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2023 (8) TMI 512 - AT - Income TaxAddition u/s 68 - receipt of share capital unexplained - HELD THAT - AO considered all the replies, submissions and documents produced by the assessee, but the said explanations documents and reply by the assessee was not sufficient to prove the burden of the assessee caused in Section 68 of the Act, therefore, made the addition. CIT(A) has also made proper analyzation of the documents produced by the assessee and found that the assessee has failed to establish the identity and creditworthiness of shares applications and genuineness of the transaction. In our opinion, the assessee has to prove the identity and creditworthiness of the creditor and genuineness of the transaction in compliance with Section 68 - assessee company by self proclaiming itself as shell company cannot shirk and avoid its legal obligation to prove the identity and creditworthiness of the so called share applicants and genuineness of the transaction as mentioned by various Courts in respect of application of provisions of Section 68. No error or infirmity in the order of the A.O. and also the order of the CIT(A) and find no merit in the grounds of appeal of the assessee.
Issues involved:
The issues involved in this case are the addition of Rs. 15,22,00,000 under section 68 of the Income Tax Act on account of receipt of share capital, failure of the assessee to establish the identity and creditworthiness of the share applicants, and the genuineness of the transaction. Issue 1: Addition of Share Capital under Section 68: The appellant challenged the addition of Rs. 15,22,00,000 under section 68 of the Income Tax Act on account of receipt of share capital. The appellant contended that the order of the Commissioner of Income Tax (Appeals) upholding the addition was erroneous. The Tribunal noted that the appellant failed to appear before the Tribunal despite repeated notices, leading to the decision being made based on the material available on record. The assessment order was passed after a search and seizure operation, where documents related to the appellant company were found. The appellant's request to treat the original return of income as filed in compliance with the notice under section 153C was considered. Ultimately, the Tribunal found that the appellant did not adequately prove the identity and creditworthiness of the share applicants and the genuineness of the transaction, as required under section 68 of the Act. The Tribunal upheld the addition of share capital, dismissing the grounds of appeal by the appellant. Issue 2: Failure to Establish Identity and Creditworthiness: The Departmental Representative argued that the assessee failed to establish the identity and creditworthiness of the share applicants and the genuineness of the transaction during the assessment proceedings. It was contended that the provisions of Section 68 of the Act were rightly invoked by the Lower Authorities to make the addition of Rs. 15,22,00,000 on account of share application money. The Tribunal observed that despite the assessee providing explanations, documents, and submissions during the assessment proceedings, they were insufficient to meet the burden of proof required under Section 68 of the Act. The CIT(A) also analyzed the documents and found the failure of the assessee to establish the necessary elements. The Tribunal emphasized the legal obligation of the assessee to prove the identity and creditworthiness of the share applicants and the genuineness of the transaction. Referring to precedents, the Tribunal concluded that the appellant's self-proclamation as a shell company did not exempt them from meeting the legal requirements. Consequently, the Tribunal found no error in the orders of the Assessing Officer and the CIT(A), dismissing the grounds of appeal by the assessee. Separate Judgment by Judges: There is no separate judgment delivered by the judges in this case.
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