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TMI Blog2012 (8) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the share application money as unexplained cash credit at the hands of the assessee company only because of a doubt in his mind that this amount could not have been earned from agricultural operations. If at all there was any doubt regarding the source of investment, proceedings should have been initiated against MD in his individual capacityand no addition could have been made at the hands of the assessee company - Decided in favor of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings, the AO found that the assessee has introduced a sum of Rs.27.05 lakhs by way of share application money. 5. In compliance to the queries of the AO, the assessee furnished details with regard to the source of the application money along with confirmation letters which were verified by the AO. The AO found that out of share application money of Rs.27.05 lakhs, an amount of Rs.12.80 lakhs was introduced by Sri Janak Rama Rao, M.D of the assessee company. The AO when asked to explain about the source of Rs.12.80 lakhs, Sri Janak Rama Rao filed a confirmation letter explaining therein the investments were made out of agricultural income in his capacity as karta of HUF. It was explained before the AO that the HUF owns 10 acres of ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that the investment was made out of income earned from agricultural operations, rejected the contentions of the assessee and sustained the addition. 6. The learned AR for the assessee submitted before us that there is no dispute with regard to the identity of the share applicant who happens to be the MD of the assessee company. The AO as well as the CIT (A) did not dispute that the MD is having 10 acres of cultivable land where agricultural operations have been carried out. The learned AR referring to pages 1 and 2 of the paper book submitted that the agricultural land held by the HUF was leased out to one Yedlapalli Satyanarayana of s/o Yedlapalli Panasyya, resident of Kammavari Savaram Village, Ramachandrapuram Mandal, East Godavari D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in his name instead of treating it as unexplained cash credit at the hands of the assessee company. In support of such contention, the assessee relied upon the following case law. i) CIT vs. Stellar Investments Ltd. (251 ITR 263) ii) CIT vs. Lovely Expoprts Pvt. Ltd. (216 CTR 195 (SC) iii) CIT vs.Dwarakadhish Investment Pvt. Ltd. & Others (330 ITR 298) iv) CIT vs. Winstral Petrochemicals Pvt. Ltd. 330 ITR 603 7. The learned DR, on the other hand, supporting the orders passed by the AO and the CIT (A) contended that the assessee having failed to prove with proper evidences, the source of investment of the share application money of Rs.12.80 lakhs at the hands of the share applicant i.e., Sri K.B. Janaki Rama Rao, the revenue author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 10 acres has not been disputed, the AO should not have treated the share application money as unexplained cash credit at the hands of the assessee company only because of a doubt in his mind that this amount could not have been earned from agricultural operations. If at all there was any doubt regarding the source of Rs.12.80 lakhs invested by the MD Sri Janaki Rama Rao, then proceedings should have been initiated against Sri Janaki Rama Rao and no addition could have been made at the hands of the assessee company. This is in view of the settled position of law enunciated by the Hon'ble Apex Court as well as different High Courts. In the aforesaid view of the matter, we direct deletion of amount of Rs.12.80 lakhs and allow the grounds ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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