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TMI Blog2021 (6) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... ground. - ITA No. 93/Hyd./2020 - - - Dated:- 25-6-2021 - Shri S.S. Godara, Judicial Member And Shri L.P. Sahu, Accountant Member For the Appellant : Sri A. V. Raghuram, AR For the Respondent : Sri R. Mujumdar, DR ORDER PER S.S. GODARA, J.M. This assessee s appeal for A.Y. 2014-15 arises against the CIT(A)-2 Hyderabad s order dated 01.11.2019 passed in case no.10246/2016-17 involving proceedings u/s 143(3) of the Income Tax Act, 1961 [for short the Act ]. Heard both the parties. Case file perused. 2. The assessee s sole substantive grievance raised in the instant appeal challenges correctness of both lower authorities action treating its share capital of ₹ 2,79,99,850/- involving M/s Twinkle Commonsales Pvt. Ltd., as unexplained cash credits u/s 68 of the Act. The CIT(A) s detailed discussion affirming Assessing officer s action to this effect reads as under. During the course of scrutiny proceedings it was noticed that the appellant has received Share capital for ₹ 4,00,43,925/- during the year. The appellant was asked to furnish return of income and bank statement and also confirmation letter along with the sources of the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f appellate proceedings, the appellant furnished only details pertaining to M/s Twinkle Commosales Pvt Ltd which were already furnished during assessment proceedings. The appellant could not furnish any other evidences to prove the creditworthiness of the investor or the identity, genuineness and creditworthiness of the transaction. The AO had made efforts to investigate the creditworthiness of the investors and the identity, genuineness and creditworthiness of the transaction. The AO had asked the appellant to furnish return of income, profit loss account, balance sheet, bank statement and confirmation letters of parties M/s Narmada Vintrade P Ltd M/s Jyotsna Vaijya P Ltd and M/s Anubhav Vintrade P Ltd. The same information was also called for from the investor viz., M/s Twinkle Commonsales P Ltd vide notice u/s 133(6). However, there was no response from the appellant as well as the investor, viz., M/s Twinkle Commonsales P Ltd.. thereby rendering the confirmation procured by the appellant as non-admissible as there is no corroboration by the share applicant directly and considering that such a huge amount is not known and stands unsubstantiated It is a primary case of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited as Share Capital/Premium are: i. The qssessee 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 worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. CIT Vs Nipun Builders Developers (P.) Ltd (30 taxmann.com 292, 214 Taxman 429,350 ITR 407,256 CTR 34) where Hon'ble Delhi High Court held that where assessee failed to prove identity and capacity of subscriber companies to pay share application money, amount so received w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough official sources and no addition should have been made on the ground of not getting response from the investor. In the instant case. It cannot be held that the addition was made not just on the ground that identity was not established or there was no response from the Investor. Even considering the details filed by the appellant in respect of the investor company, it is seen that the Financials of the investor company did not reflect genuine business activity and the income of the investor company does not commensurate the investments made. Therefore, the genuine-ness of the transaction and creditworthiness at the investor company was no established. As staled earlier, the Hon'ble Apex court in a very recent judgement in the case of NRA Iron and Steel Pvt Ltd (SLP 29855 of 2018) held that the assessee company is under a legal obligation to prove the source of receipt of share capital and/or premium to the satisfaction of the assessing officer Mere filing of primary evidence of investors does not discharge the onus cast on the assessee company by virtue of section 68 of the Income-tax Act, 1961 ('the Act'). In view of the above discussion and the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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