Income Tax Appellate Tribunal - Raipur
Mecon Engineering Services Pvt. Ltd., ... vs Income Tax Officer-1(1), Raigarh, ... on 25 January, 2024
आयकर अपील य अ धकरण यायपीठ रायपुर म।
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAIPUR BENCH, RAIPUR
BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER
AND
SHRI ARUN KHODPIA, ACCOUNTANT MEMBER
आयकर अपील सं. / ITA No.276/RPR/2023
नधारण वष / Assessment Year : 2015-16
Mecon Engineering Services Private Limited
C/o. Gomati Enterprises,
Near Gouri Shankar Mandir,
Raigarh (C.G.)
PAN : AAGCM0910J
.......अपीलाथ / Appellant
बनाम / V/s.
The Income Tax Officer-1(1),
Raigarh (C.G.)
...... यथ / Respondent
Assessee by : Shri R.B Doshi, CA
Revenue by : Shri Satya Prakash Sharma, Sr. DR
सुनवाई क तार ख / Date of Hearing : 10.01.2024
घोषणा क तार ख / Date of Pronouncement : 25.01.2024
2
Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh
ITA No. 276/RPR/2023
आदे श / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 20.07.2023, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short 'the Act') dated 26.12.2017 for the assessment year 2015-16. The assessee company has assailed the impugned order on the following grounds of appeal:
"1. Ld. CIT(A) erred in confirming addition of Rs.50,00,000/- made by A.O on account of share application money invoking Section 68. The addition made by A.O and confirmed by the Ld. CIT(A) is arbitrary, baseless and not justified.
2. The appellant reserves the right to amend, modify or add any of the ground/s of appeal."
2. Succinctly stated, the assessee company had e-filed its return of income for A.Y.2015-16 on 23.10.2015, declaring an income of Rs.1,26,400/-. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s. 143(2) of the Act.
3. During the course of the assessment proceedings, the A.O observed that the assessee company had claimed to have received an amount of Rs.50 lacs towards share application money (at premium) from seven parties, as under: 3
Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 Sl. No. Year Name of the persons from Amount of share whom share application money application money have been taken received.
1. 2014-15 Shri Mahavir Prasad Agrawal Rs.8,00,000/-
2. 2014-15 Smt. Shanti Devi Agrawal Rs.8,00,000/-
3. 2014-15 Shri Ajay Kumar Agrawal Rs.5,00,000/-
4. 2014-15 Shri Vikash Agrawal Rs.5,00,000/-
5. 2014-15 Shri Dinesh Ku.Agrawal Rs.10,00,000/-
6. 2014-15 Smt. Mani Devi Kedia Rs.10,00,000/-
7. 2014-15 Shri Munesh Kumar Pandey Rs.4,00,000/-
Total Rs.50,00,000/-
The A.O in order to verify the authenticity of the claim of the assessee of having received share application money from the aforementioned investors, inter alia, issued summons to all of them at their respective addresses that were provided by the assessee. All the aforementioned persons except for Shri Munesh Kumar Pandey (Sr. No.7) appeared before the A.O who recorded their statements u/s.131 of the Act. On a perusal of the bank statements of the aforementioned 6 persons (out of 7 persons), the A.O observed that immediately prior to the investments made by them with the assessee company there were cash deposits in their respective bank accounts. Backed by the aforesaid facts, the A.O in order to verify the financial creditworthiness of the aforementioned persons called for their financial statements. On examination, it was observed by the A.O that all the abovementioned persons were having meagre income which was not at all 4 Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 commensurate with the towering investments made by them with the assessee company.
4. The A.O considering the aforesaid facts held a conviction that the aforementioned persons were not carrying out any real business activities. The A.O confronted the aforesaid facts to the assessee company and directed it to substantiate the creditworthiness of the aforesaid investors on the basis of supporting documents. As reply filed by the assessee did not find favour with the A.O, therefore, he declined to accept the claim of the assessee of having received genuine investments towards share application money from the above-mentioned persons. As regards Shri Munesh Kumar Pandey (supra), the A.O though directed the assessee company to produce the said person but it failed to do the needful. Considering the aforesaid facts, the A.O was of the view that in the case of Shri Munesh Kumar Pandey (supra) the aspect of identity of the so called investor was not established. Although the assessee company had filed with the A.O copy of returns of income, capital account, bank statements of the aforementioned 6 persons, the A.O did not find favour with the same. Accordingly, the A.O based on his aforesaid observations held the entire amount of Rs.50 lacs claimed by the assessee company to have received on account of share application money from the aforementioned persons as unexplained cash credit u/s. 68 of the Act. Thus, the A.O vide his order passed u/s.143(3) dated 26.12.2017 after making the aforesaid addition assessed income of the assessee company at Rs.51,26,400/-. 5
Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023
5. Aggrieved the assessee company carried the matter in appeal before the CIT(Appeals). As the assessee had failed to participate in the course of the proceedings before the CIT(Appeals), therefore, the latter was constrained to proceed with the matter after considering the material available on record in the backdrop of the observations of the A.O. The CIT(Appeals) finding no infirmity in the view taken by the A.O approved the addition of Rs.50 lacs made by him u/s. 68 of the Act observing as under:
"5. Decision on Merits:- Thus, on merits also, the appellant has no case. The appellant has challenged the addition made amounting to Rs.50,00,000/- u/s 68 of the I.T. Act 1961. Mere claiming that the AO erred in making the additions does not give an edge to the appellant. The relevant part of the assessment order is reproduced below:-
4. Share Application money received: During the assessment proceedings it came to the knowledge of the department that the assessee had received share application money at premium from the following persons:-6
Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 All of the above persons from whom share capital money money have been received are belong to the nearby areas Raigarh. For verification of the identity , credit worthiness and genuineness of the transaction. The assessee was asked to furnish the current address, copy of bank a/c and confirmation of above persons which was submitted by the assessee. It is now a settled law that to-establish veracity of share application money received, 'three conditions are to be fulfilled. These are the presence of verifiable evidences regarding genuineness of transaction and ideality and creditworthiness of the investor.' In absence of any of these, a transaction in the nature of share application money would be treated as bogus, To verify the first condition regarding the identity of the above person summons were sent to all of the above person to the address provided by the assessee. All of the above assesses except Munesh Kumar Pandey attended the case and statements were recorded. Shri Munesh Kumar Pandey, from whom the company has received share application money was not traceable. The assessee was asked to produce the him for his statement but .the assessee could not produce him and hence the Identity of the person from whom the assessee has shown received of the share applications money is in jeopardize.
To verify the second condition regarding the creditworthiness of the above person except Shri Munesh Kumar Pandey who was not traceable, the bank statement through which they had purchase the shares at premium price were examined, where it was noticed that the persons had invested in this company after depositing the cash just before the issuing of cheques to the company for the purchasing of shares. Therefore it was very necessary to know the financial status of all of the above persons. The required documents were called for and submitted by the assessee, from where the balance sheet and the P& L a/c of all of the above persons were examined and found that the persons were having meager income and did not commensurate with the towering figures in share capital account. This clearly indicates no real business activities were done by these persons. In this regard the assessee was asked to explain all of the above issues found with supporting documents. The assessee submitted his reply dated 27/11/2017 which was misleading and not upto the satisfaction of the undersigned. In this regard the statement of the director Shri Manoj L Agrawal were recorded as below ,where he could not explain, the cash deposits made by-all the share holders before issuing the cheques to the company for purchasing of shares:-
Therefore, taking all of the above discussion into consideration, there is no doubt, It was assessee's own undisclosed income, introduced in the business in the garb of share application money. In this regard, the following judgements of hon'ble courts can explain the situation better.
In the case of CIT -v- Precision Finance Pvt. Ltd. report in 208 1TR 465 (CAL) it has been held that credit in the names of various person -7
Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 burden of proof assessee must prove identity of creditors and their creditworthiness - fact that transaction were through bank not conclusive -- no material to, establish identity of creditors and their creditworthiness. -- amount assessable as income from undisclosed source - Income tax Act, 1961.
Further, in the case of McDowell & Co. Ltd vs Commercial Tax Officer (1985) 22 Taxman 11 (SC), Hon'ble Supreme Court held that "Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honorable to avoid the payment of tax by restoring to double methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges, courts are now concerning themselves not merely with the genuineness of a transaction, but with-the intended effect of it for fiscal purpose. No one can now get away with a tax avoidance project with the mere statement that there is nothing illegal about it."
After taking all of the above discussion into consideration, the assessee was asked to explain why not the share application money of Rs. 50,00,000/- received should not be treated as its own undisclosed income introduced in the business in the garb of share application money through this office letter dated 22.12.2017. In response to this letter the assessee filed its submission by stating that it had received share application money from different people and in support of its claim it has already submitted the copy of IT return, capital A/c and bank statement of these person and hence has established the identity and credit worthiness of the allots. The assessee has also mentioned that it has not carried out any business activity but only has invested its capital in a partnership firm and hence how can it will invest from undisclosed sources. Considering the submission made by the assessee it is important to mentioned that the undersigned is of view that the company introduced its undisclosed money through the share application money, the assessee has raised its objection by stating that it has not carried out any business activities so how can it invested from undisclosed sources. The assessee here is in wrong foot because even though the company has not started any business activities till date, that is why it has been rightly stated that the assessee company has invested from undisclosed sources. Regarding the credit worthiness of all the persons from whom share application money has been received have deposited cash in their respective account before issuing of cheques for purchase of shares. They could not explain the source of cash deposits made in their account properly when they were asked to explain. Therefore the submission of the assessee that it has established the identity and credit worthiness of the allottes is not acceptable.
Hence after taking all of the above discussion and sec. 68 of IT Act into consideration which provides, if any sum found credited in the books of accounts maintained for any previous year and the 8 Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 • Assessee offers no explanation about the nature and source of such credit OR • Explanation offered by assessee is not satisfactory in the opinion of Assessing Officer, the sum so credited may be charged to income tax as the income of the assessee of that previous year.
Hence, the share application money of Rs.50,00,000/- received by the assessee from the above persons whose credit worthiness are in question and as the assessee failed to explain it properly is found bogus and added to the income of the assessee U/s 68 of the IT Act as the income from the undisclosed sources".
6. The AO has elaborately discussed all the issues in the assessment order for making additions of Rs.50,00,000/- u/s. 68 of the I.T. Act 1961. Further, during appellate proceedings no response was received from the appellant to substantiate its claim in support of grounds of appeal though enough opportunities of being heard were given to it, as tabulated in Para 4 above. Hence, keeping in view all the stated facts and discussions, I find no reason in altering the additions made by the AO. In view of this, the grounds raised by the appellant are dismissed.
7. In the result, the appeal is treated as dismissed."
6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.
7. We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
8. Shri R.B Doshi, Ld. Authorized Representative (for short 'AR') for the assessee company at the threshold submitted that the CIT(Appeals) had disposed off the appeal vide an ex-parte order. At the same time, the Ld. AR fairly submitted that the CIT(Appeals) while disposing off the appeal had taken cognizance of the 9 Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 material that was available on record before him. Apropos the merits of the case, the Ld. AR submitted that now when 6 investors (out of 7 investors) had in their statements recorded u/s.131 of the Act by the A.O duly admitted of having made investment with the assessee company, therefore, there was no justification for the A.O to have held their respective investments as unexplained cash credit u/s. 68 of the Act. The Ld. AR in order to buttress his aforesaid claim had taken us through the respective statements of the aforementioned persons, Page 46 to 98 of APB. Also, the Ld. AR had placed on record a "chart" wherein the respective investments made by the aforementioned persons a/w. their PAN and their statements (gist) before the A.O stands revealed. The Ld. AR drawing our attention to the "chart" submitted that two investors, viz. Shri Vikash Agrawal (Sr. No.4) and Smt. Mani Devi Kedia (Sr. No.6) had in their respective statements explained their respective sources out of which cash deposits were made by them in their bank accounts. Our attention was drawn to the relevant extract of the statements of the aforementioned persons, Page 72 to 95 of APB. The Ld. AR submitted that now when all the 6 investors had owned the investment made by them with the assessee company, therefore, for the said reason itself there was no justification for the A.O to have characterized the amounts received from the said persons as unexplained cash credit u/s. 68 of the Act. Alternatively, the Ld. AR submitted that as in the case of Shri Vikash Agrawal and Smt. Mani Devi Kedia, the source of source of the respective investors with respect to the share application money invested with the assessee company had been established, therefore, the statutory requirement 10 Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 contemplated in the "1st proviso" to Section 68 of the Act was duly satisfied, and thus, no adverse inferences in their case could be drawn. At the same time, the Ld. AR submitted that the "1st proviso" to Section 68 only did cast an obligation on the investor to explain the "nature" and "source" of the specified investments with the assessee company. It was thus, the Ld. AR's claim that no obligation was cast upon the aforementioned investors to substantiate the source out of which respective investments towards share application money was made by them with the assessee company.
9. Per contra, the Ld. Departmental Representative (for short 'DR') relied on the orders of the lower authorities.
10. Before proceeding any further, we deem it fit to cull out the provisions of Section 68 of the Act, i.e, post amended vide the Finance Act, 2012 w.e.f. 01.04.2013 which are applicable to the case of the assessee company for the year under consideration, i.e., A.Y.2015-16 are as under:
"68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year :
Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless--
(a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and 11 Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023
(b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:
Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." As per Section 68 of the Act (post amended), two-fold obligations are cast upon an assessee company which claims to have received the amounts towards share application money, share capital, share premium or any such amount by whatever name called, viz. (i) an explanation about the nature and source of the sum credited in its books of account; and (ii) to place on record to the satisfaction of the A.O an explanation about the nature and source of the sum credited in the name of the person, a resident, as recorded in its books of account. Accordingly, as per the "1st proviso" to Section 68 of the Act as had been made available on the statute vide the Finance Act, 2012 w.e.f. 01.04.2013, an additional obligation is cast upon the assessee company to place on record the explanation of the share applicant/subscriber company as regards the nature and source of the sum so credited against the latter's name. Based on the aforesaid mandate of law, we are unable to concur with the claim of the Ld. AR that no obligation was cast upon the assessee company to offer an explanation about the source of the sum as was invested by the aforementioned persons as share application money (including premium) with the assessee company. As the "1st proviso" to Section 68 mandates the explanation of the assessee company about the source of the investor who had invested the sum towards share application money, share capital, share premium or any such amount by whatever name called, therefore, the assessee company in 12 Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 the present case before us was statutorily required to satisfy the said obligation on the basis of supporting documentary evidence in the course of proceedings before the A.O.
11. We shall now in the backdrop of the aforesaid statutory obligation that was cast upon the assessee company u/s. 68 of the Act (post amended) look into the aspect as to whether the onus that was cast upon it had been discharged.
(A) Shri Munesh Kumar Pandey (Sr. No.7) : Rs.4,00,000/-
12. Apropos the amount of Rs.4,00,000/- claimed to have been received by the assessee company from Shri Munesh Kumar Pandey (supra), we are of the view that as the assessee company despite specific direction by the A.O had neither produced the said person nor substantiated the investment made by him as per requirement of Section 68 of the Act, therefore, the sum so received by the assessee company from the said person had rightly been held by the A.O as unexplained cash credit u/s. 68 of the Act.
(B) Shri Mahavir Prasad Agrawal (Sr. No.1) : Rs.8,00,000/-
13. Although the aforementioned person in his statement recorded u/s. 131 of the Act, dated 29.11.2017 had admitted of having purchased 500 shares @Rs.100/- per shares, Page 49 of APB from his relative, viz. Shri Manoj Agrawal, director of the assessee company and the said investment is found to have been disclosed by the investor in his "balance sheet" (unsigned) for the year under consideration i.e. A.Y.2015-16, Page 6 of APB but there is nothing discernible from 13 Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 the record to substantiate to hilt the authenticity of the aforesaid investment as well as source from where the same was made by the said investor. Accordingly, as the investment claimed by the assessee company to have been made by the aforementioned person does not satisfy the statutory obligation cast u/s.68 of the Act, therefore, we find no infirmity in the view taken by the A.O who had rightly held the same as unexplained cash credit.
(C) Smt. Shanti Devi Agrawal (Sr. No.2) : Rs.8,00,000/-
14. As observed by the A.O, and rightly so, the return of income of the aforementioned person reveals meagre income and does not inspire any confidence as regards the investment claimed by the assessee to have been received from her. Also, the unsigned balance sheet of the aforementioned person as had been placed on record, Page 12 of APB does on the said stand alone basis either fortify the creditworthiness of the aforementioned person or the nature of income therein disclosed. In fact, we find that the aforementioned person had in her statement recorded u/s.131 of the Act dated 29.11.2017 categorically declined of having made any investment with the assessee company, Page 55 of APB.
15. Considering the aforesaid facts, we approve the view taken by the A.O who had rightly held the aforementioned amount which was claimed by the assessee to have been received from the aforementioned person as share application money as unexplained cash credit u/s. 68 of the Act.
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Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 (D) Shri Ajay Kumar Agrawal (Sr. No.3) : Rs.5,00,000/-
16. As is discernible from the records, the assessee company had placed on record copies of return of income of the aforementioned person which reveals meagre income a/w. unsigned balance sheet, which, thus, does not inspire any confidence as regards the authenticity of the assessee's claim of having received investment towards share application money of Rs.5 lacs from the aforementioned person. Also, we find that the aforesaid person had in his statement recorded u/s.131 of the Act dated 11.10.2017, Page 61-62 of APB on being queried about the investment made in the assessee company, had stated that though the director of the aforementioned company, viz. Shri Manoj Bansal was son of his aunt Smt. Mohini Agrawal but he was not sure about the investment made towards purchase of shares of the said company. In fact, he expressed his total unawareness about the transaction of investment in the assessee company.
17. Considering the aforesaid facts, we find no infirmity in the view taken by the A.O who had rightly observed that the amount claimed by the assessee to have been received from the aforementioned person as share application money in the totality of the facts was to be held as an unexplained cash credit u/s. 68 of the Act. (E) Shri Vikash Agrawal (Sr. No.4) : Rs.5,00,000/-
18. As is discernible from the records, the assessee company had placed on record the copy of the return of income a/w. financial statements (unsigned) of the aforementioned person. Although the copy of the balance sheet (unsigned) of the 15 Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 aforementioned person, Page 26 of APB reveals investment towards shares of Rs.5 lacs but the same in absence of any supporting documentary evidence does not inspire any confidence. Apart from that, the meagre income returned by the aforementioned person in his return of income for the last three years is not found to be commensurate with the towering investment of Rs.5 lacs made in the assessee company. Although the investment of Rs.5 lacs made by the aforementioned person with the assessee company vide cheque No.3 dated 07.04.2014 (date of debit) in the bank account immediately is preceded by cash deposit of an equivalent amount in two tranches of Rs.4.51 lacs and Rs.49,000/- on 07.04.2014 and 05.04.2014 respectively, but the said person in his statement recorded u/s.131 of the Act dated 11.10.2017 had categorically admitted of having made investment towards share application money with the assessee company a/w. source of the same. It was also stated by the aforementioned person that the investment made with the assessee company was sourced out of his accumulated savings from the business of sale of paddy husk, which sale proceeds were deposited by him in his bank account and was, thereafter, utilized for making investment with the assessee company. On being queried about further cash deposit of Rs.8 lacs in his bank account, which, thereafter, had found its way to the coffers of the assessee company, the aforementioned person had failed to conclusively come forth with any explanation and had merely stated that the same were accumulated savings of his mother, viz., Smt. Shanti Devi Agrawal. 16
Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023
19. Considering the aforesaid facts, we are of the view that though the aforementioned person had admitted the investment made by him towards share application money of Rs.5 lacs with the assessee company and had also, come forth with an explanation as regards the source of the said investment, i.e., accumulated savings garnered over the last 4/5 years from the trading of paddy husk that was carried out by him, but we cannot remain oblivion of the fact that the said claim of the assessee is not substantiated on the basis of any clinching documentary evidence. We, thus, in terms of our aforesaid observations are of the considered view that the matter, in all fairness, requires to be restored to the file of the A.O who shall carry out necessary verification as regards the satisfaction of the requisite condition contemplated u/s. 68 of the Act. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee company which shall remain at a liberty to substantiate its aforesaid claim on the basis of documentary evidence, if any. (F) Shri Dinesh Kumar Agrawal (Sr. No.5) : Rs.10,00,000/-
20. As is discernible from the records, the assessee company had placed on record copy of return of income of the aforementioned person which revealed a meagre income over the years, and thus, does not inspire any confidence as regards the creditworthiness of the said person. Apropos the investment of Rs.10 lacs made by the aforementioned person vide cheque No.154554 drawn on his bank account with State Bank of India, Branch: Raigarh, we find that the same is preceded by cash deposits of Rs.5 lacs each in two tranches on 23.04.2014 and 17 Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023 25.04.2014. Although the assessee company had placed on record balance sheet of the aforementioned person for the year under consideration (unsigned), wherein investment with the assessee company is disclosed, but the same in the totality of the facts does not inspire any confidence. On a perusal of the statement of the aforementioned person recorded u/s.131 of the Act dated 08.11.2017, we find that on being queried about the source of the cash deposit of Rs.5 lacs each made by him in two tranches on 23.04.2014 and 25.04.2014, he had failed to come forth with any plausible reply and merely stated that the same were the accumulated savings generated by him from commission income that was lying available with him. Although the Ld. AR had stressed on the aspect that the aforementioned person on being queried as to why the investment of Rs.10 lacs made by him may not be treated as money belonging to the said company, had denied the same and had claimed that the said money belongs to him, but we are afraid that the said standalone aspect would by no means assist the case of the assessee before us.
21. Considering the fact that the assessee company had failed to discharge the onus that was cast upon it as per the "1st proviso" to Section 68 of the Act, i.e., the source out of which the aforesaid investment of Rs.10 lacs was made by the aforementioned persons towards share application money (including premium) with it, therefore, the said amount had rightly been held by the A.O as unexplained cash credit u/s. 68 of the Act.
(G) Smt. Mani Devi Kedia (Sr. No.6) : Rs.10,00,00/-
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Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023
22. On a perusal of the records, we find that the assessee company had placed on record copies of the return of income of the aforementioned person a/w. financial statements (unsigned). Although the balance sheet of the aforementioned person for the year under consideration (unsigned) disclosed the investment of Rs.10 lacs with the assessee company but considering the meagre income of the aforesaid person and the totality of the facts therein involved, i.e., specifically the fact that the aforementioned person in both the years had merely received gifts and has no clear source of income, thus, does not inspire any confidence as regards her creditworthiness which would justify the aforesaid hefty investment made with the assessee company. Also, we find that the very fact that the payment of Rs.10 lacs made by the aforementioned person from her bank account (joint account with Union Bank of India, Raigarh) to the assessee company towards share application money (including premium) was preceded by cash deposits of an equivalent amount on the same date raises serious doubts about the authenticity of the assessee's claim of having received genuine amount from the aforementioned person. On a perusal of the statement of the aforementioned person recorded u/s. 131 of the Act on 21.11.2017, we find that she had on specifically being queried that in absence of any clear source of income from where the aforementioned substantial amount of investment of Rs.10 lacs was made with the assessee company, therein submitted that the same was sourced out of interest income that was garnered by her over the years and was lying available with her as accumulated savings.
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Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023
23. We have thoughtfully considered facts as regards the investment claimed by the assessee to have been received from the aforementioned person and do not find any substance in the same. Considering the meagre income as disclosed in the return of income by the aforementioned person a/w. no clear source of income out of which cash deposit of Rs.10 lacs was made in her bank account clearly rules out any genuine investment made with the assessee company. We are unable to concur with the claim of the Ld. AR that as the aforementioned person had admitted to have made investment with the assessee company, no adverse inference with respect to the same could have been drawn by the A.O. We are of the view that as there is clear lack of any material which would substantiate the source from where the aforementioned person had made investment of Rs.10 lacs with the assessee company, therefore, onus that was cast upon the assessee company as per "1st proviso" to Section 68 of the Act had not been discharged.
24. Considering the aforesaid facts, we find no infirmity in the view taken by the A.O who had rightly held the amount of Rs.10 lacs received from the aforementioned person as unexplained cash credit u/s. 68 of the Act.
25. Thus, the Ground of appeal No.1 raised by the assessee is partly allowed for statistical purposes in terms of our aforesaid observations.
26. Ground of appeal No.2 being general in nature is dismissed as not pressed.
20
Mecon Engineering Services Pvt. Ltd. Vs. ITO-1(1), Raigarh ITA No. 276/RPR/2023
27. In the result, appeal of the assessee is partly allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in open court on 25th day of January, 2024.
Sd/- Sd/-
ARUN KHODPIA RAVISH SOOD
(ACCOUNTANT MEMBER) (JUDICIAL MEMBER)
रायपुर/ RAIPUR ; दनांक / Dated : 25th January, 2024.
SB
आदे श क त ल प अ े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-1, Raipur (C.G.)
4. The Pr. CIT, Raipur-1 (C.G)
5. वभागीय त न ध, आयकर अपील य अ धकरण, रायपुर बच,
रायपुर / DR, ITAT, Raipur Bench, Raipur.
6. गाड फ़ाइल / Guard File.
आदे शानुसार / BY ORDER,
// True Copy //
नजी स चव / Private Secretary
आयकर अपील य अ धकरण, रायपरु / ITAT, Raipur.