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Facts
The assessee filed an appeal against the CIT(A)'s order for AY 2012-13. The appeal had four issues, including the disallowance of share application money and other expenses. The assessee provided information for four out of fourteen share applicants, with the remaining nine's details being unavailable. The unpaid VAT and service tax grounds were withdrawn by the assessee.
Held
The tribunal held that for the four share applicants where substantial information was provided, the addition made by the Assessing Officer was deleted, following the Supreme Court's decision in CIT vs. Lovely Exports. For the remaining nine applicants, the addition was confirmed as no information was provided. Regarding other expenses, the disallowance was reduced from 10% to 2.5%.
Key Issues
Disallowance of share application money due to insufficient information for some shareholders and disallowance of other expenses.
Sections Cited
Section 2(22)(e) of the Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Sri Devesh Poddar, A.R. Department represented by Smt. Rinku Singh, CIT-DR Date of hearing 11/06/2025 Date of pronouncement 11/06/2025 O R D E R PER: BENCH 1. This is an appeal filed by the assessee against the order of the learned CIT(A), Jamshedpur in appeal No. 524/JSR/2017-18 dated 14/01/2019 for the A.Y. 2012-13.
Shri Devesh Poddar, ld A.R. is represented on behalf of the assessee and Smt. Rinku Singh, ld. CIT-DR is represented on behalf of the revenue.
It was submitted by the ld. AR that the impugned assessment year is 2012-13 and there are four issues in the appeal. The first issue is in regard to the disallowance of the share application money which has been received by the assessee to an extent of ₹ 1,00,56,000/-. It was a submission that the list of share holders had been provided to the Assessing Officer which number nearly fourteen. The assessee was able to provide the information in regard to only four persons being one M/s Pato Infrastructure Ltd. which was the sister concern of the assessee, second being Shri Mukesh Kumar in respect of 15000 M/s Pato Builders Pvt. Ltd. Vs ACIT shares. Shri Mukesh Kumar is the Director of the assessee company. The third is Smt. Champa Devi for 11000 shares she is the mother of the Director of the assessee company and Smt. Sunita Devi for 9000 shares who is the wife of the Director of the assessee company. It was a submission that the details in regard to other nine share holders were not available with the assessee. It was a submission that the assessee was unable to provide any information nor the assessee is in position to provide any further information in regard to such share holders. It was further submitted that the assessee company is now in the process of winding up as the Director of the assessee company is having health related issues and has been under medical treatment for the past few years.
In reply, the ld. CIT-DR submitted that even in respect of said four persons, all required information had not been provided by the assessee.
We have considered the rival submissions. A perusal of the assessment order clearly shows that in respect of said above four persons, the assessee has provided substantial information to show that the assessee has received the share application money from the said four persons. Once the basic information has been provided by the assessee then in view of the decision of the Hon'ble Supreme Court in the case of CIT Vs M/s. Lovely Exports Pvt. Ltd. reported in (2008) 216 CTR 195 (SC), the Assessing Officer is at liberty to call for the details in the assessment of such persons who have made share application money. This being so, the addition made in respect of the share application money in respect of the said four persons being M/s Pato Infrastructure Ltd., Shri Mukesh Kumar, Director of the assessee company, Smt. Champa Devi, mother of the Director of the assessee company and Smt. Sunita Devi, wife of the Director of M/s Pato Builders Pvt. Ltd. Vs ACIT the assessee company stands deleted. In respect of balance nine persons, as no information has been provided and the assessee has also admitted that he is not in a position to provide any further information, the addition as made by the Assessing Officer and as confirmed by the ld. CIT(A) stands confirmed.
The next is in regard to the unpaid VAT. It was a submission by the ld. AR Representative that the amount has been paid before the due date of foiling of the return. However, when the assessee was asked to provide the proof, the assessee submitted that he is not in position to provide any information as the details were not available with him immediately. Consequently, he prayed that he may be permitted to withdraw the said ground. The ld. AR is permitted to withdraw the said ground and consequently, the said ground is dismissed as withdrawn.
In respect of the third issue being the unpaid service tax also the same was similar to the issue of the unpaid VAT and the ld. AR has withdrawn the said ground. Consequently, the said ground is dismissed as withdrawn.
The fourth issue was the disallowance of large other expenses. It was a submission by the ld. AR that the total expenses of the assessee was ₹ 16,10,29,331/-. It is a submission that the Assessing Officer had disallowed 10% of the same. The ld. AR drew our attention to the paper book of the assessee to submit that out of the said ₹ 16,10,29,331/- nearly ₹ 12.95 crores were the contract expenses. It was a submission that in respect of contract expenses, the evidences were available in the form of TDS certificate and the bills. It was a submission that in respect of other expenses, the bills are available, however, it was submission that the assessment is very old and the