2019 (8) TMI 1851

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....,00,000/- u/s 68 of the I.T. Act on account of acceptance of share application money from M/s Indlon Hosiery Pvt. Ltd. based on the conjecture and surmises ignoring the fact that there was no adverse material before the AO to doubt the identity and creditworthiness of the above share applicant." 2. At the outset, the Ld. AR submitted that the assessee is engaged in the business of development of real estate and during the year under consideration, it had received share application money amounting to Rs.50 lakhs from M/s Indlon Hosiery (P.) Ltd. and the Assessing Officer during assessment proceedings raised a query regarding identity, genuineness and creditworthiness of the investor and therefore investor company was issued notice u/s 133....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....led by the assessee allowed. 3. The Ld. DR on the other hand, heavily placed her reliance on the order of the authorities below and also relied on a number of case laws and filed written synopsis. The ld. DR specifically relied on the case of Hon'ble Supreme Court in the case of PCIT vs NRA Iron P. Ltd and it was argued that the transactions was not genuine and the assessee is required to prove all the ingredients such as identity, creditworthiness and genuineness of the transactions and which he has failed as the audited accounts of the invest company itself do not warrant such investment and that too a huge premium. 4. We have heard the rival parties and have gone through the material placed on record. We find that the assessee has ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... of funds is in loans and advances. The financials of the investee company does not warrant that it deserves share premium of Rs.90 per share, therefore, all these facts prove that the transactions of share application money is not a genuine transaction. The Hon'ble Apex Court in the case of PCIT vs NRA Iron & Steel Pvt. Ltd. vide its order dated 05/03/2019 has held that the practice of conversion of unaccounted money through cloak of share capital/premium must be subjected to careful scrutiny especially in private placement of shares. Filing primary evidence is not sufficient and the onus to establish creditworthiness of the investor companies is on the assessee. The Hon'ble Court has held that the assessee is under legal obligation to pro....