Assessee-company had issued equity shares at Rs. 10 each to 21 persons thereby raising equity share capital and had also availed fresh unsecured loans.  Assessing Officer accepted said share capital investment.Pr. CIT noticed that assessee furnished copies of IT, bank statements and confirmations from all persons (Shareholders and/or loan providers) but out of 21 shareholders, only 4 persons had submitted their balance sheets and that bank statements of some of these persons also revealed that in some cases cash/cheques were deposited/credited in their bank accounts immediately prior to issuing funds to assessee-company either as share capital or as loan. PCIT  set aside assessment order as erroneous and prejudicial to interests of revenue, since same was passed by Assessing Officer without making necessary and adequate enquiries into source of investment in shares of assessee-company. In case of said four persons who had filed their balance sheets, it was found that huge amount of unsecured loans was availed by them and accordingly, aforesaid investments in share capital of assessee-company were made out of borrowed funds and further, said shareholders gave substantial amount as unsecured loan but they did not have sufficient means. On appeal the Tribunal held that  enquiry made by  the Assessing Officer was not adequate and he simply accepted version of assessee without application of mind.  Accordingly, order passed by Assessing Officer was erroneous and prejudicial to interests of revenue. Revision order is affirmed. (AY. 2016-17)