TaxTMI 
TaxTMI 
2015 (9) TMI 490
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....lained share capital under section 68 of the IT Act, 1961 treating the same as income from undisclosed sources without appreciating the fact that the assessee has failed to discharge its onus to prove the credit worthiness of company providing share capital and also the genuineness of the transaction. 3. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 3,12,000/- made by the assessing officer on account of disallowance of 50% out of salary expenses on adhoc basis. 4. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal." 3. Vide ground no. 2 grievance of the department relates to the deletion of addition of Rs. 44....
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....of Rs. 3,12,000/- 4. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that the assessee had furnished following documents to prove the existence of the parties and genuineness of the transactions: (i) Name and address (ii) Share application Form (iii) Permanent Account Number (iv) Detail of Bank Account from where money is paid along with copy of bank statement (v) Copy of Acknowledgement of Income Tax Return (vi) Confirmation from the subscribers (vii) Copy of Balance Sheets of Companies 5. It was further submitted that the assessee furnished the affidavit from all the three companies confirming the transaction which included the distinctive numbers of the shares allotted to those companies and even ....
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.... letter posted directly to the AO and if it was necessary then the AO should have issued notice u/s 131 of the Act but he had never issued the notice u/s 131 of the Act and made the addition of Rs. 44,00,000/-. It was further submitted that the addition cannot be made with regard to the share capital money in the hands of the assessee company if the identity of the investor is proved. The reliance was placed on the following case laws: - CIT Vs M/s General Exports Credits Ltd. in ITA No. 880/2006 (Del) - CIT Vs Raghvi Finance Ltd. ITA 1264/2010 (Del HC) - CIT Vs Orbital Communications (P) Ltd. ITA 989/2010 (Del. HC) - CIT Vs Ultratech Finance & Investment Ltd. ITA 1122/2010 (Delhi HC) - CIT Vs Khushagra Real Estate (P) Ltd. ITA 498/201....
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....the three investors had sent their letters to the AO along with their confirmations, share application form, copy of ITR acknowledgment, copy of balance sheet, bank statement. He also observed that the assessee had also requested the AO for issuing summons for personal appearance to all investors as it was not within the assessee's power to enforce their attendance. According to the ld. CIT(A), the assessee had discharged the onus cast upon it and provided all the essential ingredients to prove genuineness, creditworthiness and identity of the investors as required u/s 68 of the Act. The ld. CIT(A) deleted the addition of Rs. 44,00,000/-. The reliance was placed on the judgment of the Hon'ble Supreme Court in the case of CIT Vs Love....
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....he ld. DR also stated that the assessee could not discharge the onus cast upon it, to prove the identity and creditworthiness of the share applicants and genuineness of the transaction. Therefore, the AO rightly made the addition u/s 68 of the Act and the ld. CIT(A) was not justified in deleting the impugned addition. As regards to the disallowance out of salary, the ld. DR reiterated the observations made by the AO. 11. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that all the requisite documents and information asked by the AO to prove the identity and creditworthiness of the investors, genuineness of transaction, were furnished before the AO.....
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....sessee was not fully discharged. In our opinion the ld. CIT(A) was not justified in deleting the addition made by the AO particularly when the assessee failed to produce the concerned parties. At the same time, it also appears that the AO without considering the documents furnished by the assessee in the form of share applications, copy of bank account from where money was paid, copy of acknowledgment of Income Tax Return, copy of the balance sheet etc. and made the addition. It is also noticed that the confirmation furnished by the assessee were doubt full which is evident from the confirmation placed at page no. 28 of the assessee's paper book, claimed to have been received from M/s Chandra Buildcon Pvt. Ltd. and had been signed by Ka....