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TMI Blog2023 (11) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... ned income." Ground No. 1 3. Apropos ground No. 1 the ld Sr. DR submitted that the assessee received a total amount of Rs. 3,70,00,000/- as share application money during the year and the amount of Rs. 1.30 crores accepted by the AO but an addition of remaining part of it amounting to Rs. 2.40 crores added back to the total income of the assessee as unexplained credit from undisclosed source u/s 68 of the Act. The ld Sr. DR submitted that only a few persons provided fund to the assessee company in the form of share application money and unsecured loans and most of them stated that their source of investment is from sale of shares. The ld SR DR submitted that the when the applicants were confronted then no reply was received nor any confirming was submitted therefore, the AO was right in making addition in the hands of the assessee u/s 68 of the Act. The ld Sr. DR submitted that the ld CIT(A) has granted relief to the assessee without any basis therefore, impugned first appellate order may kindly be set aside by restoring back to the AO. 4. Replying to the above the ld counsel of assessee submitted that the ld CIT(A) after considering the submission of assessee, objections and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to reproduce the relevant operative portion of the first appellate order as follows:- "3.8. I have gone through the facts and circumstances of the case, observations of the A.O., submissions made by the A.R. of the appellant, remand report of the assessing officer, rejoinder to the remand report, various judicial pronouncements on this issue and the provisions of the I.T. Act. I have also called for the assessment records and examined the same. This ground of appeal is being finalized after making following observations: (a) On going through the assessment it is observed that the assessing officer has considered the total share application money of Rs. 3.70 crores and has accepted an amount of Rs. 1.30 crores as genuine, while rejecting the claim of Rs. 2.40 crores as not having been explained u/s 68 of the 1.T. Act. In the assessment order, no specific details were provided regarding the persons from whom the amount of Rs. 2.40 crores was not being as genuine. The assessing officer has made general remarks stating that in response to summons u/s 131 only some persons had responded and provided details and confirmations. The assessing officer had also received letters from va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing officer and despite the investigations no adverse findings were brought on record by the assessing officer on the basis of which the addition of Rs. 2.40 crores. (c) The A.R. of the appellant has made detailed submissions which have been reproduced earlier in the order and has also provided a chart regarding the various persons from whom the share application money had been taken. On the basis of the chart which summarises the details about the different parties, it is also clear that the appellant had discharged initial onus of establishing the identity, genuineness and creditworthiness of the various parties through details like PAN, ITR, bank statements etc. On the other hand, the assessing officer has merely stated that since many of the persons to whom summons had been issued u/s 131 did not attend personally, the amounts totalling Rs. 2.40 crores was being added u/s 68 of the I.T. Act. Even on going through the assessment records it is not clear as to how this total amount of Rs. 2.40 crores was computed and who were the persons with which the assessing officer was not satisfied with regard to the amounts shown as share application money in the appellant company. (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have creditworthiness for providing this amount. In view of the various judicial pronouncements on this issue as well as the provisions of the I.T. Act, I do not see any reason for the assessing officer to have made this addition, specially because no specific adverse information was available with him. (e) with regard to the issue of TEP, it is clear that the TEP had been fully considered by the assessing officer and on the basis of the same statements of Sh. Harish Aggarwal and Shri Suresh Aggarwal have been taken. Despite the information with the assessing officer available through the TEP, there was no specific allegation or information on the basis of which any addition has been made by the assessing officer. The allegations had been made in respect of Shri Harish Aggarwal, but no specific allegation regarding information of the other share applicants or the appellant company must have been available with the assessing officer, on the basis of which any addition could have been made. The assessing officer had also made efforts to investigate the issues and financial transactions of the appellant company, but from the records there is nothing to establish the general allegati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs. 2.40 crores. Accordingly, this amount of Rs. 2.40 crores is deleted. This ground of the appellant is treated as allowed." 7. The ld CIT(A) first of all observed that the AO has accepted the amount of Rs. 1.30 crores as genuine and rejected the claim of the assessee amounting to Rs. 2.40 crore as not having been explained u/s 68 of the Act. The ld CIT(A) noted that the AO made general remarks stating that response to summons issued u/s 131 of the Act only some persons had responded and provided details and confirmations. The ld CIT(A) noted that it is not the case of any entry operator and during the course of assessment proceedings, various details including addresses, PAN Nos., confirmation letters, copies of income tax returns, bank statements and other details relating to share application and share issued by the assessee were provided to the AO. The ld CIT(A) noted that though in all cases parties did not appear in person but except in one case, in all other cases the persons either appeared and responded though letters to confirm the transaction. The ld CIT(A) also noted that the AO has not brought anything on record to establish that the various persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made on general apprehensions or surmises. 10. The ld CIT(A) finally relying on the proposition rendered by the Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports (supra) concluded that no adverse finding other than baseless observation given by the AO and also that this is not a case relating to entry operators and the ld CIT(A) has recorded categorical finding that all the parties are regularly assessed to tax and intimation have also sent to various AO to take necessary follow up action. The ld CIT(A) finally concluded the details in the remand report as well as various documents filed by the assessee have clearly established that the onus cast upon the appellant with regard to establishing identity, capacity and creditworthiness of contributor/ investor of share application amount has been discharged. Thus, we are unable to see any ambiguity, perverse to any valid finding recorded by the ld CIT(A) that the onus discharged by the appellant with regard to share application amount and no specific adverse information or evidence has been brought on record by the AO to justify the addition of Rs. 2.40 crores u/s 68 of the Act. Accordingly, we hold that the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to sustain the addition made by the AO u/s 68 of the Act. It is pertinent to mention that on being asked by the bench the ld Sr. DR did not controvert the factual position noted by the ld CIT(A) that the amount of Rs. 31 lakhs was repaid during the same financial period to the respective loan creditor i.e. M/s. Abhinav Leasing and Finance Ltd. 14. In view of the foregoing, we are unable to see any valid reason to interfere with the findings arrived and recorded by the ld CIT(A) and thus we uphold the same. Accordingly, ground No. 2 of the revenue is also dismissed. Ground No. 3 15. Apropos ground No. 3, after considering the rival submissions we note that the ld CIT(A) has restricted the addition to Rs. 1 lakhs instead of Rs. 2,31,200/- estimating the business income. The grievance of the ld Sr. counsel is that if the business income of assessee is estimated to Rs. 1 lakhs then it would be lesser then the return income of the assessee. In our considered opinion, returned income of assessee was Rs. 1,92,270/- and the AO estimated business income from operations Rs. 2,31,200/- above the returned income by considering the net profit @10% on the total turnover/ receipt of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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