DCIT Vs J.A. Infracon Pvt. Ltd. (ITAT Ahmedabad)
Share application money cannot be added as unexplained income merely on the basis of surmises and conjectures
ITAT Ahmedabad held that addition, treating share application money as unexplained income, based on surmises and conjectures without making proper verification of facts with relevant materials and evidences is not sustainable in law. Accordingly, appeal of the revenue dismissed.
Facts- The assessee is Private Limited Company has no business activity during the financial year. During scrutiny assessment, AO found that the assessee company has received share application money with premium from three parties of Rs.10.5 crores and has given loans and advances of Rs.10.46 crores. AO issued notices to provide the share applicant’s/subscribers details, proof of identity, credit worthiness, bank transaction and copy of the Returns filed by the above applicants. The assessee failed to comply with the notices and when AO issued notices u/s. 133(6) to the share applicants, the same were also not replied by them. Thereby AO treated the share application money of Rs.10.5 crores as unexplained income of the assessee and also treated the commission expenses calculated at 2.5% on the above amount of Rs.26,25,000/- as unexplained expenditure u/s. 69C of the Act and demanded tax thereon.
