TaxTMI 
TaxTMI 
2019 (3) TMI 492
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....ng total income at Rs. 30,162/-. The case of the assessee was selected for the scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee had issued share capital of Rs. 2,73,330/- (27,330 nos. of face value of Rs. 10/- each) during the year under consideration. The company has also received share premium of Rs. 38,26,200/- (at the rate of Rs. 140/- per share). The AO has compiled the details of all share applicants on page no.3 of the assessment order, which reads as under: s. No. Name & Address Date of No. of Shares applicant/allotted during the year Issue price of the shares Share premium if any with @ of per share Total considerati on received PAN 1 Devilal Meena 31/08/2011 4570 10 140 685500 AQZPM4906G 2 Savita Meena 31/08/2011 3465 10 140 519750 AQYPM2236N 3 Devilal Meena (HUF) 31/08/2011 3840 10 140 576000 AAFHD5664J 4 Laxmanlal Meena 31/08/2011 3550 10 140 532500 AQZPM4905F 5 Nathulal Meena 31/08/2011 3650 10 140 547500 AQZPM4907H ....
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....e, which would amount to rejection of all other evidences so as to disbelieve the version put-forth by the assessee. She made reference to the decisions relied upon before the ld.First Appellate Authority, which has been noticed by the ld.CIT(A) in the submissions of the assessee. 7. On the other hand, ld.DR relied upon orders of the Revenue authorities. He pointed out that ld.AO has specifically directed the assessee to produce all the share applicants because they have very meager source of income, and the AO wanted to verify their credit-worthiness as well as genuineness of the transaction. He made reference to pages 60 to 70 of the paper book and contended that all the cheques and other details are in same hand-writing. It also gave raise to doubt about the genuineness of the transaction. For buttressing his contentions, he specifically drew my attention towards paragraph no.2.6 and 2.7 of the ld.CIT(A)'s order. 8. I have duly considered rival contentions and gone through the record carefully. Before I embark upon an inquiry on the facts of the present appeal, in order to find out whether the share capital and share premium money received by the assessee during the year i....
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....come of the assessee of that previous year." 9. A perusal of the section would indicate that basically this section contemplates three conditions required to be fulfilled by an assessee. In other words, the assessee is required to give explanation which will exhibit nature of transaction and also explain the source of such credit. The explanation should be to the satisfaction of the AO. In order to give such type of explanation which could satisfy the AO, the assessee should fulfill three ingredients viz. (a) identity of the share applicants, (b) genuineness of the transaction, and (c) credit-worthiness of share applicants. As far as construction of section 68 and to understand its meaning is concerned, there is no much difficulty. Difficulty arises when we apply the conditions formulated in this section on the given facts and circumstances. In other words, it has been propounded in various decisions that section 68 contemplates that there should be a credit of amounts in the books of an assessee maintained by the assessee, (b) such amount has to be a sum received during the previous year, (c) the assessee offers no explanation about the nature and source of such credit found in....
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.... not sufficient documents, because they have their own limitation. A permanent account number is being allotted on an application made by an assessee. It is pertinent to observe that in these days, such account number is being allotted on on-line application. There is no investigation about the identity of an assessee who obtains PAN. Similarly, certificate of incorporation can be given a corroborative evidence in support of identity, but it will not exhibit whether share applicant company was a paper company or not. In brief evidence in the shape of PAN, certificate of incorporation would not be sufficient for proving the identity of the share applicant company. Similarly, payments received through banking channels would not be sacrosanct and sufficient to believe genuineness of the transaction. The AO can examine the source of such money in the accounts of applicants in order to form a belief that such transaction was not genuine rather an arranged transaction. All these factors would be relevant on the quality of investigation carried out by the AO. It has been debated before us that there are large number of sham companies which are in turn providing accommodation entries to....
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....able in this case that all the investors have opened the bank account in the same bank and from there the money is company. It is also noticeable that just before the investment; the bank accounts of all the persons are credited with identical amount as it was to be invested. Another very crucial fact is that all the above investors have opened the accounts in State Bank of Bikaner, C.G. Road, Ahmedabad. The money deposited in these accounts and cheques were issued to the appellant for the purchase of shares. This all leads to the conclusion that it was the unaccounted money of the appellant itself which was being channelized to give it a garb of investment in the name of various persons. No doubt, the appellant has tried to layer it down to camouflage from the eyes of the department. It is really surprising that persons of small means, why they will purchase shares of unlisted company at hefty premium. The probabilities of evidences lead to the conclusion that it was the amount of share capital and share premium received from the above shareholders remained unexplained and therefore be treated as unexplained cash credit under section 68 of the Act. 2.7. It is a w....