The case between Hindustan Glass Works Ltd (formerly known as M/s South Impex Pvt. Ltd.), the appellant, and the Assistant Commissioner of Income Tax (ACIT) Circle-12(1), New Delhi, the respondent, pertains to the Assessment Year (AY) 2003-04. The case was filed on 13th June 2019 and concluded with a final order on 25th September 2019. The case was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘C’.
Hindustan Glass Works Ltd filed its return of income declaring a total income of Rs. 3,53,959/-. The assessment under section 143(3) read with section 147 of the Income Tax Act, 1961 (the Act) was completed on 24th December 2007, after making an addition of Rs. 4,80,00,000/- under section 68 of the Act, along with 1% commission amounting to Rs. 4,80,000/-. The first appellate authority deleted the addition, but on further appeal by the Revenue, the Tribunal restored the matter to the file of the Assessing Officer with specific directions.
The appellant challenged the order dated 12th April 2019 passed by the Commissioner of Income Tax (Appeals)-16, New Delhi, raising the following grounds:
The Tribunal found that the Assessing Officer issued a detailed questionnaire containing more than 29 questions, which the appellant responded to, seeking cross-examination of persons whose statements had been recorded by the Investigation Wing and were relied upon for making the addition under section 68 of the Act. The appellant submitted documents supporting the identity, creditworthiness, and genuineness of the transaction, including certificates of incorporation, PAN copies, bank statements, balance sheets, and confirmations from the share applicant companies.
The Tribunal noted that the Assessing Officer insisted on producing the directors of the share applicant companies, and despite the appellant’s efforts, some directors did not appear. The CIT(A) forwarded documents to the Assessing Officer for a remand report, during which the directors of 14 share applicant companies appeared and confirmed the investments, providing necessary financial documents.
The Tribunal observed that the CIT(A) sustained the addition based on the following conclusions:
The Tribunal found that the appellant had produced substantial evidence to discharge its onus under section 68 of the Act. The directors of the share applicant companies appeared before the Assessing Officer during remand proceedings and confirmed the investments, filing necessary documents. The Tribunal noted that the CIT(A) relied on the statements recorded during the search and survey proceedings without providing an opportunity for cross-examination, and no corroborating material was found to support those statements.
The Tribunal emphasized that the appellant had demonstrated the identity, creditworthiness, and genuineness of the transactions, with no evidence suggesting that the share application money was the appellant’s unaccounted money routed back. The Tribunal cited the case of Lakshmi Float Glass Ltd., where under similar circumstances, the Delhi High Court affirmed the deletion of the addition under section 68 of the Act.
The appeal by Hindustan Glass Works Ltd against the ACIT Circle-12(1), New Delhi, was allowed by the ITAT. The Tribunal concluded that the addition of Rs. 4,80,00,000/- under section 68 of the Act was not justified, as the appellant had provided sufficient evidence to substantiate the identity, creditworthiness, and genuineness of the share application money received. The CIT(A)’s reliance on statements recorded during search and survey proceedings without corroborating evidence was not sustained.
Order pronounced in open court on 25th September 2019.
Judicial Member: Shri Sudhanshu Srivastava
Accountant Member: Shri O.P. Kant
Date of Order: 25.09.2019
Copy forwarded to:
Assistant Registrar, ITAT, New Delhi
Unexplained Share Application Money: Hindustan Glass Works Ltd vs ACIT for AY 2003-04
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