TaxTMI 
TaxTMI 
2018 (4) TMI 380
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.... towards share application money received from 3 parties and disallowance of interest expenses u/s 36(1)(iii) of the Act. The assessee carried the matter in appeal before the CIT(A). The CIT(A) for the detailed reasons recorded in his order dated 15-12-2015 allowed appeal filed by the assessee, wherein he has deleted addition made by the AO towards share application money u/s 68 of the Act, disallowance of interest u/s 36(1)(iii) of the Act. Aggrieved by the CIT(A)'s order, revenue is in appeal before us. 3. The only issue that came up for our consideration from this appeal is deletion of addition made by the AO towards share application money u/s 68 of the Act. The facts with regard to the impugned addition are that during the course of assessment proceedings, the AO noticed that the assessee has received share application money to the tune of Rs. 1.15 crores from 3 parties, therefore, called upon the assessee to furnish necessary evidence including share application forms, copy of PAN card, incorporation certificate of the share applicants and copy of bank statements. In response to notice, the assessee vide letter dated 05-09-2010 furnished the details called for by the AO in r....
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....iterated its submissions made before the AO to argue that it has furnished various details including share application forms, PAN card, incorporation certificate, bank statement of share applicants and also the bank statement of the persons from whom share applicants have received money to the AO. However, the AO has ignored all evidences merely for the reason that share applicants have received money from other persons and the other persons have deposited cash into their bank accounts without appreciating the fact that once assessee discharged its onus by filing identity, genuineness of transactions, creditworthiness of the parties, AO cannot look into the source of source. The assessee further contended that out of 3 applicants, M/s Hemang Fincap Services Pvt Ltd filed its return of income and copy of ITR acknowledgements have been furnished to the AO. Though the other two applicants have not filed return of income, they have filed enough evidences to justify the source of share application money given to the assessee, therefore, the AO was incorrect in making addition u/s 68 of the Act. The CIT(A), after considering relevant submissions of the assessee and also relying upon the ....
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....ird parties where they have deposited cash into their bank accounts without appreciating the fact that once assessee proves identity of the share applicants, the AO cannot question source of source. The Ld.AR further submitted that the assessee has discharged its initial onus cast u/s 68 of the Act by filing various documents and once the initial burden has been discharged, the onus shifts to the revenue to prove otherwise. The AO without any evidence which could rebut the documents produced by the assessee, made addition merely on the basis of surmises and suspicion only on the basis of bank statements of share applicants and their concerns. In this regard relied upon decision of Hon'ble Bombay High Court in the case of CIT vs M/s Gagandeep Infrastructure Pvt Ltd (2017) 394 ITR 680 (Bom). The assessee also relied upon the decision of Hon'ble Supreme Court in the case of CIT vs Orissa Corporation Pvt Ltd 1986 AIR 1849. Insofar as the arguments of the Ld.DR, that the name of two companies have been struck off by the ROC, the Ld.AR submitted letters from those companies stating that their names have been struck off by the ROC as the annual returns of the companies were not filed for ....
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.... filed various details including share application forms, incorporation certificate of the share applicants and their bank statement. The assessee also furnished copy of income-tax return acknowledgment in respect of M/s Hemang Fincap Services Pvt Ltd. On verification of details filed by the assesse, we find that the share applicants have paid share application money to the assessee through bank accounts and also disclosed investments in their financial statements for the relevant financial year. Though two share applicants have not filed their income-tax returns, furnished copy of PAN and their bank statements. Once the assessee has discharged its initial burden cast u/s 68 by filing documents to prove identity, genuineness of transactions and creditworthiness of the parties, then the burden shifts to the revenue to prove otherwise. In this case, the AO does not have any evidence which could rebut the documents produced by the assessee. The AO made addition only on the basis of suspicion and surmises on the ground that the share applicants do not have any capacity to explain amount transferred to their account. 9. Having considered facts, we do not find any merit in the arguments....