2023 (4) TMI 242 - AT - Income Tax

Unsecured Loans u/s 68 - receipts of share capital/share premium received from investor - CIT(A) did not agree with the submissions of the assessee and held that the receipt from the investors was not proved by substantial documentary evidence - plea of the assessee that there is no transaction among the parties except the allotment of shares for which the payment was made in the preceding financial year - HELD THAT - We find that without examining the aforesaid aspect the plea of the assessee was rejected. The assessee has not produced the parties as required by the AO during the remand proceedings. Therefore in view of the aforesaid findings we deem it appropriate to remand this matter to the file of the AO for de novo adjudication after necessary examination/verification of the various aspects as highlighted above. Grounds raised by the assessee as well as by the Revenue allowed for statistical purposes.

Summary

Issues involved:
The judgment involves challenges to an order passed under section 250 of the Income Tax Act, 1961 for the assessment year 2009-10. The appellant raises concerns regarding the addition of Rs.19,80,000 on account of Unsecured Loans under section 68 of the Act. The Revenue, on the other hand, contests the deletion of additions of Rs.8,82,03,600 out of Rs.9,01,83,600 on account of receipts of share capital/share premium received from investors under section 68 of the Act.

Assessee's Appeal:
The appellant contested the addition of Rs.19,80,000 on account of Unsecured Loans under section 68 of the Income Tax Act, 1961, stating that the amount was received in earlier years and not during the year under consideration. The appellant requested the deletion of the addition based on this argument.

Revenue's Appeal:
The Revenue challenged the deletion of additions of Rs.8,82,03,600 out of Rs.9,01,83,600 on account of receipts of share capital/share premium received from investors. The Revenue argued that the genuineness, identity of investors, and creditworthiness of lenders were not established beyond doubt, making the additions maintainable under the proviso to Section 68 of the Income Tax Act, 1961.

Facts and Proceedings:
The assessee, engaged in money-changing business, filed its return declaring income under normal provisions and book profit under section 115JB. Reassessment proceedings were initiated based on share premium information received. The Assessing Officer treated the share premium and share capital as unexplained cash credit, adding the amount to the total income. The CIT(A) granted partial relief, directing deletion of a portion of the additions, leading to cross-appeals by both parties.

Decision and Analysis:
The CIT(A) upheld the addition for some investors due to lack of proof of investment, while accepting submissions for others. However, critical aspects like creditworthiness and transaction genuineness were not adequately examined. The judgment remanded the matter for fresh adjudication, emphasizing the need for thorough verification and examination of various aspects. Both parties were allowed to present evidence to establish the genuineness of transactions and the identity and creditworthiness of investors.

Conclusion:
The judgment allowed the cross-appeal for statistical purposes, remanding the matter for detailed examination by the Assessing Officer to determine the legitimacy of the transactions and investor details. The parties were directed to comply with all directions for a comprehensive adjudication of the case.