2023 (2) TMI 269 - AT - Income Tax

Unexplained investment in unlisted equities - Identity and creditworthiness of entities from whom funds were taken to invest in unlisted equities during the financial year relevant to A.Y. 2015-16 were not established by the assessee company before the AO - HELD THAT:- The assessment order itself reveals that the assessee submitted before the Ld. AO confirmed copy of account of both the parties, namely M/s. Rasaraj Sales Ltd. and M/s. Gunvardhan Vyapaar Pvt. Ltd. and stated that both are group entities of the assessee company and furnished their complete address. In fact, AO himself says that the summons issued by him to both the concerns u/s 131 of the Act were served at the given address. Therefore, identity of the concerns from which the assessee received the amount utilised towards purchase of 2,80,000 shares of M/s. Spectrum Distributors Pvt. Ltd. cannot be doubted.

Balance sheet of these concerns for the year indicating their high networth was placed on record establishing their creditworthiness. The shares were purchased by the assessee from M/s. Kashyap Property Pvt. Ltd. (now known as Rajdarbar Group Pvt. Ltd.). Documentary evidence, namely copy of bank statement of M/s. Rajdarbar Beverages (P) Ltd. for the period from 01.04.2014 to 31.03.2015 as also copy of confirmation along with bank statements and ITR of M/s. Kashyap Property (P) Ltd. was filed before the Ld. AO to prove the genuineness of the transaction.

Payment was advanced by the assessee company as investment in shares which were, however not allotted. These findings could not be controverted by the Revenue by bringing on record any adverse material either before the Ld. CIT(A) or before us. We, therefore, endorse the findings of the Ld. CIT(A) and reject the ground taken by the Revenue before us. Decided in favour of assessee.