2017 (7) TMI 304

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....stified. 3. That the order of the Ld. Commissioner of Income Tax is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable." 3. The only issue in the present appeal is relating to addition made under section 68 of the Income Tax Act, 1961 (in short 'the Act') amounting to Rs. 7,50,000/- on account of share application money. 4. Brief facts relevant to the case are that during the year under consideration the assessee company had shown share application money received from six investors to the tune of Rs. 25,50,000/-. The Assessing Officer made an addition of Rs. 7,50,000/- to the returned income of the assessee under section 68 of the Act by rejecting the submissions of the assessee on account of investment made by three investors as below and for the reason that their creditworthiness was not proved: S.No. Name of the Share Applicant Share Application Money Addition made 1 Shri Harnek Singh s/o. Shri Puran Singh, V. Daftriwala, Teh. Samana. 3,00,000/- 3,00,000/- 2 Shri Harbans Singh s/o. Shri Dev Singh, V. Daftriwala, Teh. Patran. 3,50,000/- 3,50,000/- 3 Shri Dhian Singh s/o. Shri Kashmir Singh, V....

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....findings of the CIT (Appeals) at para 5.5 of his order are as under: "I have gone through the written submissions of the appellant and the comments of the Assessing Officer. The alleged investors namely Sh. Harnek Singh, Sh.Harbans Singh & Sh. Dhian Singh in their statements, before the Assessing Officer, the copies "of which were produced before me, have stated that they have taken 10 acres, 10 acres and 25 acres of land respectively, on theka (land taken on contract for cultivation) besides their own family land measuring 6 acres, 8 acres and 6 acres respectively. However, they have not furnished any documentary evidence in support of their contention regarding land taken on theka. On going through the bank statements of the investors/shareholders, it was noticed that Rs. 3,00,000/-, Rs. 3,50,000/- & Rs. 3,50,000/- respectively were deposited in cash in their respective bank accounts on 081)8.2008 and the same amounts were invested through cheque with the appellant company on the same day. It is also noticed that these alleged investors have negligible balance in their accounts before and after this transaction. The appellant company has also submitted photocopi....

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....2007-08 and 2008-09. 5-6 4. Copy of the statement of Sh. Harbans Singh recorded on 22.06.2011. 7-9 5. Copy of the Bank statement of Sh. Harbans Singh. 10-11 6. Copy of ledger account of Sh. Harbans Singh, as appearing in the books of M/s Telu Ram Karam Chand, Commission Agents for the F. Y. 2008-09. 12 7.  Copy of the statement of Sh. Dhian Singh recorded on 22.06.2011. 13-15 8. Copies of ledger accounts of Sh. Dhian Singh, as appearing in the books of M/s Telu Ram Karam Chand, Commission Agents for the F. Y. 2007-08 and 2008-09. 16-17 8. The Ld. counsel for the assessee further argued that in case of other share applicants also, the facts were identical. The Ld. counsel for the assessee stated that the investment made by them was also through banking channels and they had also confirmed the same in their statements u/s 131(1) of the Act. Copies of their bank statements and their statements recorded on oath was placed before us. The Ld. Counsel pointed out that no addition had been made in those cases. The Ld. counsel for the assessee, therefore, stated that the Assessing Officer cannot blow hot and cold at the same time and h....

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....ee cases statements have been recorded of the said persons who have accepted making the aforesaid investments and have stated the source of the same as being out of their agricultural produce sold. As evidence of the source, copy of account of the commission agent through whom agricultural produce was sold, M/s Telu Ram Karam Chand, has been filed. A perusal of the copy of account of the three share applicants appearing in the books of the commission agent demonstrates the following: 1) In the case of Shri Harnek Singh the statement shows cash received of Rs. 4,21,288/- on 10.1.2008 and Rs. 92,609/- on 3.5.2008 while the investment of Rs. 3 lacs has been made on 8.8.2008. The Ld DR has not contoverted this fact. Considering this fact therefore we are of the view that Shri Harnek Singh, the share applicant, had duly demonstrated the availability of sufficient funds for the purpose of making the investment. The CIT(A) & the Assessing Officer, we find, had taken into consideration only the cash received of Rs. 92,609/- and had failed to consider the amount of Rs. 4,21,288/- received on 10.1.2008. In view of the same, we find merit in the submissions of the assessee that the c....