TaxTMI 
TaxTMI 
2025 (3) TMI 1519
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....on of law: "Whether the findings rendered by the Tribunal in respect of deletion or addition under Section 68 of the Income Tax Act, 1961 are not rendered perverse in light of the evidence which had been relied upon by the AO?" 4. Insofar as the issue of addition under Section 68 of the Act is concerned, the Tribunal has observed as follows: " 21. Thus, the reason assigned by the Assessing Officer does not have much credence to dislodge the evidences filed by these parties to corroborate the assessee‟s explanation and the documents submitted by the assessee to prove the nature and source of credit. Regarding various observations and allegation of the Assessing Officer, the ld. Counsel has given a very detail rebuttal based on documents on record as incorporated above in the foregoing paragraphs. From bare perusal of the explanation duly supported by the documents, we find that whatever so called inquiry which was conducted by him has not lead to any iota of adverse material so as to hold that the transaction is not genuine. The Assessing Officer required the Directors/the representatives of the three companies which were produced before him, the same were....
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....element of cash or anything has been brought on record that any of the trails, assessee‟s undisclosed cash or income has been routed. In fact, none of these bank account requisitioning by the Assessing Officer u/s. 133(6), there was any cash deposits. 24. In so far as the source of the fund and the creditworthiness of the parties, it is seen from the chart reproduced hereinabove that these parties had sufficient own funds to invest and the share of assessee-company duly reflected in their balance sheet as on 31.03.2011. 25. Thus, on these facts and circumstances of the case and material on record, it cannot be held that the onus cast upon the assessee to prove the identity, creditworthiness of the investee parties or genuineness of the transaction has not been explained properly nor there is any adverse finding or material gathered from any inquiry that it is a bogus transaction or kind of accommodation entry. Thus, we do not find any reason to tinker or deviate from the finding of the ld. CIT (A) while deleting the addition. Accordingly, the order of the ld. CIT (A) is confirmed and the appeal filed by the Revenue is dismissed. " 5. Proceeding then to th....
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....50 crores) The assessee company has shown receipt of Rs. 35.50 crores from M/s Topgrain Mercantile Pvt Ltd. As mentioned above, on the basis of bank statement submitted by the assessee, enquiries were conducted in banks. On verification, it was found that actually, the amount has been directly received by the assessee company from the account of M/s Bridge and Building Construction Co. Pvt Ltd. (BBCCPL). On verification of bank statement of BBCCPL, it was noticed that just before it made any payment to the assessee company, it has received funds from M/s PACL, a Delhi based company. The pictorial diagram of the funds movements look like as under: The said company has also received funds from M/s Passionate Agency, Radhika Investment and Virat Solution. GODSEND BIOTECH LTD(Rs. 42.35 crores): The assessee company has shown receipt of Rs. 42.35 crores from M/s Godsend Biotech Limited. On verification of bank statement of the said company, it was noticed that the said company just before making any payment to the assessee company has received funds from Oshin Investments And Finance (P) Ltd., Novelty Traders Ltd., Sidh Housing Development Company Ltd....
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....ese companies are being run. 8.6. As has been mentioned earlier, to prove and substantiate the share capital assessee was asked, on 20.02.2014 to produce the controlling persons of the companies which had applied for allotment of shares in* the closely held assessee company to prove the genuineness of transactions. On 21/03/2014, the AR of the assessee attended and produced Shri Govind Agrawal, ex-director & AR of M/s Topgrain Mercantile P Ltd, TVH Trading Co P Ltd, TVH Trading Co P Ltd and also produced Shri Pravin Nayak, Advocate and AR of Godsend Biotech Ltd. for personal examination. Though the assessee produced the persons who were not directors, for the sake of natural justice, their statement was recorded. When requested for letter of authority, they replied that they were not holding the same at that time. They were asked to give details of share holding pattern, sources of investment made by above mentioned companies, in response to which they submitted that they may be given more time preferably 3 weeks, as the details are maintained at Kolkata and Mumbai and they need time to collect the same. They were then intimated that as the assessment in this case was gett....
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....Sheets Ltd. 17 Virat Solutions 18 Panchwati Commotrade (P) Ltd Further the money movement has been examined. The assessee received monies from Layer-2 companies who are proved to be paper entities who in turn received monies from other paper entities grouped as Layer-3 The date and the amount of monies received is enquired through banking channels. xxx xxx xxx The money/fund trail proved how the amounts were transferred from one entity to other immediately on the same or nearer dates." 8. It was on the basis of the aforesaid findings of fact, that the AO ultimately came to the following conclusion: "11.2. Thus, the assessee has failed to discharge its liability to prove that the amount received is genuine and failed to prove the onus of capital receipt. Not only that the department has fairly prove with their party evidences, through bank statements, by establishing the trails that the amount is undisclosed in the hands of the assessee." 9. As is manifest from the above, the Tribunal has clearly failed to either engage or deal with the aforesaid conclusions on facts that were drawn by the AO. As we view paragraphs 21 to....
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.... use of the words "any sum found credited in the books" in Section 68 of the Act indicates that the section is widely worded, and includes investments made by the introduction of share capital or share premium. 9.3. As per settled law, the initial onus is on the assessee to establish by cogent evidence the genuineness of the transaction, and creditworthiness of the investors under Section 68 of the Act. The assessee is expected to establish to the satisfaction of the assessing officer [CIT v. Precision Finance (P) Ltd., 1993 SCC OnLine Cal 384 : (1994) 208 ITR 465] : * Proof of identity of the creditors; * Capacity of creditors to advance money; and * Genuineness of transaction This Court in the landmark case of Kale Khan Mohd. Hanif v. CIT [Kale Khan Mohd. Hanif v. CIT, (1963) 50 ITR 1] and, Roshan Di Hatti v. CIT [Roshan Di Hatti v. CIT, (1977) 2 SCC 378 : 1977 SCC (Tax) 292 : (1977) 107 ITR 938] laid down that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and creditworth....
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.... nature. While considering the explanation of the assessee, the department cannot, however, act unreasonably." 12.2. In CIT v. P. Mohanakala [CIT v. P. Mohanakala, (2007) 6 SCC 21 : (2007) 291 ITR 278] this Court held that: (SCC p. 28, paras 16, 19 & 25 : ITR pp. 278-79) A bare reading of Section 68 of the Income tax Act, 1961, suggests that (i) there has to be credit of amounts in the books maintained by the assessee; (ii) such credit has to be a sum of money during the previous year; and (iii) either (a) the assessee offers no explanation about the nature and source of such credits found in the books or (b) the explanation offered by the assessee, in the opinion of the assessing officer, is not satisfactory. It is only then that the sum so credited may be charged to income tax as the income of the assessee of that previous year. The expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. ... The burden is on the assessee to take the plea that, even if the explanation is not acceptable, the material and attending ....
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....ies 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, creditworthiness of the recipient, object and 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. 12.7. Other cases where the issue of share application money received by an assessee was examined in the context of Section 68 are CIT v. Divine Leasing & Finance Ltd. [CIT v. Divine Leasing & Finance Ltd., 2006 SCC OnLine Del 1624 : (2008) 299 ITR 268 : (2007) 158 Taxman 440] and CIT v. Value Capital Services (P) Ltd. [CIT v. Value Capital Services (P) Ltd., 2008 SCC OnLine Del 1474 : (2008) 307 ITR 334] 13. The principles which emerge where sums of money are credited as share capital/premium are: 13.1. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and creditworthiness of the investors who should have the financial capacity to make the investment in question, to th....