Case Number: ITA 5533/DEL/2019
Appellant: Dhruv International Pvt. Ltd., New Delhi
Respondent: DCIT, Circle-7(2), New Delhi
Assessment Year: 2012-13
Result: Appeal Dismissed
Case Filed on: 2019-06-25
Order Type: Final Tribunal Order
Date of Order: 2022-07-20
Pronounced on: 2022-07-20
The appeal in this case was filed by Dhruv International Pvt. Ltd., based in New Delhi, against the Deputy Commissioner of Income Tax (DCIT), Circle-7(2), New Delhi. The case pertained to the assessment year 2012-13 and was initially filed on 25th June 2019. The dispute arose due to the addition made by the Assessing Officer (AO) on the share application money received and the disallowance of certain expenses claimed by the appellant.
Dhruv International Pvt. Ltd. filed the appeal against the order of the Commissioner of Income Tax (Appeals)-34, New Delhi, dated 22nd April 2019. The primary reason for the appeal was to contest the addition of Rs. 50,00,000/- being share application money received from four companies and the disallowance of expenses amounting to Rs. 7,43,204/-.
The case was heard before the Income Tax Appellate Tribunal (Delhi Bench “SMC”) in New Delhi on 5th July 2022. The bench comprised Shri Kul Bharat, Judicial Member. The appellant was not represented during the hearing, and the Revenue was represented by Sh. Om Prakash, Sr. DR.
The AO made an addition on account of share application money of Rs. 50,00,000/- received from four companies, namely M/s North India Securities Pvt. Ltd., M/s DMC Institute of Capital Market Pvt. Ltd., M/s V Soft Services Pvt. Ltd., and M/s Shark Communication Pvt. Ltd. The appellant filed confirmations, bank statements, PAN cards, income tax returns, certificates of incorporation, and Memorandum & Articles of Association in support of the share application money received. However, the AO found discrepancies and concluded that the appellant failed to establish the identity, creditworthiness, and genuineness of the transactions.
The AO also disallowed expenses amounting to Rs. 7,43,204/- claimed by the appellant, stating that no business activities were carried out during the relevant year and the expenses were not justified.
At the time of hearing, the appellant was not present to argue their case. The learned Senior Departmental Representative (Sr. DR) supported the orders of the authorities below, emphasizing that the appellant failed to provide sufficient evidence to substantiate their claims regarding the share application money and expenses.
The tribunal upheld the findings of the CIT(Appeals) and the AO. The learned CIT(Appeals) observed that the appellant failed to produce directors of the investing companies except one, who admitted to being a domestic servant with no knowledge about the investments. The tribunal found that the appellant failed to prove the identity, creditworthiness, and genuineness of the transactions. Consequently, the addition of Rs. 50,00,000/- was upheld.
Regarding the disallowance of expenses, the tribunal agreed with the CIT(Appeals) that the appellant did not furnish any justification for the expenses during the assessment proceedings. The CIT(Appeals) allowed minimal expenses necessary for the appellant’s existence and disallowed the rest. The tribunal found no reason to interfere with this finding.
The appeal of Dhruv International Pvt. Ltd. vs. DCIT, Circle-7(2), New Delhi, was dismissed. The tribunal upheld the addition of Rs. 50,00,000/- on account of share application money and the disallowance of Rs. 7,43,204/- in expenses. This outcome highlights the importance of providing adequate evidence and justification for financial transactions and claims in tax disputes.
The order was pronounced by Shri Kul Bharat, Judicial Member, on 20th July 2022.
Members Present:
Shri Kul Bharat, Judicial Member
Document Reference:
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)-34, New Delhi
5. DR: ITAT
ASSISTANT REGISTRAR, ITAT NEW DELHI
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