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TMI Blog2021 (5) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... led evidences as well as the confirmations from all the remaining parties on merits. We thus conclude in this factual matrix that the impugned unexplained share capital addition made in respect of the assessee's 42 investor parties does not deserve to be upheld. The same is directed to be deleted for this precise reason only. - Decided in favour of assessee. - ITA No. 1541/Hyd/2019 - - - Dated:- 23-4-2021 - S.S. Godara, Member (J) and Laxmi Prasad Sahu, Member (A) For the Appellant : P. Murali Mohan Rao For the Respondents : Sunil Kumar Pandey, D.R. ORDER S.S. Godara, Member (J) This assessee's appeal for Asst. Year 2014-15 arises from the Commissioner of Income Tax (Appeals)-l, Hyderabad order dt. 25.03.2017 passed in case No. 0536/2016-17/ITO-17(3)/CIT(A)-1/Hyd/2019-20 in proceedings under Section 143(3) of Income Tax Act, 1961 ('the Act'). Heard both the parties. Case file perused. 2. The assessee's sole substantive grievance challenges correctness of both the lower authorities' action adding of unexplained share capital of ₹ 1,15,66,200 u/s. 68 of the Act. It transpires during the course of hearing that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1,15,66,200/- of 42 persons found to be disproportionate to the land holdings admitted by the individual investors. A copy of list of 42 persons is enclosed. Altogether 22.01% of such investments, i.e., ₹ 75,00,000 out of ₹ 3,40,72,000 mobilized during the year were agreed to be to genuine due to non co-operation from them. Further, as verified from the confirmation letter dt. S. No. 62 received I the name of Smt. Ch. Mangamma for ₹ 3,10,000 the signature is by name chandramma not tallies and required to be rejected. Please find enclosed here with a copy of the list containing the details of 115 investors to whom letters requesting to prove the genuineness of source sent through speed post, some of the letters send have been returned by the postal authorities with endorsement such as Insufficient address/no such person clearly supports the decision taken by the assessing officer for treating the same as unexplained investments. The list of such cases is enclosed. Since no fresh additional evidence seems to have been furnished by the appellant before CIT(A)-5, Hyd ad hence deserved to be rejected for the reason that the assessment was completed after con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers (agriculturists) is disproportionate to the investment made by them in the company. The Ld. AO mentioned in the Remand report that they have sent letter to 115 Investors for the verification of genuineness of source and some of the letters have been returned by postal authorities. In this regard the Ld. AO cannot draw adverse inference on the assessee company if the noticee has either not received the notice or the notices were not served and that the necessary details were not furnished by a third party. The Ld. AO erred in holding that the farmers do not have such huge surplus amount is only based on assumption, suspicion and conjecture without having adequate evidence and facts to support such assumption. The signature as chandramma instead of Ch. Mangamma is an in admitant Mistake caused due to Low level Staff (Accountant) as he doesn't know the proper telugu and the investor (agriculturist) doesn't know the English. We can say it is a mistake purely caused due to the Communication Gap between Lower level Staff and the Investor. The assessee is of the view that Sec. 68 of the Act does not apply to the assessee as applicability of the Section a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to have contradictory material/evidence to show that the above transaction is not genuine or unreal. The mere statement that the land holdings of the investors (agriculturists) are very low as compared to the investment in the company does not mean by itself that the share capital received is bogus. The assessee in relation to proving the genuineness of the transaction of share capital received from the investors has submitted the above following documents which also consist of Form No. PAS-3 filed before ROC for the allotment of shares. The company shares have been allotted to all the parties and Form No. PAS-3, has also been filed with the ROC after allotment of shares. The AO has not disputed regarding the allotment of shares and Form No. PASS filed with the ROC. Thus, the Ld. AO is satisfied with share allotment transaction of the company. The assessee has also submitted the copies of the Pattadar Passbook of the farmers which prove creditworthiness of the Investors. The very allotment of shares to these investors is the Conclusive proof for the Genuineness of the Transaction. Furthermore, the observations of the Assessing Officer for making such addition are wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned u/s. 68 of the Act and the addition made of ₹ 1,15,66,200/- u/s. 68 of the Act deserves to be deleted. It is therefore, requested the Ld. CIT(A) to delete the addition of ₹ 1,31,17,724/- for the AY 2014-15 and to direct the Ld. AO to pass necessary modification order accordingly. 11. I have carefully considered the facts of the case, assessment order Remand Report and submissions of the appellant. There is no evidence or proof furnished by the appellant to prove that the share applicants have sources of income except filing land pattadar pass book. Therefore, since there is no PAN and also the creditworthiness of these not proved, I am in agreement with the Assessing officer and the addition made by the AO confirmed. Hence, the ground raised by the appellant dismissed. 4. We have given our thoughtful consideration to the rival pleadings. Suffice to say, it is not in dispute that both the lower authorities decline to accept the assessee's share capital of ₹ 1,15,66,200 out of the total sum of ₹ 3,40,72,000 in involving 42 investors. It is an admitted fact that of these 42 parties have duly filed confirmations both in the course of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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