2019 (7) TMI 1996

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.... cognize thereof f can be taken. 2. That under the facts and circumstances the Ld. A.O. erred in law and on facts in not deducting the C.Y losses of Rs.1,24,13,900/- out of addition of Rs.1 Cr. for arriving at the figure of income assessed at special tax rate u/s. 115BBL." 2. The assessee is engaged in the business of construction, selling and renting of residential & non-residential building and dwellings. During the year, the assessee has received unsecured loans from two parties, namely, M/s Regal Infotech Pvt. Ltd. to Rs.55,00,000/- and M/s Awasthi Medi Equipments Pvt. Ltd. of Rs.45,00,000/-. During the assessment proceedings, the Assessing Officer has issued notice u/s 133(6) of the Act to the Principal Officer of the Assessing Officer to the companies which have come back un served. Based on the non-service of notice, and the report of the Inspector indicating that the companies in question could not be found at the given address, and based on the returned income which is Rs.27,715/- in the case of M/s Awasthi Medi Equipments Pvt. Ltd. and based on the paid up capital of Rs.1,93,500/-, the Assessing Officer held that the loans obtained by the assessee are bogus in....

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....A Iron & Steel (P.) Ltd. [20191 103 taxmann.com 48 (SC) (Copy Enclosed) where Hon'ble Supreme Court reverse order of lower Authorities holding that where there was failure of assessee to establish credit worthiness of investor companies, Assessing Officer was justified in passing assessment order making additions under section 68 for share capital / premium received by assessee company. Merely because assessee company had filed all primary evidence, it could not be said that onus on assessee to establish credit worthiness of investor companies stood discharged 2. PCIT Vs NDR PROMOTERS PVT LTD (2019-TIOL-172-HC-DEL-IT) where Hon'ble Delhi High Court held that a case involving make-believe paperwork to camouflage the bogus nature of the transactions is to be treated as unexplained credit u/s 68 3. ITO Vs Synergy Finlease Pvt. Ltd (ITA No.4778/Del/2013) where Hon'ble ITAT Delhi held that where investor of share application money had nominal income and cheques had been received just before issue of cheques for share application money, creditworthiness was not proved and addition u/s 68 was sustained. 4. Prem Castings (P.) Ltd. Vs CI....

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....o that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer had observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions. "20. Now, when we go to the order of the Tribunal in the present case, we notice that the Tribunal has merely reproduced the order of the Commissioner of Income-tax (Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its co-ordinate Bench in the case of MAF Academy P. Ltd., a decision which has been overturned by the Delhi High Court, vide its judgment in CIT v. MAF Academy P. Ltd. [2014] 206 DLT 277 ; [2014] 361 HR 25S (Delhi)). In the impugned order it is accepted that the assessee was unable to produce directors and principal officers of the six shareholder companies and also the fact that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer has observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions. ....

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....ther been observed that the report of the investigation wing cannot conclusively prove that the assessee's own monies were brought back in the form of share application money. As noted in the earlier paragraph, it is not the burden of the AO to prove that connection. There has been no examination by the Tribunal of the assessment proceedings in any detail in order to demonstrate that the assessee has discharged its onus to prove not only the identity of the share applicants, but also their creditworthiness and the genuineness of the transactions. No attempt was made by the Tribunal to scratch the surface and probe the documentary evidence in some depth, in the light of the conduct of the assessee and other surrounding circumstances in order to see whether the assessee has discharged its onus under Section 68. With respect, it appears to us that there has only been a mechanical reference to the case-law on the subject without any serious appraisal of the facts and circumstances of the case. 13. We, therefore, answer the substantial question of law framed by us in the negative, in favour of the revenue and against the assessee. The appeal of the revenue is allowed with n....

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....ovely Exports (P.) Ltd. 's case (supra). The material and the records in this case show that notice issued to the 5 of the share applicants were returned unserved. The particulars of returns made available by the assessee and taken into consideration in paragraph 3.4 by the AO in this case would show that the said parties/applicants had disclosed very meager income. The AO also noticed that before issuing cheques to the assessee, huge amounts were transferred in the accounts of said share applicants. This discussion itself would reveal that even though the share applicants could not be accessed through notices, the assessee was in a position to obtain documents from them. While there can be no doubt that in Lovely Exports (P.) Ltd. (supra), the Court indicated the rule of "shifting onus" i.e. the responsibility of the Revenue to prove that Section 68 could be invoked once the basic burden stood discharged by furnishing relevant and material particulars, at the same time, that judgment cannot be said to limit the inferences that can be logically and legitimately drawn by the Revenue in the natural course of assessment proceedings. The information that assessee furnishes would ha....

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.... Delhi High Court held that even if a transaction of loan is made through cheque, it cannot be presumed to be genuine in the absence of any agreement, security and interest payment. Mere submission of PAN Card of creditor does not establish the authenticity of a huge loan transaction particularly when the ITR does not inspire such confidence. Mere submission of ID proof and the fact that the loan transactions were through the banking channel, does not establish the genuineness of transactions. Loan entries are generally masked to pump in black money into banking channels and such practices continue to plague Indian economy." 6. Heard the arguments of both the parties and perused the material available on record. 7. We find that - with regard to the loan received from Awasthi Medi Equipments Pvt. Ltd., it has been confirmed by the parties by the virtue of bank statements, ITR and audited account. The company had share capital of Rs.5.91 crores and Rs.13.55 crores of short term borrowings. The Revenue from operations including the interest received was of Rs.3,87,188/-. For the year ending 31.03.2017, the lending company has shown business income of Rs.95.86 lakhs and a net pro....