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2023 (3) TMI 781 - AT - Income TaxAddition u/s 68 - accommodation entry - issue of shares for consideration other than 'cash' - assessee has not discharged his primary onus to prove that the sum credited in the books of accounts were related to F.Y. 2007-08 - HELD THAT - As decided by CIT-A correctly onus to prove the three factum i.e. identity, creditworthiness and genuineness is on the assessee as the facts are within the assessee's knowledge. Mere production of copies of agreement with a number of persons without giving their PAN, source of income, IT details, bank statement is totally insufficient to prove the identity, creditworthiness and genuineness of transactions. Further, facts like non-maintenance of bank accounts, reliance only on self serving documents, Inability to produce the primary share allottees and present directors share holders, filing of forms and returns of earlier many years with ROC in FY 2015-16 gives conviction to uphold the findings of Ao. Adjustment by way of book entry can only be in the case where there is already some liability/asset/entry in books of account's which is to be adjusted. However, in the instant case that was not the case. There was no entry subsisting in the books of account's which was adjusted.This was a fresh issue of equity shares for consideration other than cash, and was not issued against any of liability in the books of accounts. We find that CIT(A) by well reasoned and detailed order and after considering the submissions of the assessee and for the reasons which have been reproduced hereinabove dismissed the appeal of the assessee. Before us assessee has not placed any material on record to point out any fallacy in the findings of AO and CIT(A). In such a situation we find no reason to interfere with the order of CIT(A) and thus the grounds of assessee are dismissed.
Issues Involved:
1. Validity of the assessment order under Section 143(3) of the Income Tax Act. 2. Addition of Rs. 85,10,50,000/- under Section 68 of the Income Tax Act. 3. Reference to Section 197(c) of the Finance Act, 2016. 4. Establishment of the identity and creditworthiness of shareholders and genuineness of the transaction. 5. Addition of Rs. 1,70,21,000/- under Section 69C of the Income Tax Act. Summary: Issue 1: Validity of the assessment order under Section 143(3) of the Income Tax Act The assessee filed its return of income for A.Y. 2014-15 declaring loss at Rs. NIL. The case was selected for scrutiny, and the assessment was framed u/s. 143(3) determining the total income at Rs. 86,80,71,000/-. The assessee's appeal against this order was dismissed by the CIT(A). Issue 2: Addition of Rs. 85,10,50,000/- under Section 68 of the Income Tax ActThe AO noted that the assessee showed share capital of Rs. 19,91,000/- and share premium of Rs. 84,90,59,000/- but did not provide details of shareholders. The AO concluded that the assessee failed to prove the identity, creditworthiness, and genuineness of the transactions, thus making an addition of Rs. 85,10,50,000/- u/s. 68. The CIT(A) upheld this addition, noting the absence of necessary documents and evidence to substantiate the claim that the sum was credited in F.Y. 2007-08. Issue 3: Reference to Section 197(c) of the Finance Act, 2016The assessee contended that the reference to Section 197(c) by the authorities was misplaced and not applicable to the case. However, the CIT(A) dismissed this contention, emphasizing the lack of evidence for the financial year 2007-08 and the self-serving nature of the documents provided. Issue 4: Establishment of the identity and creditworthiness of shareholders and genuineness of the transactionThe AO and CIT(A) found that the assessee failed to establish the identity and creditworthiness of the shareholders and the genuineness of the transactions. The CIT(A) noted that the primary shareholders did not exist at the given addresses and the directors were not produced before the AO. The documents provided were deemed self-serving and not genuine. Issue 5: Addition of Rs. 1,70,21,000/- under Section 69C of the Income Tax ActThe AO estimated that the assessee paid a 2% commission on the amount of share capital and premium, amounting to Rs. 1,70,21,000/-, and made an addition u/s. 69C. The CIT(A) upheld this addition, citing the lack of genuine transactions and supporting documents. In conclusion, the Tribunal found no reason to interfere with the order of the CIT(A) and dismissed the appeal of the assessee.
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