TaxTMI 
TaxTMI 
2025 (8) TMI 901
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....estment was made by five companies on behalf of assessee company. These five companies were subsequently explained as creditors under the head "Liabilities" in the balance sheet. The AO, after several enquiries, held that the assessee failed to prove the identity, credit worthiness and genuineness of the transactions of the creditors leading to an addition of Rs. 1,78,29,700/- u/s 68 of the Act. The ld. CIT(A), on appeal, after considering the facts and submissions, upheld additions made by the AO. 4. Aggrieved further, the assessee is in appeal before us. 5. Before us, the ld. counsel for the assessee submitted that he relied on the submissions made by him before the ld. CIT(A) which is reflected at pages 22 to 28 of the ld. CIT(A) order. 6. The ld AR submitted that the assessee filed confirmation letter, address, Permanent Account Number, Bank statement, balance sheet and Income tax return explaining identity, creditworthiness and genuineness of transaction. The ld AR submitted that bank statement filed by it, bear round stamp of companies bearing name and further, non-mention of date on confirmation letter would not affect much. The AR reiterated that earning of low or ....
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.... were directly made by the above five companies on assessee's behalf, does not prove the identity, creditworthiness or genuineness of transaction by any cogent evidence. The explanation that due to clerical mistake in writing names of M/s Sushil Enterprises and of M/s Bishan Sons in the balance sheet against lenders as against the name of the above five companies, investors who have made investment in the company on behalf of the assessee, are not satisfactory at all. The ld DR stated that the enquiries made by the Assessing Officer with the five investor companies or with M/s Amsons Apparels P. Ltd did not yield any results with respect to genuineness of the credit entries. Thus, the ld DR reiterated that the assessee did not discharge the onus of establishing the three limbs in section 68 of identity, creditworthiness and genuineness of transaction. The ld. DR further submitted that the typical facts of the instant case is distinguishable from the facts of the cases relied upon by the ld. counsel for the assessee. 10. The ld. DR also pointed out that the Assessing Officer has clearly shown at page 9 of the assessment order that the promoters of the assessee company as well as ....
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....tion and creditworthiness of the parties. The assessee emphasis that since all the above details/documents have been filed therefore the identity and capacities of parties who have invested on behalf of assessee and genuineness of the transactions are established, is no longer good law. We are of the considered view that the Hon'ble Supreme Court in NRA Iron & Steel (P.) Ltd [2019] 103 taxmann.com 48 (SC) settled the law, in the context of addition u/s 68, that merely filing the primary documents such as ITRs, PAN, RoC etc is not sufficient to discharge the onus to establish creditworthiness of investor companies. 13. The assessee's second assertion that merely because the summons under section 131 and notice under section 133(6) have not been complied with, cannot be a ground for doubting the identity and veracity of transactions, is also misplaced. We find that such an argument could have been considered where the assessee is unable to procure any information from the lenders. In the instant case, as we have seen that one of the director Vinay Kumar is same in both the assessee company M/s Mallaya Real Estate Private Limited as well as the investee company M/s Amsons Apparels ....
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....ided the issue in favour of assessee only because the Tribunal had given a finding that cash credit in the 1st year of operation was a capital receipt and as the Tribunal had given of finding of fact, the Tribunal's finding was upheld. 16. In the instant case, the sum has been credited in the books of the assessee in the instant year and in such situation where there is no satisfactory explanation for such credits in the books, the law dictates, as laid down by hon'ble Supreme Court in the case of V. Govindarajuly Mudaliar V CIT (1958) 34 ITR 807(SC) that "There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature". 17. In the instant case, the creditworthiness of the lenders are not established. We find from the perusal of the ITRs of the investor companies, that they have also shown meagre income which does not justify the large investment made by them in M/s Amsons Apparel on behalf of the assessee. Their Bank statements also shows that after every credi....
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....e M/s Amsons Apparel Pvt Ltd or the lender companies appeared before the AO in response to notice u/s 133(6)/131 though the act of documents being filed by the lender/investor companies establishes the fact that they were in touch with the assessee. 3) The genuineness of the transaction and creditworthiness was found to be completely doubtful. The enquiries revealed that the lender companies had filed returns for negligible taxable income, which would show that the lender companies did not have the financial capacity to invest funds ranging between Rs. 3,00,000/- to Rs. 80,00,000/- in the Assessment Year 2013-14. For example: i) M/s AMS Powertronics P Ltd had income of Rs 81,322/- but made an investment of Rs 40,00,000/-. ii) M/s Nikki Printing P Ltd had income of Rs 21,347/- but made an investment of Rs 49,98,000/-. It was further found that the company was struck off from the site of MCA. iii) No ITR of M/s Aavia Buidtech P Ltd was filed but it is claimed that it made an investment of Rs 80,00,000/-. 4) Furthermore, none of the so-called lender companies established the source of funds which were used for making investment on behalf of....
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....333 ITR 119 (Del) held that : "whenever the issue is subscribed without quoting it on stock exchange by limited or private limited company, the presumption is very strong against the assessee that subscription is available only to the closely connected persons of the assessee. Once the inference is against the assessee that the issue is subscribed by its closely connected persons, the onus is upon the assessee to prove the identify (sic. identification) of the subscribers and their creditworthiness." The Hon'ble Delhi High Court had further held that "In cases where the explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz., the receipt of money." The Hon'ble Delhi High Court further held that the" Genuineness of the transaction is to be demonstrated by showing that the assessee had, in fact, received money from the said shareholder and it came from the coffers from that very shareholder." It also laid emphasis on the factum of creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share ca....