B & B Sharecom Pvt. Ltd. Vs DCIT (ITAT Delhi)
ITAT Delhi Deletes Rs.8.16 Cr Addition on Share Capital & Commission, Restores Speculative Loss Issue-AO’s Suspicion Not Enough
Assessee appealed against order of NFAC wherein additions relating to share capital, alleged commission & speculative loss treatment were confirmed.
AO noted that during FY 2015-16 Assessee issued 80,00,000 shares of Rs.10 each to three companies – JA Infracon Pvt. Ltd., Adila Traders Pvt. Ltd. & Sonal Styles Pvt. Ltd. Notices u/s 133(6) returned unserved & verification reports showed non-existence at given addresses. AO observed negligible incomes & low bank balances of these companies, with immediate RTGS credits & transfers, indicating accommodation entries. Accordingly, Rs.8 crore was added u/s 68 & Rs.16 lakh (2% commission) u/s 69C. NFAC confirmed additions.
Before Tribunal, Assessee submitted that all investors filed ITRs, had audited accounts & confirmations with affidavits of directors. Transactions were through banking channels. Failure to produce directors within 2 days could not be held against Assessee, especially when they were based in Mumbai, Thane & Ahmedabad. It was argued that mere low income cannot negate creditworthiness if reserves & surpluses exist. Non-declaration of dividend was due to continuous losses. It was stressed that there was no evidence of Assessee’s unaccounted money routed back. Reliance was placed on recent Supreme Court rulings (Kuntala Mohapatra, Kishore Kumar Mohapatra, Parasben Kochar, Tejua Kapadia) which upheld that once identity, creditworthiness & genuineness are established through records, addition cannot be made.
