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2023 (11) TMI 927 - ITAT INDOREAddition u/s 68 - unexplained share application money - identity and creditworthiness of the shareholder and genuineness of transaction questioned - how can the shareholder make sign on application-form and make investment on 05.03.2003 when he had already died on 07.02.2003? - HELD THAT:- Receipts from Shri M.B. Deshmukh - Firstly, we find that the assessee has shown a receipt of Rs. 5,00,000/- in cash from shareholder which is a hefty sum. We also find that there is no identity proof of shareholder submitted by assessee. Also we find that the assessee has filed a copy of “SHARE- APPLICATION FORM” on a date after his death, even if the revised date of death i.e. 07/02/2003 is taken as correct, then also this date precedes 05.03.2003 i.e. the date on which the shareholder has signed the share application form.The signature at the right side of seal of notary, appearing in the scanned copy of revised-affidavit re-produced above, is a signature of assessee’s counsel for certification of documents filed in Paper-Book and not of deponent of affidavit. Thus, without making any more comment from our side, we only suffice to conclude that the assessee has miserably failed to prove the identity of the shareholder much less the elements of creditworthiness and genuineness. In these circumstances, we are not inclined to accept the impugned receipt as satisfying the requirements of section 68. Receipts from Shri Vijay Singh Rajput - Assessee has given a complete address of shareholder. Then, the assessee has filed an affidavit of shareholder himself before his death which contains full address of shareholder and clear confirmation that he invested in shares of assessee. The assessee has also given PAN of shareholder. Lastly, the amount of investment is Rs. 1,00,000/- only. Therefore, there are sufficient evidences to support the requirement of section 68. Hence, the authorities are not justified to disbelieve submissions of assessee without bringing anything adverse on record. Receipts from Mayank Welfare Society - As shareholder is a registered society, we find merit in the submission of Ld. AR that the AO is not justified to link the investment made by shareholder with gross-receipts of shareholder in current year alone; the investment could have been well-made out of accumulated funds. We also find a strong merit in the submission of Ld. AR that even if the investment in shares of assessee by the shareholder-society is a violation of section 10(23C) or 11(5), such violation can permit the department to take any action against the shareholder-society but cannot be a basis for addition u/s 68 in the hands of assessee. Receipts from Mayank Club - Observation made by Ld. AO that the shareholder is a low-profile club which cannot make investment of Rs. 3,00,000/- in assessee’s share, is only a conjecture not based on any fact. Therefore, we do not find any justification in the basis adopted by lower-authorities for making addition in the hands of assessee. Receipts from Shri Sanjay Gupta - As there is a strong merit in the submission of Ld. DR that the shareholder is having a meagre annual income of Rs. 47,967/- and after his household expenses would be left with a very small saving. Therefore, the shareholder cannot make investment as high as Rs. 1,30,000/- which is manyfold of his saving. No other source available with the shareholder for making investment in assessee is submitted before lower-authorities or even before us. Therefore, we are not in position to find creditworthiness of the shareholder and genuineness of transaction. Appeal of assessee partly allowed.
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