PREM FORGE & ALLOYS PVT. LTD.,KOLKATA vs. I.T.O.,TECHNICAL-1, KOLKATA

The sole issue involved in this appeal is relating to the share application money of Rs.37,17,000/- received by the assessee company.

The ld. Assessing Officer observed that the assessee during the year received share application money from eight parties totalling Rs.37,17,000/-. Being asked to explain the identity, creditworthiness of the subscribers and genuineness of the transactions, the assessee furnished relevant details and documents of the subscribers such as Income Tax Return for assessment year 2012-13 along with computation of income, Income and Expenditure A/c, Balance Sheet, bank statement and ledger of the Assessment Year: 2012-13 Prem Forge & Alloys Pvt. Ltd subscribers and bank accounts of the subscribers. However, the Assessing Officer did not get satisfied with the above documents furnished by the assessee to prove the identity, creditworthiness and genuineness of the transactions. Accordingly, the Assessing Officer treated the aforesaid share application money from eight parties as unexplained income of the assessee and added the same in the income of the assessee u/s 68 of the Act.

The ld. CIT(A) confirmed the addition so made by the Assessing Officer. The assessee thus came in appeal before this Tribunal.

I have heard the rival contentions of the ld. representatives of the parties. The ld. counsel for the assessee has submitted that the share application money was received from eight parties during the year and that all the eight parties were either directors of the assessee-company or close relatives of the directors of the company. That necessary documents such as Income Tax Return for assessment year 2012-13 along with computation of income, Income and Expenditure A/c, Balance Sheet, bank statement and ledger of the subscribers and bank accounts of the subscribers etc. were filed before the Assessing Officer. He has further submitted the following chart in respect of eight parties:

Details of Share Application Money received 31.03.2012 SI Name & Address of PAN Status Share Income for Capital as on No. Share Applicant Application the year 31/03/2012 Received ended (Rs.) (Rs.) 31/03/2012 (Rs.) 1 RAJU JAISWAL AGBPI7571N Director 3,65,000 3,62,299 27,53,522 182/3, BELILIOUS ROAD, HOWRAH- 711101 2 DEEP CHAND AGDPJ4970D Director 82,000 2,00,963 23,13,197 JAISWAL 182/3, BELILIOUS ROAD, HOWRAH- 711101 3 JITENDRA JAISWAL AGCPJ7537K Director 1,80,000 2,01,015 21,26,195 182/3, BELILIOUS ROAD, HOWRAH- 711101 4 SONAM JAISWAL AIZPJ837OR Wife of Mr 5,00,000 2,00,362 13,54,782 182/3, BELILIOUS Raju

The ld. counsel has further submitted that a perusal of the above chart shows that small amounts were received by the assessee from the seven subscribers except from the M/s Prem Chand Jaiswal & Bros. mentioned at serial no.8 of the chart. He has submitted that in the said firm i.e. M/s Prem Chand Jaiswal & Bros., the father of the director of the company is a partner in the said firm. He has further submitted that in fact the goods were purchased by the assessee-company from the said firm and the amount was outstanding against the assessee which was later on converted into share application money. He has further submitted that a perusal of the above chart would show that the subscribers had enough capital to make investment in the assessee company. Moreover, all the parties were interested parties in the assessee company being the directors of the assessee company or the close relatives of the directors of the company. He, therefore, submitted that not only the identity, creditworthiness of the subscribers has been proved but also the genuineness of the transactions. On the other hand, the ld. DR has relied upon the findings of the lower authorities.

I have considered the rival submissions. The assessee has duly established not only the identity but also the creditworthiness of the share subscribers and has further submitted that the share subscribers are either directors of the assessee company or the close relatives of the directors of the company as mentioned in the chart as reproduced above. In view of this, I do not find any justification to make the impugned addition. The same is accordingly ordered to be deleted.