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TMI Blog2023 (2) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... anies the income is very meagre and in comparison, of such income in the present as well as in the past period do not carry a weight and is beyond human probability to venture for a huge investment in the assessee company which itself has poor financials. All the transactions involving the issuing of share capital on the equity shares of face value of Rs. 10/- and share premium of Rs. 9,990/- as well as the huge investments by alleged shareholders neither prove the genuineness of the transaction nor prove the creditworthiness of such shareholders. Therefore, we fail to find any infirmity in the finding of ld. CIT(A) and the same is confirmed. Accordingly, the addition made by ld. AO u/s 68 of the Act stands confirmed. Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... e to a conclusion that the alleged share capital is received from shell and paper companies who do not have any regular business activity to support the action of making huge investment in assessee company and thus, confirmed the action of ld. AO. 5. Aggrieved, the assessee is now in appeal before this Tribunal. Ld. Counsel for the assessee referring to the detailed submissions before the lower authorities and also referring to paper book in 4 volumes and also referring to plethora of judgments placed in the index of paper book stated that the assessee has filed sufficient details to prove the identity and creditworthiness of the share applicants and genuineness of the transactions. Ld. Counsel for the assessee also stated that most of the companies who have invested in the assessee company are regularly assessed to tax and in some cases also passed through scrutiny proceedings. 6. On the other hand, ld. D/R filed paper book and also placed reliance on the decision of coordinate Bench Mumbai in the case of DCIT vs. M/s. Leena Power Tech Engineers Pvt. Ltd. in ITA No. 1313/Mum/2020 order dated 21.09.2021. 7. We have heard rival contentions, perused the records placed before us an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of all sources of investment/transactions with the above party for the A.Y. 2012-13 6. Identification of family members who are directors in the assessee company and their relationship. 7. A write-up on justification of large share premium." 10. Further, we notice that ld. AO asked ld. Counsel for the assessee to produce the directors of the assessee company. The reason behind calling the directors of the assessee company was mainly to identify the genuineness of the transaction regarding issuing of share capital with huge share premium as well as the process through which the assessee company approached various shareholders who in turn were satisfied to invest in the assessee company. However, in spite of various opportunities, the directors of the assessee company failed to appear and thus, the assessee company failed to establish the three ingredients namely identity, creditworthiness and genuineness of the said sources of fund introduced in the nature of share capital. Ld. AO, after considering the ratio laid down by Hon'ble Apex Court in various judgments including that of CIT vs. Durga Prasad More reported in 82 ITR 540, Sumati Dayal vs. CIT reported in 214 ITR 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial results reveal that the appellant has not been doing any business worth notice. It has not earned anything from its 'business operations' and has also not spent any notable amount towards conducting its business. A company with no earnings attracting huge investments in shares, that too, at unreasonably high premium, beats the normal business prudence. This brings the entire transaction of issue of share capital and premium under a big question mark. (iii) A similar trend is witnessed in the case of the investors who have purchased the shares of the appellant company at a premium. Each of the companies indicated in the table above has shown the same character. The Revenue from Operations are NIL in all except two cases (Intellect Stock Broking Ltd. and Keynote Commercial Pvt. Ltd) which have shown it at Rs. 78,15,701 for AY 2011-12 and Rs. 74,53,847 for AY 2012-13 in the case of Intellect Stock Broking Ltd. and Rs. 5,51,000 (AY 2012-13) for Keynote Commercial Pvt. Ltd. All that the investor companies have earned from is interest. The returns are either of loss or of insignificant incomes below taxable limits. (iv) They have all issued shares at a very high premium wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following manner: "7.16 If the facts of the appellant's case are viewed in the light of the above referred judgments, it will be clear that on similar facts, the courts have ruled that the onus of establishing the identity, creditworthiness and genuineness of the share transactions was not discharged by those appellants. In the same vain, in the instant case too, the returns of income filed by the appellant's shareholders show that they did not have any real business activity and had never earned taxable income, yet they were dealing in crores in the name of investing and receiving funds towards share capital at unreasonably high premium. The bank accounts too show that they were being used only to rotate money and never had any substantial balance left either before or after transaction. Thus, once an amount through cheque or RTGS was received from one entity, it would immediately be diverted to another entity and the resultant cash balance was left at a paltry sum of few thousands. These facts, as ruled by the courts in the above referred decisions, establish that the transactions were not genuine. The thin cash balance left in the bank accounts pre and post the 'rotation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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