TaxTMI 
TaxTMI 
2023 (7) TMI 1401
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....addition amounting to Rs. 2,68,50,000/- on account of bogus share capital u/s 68 of the Act. 2. The assessee firm failed to prove the genuineness of the funds utilized to introduce capital in to the firm during the year under consideration as the funds introduced as capital have been routed through various persons whose creditworthiness was not established when their ITR and bank statements were taken into account. Further, the loans received by partner's from various persons are on account of money received by these purported lenders either in cash or through banking channels just before granting loan to the partners. It is again emphasized that the firm is the ultimate beneficiary in this regard and hence the bogus share capital ....
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....uildmart Pvt. Ltd. has been routed through partners through partners to create share capital of assessee firm. Thereafter, under the veil of purchase of weigh bridge (dharma kanta) the same amount of share capital created in the assessee firm is transferred back to M/S SHL Pvt. Ltd. The AO has asked the appellant to explain the nature of payment and transactions with M/s Seven Heaven Landcon Pvt. Ltd. The AO has recorded the statement of Sh. Jitender Kharbanda u/s 131 and it is explained by him on oath all amount given to M/s Ambika Enterprises by him reflected loan repayment from M/s Seven Heaven Landcon Pvt. Ltd. The AO has issued the summon to Sh. Sabharwal Director of M/s Seven Heaven Landcon Pvt. Ltd. to corroborate the claim of the pa....
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....n through banking channel from the partners Sh. Jitender Kharbanda and Mohanlal Kharbanda. The identity of the partners and regarding sources of income has been placed on record. Both the partne assessed to tax on their independent income and have admitted that account of money brought in by them. In the case of the non-corporate assessee, AO could not examine the source of source of funds. In the case of the appellant source of introduction of funds are by partners only. There is nothing to suggest the aforesaid amount brought in by the partners were actually income of the firm. In case the AD doubted the genuineness of the sources he should have considered the in the hands of the partners not in the hands of the firm. It is held by Hon....
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.... of CIT Vs M/s Radiant Embroidries (ITA No. 3428/AND/2008) Hon'ble Ahmedabad TTAT hold that when the west has explained the amounts as capital contributions by the partners, the AO is not justified in holding that the assessee has not explained the source. In case the Assessing Officer doubted the genuineness of the source, he should have considered the same in the hands of the partners only und not in the case of the firm." 5.8 In the case of the appellant, the AO admitted that the flow of the funds in the hands of the partners but he hold that firm was not able to discharge its statutory onus of proving genuineness and creditworthiness of the share capital. As per the provisions of section 68 source of source has to be proved....
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....mmissioner of Income-tax v. Pankaj Dyestuff Industries, rendered on 6.7.2005 in Income Tax Reference No. 241 of 1993. b) PCIT-4 vs. VAISHNODEVI REFOILS AND SOLVEX in Tax Appeal No. 846 of 2017 order dated 28.11.2017 iii) Madaras High Court :- in the case of CIT vs. Taj Borewell [2007] 291 ITR 232 (Mad) iv) Telangana & Andhra Pradesh High Court:- in the case of CIT vs. M. Venkateswara Rao and others [2015]370 ITR 212 (T& AP) v) Punjab & Haryana High Court:- in CIT vs. Metal and Metals of India (2007) 208 CTR 457 (P&H) vi) Rajasthan High Court: the Rajasthan High Court in CIT v. Kewal Krishna and Partners [2009] 18 DTR 121 (Raj) has also taken similar view. vii) Madhya Pradesh High court:-....