Divya Electronics Pvt. Ltd. vs. ITO, Ward 6(2)

Parties Involved

Facts Summary

The assessee, Divya Electronics Pvt. Ltd., filed its return of income on 11.01.2013 declaring a total income of ₹1,01,754/-. The case was selected for scrutiny, and notices under sections 143(2) and 142(1) of the Income-tax Act, 1961, were issued. The Assessing Officer (AO) called for evidence regarding share capital raised during the year, which the assessee provided. The shares were allotted to three entities: M/s Ranbhumi Marketing (P) Ltd., Kamla Devi Kothari, and R.C. Suppliers Pvt Ltd. The AO noted non-compliance with summons under section 131 of the Act by the subscribers and made an addition of ₹55 lacs as unexplained cash credit. The Commissioner of Income Tax (Appeals) (CIT(A)) confirmed this addition. The assessee produced all required evidence before the AO and CIT(A). The second issue involved disallowance of ₹1,00,00,000/- in respect of employees' benefits and other expenses, which the AO disallowed on the basis of an increase in expenses despite the assessee providing evidence of payments.…

Legal Issues

• 1. Confirmation of addition of ₹55 lacs by the ld. CIT (A) as made by the ld. AO in respect of share capital raised by the assessee during the year as unexplained cash credit u/s 68 of the Act.
• 2. Confirmation of disallowance by the ld. CIT (A) of ₹1,00,00,000/- as made by the ld. AO in respect of employees benefits and other expenses.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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