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2022 (4) TMI 280 - AT - Income TaxAddition u/s 68 - Bogus share application money - outstanding sundry credit balance found in account books of the assessee - HELD THAT:- The fact that the amount involved was received in the previous year has not been disputed by the revenue. CIT(A) has given a finding that the said amount was received in AY 2010-11. He has found that the copies of ledger account and bank statement have been examined and the same duly fortified the fact that these share application money were received in the earlier period. Once, it is clear that share application money has not been received in the current assessment year and the same have been received in preceding assessment year, the addition of the same u/s. 68 in the current assessment year is not permissible. The Hon’ble Bombay High court in the case of PCIT vs Real Value Realtors Pvt.Ltd. [2019 (11) TMI 590 - BOMBAY HIGH COURT] has held that when the share application was money received in earlier assessment year, it could not be added in the impugned assessment year. Similarly, Hon’ble Bombay High Court in the case of Ivan Singh [2020 (2) TMI 850 - BOMBAY HIGH COURT] has held that provision of section 68 cannot be invoked for outstanding sundry credit balance found in account books of the assessee for FY 2006-07 to income of assessee for AY 2009-10.Once, it is clear that the amount involved has not been received during the year, the same cannot be added u/s. 68. Undisclosed unsecured loan - disallowance of interest on these loans - The facts of the case clearly indicate that AO has not made any investigation of his own. He solely relied upon the examination by the investigation wing in the Bhanwaralal Jain case. Further, ld.CIT(A) has correctly observed that by not giving assessee the statements for rebuttal and an opportunity to cross examine coupled with the retraction by the party, the evidentiary value of the said statement is diminished. The AO has not even issued notice u/s. 133(6) to the parties. Once, it is undisputed that no independent verification was done by the AO and the assessee has provided all the basic documents, the onus upon the assessee stands discharged. Hence, we do not find any infirmity in the order of ld.CIT(A). Hence, we uphold the same. On the same reasoning, the disallowance of interest on these loans have been deleted by ld.CIT(A). We also uphold the said order. Disallowance of interest for diversion for non-business purpose - This issue has been addressed by the ld.CIT(A) by observing that assessee has actually not debited the amount in profit and loss account. Rather the entire interest has been debited to work in progress. Hence, ld.CIT(A) has agreed with the AO that there is diversion of interest, but he has directed that since the interest has been debited to work in progress, the said amount be reduced from work in progress. Hence, ld.CIT(A) has correctly appreciated the issue. We do not find any infirmity in the same. Thus, the revenue’s appeal being misplaced is dismissed on this account. Addition u/s. 68 for investment in joint venture - Assessee has duly discharged the onus and given all the necessary documents for the identity, genuineness and creditworthiness of the parties. Ld.CIT(A) has duly examined the same and found the same to be correct. AO’s order is only based upon surmise and conjecture. He has not dislodge any of the documents filed by the assessee. The assessment year before us is AY 2012-13. The source of source provision has been inserted by amendment u/s.68 of the Act w.e.f. 01.04.2013 effective from AY 2013-14 onwards. That is also for share capital, even in that case Hon’ble Bombay High court has held that it is the pre-amendment provision of section 68 in respect of which the assessee has to discharge its onus. Though in the present case, the issue is not all share capital, even then we note that there is no provision of examination of source of source in section 68 for the impugned assessment year. Still as noted above, the assessee has discharged its onus. The adverse inference drawn by the AO regarding some of the parties not appearing before him or that the summons could not be served at the address or that before the issuance of cheque amounts were deposited are all without specific detail and are also in the realm of surmise and conjuncture. Such issue has been duly adjudicated by Hon’ble Bombay High court in the case of CIT vs. Orchid Industries [2017 (7) TMI 613 - BOMBAY HIGH COURT] - Decided against revenue.
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