TaxTMI 
TaxTMI 
2021 (9) TMI 257
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....n, as unexplained cash credits u/s 68 of the Act, by considering the data as pertaining to some other assessee, without appreciating that the assessee has not received any share capital ever, from the shareholders, whose creditworthiness has been adjudicated in the assessment order and the CIT(A) order. Hence, such impugned addition as made by the learned AO and confirmed by the learned CIT(A) by relying on the data not at all pertaining to the assessee, is not only absolutely erroneous, incorrect and bad-in-law but also shows non application of mind and hence, needs to be shunned out rightly. 2. Without prejudice to the aforesaid ground of appeal no.1, even otherwise on facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in confirming the action of the learned AO in treating the share capital including premium of Rs. 1,00,00,000/- as received by the assessee during the year under consideration, as unexplained cash credits u/s 68 of the Act, which is absolutely erroneous, incorrect and bad-in-law and needs to be deleted. 3. The assessee craves to add, amend, alter, substitute, modify any or all the above grounds of appeal,....
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.... RENJJ FINPROP PRIVATE LIMITED Served Yes SNEHA RESIDENCY PVT. LTD Served Yes SUSHMITA DISTRIBUTERS PVT. LTD Served Yes 4. In order to verify the identity, creditworthiness and the genuineness of the transactions, an enquiry was got conducted by the AO in respect of the above four investor companies. The AO found on making bank inquiries related to the investor companies that cash deposits have been made at the third layer of banking transactions and also transfer of funds have been made by known entry operators running various shell companies. The inquiries revealed that these investors companies were not having any income /or extremely low income and therefore did not have creditworthiness to make the investment. The assessee company was directed in the show cause notice to produce the investors before the AO on 09.03.2015 for examination but no compliance was made and the investors were not produced. The AO had provided several opportunities to the assessee company for producing the investors but no compliance was made. The AO on the analysis of the bank account found that these investor companies were not carryi....
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.... assessee had received a sum of Rs. 10,00,000/- towards share capital and Rs. 90,00,000/- towards share premium totaling Rs. 1,00,00,000/- from the following four companies, during the year under consideration. 1. Nirdesh Trading Pvt.Ltd. Rs. 20,00,000/- 2. Renu Finprop Pvt.Ltd Rs. 35,00,000/- 3. Sneha Residency Pvt. Ltd. Rs. 25,00,000/- 4. Sushmita Distributers Pvt. Ltd. Rs. 20,00,000/- Total Rs. 1,00,00,000 /- The share premium of Rs. 90/- has been received from four companies based at Kolkata. The assessing officer made addition because assessee company has failed to prove the identity, creditworthiness and the genuineness of the transactions. On appeal, ld CIT(A) has confirmed the action of the assessing officer and therefore now the assessee is in appeal before us. We note that according to section 68 of the Income Tax Act, 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 satisfactory in the opinion of the assessing officer, the sum so credited may be charged to in....
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....ed detailed reply along with the following documentary evidences, to discharge the primary onus cast under section 68 of the Act: (i) Name of the Investor companies; (ii) Address of the Investor companies; (iii) PAN of the Investor companies; (iv) Number of shares allotted; (v) Value of shares allotted; (vi) Share application form as filed by the Investor companies (vii) Confirmation of the Investor companies having made the investment explaining the source of making the investment; (viii) Copy of Income Tax Return of the Investor companies; (ix) Audited annual accounts of the Investor companies; (x) Bank Statement of the Investor companies; (xi) Affidavit of the directors of the Investor companies confirming the investments made by them and also explaining the business prudence by which they made the investments. Learned Counsel for the assessee states before the Bench that by submitting these plethora documents, the assessee company has discharged the primary onus cast under section 68 of the Act to prove the identity, creditworthiness and genuineness of share capital and share p....
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....ficer has not even an iota of evidence to hold that the share capital is non-genuine since in the inquiry carried out by him the share capital has been found to be genuine and the findings in the assessment order are not relevant as they are pertaining to some other assessee and not to the assessee under consideration. Therefore, we note that despite of complete compliance made by the Investor companies and furnishing of all the details as required by the learned AO to establish the identity, creditworthiness and genuineness of the transaction, the impugned assessment order as passed by the learned AO is absolutely erroneous. 11. Before we adjudicate as to whether the Ld. CIT(A)'s action is right or erroneous, let us look at section 68 of the Act and the judicial precedents on the issue at hand. Section 68 under which, the addition has been made by the AO, reads 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 charg....
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....e in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw and adverse inference against the assessee. in the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by' treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69. 13. To ....