TaxTMI 
TaxTMI 
2017 (4) TMI 1191
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....t filed its return of income for the AY 2011-12 on 30/09/2011 admitting a loss of Rs. 7,07,63,923/-. The return was processed u/s 143(1) of the Act on 07/01/2012 and the case was selected for scrutiny and notice u/s 143(2) was issued on 25/09/2012. 2.1 During the course of assessment proceedings, AO observed that as per the balance sheet, total paid up share capital is Rs. 21,70,70,941/-, whereas an amount of Rs. 3,38,16,000/- is appearing as share application money pending allotment. Out of this, share capital of Rs. 9,74,28,000/- and share application money of Rs. 2,97,11,000/- was received during the current AY. The assessee was asked to prove the genuineness of the share capital and share application money appearing in balance sheet ....
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....an appeal before the CIT(A). CIT(A) after considering the submissions of the assessee as well as considering the relevant confirmation letters and bank statement submitted by the assessee, observed that one come to inevitable conclusion that both the persons Smt. M. Rama Devi and Smt. S. Anuradha do not have creditworthiness to subscribe towards capital of Rs. 64.30 lakhs and Rs. 16 lakhs respectively. He further observed that a careful analysis of the accounts reflect that, but, for the credit and debits of amounts equivalent to share subscription, there are no other transactions. Taking into account the totality of the facts and circumstances of the case, the CIT(A) held that these two subscribers only have lent their name, but, do not ha....
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....ements before the CIT(A) and AO. He, therefore, submitted that assessee has discharged its onus by submitting the above documents and established the genuineness of the transaction and creditworthiness of the subscribers. He further submitted that all the transactions are through proper banking channels only and CIT(A) should have considered this aspect. Ld. AR submitted that the subscribers have received gifts from her brother in one case and loans from relatives in another case. He submitted that as long as the assessee has proved the source for the subscription, it need not have to substantiate the source of the source. He submitted that, in case, the department has issues with the creditworthiness of the investors, they can very well pr....
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....uthorities, therefore, the assessee has discharged the onus of proving genuineness of transaction and creditworthiness of the investors. Ld AR also submitted that the assessee has allotted share capital to the investors, which establishes that the transaction is genuine. He also submitted that the transactions were through banking channels. On the other hand, Ld. DR relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs. N. Tarika Properties Investment (supra). In that case the assessee has submitted the PAN details, incorporation details along with fabricated bank statement. This fact was unearthed by the authorities and it was clearly established that the assessee has mislead the authorities. But in the present case, the....