2023 (1) TMI 770 - AT - Income Tax
Addition u/s.40A(3) - expenditure incurred in cash - CIT(A) rejected the claim of the assessee that such expenditure was incurred in cash for purchase of Furnace oil in absence of any satisfactory evidence as to why the payments were made in cash which are not falling under the exceptional circumstances - HELD THAT:- As mentioned earlier, the assessee could not substantiate as to how the payments made in violation of provisions of section 40A(3) fall under exceptional circumstances allowing payment of cash in excess of Rs.20,000/- as specified in Rule 6DD of the I.T.Act. Since the assessee has failed before the AO as well as the ld.CIT(A) to substantiate the same and there is nothing before us to take a contrary view then the view taken by the AO and ld.CIT(A) on this issue, therefore, the ground raised by the assessee is dismissed.
Addition not allowing 1/5th of subscription fee for increasing share capital which is capital in nature u/s. 35D - CIT(A) rejected the claim of the assessee to allow the same u/s.35D - HELD THAT:- We do not find any infirmity in the order of the ld.CIT(A) on this issue in absence of furnishing of any details or evidence in support of the claim that the expenditure falls under any of the categories mentioned in provisions of section 35D(2) of the I.T.Act. We, therefore, do not find any infirmity in the order of the ld.CIT(A) on this issue and accordingly, the same is upheld. The grounds raised by the assessee is accordingly dismissed.
Addition u/s. 68 - assessee could not substantiate with evidence to his satisfaction regarding the identity and creditworthiness of the 13 investors who have invested in the share capital of the assessee company and the genuineness of the transaction - HELD THAT:- We find during the remand proceeding, the assessee had given the list of the 13 shareholders with their source. However, it is seen from the source of investment that the investors themselves received loan from others to invest in the shares of the assessee company. It is also important to note that none of the shareholders are assessed to tax and all of them have borrowed money from others, who are again agriculturists and the agriculturists are again not assessed to tax. Further, none of the agriculturists from whom the so called investors have borrowed money are maintaining any bank account. While some of the agriculturists have put their thumb impression, however, the confirmations are in English. Under these circumstances and in view of the detailed reasoning given by the ld.CIT(A) while sustaining the addition made by the AO u/s. 68, we do not find any infirmity in the same. Accordingly, the order of the ld.CIT(A) on this issue is upheld and the grounds raised by the assessee on this issue are dismissed.
Addition as unexplained share capital u/s. 68 - CIT-A deleted the addition - HELD THAT:- We find in the case of CIT vs. Titan Securities Pvt.Ltd. [2013 (5) TMI 329 - DELHI HIGH COURT], after considering the decision of M/s. Lovely Exports Pvt.Ltd. [2008 (1) TMI 575 - SC ORDER] has held that where the company, which has subscribed to share capital is found to be hawala company providing accommodation entries, mere furnishing of income tax returns, balance sheet, statement of affairs and bank statement without any explanation for deposits in accounts may not meet the requirements of section 68 - it is necessary to note the business activities of share subscribers in order to ascertain whether they are financially sound and are able to purchase the shares for substantial amount. However, in the instant case, as mentioned earlier, none of the investors has filed his/her return of income which would have alerted the ld.CIT(A) before taking the decision by deleting the addition made by the AO u/s. 68. We are unable to uphold the order of the ld.CIT(A) deleting the addition made by the AO u/s. 68. Grounds raised by the revenue allowed.