M/S BNT MOTORS P LTD.,,DELHI vs. ACIT (OSD), NEW DELHI

Assessee by : Sh. Somit Aggarwal, Adv Dr. Rakesh Gupta, Adv Sh. Abhishek Anand, Adv Revenue by: Sh. KK Jaiswal, DR Date of Hearing 12/07/2016 Date of pronouncement 09/09/2016 O R D E R PER PRASHANT MAHARISHI, A. M. This is an appeal filed by the assessee against the order of the ld CIT(A)-V, 1. New Delhi dated 12.02.2013 for the Assessment Year 2008-09 against confirmation of addition of Rs. 5 lakhs u/s 68 of the Income Tax Act, 1961. The brief facts of the case is that the assessee is a company engaged in the 2. business of service of Volvo vehicles, filed its return of income showing loss of Rs. 782350/-. Against this the total income assed at Rs. 2221974/-. Amongst the various additions made an addition of Rs. 5 lakhs was made u/s 68 of the Income Tax Act, 1961 with respect of following transactions of receipt of share application money in cash.- S Amount Date of receipt of Name of the person depositing share No. cash application money in cash 200000/- 14.11.2007 M/s. Naini Talwar, W-80, GK-II, New 1. Delhi-48 100000/- 22.10.2007 Naintara Hospitality Pvt. Ltd., 2. W-80, GK-II, New Delhi 200000/- 14.11.2007 Sh. Rakesh Talwar, 3. W-80, GK-II, New Delhi-48 The above amounts have been received by the assessee in cash from the 3. above persons. Before the ld Assessing Officer the assessee submitted Page 2 of 3 confirmation of above deposits along with acknowledgment of their income tax returns and bank statement. As the assessee has received this sum as loan in cash, addition was made u/s 68 of the Act for the above sum. The assessee agitated the issue before the ld CIT (A), who in turn confirmed the additions. The main reason for the confirmation by the ld CIT (A) was that all the share applicants are residing at the same address and what prevented them to issue account payee cheques and deposit money in cash. Therefore, he held that transactions are not genuine. Aggrieved by this the assessee is in appeal before us. The ld AR submitted that the assessee has submitted the confirmation of 4. above parties before the ld Assessing Officer stating their names, address, Permanent Account number and bank account of those persons along with income tax returns. He further demonstrated withdrawal of the cash from the respective bank accounts of the parties which is in turn deposited with the company. He therefore, submitted that merely because the cash is deposited as share application money which is duly reflected as withdrawal from their bank account and further deposit of cash for share application is not prohibited under the Companies Act, the addition was made by the Assessing Officer is incorrect. He further relied on the decision of the Hon'ble Delhi High Court in case of Bhav Shakti Steel Mines P. Ltd. Vs. CIT 320 ITR 619 to submit that when the bank statement is furnished there is no investigation made by the Assessing Officer to show that the cash did not exist in their hands to be deposited with the assessee company. The ld DR in turn relied on the orders of the ld Assessing Officer and ld CIT(A) 5. to say that when the share holders have the bank account what is the reason that they have deposited cash with the company as share application money, this shows that the transaction is not genuine. We have carefully considered the rival contention and also perused the 6. material on record. It is undisputed that these three persons have deposited cash with the company as share application money. However, all the three persons are assessed to income tax and their bank statement and income tax return are produced before the ld Assessing Officer to show the availability of cash with them on relevant dates. Therefore identity as well as creditworthiness of the of these deposits are accepted by the revenue. The