Vinayaka Paper & Boards Limited, ... vs Assessee

This appeal by assessee is against the order of the Commissioner of Income Tax(Appeals)-II, Hyderabad dated 16-10-2014, confirming the Assessing Officer's (AO's) action of treating share application money of Rs. 75,98,100 as un-explained cash credit.

2. Briefly stated, assessee received during the year share application money of Rs.4.50 Crores out of which Rs.3.00 Crores was converted to equity. These amounts were received from 23 persons. AO asked for confirmations and on assessee furnishing details enquired and got confirmation letters. 18 persons credits were accepted as genuine but five persons credits were not accepted on the reason that no identity I.T.A. No. 1883/Hyd/2014 :- 2 -: Sri Vinayaka Paper & Boards Ltd.,

proof was furnished. Further, AO held that they are not income tax assessees as no PAN was mentioned. The details of such credits are as under:

S.No. Name of the person Occupation Amount received

1. Dasaratha Rami Reddy Business 30,45,000

2. Lakshmi Agriculture 11,00,000

3. Sashidhar Reddy Agriculture 10,00,000

4. Sridhar Reddy Agriculture 14,03,100

5. Y. Srinivasulu Agriculture 10,50,000 Total: 75,98,100

3. Apart from relying on various case law, AO also contested that it has furnished all the details and AO enquired and got confirmation letters from the parties therefore, genuineness and source of credit could not be doubted. It also stated to have furnished confirmation letter with PAN number before Ld. CIT(A). Ld. CIT(A) however, confirmed the action of AO.

4. Ld. Counsel filing additional evidence of confirmation letters with PAN number of above persons stated that the same was filed before Ld. CIT(A), but there is no mention of same, so the same was filed as additional evidence. It was submitted that the share application money received was genuine. Ld. DR submitted that assessee has not proved genuineness of the transactions.

5. We have considered the facts and additional evidence. The assessee has furnished the details and AO has made enquiries with the share applicants. Just because there is no PAN number mentioned in confirmation letter, one cannot decide that the said persons are not creditworthy without any further enquiry. Assessee has now furnished confirmation letters [same stereotyped as considered by CIT(A) ] but with PAN numbers. Since these five persons have PAN numbers, these I.T.A. No. 1883/Hyd/2014 :- 3 -: Sri Vinayaka Paper & Boards Ltd.,

credits are also to be accepted as genuine as was done in other 18 cases. However, since the confirmations were filed as additional evidence before us, we admit the same and direct the AO to examine and decide the genuineness of such credit afresh. For this purpose, order of AO and CIT(A) are set aside with a direction to redo the assessment to the above exent as per facts and law. Assessee's grounds are allowed for statistical purposes.

6. In the result, appeal is allowed for statistical purposes.

Order pronounced in open Court on 17th April, 2015.

Sd/- Sd/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 17th April, 2015

TNMM

Copy to :

1. Sri Vinayaka Paper & Boards Ltd., C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, 1st Floor, Somajiguda, Hyderabad.

2. The Dy. Commissioner of Income Tax, Circle-3(2), Hyderabad.

3. CIT(Appeals)-II, Hyderabad

4. CIT-III, Hyderabad

5. D.R. ITAT, Hyderabad