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2022 (2) TMI 807 - ITAT SURATAddition of bogus share application money u/s 68 - explanation to source of the source - scope of amended provisions of section 68 - assessee receiving a credit has to testify its case through the 'triple marker test' of Identity, Creditworthiness and Genuineness of Transactions - HELD THAT:- In the instant case, the credit is in the form of receipt of share capital from share applicants. The nature of receipt towards share capital is seen from the entries passed in the respective balance sheets of the companies as share capital and investments. In respect of source of credit, the assessee has to prove the three necessary ingredients i.e. identity of share applicants, genuineness of transactions and creditworthiness of share applicants. For proving the identity of share applicants, the assessee furnished the name, address, PAN of share applicants together with the copies of balance sheets and Income Tax Returns. With regard to the creditworthiness of share applicants, we noted that these share applicants are having capital and reserves and the investment made in the assessee company is only a small part of their capital. These transactions are also duly reflected in the balance sheets of the share applicants, so creditworthiness is proved. Even if there was any doubt, if any, regarding the creditworthiness of the share applicants was still subsisting, then AO should have made enquiries from the AO of the share subscribers. We note that with effect from assessment year 2013-14 section 68 of the Act has been amended to provide that if a closely held company fails to explain the source of share capital, share premium or share application money received by it to the satisfaction of the A.O., the same shall be deemed to be the income of the company u/s 68 of the Act. The said amendment has been held to be prospective and not retrospective by Gagandeep Infrastructure Private Limited[2017 (3) TMI 1263 - BOMBAY HIGH COURT]. We note that in assessee`s case under consideration, the amended provisions of section 68 are not applicable, as the assessment year involved in the assessee`s case is “assessment year 2012-13, hence the assessee need not to explain the source of the source. We note that with effect from assessment year 2013-14 section 68 of the Act has been amended to provide that if a closely held company fails to explain the source of share capital, share premium or share application money received by it to the satisfaction of the A.O., the same shall be deemed to be the income of the company u/s 68 of the Act. The said amendment has been held to be prospective and not retrospective by Hon`ble Bombay High Court in Gagandeep Infrastructure Private Limited [2017 (3) TMI 1263 - BOMBAY HIGH COURT] - We note that in assessee`s case under consideration, the amended provisions of section 68 are not applicable, as the assessment year involved in the assessee`s case is “assessment year 2012-13, hence the assessee need not to explain the source of the source - Decided in favour of assessee.
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