ACIT Vs Agrawal Infrabuild Pvt. Ltd (Chhattisgarh High Court)
Chhattisgarh High Court held that addition under section 68 of the Income Tax Act justifiable since the money trail establishes circulation of assessee’s own unaccounted funds through shell company. Accordingly, appeal of revenue allowed and order of ITAT set aside.
Facts- The respondent / assessee being a Pvt. Ltd. Company, derives income from business and profession. In this case, search and seizure operations were carried out u/s. 132 of the Act at the factory and office premises of the respondent/assessee on 08.02.2017. Consequently, AO made addition vide Assessment Order dated 28.12.2018 u/s 153A read with Section 143(3) of the IT Act of Rs.6,40,50,000/- in AY 2014-15 on account of bogus share capital/premium from shell companies.
CIT (Appeals), by order dated 27.11.2019, dismissed the appeal and upheld the addition made by the AO. ITAT allowed the appeal of the assessee. Being aggrieved, revenue has preferred the present appeal.
Conclusion- In the present case, the capacity of the investor is conspicuously absent, as it had negligible income and no independent financial strength. Similarly, genuineness is disproved by the positive evidence of money trail showing circulation of assessee’s own unaccounted funds.
Held that it is clear that the assessee has failed to discharge the heavy burden cast upon it under Section 68 of the IT Act. The AO and CIT(A) were justified in treating the share capital and premium as unexplained cash credit. The ITAT, in ignoring this unimpeachable evidence and deleting the addition merely on the basis of superficial documents, has recorded a finding that is not only contrary to record but also perverse in law. Thus, we answer the substantial question of law in favour of the Revenue and against the assessee, holding that the ITAT was not justified in setting aside the order of the CIT(A).
