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2020 (8) TMI 714 - AT - Income TaxAddition u/s 68 - Unexplained share capital receipt - CIT(A) held that since no business activities are carried out by the assessee company and the assessee company could not earn any income from many of its source of income or any business activities carried by it, the share application money brought by the above investor companies cannot be considered as assessee’s own money earned by it by any source and the provisions of section 68 of the Act cannot be invoked - HELD THAT:- The way of acquaintance of these share applicant entities with the affairs of the assessee company, the facts that motivated these entities to purchase the shares of the assessee company at a huge premium, particularly when the assessee did not commence the business and does not possess any assets of considerable net worth, the measures of security for such investment obtained by such entities, the modus operandi of the agreement between the assessee and such entities - all these things will have to be get clarified, not by papers, but by examination of the persons who run and manage these entities. Orders of the authorities below reveal that the assessee has not complied with the requirements of the learned Assessing Officer in the exercise of forming satisfaction as to the creditworthiness of the share applicants or the genuineness of the transaction. Mere paperwork by the assessee does not take the authorities anywhere, when the learned Assessing Officer suspected the real existence of the entities that applied and paid for share application and share premium and insisted that a higher degree of proof is required in that respect. In the circumstances of the case, in view of the decisions of the Hon’ble Apex Court in the case of PCIT vs. NRA Iron and Steel (P) Ltd [2020 (2) TMI 273 - SC ORDER] we are of the considered opinion that the action of the learned Assessing Officer was legal and the inference drawn by him that the assessee had routed their own money in the books of accounts through the conduit of investor companies is justified. On this premise, we agree with the Revenue and while setting aside the impugned order, restore the addition made by the learned Assessing Officer under section 68 - Decided against assessee.
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