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Facts
The assessee filed its return of income and later raised share application money of Rs. 70,00,000/-. The AO noticed that Rs. 6,40,000/- was received in an earlier AY and directed its deletion. The remaining Rs. 70,00,000/- was questioned for genuineness and capacity of investors.
Held
The Tribunal noted a discrepancy in the order date versus the hearing date. While dismissing grounds 5, 6, & 7 as not pressed, the Tribunal restored the issue of Rs. 70,00,000/- share application money to the AO for verification of affidavits filed by investors.
Key Issues
Whether the share application money of Rs. 70,00,000/- could be added as unexplained cash credit without proper verification of the investors' affidavits?
Sections Cited
68, 133(6)
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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
Assessee by : Shri K. Gopal and Ms. Neha Paranjpe, A/Rs Revenue by : Shri Leyaqat Ali Aafaqui, Sr. A/R सुनवाई की तारीख/Date of Hearing : 17/09/2025 घोषणा की तारीख /Date of Pronouncement: 22/09/2025 आदेश/O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the assessee is preferred against the order of the ld. CIT(A) – 10, Mumbai [hereinafter the ‘ld. CIT(A)’] dated 20/03/2014 pertaining to AY 2010-11.
At this point, it would be pertinent to mention that the date of order appears to be a typographical error because the date of hearing of the appeal is 19/03/2015, therefore, the order cannot be dated 20/03/2014. Be that as it may, the assessee has raised seven substantive grounds of appeal but at the time of hearing, the assessee did not press Ground Nos. 5, 6 & 7 and, therefore, the same are dismissed as not pressed.
2 3. The remaining substantive grounds relate to the addition of Rs. 6,40,000/- and Rs. 70,00,000/- u/s 68 of the Act as unexplained cash credit.
Representatives were heard at length. Case records of the carefully perused and the relevant documentary evidence brought on record which are duly considered in the light of Rule 18(6) of the ITAT Rule, 1963.
Briefly stated facts of the case are that the assessee filed its return of income on 25/09/2010 declaring total income at Rs. 1,50,270/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. The assessee is trading in diamonds while scrutinizing the return of income, the AO noticed that the assessee has raised share application money of Rs. 70,00,000/- and share premium is shown at Rs. 6,40,000/-. 5.1. Insofar as the share application money of Rs. 6,40,000/- is concerned, evidence on record show that it was received during FY 2007-08 pertaining to AY 2008-09. This fact has also been accepted by the AO on paragraph 5 of his order. Since this amount pertains to FY 2007-08 relevant to AY 2008-09, the same cannot be considered u/s 68 of the Act for the assessment year under consideration. Therefore, it is directed to be deleted. 5.2. Insofar as, share application money of Rs. 70,00,000/-, which was received during the year under consideration, the assessee as accepted share application money from the following parties:-
The AO issued notice u/s 133(6) of the Act to the share investors at the address given. Four notices were returned by the postal authority. The same was brought to the notice of the assessee. The assessee was also asked to produce the share investors. The assessee showed its inability to produce the shares investors as all the share investors are at Raipur. The assessee furnished details sought in the notice u/s 133(6) of the Act of each party. The AO has extracted the details on pages 5 to 9 4 of the assessment order and in the case of each investor, the AO observed that the party has deposited cash either on the date of transfer to the assessee or earlier. This led to the AO to question the genuineness of the transactions and the capacity of the investors.
Before us, the assessee filed affidavits of all the investors who have categorically explained the sources. The ld. D/R had strongly objected for the admission of these additional evidence stating that after a lapse of several years, the assessee is filing these additional evidence without explaining any cogent reason for not filing them before the authorities below. The ld. Counsel vehemently stated that he has pointed out during the course of assessment proceedings itself that each investor has sufficient cash balance in their respective books to make the impugned investments in the shares of the assessee company. The ld. Counsel stated that the affidavits are filed only to emphasize the fact that each investor had enough cash in hand available with them to make the investment in the shares of the company. 8. Since the affidavits go to the root of the matter, in the interest of justice, we deem it fit to admit them, however, at the same time, we are of the considered opinion that the contents of the affidavit needs to be thoroughly examined by the preliminary officer i.e., the AO. Therefore, we restore this issue to the file of the AO. The assessee is directed to furnish the copy of the affidavits before the AO and the AO is directed to get the contents verified by due process of law but after affording reasonable and adequate opportunity of being heard to the assessee. With these directions, the issue relating to the addition of Rs. 70,00,000/- is set aside to the file of the AO.