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TMI Blog2025 (2) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... that the shares had been issued without any monetary consideration. The respondent appears to have debited the goodwill account of the company and made a corresponding credit to the share capital account for the purposes of allotment of shares to Mr. Kaushik. It was in the aforesaid light that it had taken the position that it was merely a book entry and thus, would not have fallen within the ambit of Section 68. the view as expressed by the CIT(A) and which came to be affirmed by the Tribunal does not merit any interference bearing in mind the undisputed fact that the transaction did not represent an actual receipt of any cash in the hands of the assessee company. In absence of any such consideration having entered the books, the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in suggesting that the additions, if any, shall be made in the hands of the deceased, i.e. Sh. Surinder Kumar Kaushik or his legal Heirs instead of the Assessee company?" 2. The principal issue which arises is with respect to the validity of the additions which were made by the Assessing Officer (AO) in terms of Section 68 of the Income Tax Act, 1961 (ACT). That provision for ready reference is extracted herein below:- "68. Cash credits - 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 Assessing Officer, satisfactory, the sum so credited may be charged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... context of the following facts which have also been noticed by the Tribunal in the order impugned before us. The assessee company had filed its Return of Income on 31 October 2015 declaring 'Nil‟ income. In the course of the assessment proceedings, the AO appears to have picked up an issue with respect to allotment of shares to one Mr. Surinder Kumar Kaushik in lieu of goodwill and without any monetary consideration. On being posed with the query raised by the AO in that respect, the assessee took the position that in light of the services rendered by Mr. Kaushik, the company had decided to allocate shares having a face value of INR 20 crores against goodwill in recognition of his efforts to the business. The AO however, took the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence of books recording of a sum which the Assessing Officer considers as doubtful. The Assessing Officer then starts enquiry, specifically to satisfy himself of the source of such credit. If during the course and of enquiry, AO is satisfied that the entries are not genuine, then he will have every right to add the said sum represented by such credit entry as income from other sources. The satisfaction of the assessing officer is the basis of invocation of his powers under section 68. However, such satisfaction must not be illusory or imaginative but must have been derived from relevant facts and factors, and is on the basis of proper enquiry of all material before him but also to which he has command. 5.8 If at all the provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovide the basis of such goodwill and, therefore, the genuineness of such transaction remained unproved. Further, the assessee could not provide any supportive evidence of work/services rendered for which the goodwill was created. According to the ld. DR, the basis of such valuation at Rs.20 crores and not at a lower amount or higher amount has not been substantiated. It is the submission of the Id. counsel for the assessee that the provisions of section 68 are not applicable to the facts of the present case since the assessee has not received any actual amount of cash. It is also his submission that the various documents filed before the Ministry of Corporate Affairs such as Forms No.2, 3 and 5 filed with ROC relating to issue of shares fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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