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2022 (7) TMI 77 - AT - Income TaxAddition u/s 68 - Unexplained credit - scope of amended provisions of section 68 - onus to prove the source of source for the period prior to such amendment - genuineness of transactions and creditworthiness of the payer as well as even the source of the payer for making investment in the share capital of the appellant proved or not? - HELD THAT:- When assessing officer has examined the source of the source and asked the assessee to explain, then onus shifts on the assessee to explain the same. Thus, at the cost of repetition we state that credit-worthiness of the company is not established and the amount introduced as share capital is that of received from M/s Texworld Fashions Pvt. Ltd. and M/s Sita Fabric Mills Pvt. Ltd and these two companies had no liability to repay the said unsecured loan. As far as the genuineness of the transaction is concerned when M/s Lily enclave Pvt. Ltd has introduced Rs.55 lakhs as share capital in the books of assessee-company from the amount it was not due to receive, the transaction cannot be termed as genuine. When assessing officer asked the assessee to explain these inter-connected transactions, it was the duty of the assessee to explain the same. In this regard, a useful reference may be made to the decision of the Hon`ble Apex Court in the case of Biju Patnaik [1986 (5) TMI 2 - SUPREME COURT] wherein it was held that in appropriate cases even the source of source has to be proved by the assessee under section 68 of the Act. Although, the issue before us pertains to assessment year 2012-13 where amended provisions of section 68 do not apply, however, considering the facts of the case, the assessee has to explain the source of the source, as the assessing officer has pointed out the trail of money, and in that circumstances owns shifts on the assessee to provide suitable explanation to Assessing Officer. It is the appropriate case to prove source of the source. At the cost of repetition, we state that when Assessing Officer observed that M/s Tax World Fashions Pvt. Limited and M/s Sita Fabric Pvt. Limited had no liability to repay loan, so it was the assessee`s money which came back to the assessee by way of share capital. In that situation, the assessee ought to have proved with evidence that it was not assessee`s money, however, assessee has failed to do so. Therefore, considering the complex nature of transactions, we are of the view that one more opportunity should be given to the assessee to explain the transaction before the assessing officer - remand the issue raised by the assessee in the grounds of appeal before CIT(A), for fresh consideration by the assessing officer with a liberty to the assessee to prove his case by producing sufficient evidence/material - Appeal of the assessee is allowed for statistical purposes.
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