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2015 (4) TMI 338 - DELHI HIGH COURT

2015 (4) TMI 338 - DELHI HIGH COURT - [2015] 377 ITR 641 (Del) - Unaccounted share capital received from six applicants - Held that:- It is not sufficient that the identity of the share applicant or the creditor should be established for the assessee to discharge the initial onus, which is upon the assessee. Under the requirement of Section 68, the assessee has to further satisfy the Revenue as to the genuineness of the transaction and the creditworthiness of the share applicant or the individua .....

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ns on the basis of certain observations of the CIT (Appeals) in this regard. The creditworthiness of the share applicants had to be seen in the context of the assertion made by them or the materials presented before the AO at the relevant time. The materials on record disclosed that some information from at least two individuals indicated that the money had not been given by them. In view of the fact that concurrently the lower authorities held against the assessee and given the intensive factua .....

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pital received from six applicants, was rejected. 2. The assessee is a private company incorporated on 11.03.2003. Its return for the Assessment Year (AY) was framed under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred as the Act ). Subsequently, the Revenue sought to re-open the assessment under Sections 147 and 148 of the Act. In the reassessment proceedings, a sum of ₹ 24 lakhs was added since the Assessing Officer (AO) was not convinced by the explanation furnished by .....

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ity, genuineness and creditworthiness of the persons who have allegedly made the investment. As the explanation offered by the assessee about the nature and source of the sums found credited in the books was not satisfactory there was, prima facie, evidence against the assessee, viz., the receipt of money. The burden was on the assessee to rebut the same, and, he failed to rebut it, it can therefore be held against the assessee that it was a receipt of an income nature. The appellant has failed .....

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t has been claimed that the appellant company came into existence only on 11.03.2003 i.e. 20 days prior to the end of the relevant financial year and therefore, there was no business activity and no unaccounted income could have been earned by the appellant. As discussed by the Assessing office in the remand report, the funds in a Pvt. Ltd. company are derived in from the relatives or near & dear ones of the Directors or key persons of such company and not from public at large. This is a pri .....

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s such type of transaction are purely arrangements between the two known entities. 3. The Tribunal rejected the appeal preferred against the order of the CIT (Appeals). Learned counsel for the assessee contends that given the CIT (Appeals) s order which expressly recognized that the sum of ₹ 24 lakhs in fact emanated from the directors of the share applicants, it could not be said that requirement of Section 68 of the Act is not discharged. He relied upon the decision of Supreme Court in C .....

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943, there is a cash credit entry of ₹ 50,000. On December 2, 1943, there is a cash credit entry of ₹ 15,000 and on March 15, 1944, there is a cash credit entry of ₹ 35,000. These cash credit entries total up to ₹ 2,50,000. The Income-tax Officer called upon the assessee to explain those cash credit entries. The explanation given by the assessee was found to be false by the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal. But, all the same, the T .....

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ned a profit of ₹ 1,00,000 within a few days, after the commencement of its business. Hence, it is reasonable to assume that those cash credit entries are capital receipts though for one reason or other the assessee had not come out with the true story as regards the person from whom it got those amounts. It is true that in the absence of satisfactory explanation from the assessee the Income-tax Officer may assume that cash credit entries in its books represent income from undisclosed sour .....

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