2016 (1) TMI 1394

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....n money of Rs. 15.00 lacs u/s 68 of the Income Tax Act, 1961." 3. The assessee is a company. It is engaged in the business of finance investment and project work. In the course of assessment proceedings for A.Y.2005-06 the AO noticed that the assessee has received share application money of Rs. 20,00,000/- from three parties namely (i) Jay kali Properties (P) Ltd., : Rs. 5,00,000/- (ii) Kalisaran Properties (P) Ltd. : Rs. 10,00,000/- (iii)Lunaram Agarwal, HUF : Rs. 5,00,000/- The AO did not accept the explanation with regard to the receipt of share application money from Jai Kali Properties (P)Ltd (JKP) and Kalisaran Properties Pvt. Ltd.(KPL) The order of the AO was confirmed by the CIT(A) which has given ri....

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....w that no evidence of sale of investments in Prabhudhan Securities (P)Ltd was filed by the assessee. The AO called upon the assessee to produce Shri Bijay Kr.Dabriwal on 28.12.2007, but the assessee did not produce Shri Bijay Kr.Dabriwal. AO therefore concluded that the investment by Jai Kali Properties (P)Ltd. In the form of share application money was not proved. The assessee had also filed a copy of the bank account of Jai Kali Properties (P)Ltd. The same is places at pages 10-12 of the assessee's paper book. A perusal of the bank account shows that as on 11.02.2005 the balance in the account of Jai Kali Properties (P)Ltd with Federal Bank Limited was a sum of Rs. 1,55,370/-. On .14.02.2005 a sum of Rs. 1,50,000/- had been invested as sh....

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.... Kali Properties (P) Ltd. Thus it is clear that the assessee has established the identity and creditworthiness and genuineness of the transactions of the receipt of share application money. We, therefore, hold that the addition made by the AO and sustained by CIT(A)should be deleted. 7. As far as receipt of share application money from Kalisaran Properties (P)Ltd is concerned the facts are almost identical. Kalisaran Properties (P)Ltd held investments worth Rs. 10,00,000/- in Prabhudhan Securities (P)Ltd as on 31.03.2004. These investments were liquidated and utilised in making investments in share application money with the assessee. The letter of Kalisaran Properties (P)Ltd in this regard is at page 1 of the paper book. Pages 3 and 4 i....