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Facts
The appeals pertain to assessment years 2009-10, 2010-11, and 2015-16, involving additions made by the Assessing Officer related to share application money, stock, and cash. The assessee argued that the share register was maintained as per statutory requirements and share application money was received through banking channels, not constituting incriminating material. For A.Y. 2015-16, additions were made for unexplained stock and cash based on search findings.
Held
The Tribunal held that for A.Y. 2009-10 and 2010-11, the share register (RKM-37) cannot be treated as incriminating material as it was a statutory document showing share application money received via banking channels and disclosed in the balance sheet. For A.Y. 2015-16, the deletion of cash addition by CIT(A) was upheld, but the issue of stock was restored to the Assessing Officer for readjudication.
Key Issues
Whether share application money, received through banking channels and documented in a statutory share register, can be treated as incriminating material for making additions? Whether additions for unexplained stock and cash are justified based on search findings and subsequent reconciliation?
Sections Cited
459 ITR 212 (SC)
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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 09/06/2025 Date of pronouncement 09/06/2025 O R D E R PER: BENCH 1. IT(SS)A No. 34/Ran/2023 pertains to the A.Y. 2010-11 and IT(SS)A No. 35/Ran/2023 relates to A.Y. 2015-16 and A.Y. 2009-10 has been marked as ITA in place of IT(SS)A are the appeals filed by the assessee against the orders of the ld. CIT(A), Patna-3, Patna dated 26/05/2023 and 29/05/2023 respectively. As all IT(SS)A No. 34 & 35/Ran/2023 & ACIT Vs Anjanay Rice Mill P Ltd. the issues in these appeals relate to the common issues, therefore, they are being disposed off by this common order.
Smt. Rinku Singh, ld. CIT-DR is represented on behalf of the revenue and Sri Devesh Poddar, ld A.R. is represented on behalf of the assessee. The ld. AR of the assessee submitted that for the A.Y. 2010-11 and 2009-10, the ld. CIT(A) has deleted the additions by relying upon the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell reported in 459 ITR 212 (SC). It was a submission by the ld. CIT-DR that there was a search on the Jagdamba Group of cases on 03/09/2014. In the course of search, a register containing the names and addresses of share applicants and the amounts introduced by those share applicants in the assessee company had been found. The same was treated as incriminating material and in the course of assessment, the addition had been made bringing to tax, the share application money received alongwith the premium holding the same as undisclosed income of the assessee. It was a submission that a search in the case of one Shri Navin Kumar, CA had brought out the information that the assessee has received bogus share capital. It was a submission that the ld. CIT(A) held that the said register could not be treated as incriminating material and had applied the principles laid down by the Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) to delete the additions. It was a prayer that order of ld. CIT(A) be reversed and the Assessing Officer restored.
In regard to IT(SS)A No. 35/Ran/2023, it was a submission that this related to A.Y. 2015-16 wherein there was certain stock which was found to have been unexplained and also certain cash and other details. The Assessing Officer had IT(SS)A No. 34 & 35/Ran/2023 & ACIT Vs Anjanay Rice Mill P Ltd. made the addition in respect of the said stock and the cash found. It was a submission that the ld. CIT(A) deleted the addition on the basis of reconciliation statement filed by the assessee. It was a submission that the said reconciliation statement specially in regard to the stock was not made available to the Assessing Officer for his rebuttal. It was the prayer that the order of ld. CIT(A) be reversed and that of the Assessing officer restored.
In reply, the ld. AR submitted that the seized material which is being relied upon for the A.Y. 2009-10 and 2010-11 is RKM-37 pages 60 to 81. It was a submission that the said document was a register maintained as per the guidelines of ROC and it contained the names of the shareholders and also the amounts invested by the assessee company. It was a submission that all the amounts had been received by cheque and the same were recorded in the books and no discrepancy had been found in the course of search to show that the assessee had brought in any of its own unaccounted funds in the form of share capital. In regard to A.Y. 2015-16, it was a submission that the reconciliation had been filed before the Assessing Officer and the Assessing Officer had not considered the same and a perusal of the order of the ld. CIT(A) clearly shows that the ld. CIT(A) has extracted the submissions of the assessee that has been filed before the Assessing Officer. It was a submission that the order of the ld. CIT(A) is liable to be upheld.
We have considered the rival submissions. Coming to the A.Y. 2009-10 and 2010-11, a perusal of the facts in the present case clearly shows that the share register as required to be maintained by the ROC is the document which has been identified as RKM-37. As it is noticed that the said document is a IT(SS)A No. 34 & 35/Ran/2023 & ACIT Vs Anjanay Rice Mill P Ltd. document prepared as per statutory requirement of the ROC and as it is noticed that the said share application money has been received through the banking channels and it is the form of cheques and the amounts have also been disclosed in the assessee’s balance sheet as also the share register, the said RKM-37 cannot be treated as an incriminating material for the purpose of making the addition in respect of the share application money received by the assessee. This being so as it is also noticed that the ld. CIT(A) has considered this fact and has relied upon the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) and as the revenue has not been able to dislodge these findings of fact, we are of the view that the order of the ld. CIT(A) for the A.Y. 2009-10 and 2010-11 does not call for any interference and the same stands upheld. Consequently, IT(SS)A No. 34/Ran/2023 and stands dismissed.
Coming to the IT(SS)A No. 35/Ran/2023 for the A.Y. 2015-16, a perusal of the order of ld. CIT(A) shows that the ld. CIT(A) has deleted the addition in respect of stock and the cash on the basis of the reconciliation filed by the assessee as also the cash book. These statements were before the Assessing Officer as is evidenced by the letters extracted by the ld. CIT(A) in his order. However, considering the prayer of the ld. CIT-DR and as the ld. CIT-DR specifically mentioned that in the course of search, the assessee had admitted that there were some stock which were not disclosed in its books so as to verify the reconciliation, the issue of the stock is restored to the file of Assessing Officer for readjudication and for verification of the reconciliation. The ld. AR has also accepted to produce the evidences to prove the reconciliation before the IT(SS)A No. 34 & 35/Ran/2023 &