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2020 (2) TMI 106 - AT - Income TaxReopening of assessment u/s 147 - addition u/s 68 - Failure to discharge onus - HELD THAT:- Here it is not a case that there is any lack of inquiry by the Assessing Officer or he is merely gone by the information received from the Investigation Wing, in fact, at all the stages Assessing Officer kept on asking the assessee to provide the requisite details and to produce the directors of the investee companies and the director of the assessee company, because it is assessee’s claim that it has received share capital/share premium from these companies. If a company is making such a huge investment, then assessee should have at least made endeavor to produce such parties before the AO when they were not responding to the notices and summons issued by the AO. Not only there was non-attendance from the side of the investee companies, but analysis of the financial credibility of these companies goes to show that they did not had any kind of creditworthiness to make such a huge investment in the assessee company. Mere furnishing of bank statement and documents does not fulfill the requirement of Section 68 because it is essential that business activities of the share subscribers and the financial health needs to be established. Assistance of Principal Officer of the subscribing companies is required and who was/should be present before the Assessing Officer to explain the said position. Otherwise also it is not a case that Assessing Officer has not made any inquiry or where he has issued notices u/s. 133(6) and all the subscribing company have duly responded and submitted and the documents relating to the transaction and confirming the same through evidences. In that case, onus shifts upon the Assessing Officer to prove that these are not correct. Here in this case it is just an opposite, as none of the notices and summons have been complied with, therefore, all the documents submitted by the assessee does not discharge the onus specifically in the light of the material information on record. On merits also, we are of the opinion that on the facts and circumstances of the case ingredients of Section 68 to establish the genuineness of the transaction were not met. Though assessee may have filed certain papers and documents, however, when there is a specific information that the subscribing / investee companies have been found to be providing accommodation entries, and later on none of these investee companies responded to the inquiry made by the Assessing Officer, then onus shifts upon the assessee to rebut such finding and this can only be done when either in response to notices u/s.133(6) parties have responded to the Assessing Officer by furnishing all the details or assessee has produced the parties before the Assessing Officer to be examined. Here in this case the Assessing Officer has given an adverse finding regarding the creditworthiness and there profit making capacity which needs to established. The nature of deposit received by these companies before issuance of cheque has neither been explained nor has been proved either of the companies or by the assessee. The source of the money from where investment has been made needs to be explained by the investee companies or by the assessee, especially when entire transaction has been found to doubtful. Though proviso to section 68 which has been inserted w.e.f. 1.04.2013, that is, from A.Y. 2013-14 provides that Investee Company in whose name such credit is recorded should also offer explanation about the nature and source of such credit. Here in this case though proviso may not strictly apply but facts and circumstances as discussed above does require that the investee company has to explain the source of its investment and creditworthiness. Thus, in the interest of justice we restore this issue to the file of Assessing Officer with direction to the assessee to explain the source and creditworthiness of the investee companies and if required by the Assessing Officer, assessee shall produced the principal officers or directors of these companies to explain the nature and source of investment made in the assessee company. Accordingly the issue on merits is restored back to the file of the Assessing Officer. - Decided against assessee.
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