The assessee company received share capital and share ...

NBFC receives share investment; proves share applicants' identity & creditworthiness; Revenue fails to dispute.

Case Laws     Income Tax

November 7, 2024

The assessee company received share capital and share application money from 13 share applicants. The Assessing Officer (AO) made an addition u/s 68, alleging that the identity, creditworthiness of the share applicants, and genuineness of the transactions were not proved. The assessee filed voluminous documents to establish the identity, creditworthiness, and genuineness. The Tribunal held that the documents speak for themselves, proving the identity, creditworthiness, and genuineness beyond doubt, as the share applicant companies had sufficient net worth to make the investments in the NBFC company for better returns. Once the assessee discharged the primary onus, the burden shifted to the Revenue. The AO's general observations of dissatisfaction without examining the correctness of the documents were unjustified. The audited balance sheets showed the share applicants had sufficient net worth. The provisions of Section 56(2)(viib) were not applicable for the year under consideration. The assessee successfully explained the nature and source of the share application money by proving the identity, creditworthiness, and genuineness. The assessee discharged the burden of proof, and the Revenue did not dispute the details except making general observations. Hence, no addition u/s 68 was called for.

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