Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (12) TMI 808 - AT - Income TaxAddition u/s 68 - Bogus share capital - addition made as identity of source was not established - onus to prove - CIT(A) confirming the addition made by the AO as Identity, creditworthiness and genuineness of transaction not proved - HELD THAT:- CIT(A) has correctly held that the assessee has not been able to establish the genuineness of the transaction and the identity and the creditworthiness of the share applicant company. We observe that the assessee was incorporated on 22.09.2012 and during the year, the total revenue of the company was Rs. 43,700/- as against this, the assessee company had received share capital of Rs. 40.34 crores for 40,340 shares issued at a premium of Rs. 9,990/- per share. Accordingly, we are of the view that the assessee has not been able to give any basis as to why the assessee company would command such a huge premium for issuance of share capital given the negligible operations carried out by the company. As creditworthiness of the share applicant company M/s. Attentive Share Trading Pvt. Ltd. has also not been established by the assessee. Further, so far as the genuineness of the transaction is concerned, no justifiable reason has been furnished as to how and on what basis the valuation of share premium of Rs. 9,990/- per share was arrived at. Therefore, looking into the instant facts we find no infirmity in the order of Ld. CIT(A) in holding that the genuineness of the transaction and identity and creditworthiness of the parties has not been established in the instant facts and accordingly, we uphold the order passed by Ld. CIT(A). We need to further mention that simply because a transaction has been carried out through banking channels or confirmation of the parties has been furnished would not make a non-genuine transaction into genuine one, and all the concerning facts of the case to be looked into in totality. Courts have taken a consistent position that the assessee is expected to establish proof of identity of creditors, capacity of creditors and genuineness of creditors in order to discharge onus cast on assessee. Mere production of party or confirmation from party will not suffice, unless the assessee is also able to substantiate their creditworthiness i.e. ability to advance the sum to the assessee. The Hon'ble Supreme Court in the case of Pr. CIT v NRA Iron & Steel (P.) [2019 (3) TMI 323 - SUPREME COURT] held that that where assessee received share capital/premium, however there was failure of assessee to establish creditworthiness of investor companies, Assessing Officer was justified in passing assessment order making additions under section 68 for share capital / premium received by assessee company. The High Court of Allahabad in the case of Sagittraious Builders & Colonisers [2011 (12) TMI 240 - ALLAHABAD HIGH COURT] held that not only the identity of parties, but their creditworthiness also needs to be established by the assessee. In the case of Sanjay Waman & Co.[2001 (11) TMI 273 - ITAT PUNE] held that it is part of the duty of the assessee to furnish evidence regarding the creditworthiness of the creditors. Appeal of the assessee is dismissed.
|