TMI Blog2014 (8) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for any addition in that behalf in the assessment of the assessee-company. CIT(A) has accepted the evidences for accepting the sources for the share application money from two individuals, namely, GVK Raju and G.Uma, but has sustained the addition made by the AO, with respect to unsecured loans under S.68 of the Act - CIT(A) have accepted the genuineness of the transactions, identity of the parties and credit-worthiness of the three parties, while deciding issue of contribution to share capital, is not justified in arriving at contrary conclusions, by proceeding to examine the source of the source - the additions confirmed by the CIT(A) u/s 68 towards unsecured loans from these two individuals is deleted – Decided partly in favour of Assessee. - ITA No. 562/Hyd/12, ITA No. 727/Hyd/12 - - - Dated:- 25-7-2014 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Shri S.Rama Rao For the Department : Shri Phani Raju DR ORDER Per Smt. Asha Vijayaraghavan, Judicial Member: These are cross appeals for the assessment year 2008-09, and they are directed against the order of the Commissioner of Incometax( Appeals) IV, Hyderab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, as per the details given below Sl. No. Name of the person Share application money(Rs.) Unsecured loans (Rs.) Total (Rs.) 1. Sri G R K Raju 1,18,60,000 26,00,000 1,44,60,000 2. Ms G.Uma 71,94,200 9,00,000 80,94,200 3. Ms. P.Girija . 41,26,000 41,26,000 TOTAL 1,90,54,200 76,26,000 2,66,80,200 During the assessment proceedings, assessee was required to furnish details in respect of increase in share capital and unsecured loans, confirmatory letters, details regarding mode of receipt and bank statements, alongwith copies of IT returns of loan creditors or any other evidence to prove their credit-worthiness. Assessee filed the required confirmatory statements and details of their sources. 6. In response, with regard to the creditor/investor, GRK Raju, assessee submitted a confirmation for a total amount of ₹ 1,44,60,000 alognwith a copy of his income-tax returns, as per which his total income was ₹ 30,28,300. A letter dated 26.111.2010 was also filed giving detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j A.Dantuluri, NRI 20,00,000 3. Amount received by her husband from Nagarjuna Management Services P. Ltd. 20,00,000 4. Loan raised from Smt. M.Madhavi Latha 10,00,000 5. Amount received from G.Sitarama Raju 50,000 6. Loan raised from her brother Sri G.Sreedhar 4,00,000 7. Balance from savings including husband s income 7,28,238 TOTAL 80,94,200 8. The Assessing Officer noted from the above that Smt. Uma had shown the sources of the investments made by her as loans from relatives and friends. On the other hand, she noticed that the return of income for the assessment year had been filed by her showing a total income of ₹ 3,50,400 only. Besides, she noticed that details regarding modes of receipt, copies of FIRCs and evidence regarding their creditworthiness or their income tax particulars etc. were also not furnished. The assessee did not even file the bank account copies of Smt. G. Uma to verify the transaction in her bank accounts. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the assessee company from alleged bogus share holders, whose names are given to the Assessing Officer, then the department is free to proceed in their individual assessments in accordance with law and it cannot be regarded as undisclosed income of the assessee. Admittedly, in the instant case, the appellant had not only given the names of the share holders but had duly established their identities also. Following the said decision of the Hon ble Supreme Court, therefore, no addition can be made under sec. 68 in the hands of the appellant company on account of share application money contributed by Sri GRK Raju and Miss. Uma. The addition to the extent of ₹ 1,18,60,000/- and ₹ 71,94,200/-, on account of share application money contributed by them, is deleted. As for the unsecured loans of ₹ 26,00,000 in the name of GRK Raju, and of ₹ 9 lakhs in the name of Smt.G.Uma and ₹ 41,26,000 in the name of Smt. P.Girija, the CIT(A), concurring with the findings of the Assessing Officer that the assessee has failed to discharge the onus that lies on it, confirmed the addition made by the Assessing Officer. 12. Aggrieved by the addition sustaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the three parties, while deciding issue of contribution to share capital, is not justified in arriving at contrary conclusions, by proceeding to examine the source of the source. Hence, the additions confirmed by the CIT(A) under S.68 towards unsecured loans from these two individuals is deleted. 15. As for the unsecured loans from P.Girija, the assessee has filed confirmation letter at pages 52 and 53 and the amount has been claimed to have been received by cheques. As seen from the record, the Assessing Officer has not examined all these aspects of the matter, and proceeded to disallow on the basis of bald observation that Smt.Girija does not have creditworthiness. Even the remand report called for by the CIT(A), copy of which is furnished at page 76 of the paper-book before us, does not make any mention as to the examination of the said individual by the Assessing Officer. In the course of hearing before us, the Learned Departmental Representative fairly admitted that this issue may be sent back to the file of the Assessing Officer for fresh examination, as the bank accounts and FDRs filed before the CIT(A) constitute additional evidence. In this view of the matter, and c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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