Amogh Buildcon Pvt. Ltd. Vs ITO (ITAT Mumbai)
Low Returned Income Is Not Low Creditworthiness: Once Section 68 Documents Are Filed, AO Must Investigate—Not Speculate
Summary: The Mumbai ITAT has deleted additions aggregating to ₹4.95 crore u/s 68, holding that the creditworthiness of an investor or lender cannot be judged solely from the income returned during one particular year. Once the assessee furnishes confirmations, PAN, ITR acknowledgements, bank statements & ledger accounts establishing the three ingredients of section 68, the burden shifts to the Revenue to conduct an independent enquiry.
The AO cannot reject documentary evidence merely on suspicion without exercising the powers available u/s 131 or 133(6). [Section 68 – TaxGuru]
Share Application Money & Loans Treated as Unexplained
The assessee, a private limited company engaged in the business of builders & developers, filed its return declaring nil income under the normal provisions & book profit of ₹16,538 u/s 115JB.
During assessment, the AO called upon the assessee to explain:
Share application money of ₹3.86 crore received from ten parties; &
Unsecured loans of ₹1.09 crore received from Divine Construction Company & Mangesh Construction.
The AO noticed that confirmations were initially filed only from six out of the ten share applicants. Five confirmations were signed by a common signatory. He also found discrepancies between certain loan confirmations & the balances appearing in the assessee’s books.
