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2020 (2) TMI 244 - AT - Income TaxAddition on account of issue of share capital to the allegedly bogus non existing companies - HELD THAT:- In the present case the assessment proceedings started from 22/10/2013 and ended on 18/3/2013 (as mentioned in column number 8 of the assessment order about the date of hearings). Therefore it is apparent that assessment proceeding were after release of the directors from the judicial custody. Therefore, this explanation does not serve any purpose for non-submission of details or for appearing before the learned assessing officer. Absence of the staff could not be a valid reason for a company who has such a large operations as claimed by the assessee. Further, with respect to mental agony/depression of the directors no evidences were produced. No evidences were produced that there are large number of cases involved on the group. No reason to upset the orders of the lower authorities and in fact we agree that the assessee had sufficient opportunity to furnish the evidence but assessee has deliberately not submitted the same. Argument advanced by the assessee in the grounds of appeal and the activities of the assessee clearly shows that there is no violation of principles of natural justice of the lower authorities. In fact it is assessee who is trying to seal itself for the misdeed conducted by it. Hence, Ground no 1 to 6 are dismissed. Claim of depreciation and expenses from allegedly non-existing bogus companies and non-production of books of accounts - HELD THAT:- The most of the purchase shows by the assessee are software for which the assessee has not produced any details about its ownership, functionary etc. the AO has proved conclusively with the suppliers are bogus. The issue is squarely covered against assessee by the decision of the Hon'ble Delhi High Court in case of Chintels India Ltd Vs. DCIT [2017 (7) TMI 746 - DELHI HIGH COURT] wherein, bogus depreciation of software was disallowed of the ld AO was confirmed. The special leave petition filed before the ld Hon'ble Supreme Court is also dismissed [2018 (1) TMI 814 - SC ORDER] . The facts on that case are identical to the facts of the case before us. In view of this, we do not find any infirmity in the order of the ld AO in disallowing the depreciation on the software. We confirm order of the ld CIT A . Accordingly, ground Nos. 7 of the appeal are dismissed. Addition of share capital and share application money - HELD THAT:- Assessee did not discharge its initial onus of proving the identity, creditworthiness and genuineness of the share capital received. Most of the claim the investor were found by him to be based in Kolkata, inspector of the circle was sent to that place to verify the identity capacity and genuineness. The copy of the inspector report shows that the claimed investors are bogus. Therefore he confirmed the addition. We do not find any infirmity in the order of the learned CIT – A. Accordingly ground number 8 of the appeal is dismissed. Addition on account of unsecured loan received - HELD THAT: -The assessee has not produced any details with respect to the identity of lenders, their creditworthiness and genuineness of the transaction. Thus assessee has failed to discharge initial onus cast upon it u/s 68 of the income tax act. Therefore we do not find any infirmity in the order of the lower authorities in confirming the above addition. Addition on account of investment in the property at Mumbai - HELD THAT:- The assessee did not provide any details of information before the learned assessing officer or before the learned CIT – A. In view of this, we do not find any infirmity in the order of the lower authorities in confirming the above investment in the fixed assets. Addition on account of investment in plant and machinery - HELD THAT:- Inquiries during search as well as in assessment proceedings revealed that those companies could not have made any sales to the assessee company and there from to be bogus. The purchase of software was found to be from a nonbanking financial company which did not have any background or asset to deal with into such software. The companies were also found to be bogus there were glaring differences found with the documents submitted by the assessee. The claim of development of software was also found to be false. During the course of appellate proceedings also no further details were produced and no justification could be given regarding the investments made in these purchases. Therefore the learned CIT – A confirmed the above addition. We do not find any justification to interfere with the orders of the lower authorities. Addition of sum received from Lakshmi Exim private limited. - AO made an addition u/s 68 as the assessee has failed to show the identity, creditworthiness and genuineness of the transaction -HELD THAT:- Before the learned CIT – A, no further information was provided and therefore the addition was confirmed. The facts are identical to the facts in the case of the assessee for earlier years where the identical addition on account of share application money was made. In view of these facts we find no infirmity in the order of the lower authorities as assessee has failed to show the identity, creditworthiness and the genuineness of the rejection of the above investment in the share application money with the assessee company. Disallowance u/s 14A under rule 8D - HELD THAT:- During the course of assessment proceedings the assessee was asked to submit the details about the applicability of the provisions of section 14 A of the income tax act. The issue has been dealt with in para number 6 of the assessment order. The assessee did not furnish any reply to the above query. Thereby the learned assessing officer computed the disallowance applying the provisions of rule 8D and disallowed a sum of rupees 2293450/–. Before the learned CIT – A no justification was given by the appellant for this disallowance. As there is a complete absence of information from the side of the assessee before the lower authorities, we do not find infirmity in their order in confirming the above disallowance Disallowance being the various expenditure incurred by the assessee including the opening stock - HELD THAT:- Before the lower authorities assessee did not submit any details about the expenditure e, without substantiating the same with the vouchers and bills and the nature of expenditure, thus, no infirmity can be found with the orders of the lower authorities in disallowing the above expenditure. Before the lower authorities no books of accounts were produced to show the genuineness of the expenses claimed on how the transactions have been entered into. The above addition as made on the basis of the search and seizure operation u/s 132 and the enquiries made by the revenue. At all the times the opportunities given to the assessee were avoided. In view of these facts, we confirm the actions of the lower authorities in disallowing the expenditure on account of various expenditure including opening stock.
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