TaxTMI 
TaxTMI 
2021 (6) TMI 981
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....stantive grievance raised in the instant appeal challenges correctness of both lower authorities' action treating its share capital of Rs. 2,79,99,850/- involving M/s Twinkle Commonsales Pvt. Ltd., as unexplained cash credits u/s 68 of the Act. The CIT(A)'s detailed discussion affirming Assessing officer's action to this effect reads as under. "During the course of scrutiny proceedings it was noticed that the appellant has received Share capital for Rs. 4,00,43,925/- during the year. The appellant was asked to furnish return of income and bank statement and also confirmation letter along with the sources of the parties who have invested in share capital during the year. In response, the appellant furnished details of share capital ....
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....ntrade Pvt Ltd. , M/s Jyotsna Vaijya Pvt. Ltd and M/s Anubhav Vintrade Pvt Ltd. However, the appellant could not furnish the same. The AO had also issued notice u/s 133(6) to M/s Twinkle Commonsales Pvt Ltd asking for return of income, Profit & Loss a/c, Balance sheet and bank statement of above 3 parties.. The notice got served but there was no response. Thus, the appellant has even failed to discharge the primary requirement of the identity of the share applicant itself. As the appellant has failed to discharge the onus of explaining the source of source in case of share application money, the AO completed the assessment by treating the amount of Rs. 2,79,99,850/- as unexplained income of the appellant u/s 68 of Income Tax act. ....
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.... not even able to provide basic details properly. It is also seen that the financials of the investor company did not reflect genuine business activity and the income of the investor company does not commensurate the investments made, The FY 2012-13 shows no income and an expenditure of Rs. 11,550/- and FY 2013-14 has a meagre income of Rs,24,550/- and expenditure of Rs. 25,130/-, The financials itself state that the share applicant does not have a business apparatus and also the appellant does not have a history of distributing dividends in these years, The share applicants, balance sheet by using other applicants, are all facade created by infusing unaccounted cash at various levels in the banking systems or using this platform o....
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....ove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name - lenders. iii if the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit worthiness, then the genuineness of the transaction would not be established. In such a case, the assesse....
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....wn to each other or mode by which parties approached each other, whether the transaction is entered into through written documentation to protect investment, whether the investor was an angel investor, the quantum of money invested, credit-worthiness of 'he recipient, object arid purpose for which payment/investment was made, etc. The incorporation of a company, and payment by banking channel, etc. cannot in all cases tantamount to satisfactory discharge of onus. As the appellant has failed to establish the identity, genuineness & creditworthiness of the share applicant as already elaborated in the factual and legal discussion above, the action of AO in treating the share application money as unexplained credit u/s 68 of the Ac....
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....e assessing officer Mere filing of primary evidence of investors does not discharge the onus cast on the assessee company by virtue of section 68 of the Income-tax Act, 1961 ('the Act'). In view of the above discussion and the decision of the hon'ble Supreme Court, the ground no.4 is dismissed." 2.1. Learned AR invited our attention to assessee's detailed paper book running into 102 pages inter alia containing its submissions before the CIT(A), return along with computation, annual report and audit report; confirmation letter and bank statement(s) from M/s Twinkle Commonsales Pvt. Ltd. dated 12.8.2016, letters, returns, annual accounts and confirmation of source of investments, hon'ble apex court's decision in M/s Or....