IN THE INCOME TAX APPELLATE TRIBUNAL
[DELHI BENCH: ‘A’ NEW DELHI]
BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER
ITA No. 79/DEL/2021 (A.Y. 2016-17)
Abhi Soaps Pvt. Ltd. vs. ITO Ward-1(1), Faridabad
Appellant: Abhi Soaps Pvt. Ltd.
Plot No. 1002, Near Talab, Shiv Colony, Faridabad, Haryana
PAN No. AALCA0776B
Respondent: ITO Ward-1(1), Faridabad, Haryana
Date of Case Filing: 05th February 2021
Date of Order: 20th June 2023
Date of Pronouncement: 20th June 2023
Representatives:
For the Appellant: Sh. Rajiv Saxena, Adv., Ms. Sumangla Saxena, Adv.
For the Respondent: Sh. Kanv Bali, Sr. DR
PER YOGESH KUMAR U.S., JM:
This appeal is filed by the assessee against the order dated 18/03/2020 passed by the CIT (A)-Faridabad for the assessment year 2016-17.
The assessee has raised the following concise grounds of appeal:
These grounds are independent and without prejudice to each other. The appellant craves leave to add, alter, amend, or withdraw any grounds herein or add any further grounds as necessary.
There is a delay of 19 days in filing the present appeal. The assessee filed an application and an affidavit for condoning the delay, citing the Counsel’s preoccupation with tax audit work. Considering the reasons assigned in the affidavit, the delay of 19 days is condoned.
The return for A.Y. 2016-17 was filed by the assessee declaring an income of Rs.1,17,080/-. The case was selected for limited scrutiny, and statutory notices were issued. The assessment under Section 143(3) of the Income Tax Act was completed on 28.12.2018 at an income of Rs.91,17,380/- after making an addition of Rs.90,00,300/- under Section 68 of the Income Tax Act, treating the same as a bogus transaction.
Aggrieved by the assessment order, the assessee appealed before the CIT(A), who dismissed the appeal on 18/03/2020 and enhanced the income of the assessee by Rs. 75,00,250/- under the head of other sources by applying Section 56(2)(viib) of the Act on a protective basis, rejecting the valuation report submitted under Rule 11UA(2)(b) of the Income Tax Rules, 1962.
The Counsel for the assessee submitted that the assessee had furnished all documentary evidence to establish the identity, creditworthiness of the investors, and the genuineness of the transaction. The CIT(A) and AO failed to appreciate the material available on record. The assessee provided the bank statements through which money towards the subscription of the share capital was paid, establishing the nature of receipt.
In contrast, the Departmental Representative argued that the assessee failed to establish the identity, creditworthiness of the investors, and the genuineness of the transaction, supporting the orders of the lower authorities.
After hearing the parties and perusing the material on record, the Tribunal found that the assessee had discharged its onus to prove the identity, creditworthiness, and genuineness of the investors. The CIT(A) and AO did not bring any tangible evidence to disprove the claim. The Tribunal referred to the Supreme Court judgment in Principal Commissioner of Income Tax vs. Rohtak Chain Co. (P) Ltd. and other relevant judicial pronouncements, concluding that the addition made under Section 68 of the Act cannot be sustained.
The Tribunal also addressed the enhancement of income under Section 56(2)(viib) of the Act by the CIT(A). It noted that the assessee provided a valuation report as per Rule 11UA(2)(b) of the Income Tax Rules, 1962, which should have been accepted by the authorities. The Tribunal cited various judicial pronouncements supporting the assessee’s position, including the Gujarat High Court judgment in IMC Limited and ors vs. Union of India and ors.
The Tribunal allowed the assessee’s appeal, deleted the addition made under Section 68 of the Act, and set aside the enhancement of income under Section 56(2)(viib). The other grounds of appeal were deemed academic and did not require adjudication.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 20th June 2023.
Sd/- (ANIL CHATURVEDI)
ACCOUNTANT MEMBER
Sd/- (YOGESH KUMAR U.S.)
JUDICIAL MEMBER
Dated: 20/06/2023
*R.N, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR, ITAT NEW DELHI
Why Case Filed: ITA 79/DEL/2021 – Abhi Soaps Pvt. Ltd. vs. ITO Ward-1(1), Faridabad
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