. They argued that the addition made by the AO was justified, relying on a survey conducted in a third party's case and the statement of Shri Aseem Kumar Gupta. The Revenue also submitted that the ITAT erred in ignoring the fact that the assessee could not substantiate the necessity for obtaining huge share application money shortly after its promotion.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

PRINCIPAL COMMISSIONER OF INCOME TAX, UDAIPUR VS.

PRINCIPAL COMMISSIONER OF INCOME TAX, UDAIPUR VS. M/S. SHUBH MINES PVT. LTD.

Dated:- 3.5. 16. HON'BLE MR.JUSTICE SANGEET LODHA HON'BLE MR.JUSTICE KAILASH CHANDRA SHARMA Mr.K.K.Bissa, for the appellant.

1.

This appeal is directed against order dated 9.10.14 of Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur, whereby an appeal preferred by the Revenue against the order of Commissioner of Income Tax (Appeals) [CIT(A)], Jodhpur, dated 30.6.14, deleting the addition of Rs.75,00,000/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961 ( for short “the Act”), vide assessment order dated 4.3.14 for the assessment year 2006-07, has been dismissed.

2.

The relevant facts are that the assessee, a company, introduced share application money to the tune of Rs.75,00,000/- including the sum of Rs.50,00,000/- received third party's case and the statements of Shri Aseem Kumar Gupta, the addition made by the AO was absolutely justified. Learned counsel submitted that the ITAT has erred in ignoring the fact that the assessee could not substantiate its necessity for obtaining huge share application money only after a few months of promoting the company.

6.

We have considered the submissions of the learned counsel and perused the material on record.

7.

A bare perusal of the assessment order reveals that the AO has made the addition on suspicion which is based on the statements of third party Shri Aseem Kumar Gupta, admittedly, recorded in the back of the assessee. It has come on record that the share application money of Rs.50,00,000/- was received Aditya/

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