The Income Tax Appellate Tribunal (ITAT) deleted the addition confirmed by the Lower Authorities without pointing any defect in the bank transfer and bank statement of the moneylender.
The Assessee, M/s. Aarya Organic Foods & Ayurvedic Industries Pvt. Ltd. is a company who electronically filed its return of income declaring income.
The case was selected for scrutiny and thereafter assessment was framed under section 143(3) vide order and the total income was determined.
During the course of assessment proceedings, AO noticed that assessee has enhanced share capital and share premium to the tune of Rs.57,52,800/- and Rs.2,30,07,200/- respectively. The assessee was asked to furnish necessary confirmations and explanation to which assessee inter alia submitted that during the year only Rs.93,52,000 was increased in share capital and balance amount was pending share application money which were received in earlier year.
The AO issued notice under section 133(6) to the parties on the addresses furnished by the assessee from whom the share capital was stated to have been received by the assessee and in response to which AO noticed that in some of the cases replies were received.
AO noted that since the case was getting time barred and in the absence of confirmations from all the parties he considered Rs.93,52,000 as being unverifiable and accordingly made its addition under section 68 of the Act.
The CIT(A) has upheld the addition of Rs.62,82,150 without considering the document and evidence produced and concluded that the genuineness, creditworthiness and identity of share applications have not been proved by the assessee.
The coram consisting of Bhavnesh Saini and Anil Chaturvedi noted that assessee has received share premium and share capital during the year from 18 parties aggregating to Rs.93,52,000. AO treated the entire amount of Rs.93,52,000 as being unexplained.
As far as the additions in the case of Sanjeevji, Ajay Singh, Hanumat Prasad Nautiyal, Sunil Shastri, Virender Arya, Sulekh Arya, Suresh Arya, Narendra Arya and Mahendra Arya are concerned, CIT(A) has noted that the amounts was received in cash and the other documents like the contention of income being from agricultural activities was not supportive of their contentions. He has also noted that the documents furnished did not prove the creditworthiness and genuineness of transactions, ITAT did not find it to be incorrect and found no reason to interfere with the order of CIT(A) to that extent.
As far as addition of the amount of Rs. 2 lakh is concerned, the ITAT found that CIT(A) has given a finding that the amount was paid by cheque or bank transfer, she was employed as a teacher and had total income of Rs.3,26,334. In such a situation, it is not justified holding only Rs.1 lakh to be explained and balance Rs.2 lakh to be unexplained. Therefore, the ITAT deleted the addition of Rs.2 lakh.
The Tribunal deleted the addition of Rs.5 lakh of amount as when the fact of confirmation, bank transfer and bank statement of the lender of the money has not been found to be incorrect, it cannot be concluded the genuineness of transaction to have not been established.
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