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TMI Blog2024 (11) TMI 1093X X X X Extracts X X X X X X X X Extracts X X X X ..... been confirmed as genuine in the assessments of the respective investors, there would be little justification for the AO/CIT(A) to classify these same investments as bogus in the hands of the company receiving the share capital. Appeal of the assessee is allowed. Revision u/s 263 - assessee had received an amount from certain depositors, which became shareholders at a subsequent stage - HELD THAT:- Since in the preceding paragraphs, we have held that the assessee has been able to substantiate the genuineness of the investors and have directed that no addition is liable to be sustained in the hands of the assessee company u/s 68 of the Act, accordingly, the present appeal of the assessee is also allowed is against the order passed under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASS) due to specific reasons outlined in the assessment order. Following this, a notice under Section 143(2) of the Income Tax Act was issued and served on September 23, 2019 requesting the assessee to furnish detailed information regarding the increase in share capital and details on unsecured loans repaid during the year. During the assessment process, the Assessing Officer noted that the assessee company had a substantial increase in share capital amounting to Rs. 10,00,20,000/- and further the assessee company repaid unsecured loans totaling to Rs. 6,22,80,570/- during the financial year. The assessee company was asked to provide clarity regarding the genuineness, creditworthiness, and source of funds for these transactions. In response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholders to provide satisfactory evidence led to the inference that the share capital raised was unexplained cash credit under Section 68 of the Income Tax Act, which was accordingly added to the total income of the assessee. Consequently, the assessed income was determined as a figure of Rs. 3,77,39,430/-, and penalty proceedings were initiated under Section 271AAC of the Income Tax Act. 4. In appeal, Ld. CIT(Appeals) observed that during the assessment process, the AO had identified a significant increase in share capital amounting to Rs. 10,00,20,000/-, alongside repayments of unsecured loans totaling to Rs. 6,22,80,570/-. The assessee was asked to provide evidence demonstrating the genuineness, creditworthiness, and identity of the len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Subsequently, a Board Resolution must be passed for conversion, followed by filing E-form PAS3 within 30 days. This structured process mandates timely filings with the Registrar of Companies to ensure transparency and legal compliance. To substantiate claims of loans, the company is required to maintain comprehensive documentation, including written agreements, invoices, bank statements, signed receipts, and detailed accounting entries. These documents serve as critical evidence of credit transactions, helping to uphold financial transparency and legal standards. Furthermore, Ld. CIT(Appeals) referred to judgment by the Hon'ble Supreme Court, in which it has been held that the assessee has a legal responsibility to prove the legitimac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted addition. The counsel for the assessee argued that necessary evidence had been submitted to the AO during the assessment process. It was submitted that the four parties had undergone scrutiny assessments aimed at verifying their sources of investment in the share capital. The counsel for the assessee contended that the AO had, in fact, accepted the genuineness of these sources during those assessments. To substantiate this claim, the assessee submitted a paper book containing the assessment orders of the four investors, along with all relevant documents presented during their respective assessment proceedings. Before us, the Ld. D.R. admitted orally that the assessment orders have been passed correctly in the hands of the persons who h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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