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2024 (3) TMI 881 - AT - Income TaxAddition u/s 68 - unexplained cash credit - A.O concluded that as the assessee company had failed to substantiate the identity and creditworthiness of the share applicant/subscriber company - whether or not the dual set of conditions contemplated u/s. 68 of the Act had been satisfied by the assessee company? - Onus to prove - HELD THAT:- The assessee company in discharge of the primary onus that was cast upon it had placed on record with the A.O supporting documentary evidence substantiating the authenticity of its claim of having received share application money from the share applicant/subscriber company, viz. confirmation of the share applicant/subscriber company, bank statement, copies of the return of income, financial statements of the investor company, copy of share application forms, copy of PAN, copy of memorandum and articles of association, copy of board resolution and return of allotment in Form No.2. On a perusal of the confirmation of the share applicant/subscriber company, we find that the investor company had not merely confirmed the transaction of having invested Rs. 2.05 crore towards share application money with the assessee company but had categorically furnished the complete source from where the said investment was so made. There is no word of whisper by the A.O. as to why the aforesaid confirmation of the investor company was not to be accepted. We are unable to comprehend that now when the investor company had provided the complete details about the source of source of the investment made with the assessee company, then, on what basis the A.O without dislodging or disproving the correctness of the said explanation of the assessee company could have proceeded with and summarily drawn adverse inferences as regards the genuineness of the transaction under consideration. We are of the view that the assessee company had discharged the double facet onus that was cast upon it as regards proving the authenticity of its claim of having received genuine share application money from the aforementioned investor company, viz. M/s. Modakpriya Merchandise P. Ltd., viz. (i). by substantiating based on documentary evidence the "nature" and "source" of the amount so credited in its books of account, i.e. receipt of the share application money from the aforementioned investor company; and (ii). by coming forth with a duly substantiated explanation about the "nature" and "source" of the sum so credited in the name of the investor company, viz. M/s. Modakpriya Merchandise P. Ltd. as per the mandate of the "1st proviso" to Section 68 - We find that the A.O had not uttered a word about the aforesaid documentary evidence which was filed by the assessee company in discharge of the primary onus that was cast upon it as regards proving the authenticity of its claim of having received genuine share application money from the aforementioned share applicant/subscriber company. Thus where the assessee had produced sufficient documents in the discharge of its initial onus of proving the identity and creditworthiness of the share applicant/subscriber company, then, it is incumbent on the part of the A.O to undertake some inquiry and investigation before concluding on the issue of creditworthiness, failing which, no addition could be made u/s. 68 of the Act. Decided in favour of assessee.
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