2012 (10) TMI 475 - ITAT INDORE

Addition made u/s 68 on account of share application money received from non-existent companies viz O Ltd and M Ltd - Revenue contended that ultimate beneficiaries introduced cash in accounts such as M/s S and then transferred to entities like O ltd and M Ltd in the form of cheque and from there it reached to the ultimate beneficiaries in the form of share application money or unsecured loans - whole process of layering was done only to give this money laundering activity a colour of genuineness - in the absence of identity, credit worthiness and genuineness of such transactions, the share application was treated as unexplained income u/s 68

Held that:- It is found that O Ltd and M Ltd are non-existent companies, therefore, their identity is even in dispute. The transaction made with the non-existent entity cannot be said to be genuine rather a circuitous method has been devised by the assessee itself to enroute its own money through these camouflage routes. Inspite of sufficient opportunities and summons issued u/s 131, the identity and credit worthiness was not established. It is not the case that no opportunity was provided to the claimed share applicant. Right from the assessment stage, first appellate stage and even before the Tribunal, no effort was made by the assessee to prove the required ingredients of section 68, therefore, order of CIT(A) in upholding addition is affirmed – Decided in favor of Revenue