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2017 (11) TMI 965 - AT - Income TaxLoss on sale of shares - addition u/s. 68 on account of bogus sale of shares - Held that:- AO observed that it is clear that the assessee company debited the sum of ₹ 1580705/- to the P&L account with an intention to adjust the income accrued to it from the Service Receipts during the year. AO after examination of all the facts held that the loss amounting to ₹ 15,80,705/- on the alleged sale of the shares to such farmers was booked and cash amounting to ₹ 5,60,000/- was introduced in the guise of sale consideration of the alleged shares and rightly relied decision in the case of Sumati Dayal vs. CIT (1995 (3) TMI 3 - SUPREME Court ). We further find that CIT(A) has rightly observed that the identity and creditworthiness of buyers and genuineness of the transactions were never established. The loss of ₹ 15.80 lacs claimed is not admissible also on account of provisions of Explanation to section 73. The receipts shown on sale of shares, the amount of ₹ 5,60,000/- falsely shown as sale consideration has been rightly treated as unexplained cash credit, hence, Ld. CIT(A) has rightly upheld the addition made by the AO, which does not need any interference on our part, therefore, we uphold the same and reject the ground no. 1 to 3 raised by the assessee. Addition on account of share application money - Non genuineness of transaction - Held that:- Although, the assessee has been able to indicate that M/s Silverline Appliance Ltd. had entered the transactions in its books of account, it is clear that this was a cash transaction and as indicated by the AO in his letter dated 29.10.2004, the said company had received cash to the tune of RS.6 lacs on account of share application money on different dates in September of the relevant year. The mere fact that M/s Silverline Appliance Ltd. is an income- tax assessee does not prove that this is a genuine transaction. The voucher dated 28.3.2001 through which the alleged cash of the share application money was claimed to have been returned to the appellant company does not appear to be a reliable document. There are no signatures of any person and the acknowledgment part is totally blank. The AO's conclusion that there was never a transaction and this was only a squared up cash account of unexplained cash introduced sounds totally feasible. Hence, Ld. CIT(A) felt that the genuineness of the transaction was proved and the AO has rightly treated it as unexplained cash credit and confirmed the same, which does not need any interference on our part - Decided against assessee. Disallowance u/s. 14A - method of computation of disallowance - Held that:- We note that Section 14A envisages disallowance of expenses relating to exempted income. In such a situation, a prescribed method for working out this expenditure is already on the anvil. In the absence of a specified parameter of apportionment of expenditure in such a situation, the responsibility, (fiscal and moral) of determining corresponding expenditure lies with the assessee. In the absence of any such execution of responsibility, the AO left with no choice but to apportion the expenditure on estimate basis. Therefore, in this case the AO has very reasonably and scientifically worked out the proportion of the business receipts vis-à-vis, the exempted income and then applied that ratio to the expenditure, hence, he rightly affirmed the addition, which does not need any interference on our part - Decided against assessee.
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