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TMI Blog2019 (4) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... ,15,00,000/- received by the appellant on account of share application money from three different investor companies. 4. That the CIT(A) has failed to appreciate the fact that the assessee has discharged its burden of proof qua the identity, creditworthiness and genuineness of the transactions and the AO has not been able to prove anything against the assessee and the addition is merely on assumptions. 5. That in view of the facts and circumstances of the case and in law , the various observations made by the AO and C1T(A) are factually incorrect , illegal , bad in law and contrary to facts on record and based on mere guesswork and surmises and conjectures . 6. The additions made and the observations made are unjust, unlawful and based on mere surmises and conjunctures. The additions made cannot be justified by any material on record and additions are also excessive. 7. The explanation given in the evidence produced, material placed that has been made available on record has not been properly considered and judicially interpreted and the same do not justify the additions/ allowances made. 8. That the assessee reserves the right to add , amend, alter the grounds of appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere shown to me. From the document, I find that the appellant has not given copies of its bank account or given cheque details to show that the share capital was given out of its corpus and that enough funds were available in the account to give towards share capital. The creditworthiness of the share Applicants is not proved nor the genuineness of the transaction. I am quoting several case laws below which are all applicable on the facts of the case and which support my decision. 6.7 I shall now quote Sec. 68: "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sum so credited maybe charged to income tax as the income of the assessee of that previous year." 6.8. Thus from the plain reading of the section it is seen that if there is any amount which is found credited in the books of the appellant and the appellant does not offer any explanation about the nature and source of the amount so credited or the explanation offered by the appellant is not satisfactory in the eyes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheques or bank accounts have been furnished. I am of the view that the appellant failed to prove that the amount received was a genuine transaction. The amount Rs. 1,15,00,000/- is therefore considered as unexplained cash credit u/s 68, Rs. 2,000/- is deleted as the share capital as shown from the three companies is Rs. 1,15,00,000/-. The ground of appeal is partly ruled against the appellant." 2.4 Before us, the company secretary of the assessee company appeared and sought adjournment orally on the ground that director of the company dealing with the tax matter was out of India. 2.5 On perusal of the record, we found that similar prayer i.e. director of the company handling tax matter was out of India, was made on 28/11/2018 and 10/01/2019 and the case was adjourned to 16/01/2019 for final adjournment. On the said date, a paper book containing pages 1 to 180 was filed by the learned counsel of the assessee and case was further adjourned to 18/03/2019. But on the date of the hearing i.e. 18/03/2019 no counsel was present for arguing the case. The adjournment sought orally by the company secretary of the assessee company was rejected, and he was directed to argue the case, but he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital. Prem Castings (P.) Ltd. Vs CIT 2018-TIQL-274-SC-IT where Hon'ble Supreme Court held as follows: "We do not find any merit in this petition. The Special Leave Petition is accordingly dismissed." 4. CIT Vs Navodava Castle Pvt Ltd [2014] 367 ITR 306 (Del) where Hon'ble Delhi High Court accepted that since the assessee was unable to produce the directors and the principal officers of the six shareholder companies and also that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer had observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions. "20. Now, when we go to the order of the Tribunal in the present case, we notice that the Tribunal has merely reproduced the order of the Commissioner of Income-tax (Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its co-ordinate Bench in the case of MAF Academy P. Ltd., a decision which has been overturned by the Delhi High Court, vide its judgment in CIT v. MAF Academy P. Ltd. [2014] 206 DLT 277 ; [2014] 36/ ITR 258 (Delhi)). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay share application money, amount so received was liable to be taxed under section 68. It was held as follows: "12. A perusal of the order of the Tribunal shows that it has gone on the basis of the documents submitted by the assessee before the AO and has held that in the light of those documents, it can be said that the assessee has established the identity of the parties. It has further been observed that the report of the investigation wing cannot conclusively prove that the assessee's own monies were brought back in the form of share application money. As noted in the earlier paragraph, it is not the burden of the AO to prove that connection. There has been no examination by the Tribunal of the assessment proceedings in any detail in order to demonstrate that the assessee has discharged its onus to prove not only the identity of the share applicants, but also their creditworthiness and the genuineness of the transactions. No attempt was made by the Tribunal to scratch the surface and probe the documentary evidence in some depth, in the light of the conduct of the assessee and other surrounding circumstances in order to see whether the assessee has discharged its onu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in drawing adverse inference and adding amount in question to assessee's taxable income under section 68. It was held as follows: "9. As noticed previously, the CIT (A) was of the opinion that the assessee had discharged the basic onus which was cast upon it after considering the ruling in Lovely Exports (P.) Ltd.'s case (supra). The material and the records in this case show that notice issued to the 5 of the share applicants were returned unserved. The particulars of returns made available by the assessee and taken into consideration in paragraph 3.4 by the AO in this case would show that the said parties/applicants had disclosed very meager income. The AO also noticed that before issuing cheques to the assessee, huge amounts were transferred in the accounts of said share applicants. This discussion itself would reveal that even though the share applicants could not be accessed through notices, the assessee was in a position to obtain documents from them. While there can be no doubt that in Lovely Exports (P.) Ltd. (supra), the Court indicated the rule of "shifting onus" i.e. the responsibility of the Revenue to prove that Section 68 could be invoked once the basic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share applications were not based on genuine transactions. The CIT (A) upheld that order, after calling for a remand report. In these circumstances, the conclusion of the Tribunal, that the assessee had discharged its onus, appears to be based on a superficial understanding of the law, and an uninformed one about the overall facts and circumstances of the case. 13. In view of the above reasons, the questions of law in these appeals are answered in favour of the revenue. The orders of the Assessing Officer are restored. The appeals are to succeed and are therefore allowed. 11.CIT Vs N R Portfolio Pvt Ltd T20141 42 taxmann.com 339 (Delhi)/[2014] 222 Taxman 157 (Delhi)(MAG)/[2014] 264 CTR 258 (Delhi) where Hon'ble Delhi High Court held that if AO doubts the documents produced by assessee, the onus shifts on assessee to further substantiate the facts or produce the share applicant in proceeding. It was held as follows: "30. What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that unexplained share application money was rightly treated as assessee's income. 15. Rick Lunsford Trade & Investment Ltd Vs CIT r2016-TIQL- 207-SC-IT1 (Supreme Court) where Hon'ble Supreme Court dismissed SLP upholding that it is open to the Revenue Department to make addition on account of alleged share capital u/s 68, where the assessee company has failed to show genuineness of its shareholders." 2.6 We have heard the submission of the learned DR and perused the relevant material on record including the paper book filed by the assessee. The facts of the case in brief have already been discussed above. The fact that principal officers of the share applicant company, were not produced by the assessee is undisputed. In case of the 2 share applicant companies, the summon issued also returned unserved. The one company, in which case though the summon was served, but no one attended before the Assessing Officer in compliance of the summon. The share applicant companies have filed certain documents, including balance sheet and profit and loss account, bank statements etc. in form of paper trail. The companies have shown small amount of income in their hand, which is not su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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