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TMI Blog2017 (7) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... orded of the other share applicants, which in our view does not demonstrate that the facts were identical in all the cases.We therefore find no merit in this argument of the Ld.Counsel for the assessee and reject the same. We uphold the order of the CIT (Appeals) making addition u/s 68 on account of share application received to the extent of ₹ 4,50,000 and delete the balance amounting to ₹ 3 lacs pertaining to share application money invested by Shri Harnek Singh. - Decided partly in favour of assessee. - ITA No.15/Chd/2016 - - - Dated:- 11-4-2017 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For The Appellant : Shri Tej Mohan Singh For The Respondent : Shri Manjit Singh, DR ORDER PER ANNAPURNA GUPTA, A.M. : This appeal has been filed by the assessee against the order of CIT(Appeals), Patiala dated 14.10.2015 relating to assessment year 2009-10. 2. The assessee has raised following grounds: 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the addition of ₹ 7,50,000/- applying the provisions of Section 68 in respect of share app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The Ld. counsel for the assessee individually dealt with creditworthiness of each of the share applicants and stated that the statements of the share applicants, copies of their bank passbook and copy of account of the commission agent through whom their agricultural produce was disposed off during the impugned year amply demonstrated the availability of sufficient funds with share applicants for making investment in assessee company. The submissions of the assessee was sent to the Assessing Officer for his comments, who in his reply relied upon the assessment order and emphasized that the creditworthiness of the share applicants had not been proved and, therefore, the addition made was justified. The learned CIT (Appeals) after going through the submissions of the assessee and the comments of the Assessing Officer upheld the addition made stating that the creditworthiness of three applicants had not been proved since their statements made before the Assessing Officer, in which they had stated that they had taken lands on theka for agricultural purposes, had not been substantiated by way of any documentary evidence. The learned CIT (Appeals) also found that the cash ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has given due credence to the claim of the investors to the extent it was justified. In their depositions before the A.O. the alleged investors have stated that they have resorted to investment in the appellant company with a view to earn income from this investment . However, at the same time, they have admitted in that very statement that no money/income had been received by them till date. 6. Thereafter, the Ld.CIT(A) after relying on various judgements of the High Courts upheld the action of the AO in making addition u/s 68 on account of share application money received from three investors as above. 7. Aggrieved by the same, the assessee has now come up in appeal before us. During the course of hearing before us, the Ld. counsel for the assessee argued that the assessee had fully discharged its onus of proving the identity, the genuineness and the creditworthiness of the share applicants. The Ld. counsel for the assessee stated that the bank statements of the share applicants, the statements of share applicants confirming the investment and the ledger account of the commission agent from whom cash had been received in lieu of agricultural produce sold by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not have rejected the explanation of the assessee in the case of the balance three share applicants and made addition on account of the same. 9. The Ld. DR, on the other hand, relied upon the order of the Ld. CIT (Appeals) and stated that clearly the source of making the investment by the share applicants had not been categorically proved by the assessee and it was clearly evident from the documents submitted that as on the date of making investment sufficient funds were not available and the addition made was, therefore, justified. 10. We have heard both the parties, perused the orders of the authorities below and gone through the documents placed before us. The issue before us is the addition made u/s 68 of the Act on account of share application money amounting to ₹ 7,50,000/- on account of the following share applicants: i) Shri Harnek Singh Rs.3,00,000/- ii) S hri Harbans Singh Rs.3,50,000/- iii) Shri Dhian Singh Rs.1,00,000/- 11. In all the three cases the addition has been made for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 10.1.2008. In view of the same, we find merit in the submissions of the assessee that the creditworthiness of Shri Harnek Singh stood proved by virtue of the copy of account of commission agent showing availability of sufficient funds on the date of making investment in assessee s company coupled with the statement of Shri Harnek Singh affirming the investment made in assessee company and explaining the source of the same as being out of his agricultural produce sold. 2) In the case of Shri Harbans Singh, we find that his copy of account with the commission agent reveals receipt of a sum of ₹ 3 lacs on 10.11.2008 while his bank account shows cash deposit of ₹ 3,50,000/- on 8.8.2008 and investment of the same in assessee company on the same date. Clearly the documents on record do not prove the existence/availability of sufficient funds with the assessee for the purpose of making investment in assessee company. In the case of Shri Harbans Singh therefore we are in agreement with the Ld. DR that the documents on record produced by the assessee do not prove the creditworthiness of the share applicant and addition made to the extent of investment made by Shri Harba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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