PURVANCHAL METROCITY HOSPITAL PVT. LTD.,GORAKHPUR V. A. C. I. T., CIRCLE - 2, GORAKHPUR

ITA 61/VNS/2023

AI Insights

The case involves Purvanchal Metrocity Hospital Private Limited, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2015-16. The primary contention was the addition of Rs. 15,00,000 as unexplained share application money received from directors, under section 68 of the Income Tax Act. The AO had initially added this amount following scrutiny of the company's financial transactions, which revealed substantial cash deposits linked to the share application money. The Tribunal examined the evidence presented, including income tax returns, bank statements, and balance sheets of the directors involved, and found that the sources of funds for two of the directors were adequately documented and legitimate. However, for Shri Vinay Kumar Singh, the Tribunal required further verification of the source of his funds and restored the matter to the AO.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26053 (ITAT-VARANASI)
• Duration Of Justice: 1 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Next Hearing Date: 11-09-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 30-05-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAVITA MEENA
• Assessee Lawyers: ARVIND SHUKLA
• Keywords: Source of fund
• Section: 143(3); 143(2)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, VARANASI BEFORE: SHRI B.R. BASKARAN, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No.61/VNS/2023 (Assessment Year :2015-16) Purvanchal Metrocity Hospital Private Limited Plot No.5-6, Govind Nagri, H.N. Singh Chowk, Medical College Road, Gorakhpur-273001 Vs. ACIT, Circle-2 Gorakhpur PAN/GIR No.AAICM2140G (Appellant) .. (Respondent) Assessee by Shri Arvind Shukla, Advocate Revenue by Smt. Kavita Meena Date of Hearing 11/09/2024 Date of Pronouncement 29/11/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against the order dated 25/04/2023 passed by NFAC, Delhi for the quantum of assessment passed u/s. 143(3) for the A.Y.2015-16. 2. In the grounds of appeal assessee has challenged the addition of Rs.15,00,000/- on account of unexplained share application money received from Directors, added u/s.68. 3. The brief facts are that assessee company has filed return of income declaring total income of Rs. 60,93,490/- on ITA No.61/VNS/2023 Purvanchal Metrocity Hospital Pvt.Ltd., 2 27/09/2015. Assessee’s case was selected for scrutiny and accordingly, notice u/s. 143(2) was issued on 01/04/2016. One of the reasons for selection of scrutiny was large share premium received and share application money. Ld. AO noticed that during the year under consideration assessee has received share application money from Smt. Panmati Devi of Rs.10,00,000/- on 20/02/2015 and in support, joint account of Smt. Seema Singh and Smt. Panmati Devi, (both directors of the assessee company) was filed and was examined by him. It was noted by the AO that there was cash deposit of Rs.12,90,000/- in their bank account. In response assessee submitted that Smt. Seema Singh is one of the Director of the assessee company had advanced loan to Smt. Panmati Devi of Rs.10,00,000/- from which she has purchased shares amounting to Rs.10,00,000/-. The ld. AO rejected the explanation of the assessee and added an amount of Rs.10,00,000/-. Further, ld. AO noted that assessee has also received share application money of Rs.5,00,000/- from Shri Vinay Kumar Singh who has also made cash deposits of Rs.5,00,000/- in his bank account to issue cheque of Rs.5,00,000/- to the assessee company and accordingly, doubting the creditworthiness of cash deposits made in the account of share applicants, ld. AO has made the addition of Rs.5,00,000/-. 4. Before ld. CIT (A) assessee had filed copy of ITRs, audited balance sheet, copy of ledger account and bank statement of Smt. Seema Singh, Smt. Panmati Devi and Shri Vinay Kumar ITA No.61/VNS/2023 Purvanchal Metrocity Hospital Pvt.Ltd., 3 Singh. Ld. CIT (A) has however, confirmed the addition on the reasoning given by the ld. AO. 5. After hearing both the parties and on perusal of the material placed on record before us, it is seen that, assessee even before the ld. CIT (A), had filed the relevant income tax returns of Smt. Seema Singh and Smt. Panmati Devi and confirmation of ledger account of both the parties who have subscribed for share application money and also given their balance sheet and profit and loss account. On perusal of the details it is seen that they have declared source of funds in their return of income balance sheet, for example, Smt. Seema Singh has declared loan given to Smt. Panmati Devi of Rs. 8,71,968/-. In her balance sheet and return of income alongwith bank statement she has also tried to prove that the cash deposited in the bank account was from her own bank account the source of which was from sales from her proprietary business which was more than Rs.1,20,00,000/-. Once Smt. Seema Singh who has given all the details that she has given loan and out of the said loan, Smt. Panmati Devi has subscribed for the shares and Smt. Panmati Devi has also given her bank account and income tax return where in all these transactions have been reflected, then we do not find any reason to the share application money in the hands of the assessee company as ‘unexplained’. 6. With regard to amount of Rs.5,00,000/- received from Shri Vinay Kumar Singh, his bank statement has been filed which shows he has issued a cheque to the assessee company, but ITA No.61/VNS/2023 Purvanchal Metrocity Hospital Pvt.Ltd., 4 before that there has been cash deposits from 10/02/2015 to 18/02/2015 of same amount before issuing the cheque. The source of the cash deposits were stated to be out of opening balance available with him. However, in case of Shri Vinay Kumar Singh, we find that there is no income tax return, which has been filed before us nor balance sheet or computation of income and source of his income or funds. Thus, his identity and creditworthiness needs to be established. Accordingly, in so far as share application income received from Shri Vinay Kumar Singh, matter is restored back to the file of the ld. AO and assessee is directed to file all the relevant documents / confirmation and source of cash available with him. Accordingly, the appeal of the assessee is partly allowed for statistical purposes. 7. In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced on 29/11/2024. Sd/- (B.R. BASKARAN) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Varanasi; Dated 29/11/2024 KARUNA, sr.ps Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A), Varanasi. 4. CIT ITA No.61/VNS/2023 Purvanchal Metrocity Hospital Pvt.Ltd., 5 BY ORDER, (Asstt. Registrar) ITAT, Varanasi 5. DR, ITAT, Varanasi 6. Guard file. //True Copy// "