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TMI Blog2021 (2) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... ors and creditworthiness of the investors, who should have the financial capacity to make the investment in question to the satisfaction of the Assessing Officer so as to discharge the primary onus - Since the assessee did not discharge the primary onus cast upon them, the question of the Assessing Officer to investigate the creditworthiness of the creditors/subscribers would not arise in the case on hand. We have no hesitation to conclude that the Tribunal erred in confirming the order passed by the CIT(A) by observing that merely because the share applicants are from Andhra Pradesh that cannot be a reason to disallow the claim of the assessee. The factual position being, the Assessing Officer did not do so, but disallowed the same on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s constitute sufficient compliance on the part of the assessee? and 3.Whether the Appellate Tribunal is correct in giving relief to the assessee even after the assessee defaulted in filing return of income in time and thereby took self advantage of his own action, by restricting the scope of enquiry through delay of return of income and non compliance? 3.The assessee is engaged in the business of development of software. For the assessment year under consideration AY 2006-07, the assessee claimed expenses of ₹ 7,40,55,450/- under various heads. The assessee was called upon to produce books of accounts, bank statements etc. The assessee disclosed share capital advance to the tune of ₹ 6,17,81,000/- and they were directe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rring to the earlier decision of the Tribunal and the decision of this Court in CIT vs. Electro Polychem Ltd., [(2007) 294 ITR 661 (Madras)], partly allowed the appeal filed by the assessee. Aggrieved by the same, the Revenue preferred appeal before the Tribunal. 5.The Tribunal rejected the appeal filed by the Revenue by observing that there is no allegation that the share application money emanated from the corpus of the assessee and that the assessee has filed names and addresses of the share applicants and merely because the share applicants are from Andhra Pradesh that cannot be a reason to disallow the claim of the assessee. Aggrieved by the same, the Revenue has filed this appeal. 6.We have elaborately heard Mr.T.R.Senthil K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered by the assessee is not in the opinion of the Assessing Officer, satisfactory, the same so credited, may be charged to income tax, as the income of the assessee of that previous year. Therefore, to establish, the assessee was required to produce the creditworthiness of various persons, who are said to have made the share capital advance. Therefore, what is required to be established is the identity of the person, who has made the share capital advance, his creditworthiness and genuineness of the transaction. The onus is on the assessee to establish these factors and mere furnishing of the list of persons, who have claimed to have advanced towards share capital, will not constitute sufficient compliance of the onus placed on the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e where sums of money are credited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been established and the documents of the alleged share applicants carried by the assessee before the Assessing Officer did not reveal the investments that the assessee claimed such alleged applicants had made in the assessee, there was no reason to interfere with the order of the Assessing Officer. The Special Leave Petition filed by the assessee therein was dismissed by the Hon'ble Supreme Court in the decision reported in (2018) 100 taxmann.com 102. 14.In the decisions referred to by Ms.G.Baskar in the case of CIT vs. Gopi Textiles Ltd., [(2007) 294 ITR 663 (Madras)] and the decision of the Hon'ble Supreme Court in CIT vs. Lovely Exports (P.) Ltd., [(2008) 216 CTR 195 (SC)], the stand taken by the assessee was acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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