Case Law Details
Neo Structo Construction Pvt. Ltd. Vs ACIT (ITAT Ahmedabad)
In the case of Neo Structo Construction Pvt. Ltd. Vs ACIT (ITAT Ahmedabad), the dispute centered around the taxation of investments made by the company in land properties, contested between the Assessing Officer (AO) and the appellant, Neo Structo Construction Pvt. Ltd.
The primary issue revolved around the addition of ₹3,25,08,000 by the AO, who suspected that the company had used unaccounted funds to purchase land. The AO based this suspicion on discrepancies between the amounts paid and the banking transactions recorded. According to the AO, the company had allegedly diverted undisclosed income to purchase land, using shares issued at a premium to cover up the transactions. The AO also pointed out that attempts to verify the transactions with the land sellers were unsuccessful, as notices were returned undelivered.
Additionally, the AO raised concerns about the lack of proof regarding the identity and creditworthiness of the parties involved in the transactions. Consequently, the AO treated the entire premium paid on shares, amounting to ₹13,05,35,880, as unexplained income under Section 68 of the Income Tax Act. Furthermore, the AO added ₹16,30,44,000 as unexplained investments in land.
Neo Structo Construction Pvt. Ltd. appealed these additions to the Commissioner of Income Tax Appeals (CIT-A), who partially ruled in their favor. The CIT-A accepted the documentary evidence provided by the company, including board resolutions, meeting minutes, sale deeds, and filings with the Registrar of Companies (ROC). These documents supported the issuance of shares at a premium in exchange for land, indicating that the transactions were legitimate. Consequently, the CIT-A deleted the addition of ₹13,05,35,880 under Section 68.
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