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2023 (9) TMI 619 - HC - Income TaxAssessment u/s 68 - unexplained cash credit - assessee having received funds in the form of share capital and share premium, in turn invested in the share capital and share premium - CIT(A) concluded that the identity of the investors was established he was not persuaded to hold that the transaction was genuine and, accordingly, sustained the addition made by the AO - HELD THAT:- Tribunal held assessee proved the nature and source of the investment made in its share capital and towards share premium, was founded, if not fully, substantially, on the submission made on behalf of the respondent/assessee that information sought via notices issued u/s 133(6) had been furnished and that although in response to the summons issued under Section 131 the concerned persons had appeared before the AO, their statements were not recorded. As is evident from paragraph 6 of the impugned order, Tribunal went on to record that not only the respondent/assessee had furnished copies of the replies filed by the investor companies in response to the queries raised by the AO, but had also placed before him the relevant documentary evidence. These submissions seem to have been taken by the Tribunal on their face value. Nothing has been shown to us which would demonstrate, firstly, that the directors of the investor companies had, in fact, appeared before the AO. Secondly, that replies had been furnished by the investor companies in response to the queries raised by the AO. As indicated right at the beginning of our narration, out of Rs. 45 crores invested in the respondent/assessee, Rs. 25,52,50,000/- was reinvested by the respondent/assessee in three (3) out of the five companies, i.e., in Shuklamber Exports Ltd., Sukaram Marketing Ltd. and Sheetal Exports Ltd.,i.e., nearly the entire amount was repaid. Tribunal somehow did not deem it fit to inquire as to why more than 50% of the amount raised by the respondent/assessee was invested by it in the three companies referred to hereinabove. Tribunal, as a matter of fact, did not inquire into the financials of investor companies and, therefore, according to us, the test of creditworthiness was also not met in this case. Therefore, in our view, for the reasons given above, the transaction in issue failed to meet the test of creditworthiness and genuineness even if one were to accept that it fulfilled the test of identity. Thus, for the foregoing reasons, we are of the view that the finding returned by the Tribunal that the respondent/assessee had discharged its onus is perverse. Decided in favour of the appellant/revenue and against the respondent/assessee.
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