SRI LAKSHMI KANTHA SPINNERS LIMITED,HYDERABAD vs. DCIT, CIRCLE-3(2), HYDERABAD

Brief facts of the case are that, the appellant company is engaged in the business of manufacture of cotton yarn. The return of income for the assessment year 2012-13 has been filed on 27.09.2012 declaring total income at Rs.85,43,403/-. The assessment has been completed u/sec.143(3) of the Income Tax Act, 1961 [in short “the Act”] on 31.03.2014 and an addition of Rs.14,84,52,240/- was made in respect of unexplained share capital, determining total income of the appellant- company at Rs.15,69,95,643/-. The appellant preferred an appeal against the assessment order passed by the Assessing Officer before the learned CIT(A) and the appeal was disposed of on 11.04.2017 wherein the addition made by the Assessing Officer towards unexplained share capital has been deleted by the learned CIT(A). Against this order, the Department had filed an appeal before ITAT. The ITAT vide it’s order in ITA.No.1003/Hyd./2017 dated 12.09.2018 remanded the issue to the file of Assessing Officer with a direction to verify the investments in share capital, at least to the tune of 25% to 50% of 413 persons from whom the 3 ITA.No.19/Hyd./2024

Aggrieved by the assessment order passed by the Assessing Officer, the appellant-company preferred an appeal before the learned CIT(A). Before the learned CIT(A), the appellant-company initially sought adjournment on one occasion. However, on subsequent dates, neither appeared nor filed any details. Therefore, the learned CIT(A), on the basis of the material available on record, passed order dated 18.11.2023 and upheld the addition made by the Assessing Officer towards unexplained share capital amounting to Rs.14,84,52,240/-.

Aggrieved by the order of the learned CIT(A), the appellant-company is now in appeal before the Tribunal.

None appeared for the appellant-company. We have heard Learned DR and perused the material available on record. Initially notices were sent to the appellant- company. Subsequently, the appellant-company has filed an order passed by the National Company Law Tribunal [in short “NCLT”], Hyderabad Bench, Hyderabad dated 18.04.2024, ordering liquidation of the appellant-company in terms of Chapter-III of Part-II of the Insolvency and Bankruptcy Code, 2016 [in short “IBC”] and claimed that, the Company is in the process of liquidation and an Official Liquidator by name Dommeti Surya Ramakrishna Saibaba has been appointed as Liquidator as resolved by the Committee of Creditors [in short “CoC”]. Subsequently, notice has been issued to the Official Liquidator as per the address given to the Tribunal. But, there were no response from the side of Official Liquidator. Therefore, the appeal has been disposed of ex-parte in absence of representation from the appellant-company, after hearing the Learned DR.

We have heard submissions of the Learned DR and perused the material available on record. We find that, the Assessing Officer has made addition towards unexplained share capital amounting to Rs.14,84,52,240/- on the ground that the assessee failed to file relevant evidences to prove genuineness of share capital claimed to have been received from 413 persons. Further, in second round of proceedings, although, the Tribunal has given direction to the Assessing Officer to verify atleast 25% to 50% of 413 persons, but, the assessee neither appeared nor filed any details, even though, the Assessing Officer has issued notices u/sec.133(6) of the Act. From the above, it is clear that, the assessee does not have any explanation with regard to share capital claimed to have been received from various persons. Therefore, we are of the considered view that, there is no error in the reasons given by the Assessing Officer to make addition towards un-proved share capital u/sec.68 of the Income Tax Act, 1961. The learned CIT(A) after considering the relevant facts, has rightly sustained the addition made by the Assessing Officer. Thus, we are 6 ITA.No.19/Hyd./2024

In the result, appeal of the assessee is dismissed.