PR. COMMISSIONER OF INCOME TAX, AJMER vs. M/S SAMAPRAN SYNTHETICS PVT. LTD.

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ITA/137/2018HC RajasthanRJHC01043537201810 August 2018Bench: NIRMALJIT KAUR,DINESH MEHTA2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the AO had made additions primarily based on the statements of Shri Praveen Kumar Jain and Shri Uttam Singh Hinger. However, these individuals had subsequently retracted their statements through specific affidavits. The Tribunal found that the Revenue had not produced any other evidence to demonstrate that cash was paid by the assessee company to Shri Praveen Kumar Jain or any other person for accommodation entries. Consequently, the assessee succeeded in proving the identity and bonafide of the shares and the transactions. Since this was considered a pure question of fact, the Tribunal found no reason to interfere with the impugned order of the ITAT. The additions made by the AO were therefore deleted.

What were the facts?

The Revenue, represented by the Pr. Commissioner of Income Tax, Ajmer, appealed against an order of the Income Tax Appellate Tribunal (ITAT) dated December 8, 2017. The ITAT had deleted additions made by the Assessing Officer (AO). The assessee, M/s Samapran Synthetics Pvt. Ltd., had received share application money. The AO treated an amount of Rs. 1,87,00,000/- as unexplained income, alleging that the companies providing the funds, operated by Shri Praveen Kumar Jain, were not engaged in genuine business and were merely providing accommodation entries. The AO's conclusion was based on statements from Shri Praveen Kumar Jain and Shri Uttam Singh Hinger, who allegedly accepted cash from the assessee and issued cheques after deducting commission.

What were the issues?

1. Whether the ITAT was justified in deleting the addition made on account of unexplained credit and unexplained expenditure, considering that the companies providing share application money were allegedly not engaged in genuine business and were mere paper companies providing accommodation entries? (Question of law and fact, turning on the interpretation of provisions related to unexplained income and the genuineness of transactions). Assessee's Contentions: The judgment does not record specific contentions for the assessee. However, the finding implies the assessee argued that they had provided evidence to prove the identity and bonafide of the share transactions. Revenue's Contentions: The Revenue argued that the ITAT's deletion of additions was incorrect. They contended that the companies from which the assessee received share application money were not carrying out genuine business activities and were merely paper companies providing accommodation entries. The Revenue relied on the initial statements of Shri Praveen Kumar Jain and Shri Uttam Singh Hinger to support their claim that cash was paid by the assessee for accommodation entries.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 137/2018 Pr. Commissioner Of Income Tax, Ajmer, Ajmer ----Appellant Versus M/s Samapran Synthetics Pvt. Ltd., D-31, Basement BTM, Pur Road, Bhilwara ----Respondent For Appellant(s) : Mr.K.K.Bissa, Adv. HON'BLE MS. JUSTICE NIRMALJIT KAUR HON'BLE MR. JUSTICE DINESH MEHTA Order 10/08/2018 The present appeal is preferred challenging the deletions of additions made by the assessing officer by the learned ITAT vide order dated 08.12.2017. The assessee was asked to prove genuineness of the transactions shown in the form of share application money. The assessee filed evidence to show of the companies from which he was receiving share company money. The said companies were operated by Shri Praveen Kumar Jain. The Assessing Authority found that there was no genuine business being carried out by the companies run by Shri Praveen Kumar Jain. Accordingly, A.O. treated the amount of Rs.1,87,00,000/- as unexplained income. This is borne out from the fact that Shri Praveen Kumar Jain had accepted cash from the Assessee Company and after deducting his commission was issued the cheque for the amount as per the requirement of the Assessee Company. Thus, the decision of the

(2 of 2) [ITA-137/2018] Tribunal deleting the addition made on account of unexplained credit and unexplained expenditure cannot be accepted. Further, the Company did not indulge in physical real trading activities. In the absence of any such evidence of real trading concern, they were mere paper Company which were engaged in business for providing accommodation entries etc. Therefore, it required consideration as to whether the ITAT was justified in confirming the order of CIT deleting the addition on account of bogus share application money of the assessee. After hearing the learned counsel for the appellant and going through the various orders passed by the authorities concerned, we find that A.O. had made additions merely on the statement of Shri Praveen Kumar and Shri Uttam Singh Hinger, whereas, they have already retracted from the statement by way of specific affidavits filed by them. On the other hand, no other evidence was produced by the appellant herein to show that cash was paid by the Company to Shri Praveen Kumar Jain or any other person for accommodating the entries. In these circumstances, we find that the assessee succeeded in proving its identity and bonafide of the shares and the transactions. Thus, it being a pure question of fact, we find no reason to interfere in the impugned order. Dismissed accordingly.

(DINESH MEHTA),J (NIRMALJIT KAUR),J NK/16

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