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2019 (8) TMI 1851 - AT - Income TaxAddition u/s 68 - acceptance of share application money - HELD THAT:- Major source of funds of the investor company is reserves and surplus which itself are on account of share premium. The examination of profit & loss account of the investor company reveals that turnover of the assessee was only Rs.8,81,675/- and net profit was only Rs.95,000/-. As observe from the balance sheet of the investor company that most of the funds are locked up in, investment and loans and advances. The funds locked up in investment are Rs.89 lakhs whereas funds locked up in loans and advances are to the extent of Rs.2,56,45,000/-. Turnover of the assessee company is quite low as compared to the funds of the company which clearly demonstrates that the investor company is indulging into sham transactions. The investor company has invested in the share capital of the assessee company at a premium of Rs.90 per share. The share application money for a share of Rs.10 has been received by the assessee @ Rs.100 per share. The examination of the audited accounts of the investee company demonstrates that assessee had not carried out any significant activities. The examination of balance sheet of investee company reveals that the funds of the company are in the form of reserves and surplus and share application money and application of funds is in loans and advances. The financials of the investee company does not warrant that it deserves share premium of Rs.90 per share, therefore, all these facts prove that the transactions of share application money is not a genuine transaction. As decided in NRA IRON & STEEL PVT. LTD. [2019 (3) TMI 323 - SUPREME COURT] assessee is under legal obligation to prove the receipt of share capital/premium to the satisfaction of the Assessing Officer, failure of which, would justify addition of the said amount to the income of the assessee. In the present case, though the assessee has received an amount through banking channel but the analysis of the financial statements of investor company do not warrant any justification for having invested in the investee company at a huge premium of Rs.90 per share, specifically keeping in view the fact that investee company is also not engaged in significant activities. Therefore, in view of the facts and circumstances, the appeal of the assessee is dismissed.
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