TaxTMI 
TaxTMI 
2025 (9) TMI 1199
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....and share premium raised from paper companies/ accommodation entries and therefore, the same is an unexplained capital introduction under section 68 of Income-tax Act, 1961?" 3. Brief facts of the case are that the assessee is a private limited company and engaged in the business of manufacturing Brass products. 4. The Assessing Officer passed an order dated 13.02.2015 under Section 153A read with section 143(3) of the Act for the year under consideration assessing total income at Rs. 13,73,05,004/-. 5. Being aggrieved, the respondent assessee preferred an appeal before the CIT(Appeals) who by order dated 14.05.2015 partly allowed the appeal and deleted the addition made under section 68 of the Act. 6. The appellant Revenue preferred an appeal before the Tribunal who by order dated 24.02.2023 dismissed the appeal confirming the order passed by CIT(Appeals) on the issue of addition under section 68 of the Act. 7. Being aggrieved, the Revenue preferred Tax Appeal No.508 of 2023 before this Court which was also dismissed by order dated 29.08.2023. 8. It appears that against the order dated 24.2.2023 passed by the Tribunal, the appellant Revenue had also preferred Mis....
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....c. 12.2 The next stage comes to verify the genuineness of the transaction. Genuineness of transaction refers to what has been asserted to be true and authentic. A genuine transaction must be proved to be genuine in all respects, not merely on a piece of paper. The documentary evidence should not be a mask to cover the actual transaction or designed in a way to present the transaction as true but the same is not. The genuineness of transaction can be proved by submitting confirmation of the parties along with the details of mode of transaction but merely showing transaction carried out through banking channel is not sufficient to prove the genuineness. As such, the same should also be proved by circumstantial surrounding evidence as held by the Hon'ble Supreme Court in the case of Shri Durga Prasad More reported in 82 ITR 540 and in the case of Smt. Sumati Dayal reported in 214 ITR 801. 12.3 The last stage comes to verify the creditworthiness of the parties. The term creditworthiness as per Black Law Dictionary refers as: "creditworthy, adj. (1924) (Of a borrower) financially sound enough that a lender will extend credit in the belief default is unlikely; ....
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.... into shares. In the case of proprietary concern, the assessment under section 153A of the Act was framed for the A.Y. 2010-11 where genuineness of loan credit from said parties was examined and accepted by the AO. Therefore, in our considered view once the credit of such loan credit in erstwhile proprietary concern was accepted, then the conversion of such loan credit into share capital and premium thereon on subsequent occasion cannot be doubted. 12.8 Be that as may be, we find that during the assessment proceedings details such as name of investors, their addresses, PAN, ITR, audited financial statements, bank statement, share application form & letter, share allotment letter and confirmation letter etc were furnished. The AO issued notices under section 133(6)/131(1) of the Act for verification. The AO recorded finding that in the second attempt the investors made reply in response to notices issued to them where in they have responded/answered to each, and every query raised by the AO and furnished the required documents. However, the AO without pointing any deficiency in the above primary document and explanation furnished by the parties in response to notice under s....
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....before the transfer of amount to the assessee there was sufficient balance on account of credit from other parties through the banking channel. Thus, the amount transferred to the assessee company was not out of any cash deposit in the bank of the investor parties. However, a doubt may arise in the mind of prudent person regarding the fact there were immediate credit in the bank of the investor company equivalent to the amount transferred to the assessee which needs inquiry to draw any inference, but no such inquiry carried by the revenue. It also to be kept in mind that under the provision of section 68 of the Act, as applicable for the year under dispute, the assessee is only expected to explain the source of credit in its books and not the source of credit in the books of the party. The learned DR pointed out that in the case of the M/s Blueprint Securities, the bank statement submitted did not contain name of account holder and account number. In this regard, we note that the assessee has provided total 4 pages of bank statement of the impugned party (Blueprint Securities Ltd) containing transaction for the month of June 2009, July 2010, august 2010 and October 2010 and assesse....
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....itor parties immediately before the transfer of fund in the guise of loan. Further, the loan parties before the revenue also did not explain such cash deposit in their bank and the loan extended by them to Shri Umehs Krishanani was found non-genuine. Likewise in the case of Parvinkumar M Sangvai, it was found that the parties from whom unsecured loan credited were paper companies engaged in the activity of accommodation entry. But in the present case there is no such finding of the investigation. The investigation wing deputed for spot enquiry only submitted the parties were not found at their address and such report based on statement of random people working building/locality where investor parties situated. Furthermore, in the present case, the genuineness of the transactions and creditworthiness of most of the parties were accepted by the Revenue in the earlier year discussed above. in the same 12.13 In view of the above and after considering the facts in entirety, in our humble understanding, the principles laid down by the Hon'ble Supreme Court and High Court in the case of NRA Iron & Steel Pvt. Ltd. (Supra), Shri Umehs Krishanani and Parvinkumar M Sangvai, are n....