ASR Wines (P) Ltd. vs Income Tax Officer

Per Manish Agarwal, Accountant Member:

The present appeal has been filed by the assessee against the order dated 24.01.2023 passed by Ld. Commissioner of Income Tax(A)/National Face less Appeal Centre , Delhi [“Ld.CIT(A)/ NFAC”] in DIN & order No. ITBA/NFAC/S/250/2022-23/1049048155(1) passed u/s 250 of the Inco me Tax Act, 1961 [“the Act”] arising from the assessment order date d 30.03.2013 passed u/s 143(3) of the Act pertaining to Assessment Year 2010-11.

Brief facts of the case are that the assessee is engaged in the business o f wholesale and re tail trading of wine. The return of income was e -filed on 23 .03.2011 declaring total inco me of Rs.25,380/-.The case was se lected for scrutiny and the AO observed that assessee has received share application money of Rs.2 ,04,14,000/- during the year under appeal, out of which total sum o f Rs.6 5,14,500/- were deposited in cash in the bank accounts o f various share applicants just prior to the issue of cheques to the assessee as share application money. Thus, the AO has made the addition of Rs.65,14 ,500/- being the cash deposited in the bank account of the share applicants immediately before the issue cheques as unexplained cred its u/s 68 of the Act.

Against the said order, the assessee filed appeal before ld. CIT(A) who confirmed the findings of the AO and dismissed the appeal of the assessee.

Aggrieved by the said order, the assessee is in appeal before the tribunal by taking the following grounds of appeal:

Before us, in support of all the grounds of appeal, ld. AR of the assessee submits that the assessee during the course of assessment proceedings had filed all the necessary details in order to establish the genuine ness of share application money received such as copy of IT R, bank statement, ID cards of the share applicants and it is state d in all the cases application money was received through banking channel. Ld. AR submits that during the course of assessment proceedings some of the applicants appeared physically and they were examined by the AO and their statement were recorded wherein they have been accepted making payments tow ards the share application to the assessee co mpany. All the se details were available in the paper book filed by the asse ssee. Ld . AR further filed detailed written submission with respect to each individ ual share applicant from whom part of funds rece ived were alleged as unexplained credits and submits the details filed in support of the application money received and requested that the addition made be deleted. Ld. AR fur ther placed reliance on the decision of co-ordinate bench of ITAT Delhi in the case of Ashwini Kumar Taneja Vs. ITO in ITA No. 7391/Del/2019 wherein it is held that for the purpose of section 68 of the Act, if the identity of the creditors have been established and Revenue accep t the genuineness of part of the tr ansaction, it is not justified to disbelieve the remaining par t of the tr ansaction by mere attribution of suspicion. Ld. AR further p laced reliance on the judgme nt of hon’ble Bo mbay high court in the case of CIT Vs. Gagandeep Infrastructure (P) Ltd. (2012) 394 ITR 680 (Bom.) and Mumbai bench of Tr ibunal in the case of M/s J. R. Fiber Glass Industries Pvt. Ltd. Vs. NFAC, ITA No . 2848/Mum/2023. He prayed according ly.

On the other hand, ld. Sr . DR vehemently supported the orders of the lower authorities and submits that the AO has after examining the bank accounts of all the share applicants has observed that out o f total share application money received of 2,04,14 ,000/-, a sum of Rs.6 0,14,500/- were deposited by the respective applicants in their bank accounts in cash, the sour ce of which were not explained. Therefore , the AO made the addition u/s 68 of the Act for the said sum and accepted the remaining money received through banking channels out of the balances availab le in their accounts as explained. He submits that the AO has very reasonable in mak ing the addition to the extent of the sum, source of which remained unexplained on the part of the assessee/ respective share applicants and thus prayed for the confirmation of the orde rs of lower authorities.

Heard the parties and perused the material availab le on record. In the instant case, assessee company had received share app lication money from total 34 independent individuals. The AO observed that d uring the co urse o f assessment proceedings, the confirmatio ns were filed from which it was observed that out of 34 persons, many of the persons are having same address. However, when the circle inspector was appointed to visit and examine these persons, it was found that they were not availab le at the given addresses. The AO further observed that most of share applicants were the resident of Bijnor district, however, their bank accounts were opened in Bulandshahr and most the accounts were intro duced by the directors of the assessee comp any. The AO further observed that cash w as deposited in their bank acco unts immediately before the issue of cheques to the assessee and the pay-in-were filled- in by the employees of the autho rized persons of the director of assessee company which fact remained uncontroverted . The AO at page 4 & 5 of the o rder made a tab le where in the sour ce of income of each indiv idual applicant is stated coupled with the amo unt invested as share application. It is further observed that in many cases cash was deposited in the bank accounts of the share applicants and immediately after deposit of cash, cheques were issued to the assessee company. Before us, ld. AR fo r the asse ssee, though filed the copies of bank statements, confirmations, their ITR etc. however, nowhere in the said of details filed before the lower authorities, immediate source of the cash so deposited in the ir bank accounts w as explaine d. It is observed that the AO had accepted the funds to the extent received from these applicants, immediate source of which is duly backed by bank entry/ availability of funds in the bank account of respective individual. It is further observed that all these persons are showing income ranging between Rs.1.50 lakhs to 2.5 lakhs. However, they had made share applicatio n of 3 lakhs to 8 lakhs which is tabulated as under:

From the above table, it is evident that the AO has accepted that the application money which was duly backed by the bank credits in the accounts of respective applicants and the cases where cash deposited in the bank accounts of applicants immediately before the issue of cheques and source of which were not explained, has been held as unexplained credits and made the addition u/s68 of the Act.

The judgement relied upon the assessee of eh Co-ordinate bench in the case of Ashwini Kumar Taneja (supra)wherein it is held that whe n part funds were accepted, no addition could be made for the remaining amount on mere suspicion however, the facts of that case are totally distinguishable as in that case, funds were received from all the persons thro ugh banking channels and immediate source in their bank accounts were also fro m the banking channel. Whereas in the present case, admittedly cash was deposited immediately before the funds transferred to the assessee and the AO has made the addition for those funds only therefore, the ratio laid down by the coordinate bench is not applicab le to eh facts of the present case.

In the case of the share application money, burden is on the assessee to prove the source in the hands of the applicants which in the instant case has no t been proved to the extent the cash deposited in the bank acco unts of respective applicants.

In view of the above discussion, we are in agreement with the order of ld. CIT(A) which is hereby upheld. Accordingly, all the grounds of the appeal of the assessee are dismissed.

In the result, the appeal of the assessee is dismissed.