AJANTA INFRABUILD (P) LTD.,BULANDSHAHR vs. ITO, WARD- 3(1), BULANDSHAHR

The facts in brief are that the assessee-company is engaged in the business of commission as well as it is member of two AOPs, namely, ‘Classic Country Liquor’ and ‘Regal Foreign Liquor’. The assessee in its balance sheet has disclosed share application money received during the year of Rs.5 lac from M/s. Banney Khan. The assessee was required by the Assessing Officer to prove the identity, genuineness and creditworthiness of all the persons who have contributed towards share application money. In response, the assessee filed their confirmation and ID proof. In so far as the share application money of Rs.5 lac received from M/s. Banney Khan, assessee filed his confirmation and Income Tax particulars and also brought on record that he was member in AOP, M/s. Ahmad Traders, from where he has withdrawn the amount out of his capital and invested the same as share application money with the assessee company. Not only that, he was also produced before the Assessing Officer. However, the ld. Assessing Officer held that share application money of Rs.5 lac is not genuine, on the ground that the assessee company did not produce supporting evidence and Shri Banney Khan accepted that he has made payment in cash in financial year 2011-12 for share application money and he could not prove the genuineness of the transaction as M/s. Ahmad Trades had no any business activities.

Ld. CIT (A) has confirmed the said addition after observing and holding as under: “5.3 Ground no. 2: The appellant has challenged addition of Rs. 5,00,000/- allegedly share application money received by the appellant from Shri Banney Khan u/s 68. According to the appellant it had furnished identity, creditworthiness and genuineness of the transaction by furnishing the copy of Aadhar Card, copy of ITR and statement of affairs and confirm copy of account in support of the above three mentioned tenets of section 68. Examination of facts reveal that appellant had submitted during assessment proceedings that he has withdrawn the above said amounts out of his capital account in M/s Ahmed Traders. During appellate proceedings appellant enclosed three documents i.e. copy of acknowledgement of ITR for AY 2012-13, unsigned copy of account of Shri Banney Khan in the books of 'Ahmad Traders 09- 10' and a letter written to AO on 12.01.2015. The computation of income attached with the acknowledgement for ITR of Shri Banney Khan reflected a profit of Rs.75 from Ahmed Traders. The appellant contended that creditworthiness of Shri Banney Khan was proved. 5.3.1. However the contention of the appellant was not supported by affairs of M/s. Ahmed Traders as stated by AO in the assessment order and since the transaction was made in cash thus neither during assessment proceedings nor during appellate proceedings appellant could furnished the genuineness of transaction and creditworthiness of the investor within the provisions of section 68. Keeping in view the above facts it is held that mere furnishing of copy of return/statement of affairs does not prove the creditworthiness of appellant to the satisfaction of the AO within the provision of section 68. Thus, action of the AO making an addition of Rs.5,00,000/- u/s.68 is upheld and ground of appeal is dismissed.”

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 30th January, 2019.