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TMI Blog2024 (7) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ance sheet (unsigned) for the year under consideration i.e. A.Y.2015-16 but there is nothing discernible from the record to substantiate to hilt the authenticity of the aforesaid investment as well as source from where the same was made by the said investor. Accordingly, as the investment claimed by the assessee company to have been made by the aforementioned person does not satisfy the statutory obligation cast u/s. 68 of the Act, therefore, we find no infirmity in the view taken by the A.O who had rightly held the same as unexplained cash credit. Amount received from Smt. Shanti Devi Agrawal as observed by the A.O, and rightly so, the return of income of the aforementioned person reveals meagre income and does not inspire any confidence as regards the investment claimed by the assessee to have been received from her. Also, the unsigned balance sheet of the aforementioned person as had been placed on record, Page 12 of APB does on the said stand alone basis either fortify the creditworthiness of the aforementioned person or the nature of income therein disclosed. Amount received from Shri Ajay Kumar Agrawal the assessee company had placed on record copies of return of income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the Ld. AR that as the aforementioned person had admitted to have made investment with the assessee company, no adverse inference with respect to the same could have been drawn by the A.O. We are of the view that as there is clear lack of any material which would substantiate the source from where the aforementioned person had made investment of Rs. 10 lacs with the assessee company, therefore, onus that was cast upon the assessee company as per 1st proviso to Section 68 of the Act had not been discharged. Considering the aforesaid facts, we find no infirmity in the view taken by the A.O who had rightly held the amount of Rs. 10 lacs received from the aforementioned person as unexplained cash credit u/s. 68 of the Act. - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Assessee : Shri R.B Doshi, CA. For the Revenue : Shri Satya Prakash Sharma, Sr. DR. ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 20.07.2023, which in turn arises from the order passed by the A.O under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eagre income which was not at all commensurate with the towering investments made by them with the assessee company. 4. The A.O considering the aforesaid facts held a conviction that the aforementioned persons were not carrying out any real business activities. The A.O confronted the aforesaid facts to the assessee company and directed it to substantiate the creditworthiness of the aforesaid investors on the basis of supporting documents. As reply filed by the assessee did not find favour with the A.O, therefore, he declined to accept the claim of the assessee of having received genuine investments towards share application money from the above-mentioned persons. As regards Shri Munesh Kumar Pandey (supra), the A.O though directed the assessee company to produce the said person but it failed to do the needful. Considering the aforesaid facts, the A.O was of the view that in the case of Shri Munesh Kumar Pandey (supra) the aspect of identity of the so called investor was not established. Although the assessee company had filed with the A.O copy of returns of income, capital account, bank statements of the aforementioned 6 persons, the A.O did not find favour with the same. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Pandey attended the case and statements were recorded. Shri Munesh Kumar Pandey, from whom the company has received share application money was not traceable. The assessee was asked to produce the him for his statement but .the assessee could not produce him and hence the Identity of the person from whom the assessee has shown received of the share applications money is in jeopardize. To verify the second condition regarding the creditworthiness of the above person except Shri Munesh Kumar Pandey who was not traceable, the bank statement through which they had purchase the shares at premium price were examined, where it was noticed that the persons had invested in this company after depositing the cash just before the issuing of cheques to the company for the purchasing of shares. Therefore it was very necessary to know the financial status of all of the above persons. The required documents were called for and submitted by the assessee, from where the balance sheet and the P L a/c of all of the above persons were examined and found that the persons were having meager income and did not commensurate with the towering figures in share capital account. This clearly indicates no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im it has already submitted the copy of IT return, capital A/c and bank statement of these person and hence has established the identity and credit worthiness of the allots. The assessee has also mentioned that it has not carried out any business activity but only has invested its capital in a partnership firm and hence how can it will invest from undisclosed sources. Considering the submission made by the assessee it is important to mentioned that the undersigned is of view that the company introduced its undisclosed money through the share application money, the assessee has raised its objection by stating that it has not carried out any business activities so how can it invested from undisclosed sources. The assessee here is in wrong foot because even though the company has not started any business activities till date, that is why it has been rightly stated that the assessee company has invested from undisclosed sources. Regarding the credit worthiness of all the persons from whom share application money has been received have deposited cash in their respective account before issuing of cheques for purchase of shares. They could not explain the source of cash deposits made in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that now when 6 investors (out of 7 investors) had in their statements recorded u/s. 131 of the Act by the A.O duly admitted of having made investment with the assessee company, therefore, there was no justification for the A.O to have held their respective investments as unexplained cash credit u/s. 68 of the Act. The Ld. AR in order to buttress his aforesaid claim had taken us through the respective statements of the aforementioned persons, Page 46 to 98 of APB. Also, the Ld. AR had placed on record a chart wherein the respective investments made by the aforementioned persons a/w. their PAN and their statements (gist) before the A.O stands revealed. The Ld. AR drawing our attention to the chart submitted that two investors, viz. Shri Vikash Agrawal (Sr. No. 4) and Smt. Mani Devi Kedia (Sr. No. 6) had in their respective statements explained their respective sources out of which cash deposits were made by them in their bank accounts. Our attention was drawn to the relevant extract of the statements of the aforementioned persons, Page 72 to 95 of APB. The Ld. AR submitted that now when all the 6 investors had owned the investment made by them with the assessee company, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. As per Section 68 of the Act (post amended), two-fold obligations are cast upon an assessee company which claims to have received the amounts towards share application money, share capital, share premium or any such amount by whatever name called, viz. (i) an explanation about the nature and source of the sum credited in its books of account; and (ii) to place on record to the satisfaction of the A.O an explanation about the nature and source of the sum credited in the name of the person, a resident, as recorded in its books of account. Accordingly, as per the 1st proviso to Section 68 of the Act as had been made available on the statute vide the Finance Act, 2012 w.e.f. 01.04.2013, an additional obligation is cast upon the assessee company to place on record the explanation of the share applicant/subscriber company as regards the nature and source of the sum so credited agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory obligation cast u/s. 68 of the Act, therefore, we find no infirmity in the view taken by the A.O who had rightly held the same as unexplained cash credit. (C) Smt. Shanti Devi Agrawal (Sr. No. 2) : Rs. 8,00,000/- 14. As observed by the A.O, and rightly so, the return of income of the aforementioned person reveals meagre income and does not inspire any confidence as regards the investment claimed by the assessee to have been received from her. Also, the unsigned balance sheet of the aforementioned person as had been placed on record, Page 12 of APB does on the said stand alone basis either fortify the creditworthiness of the aforementioned person or the nature of income therein disclosed. In fact, we find that the aforementioned person had in her statement recorded u/s. 131 of the Act dated 29.11.2017 categorically declined of having made any investment with the assessee company, Page 55 of APB. 15. Considering the aforesaid facts, we approve the view taken by the A.O who had rightly held the aforementioned amount which was claimed by the assessee to have been received from the aforementioned person as share application money as unexplained cash credit u/s. 68 of the Act. (D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 11.10.2017 had categorically admitted of having made investment towards share application money with the assessee company a/w. source of the same. It was also stated by the aforementioned person that the investment made with the assessee company was sourced out of his accumulated savings from the business of sale of paddy husk, which sale proceeds were deposited by him in his bank account and was, thereafter, utilized for making investment with the assessee company. On being queried about further cash deposit of Rs. 8 lacs in his bank account, which, thereafter, had found its way to the coffers of the assessee company, the aforementioned person had failed to conclusively come forth with any explanation and had merely stated that the same were accumulated savings of his mother, viz., Smt. Shanti Devi Agrawal. 19. Considering the aforesaid facts, we are of the view that though the aforementioned person had admitted the investment made by him towards share application money of Rs. 5 lacs with the assessee company and had also, come forth with an explanation as regards the source of the said investment, i.e., accumulated savings garnered over the last 4/5 years from the trading of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by no means assist the case of the assessee before us. 21. Considering the fact that the assessee company had failed to discharge the onus that was cast upon it as per the 1st proviso to Section 68 of the Act, i.e., the source out of which the aforesaid investment of Rs. 10 lacs was made by the aforementioned persons towards share application money (including premium) with it, therefore, the said amount had rightly been held by the A.O as unexplained cash credit u/s. 68 of the Act. (G) Smt. Mani Devi Kedia (Sr. No. 6) : Rs. 10,00,00/- 22. On a perusal of the records, we find that the assessee company had placed on record copies of the return of income of the aforementioned person a/w. financial statements (unsigned). Although the balance sheet of the aforementioned person for the year under consideration (unsigned) disclosed the investment of Rs. 10 lacs with the assessee company but considering the meagre income of the aforesaid person and the totality of the facts therein involved, i.e., specifically the fact that the aforementioned person in both the years had merely received gifts and has no clear source of income, thus, does not inspire any confidence as regards her creditwort ..... X X X X Extracts X X X X X X X X Extracts X X X X
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