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2017 (3) TMI 74 - AT - Income TaxReopening of assessment - addition made under section 68 - Held that:- In respect of the share application money received from Bhagwan Krishan Investment & Trading Co Pvt Ltd, assessee had furnished details such as copy of share application form, certified copy of memorandum & articles of association, certified copy of board resolution, certified copy of the auditors' report and balance sheet as on 31st March, 2005 and so on, in support of the genuineness of the transaction of share application money. AO made addition merely on the basis of statement of Pradeep Kumar. which are not correct for the reason that the assessee has received share application money by cheque and no cash was given to Bhagwan Krishan Investment & Trading Co Pvt Ltd. The fact that no amount of cash was ever given to the company which is proved by the fact that the bank account of the investor-company Punjab National Bank, Azadpur Branch, (which was also furnished to the Assessing Officer - shows that there is no such cash deposit in the bank account of the said company and that the amount of share application money is received out of sale consideration of old investments. Even after asking by the assessee the Assessing Officer has not issued any summons under section 131 or notice under section 133(6) to the Directors of Bhagwan Krishan Investment & Trading Co Pvt Ltd. and has concluded only on the basis of the statement of Mr Pradeep Kumar. We also found that Pradeep Kumar on whose statement AO has relied was not a director of M/s Bhagwan Krishan Investment from whom assessee company received share application money. AO in the assessment order has merely relied upon the statement of a third party to hold that cash was given in order to issue cheque DD of the equivalent amount for subscribing to the share application of the assessee company without proving that cash was actually given to the investor-Company by either proving from their bank statement or otherwise, even though the assessee has proved from the bank statement of M/s.Bhagwan Krishan Investment and Trading Co Pvt Ltd that there was no such cash deposit made by the investor-company and the cheque was issued from the balance available in their bank account. AO has also not allowed cross examination of Mr Pradeep Kumar, inspite of specific request by assessee and hence, his statement on oath has no evidentiary value and hence required to be ignored.We found that Assessee Company has received application for allotment of preference shares, which have been allotted by the assessee company and identity of share applicant has also been proved by the assessee and hence, the share application money could not be added as income in the hands of the assessee company. Thus no merit in the action of AO making addition - Decided in favour of assessee
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