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TMI Blog2017 (6) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(1). On the basis of information received from the Director of Income-tax (Inv.), the Assessing Officer issued notice u/s 148 on the premise that the assessee obtained accommodation entries totaling Rs. 25 lac in the form of bogus share capital/premium/loan from Shri Surender Kumar Jain group (entry operator) where search/survey action was taken u/s 132/133A. The assessee was called upon to show cause as to why Rs. 25 lac be not added to its income u/s 68 of the Act. The assessee submitted details of the five companies who had invested Rs. 5 lac each in its share with face value of Rs. 10/- at a premium of Rs. 90/-. Not convinced with the paper trail furnished by the assessee including the dates of incorporation of these companies, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proving the identity and capacity of the creditor but also the genuineness of the transaction. All the three ingredients, namely, identity, capacity and genuineness must be cumulatively satisfied so as to bring a case out of the ambit of section 68. The filing of documents evidencing the existence of creditor and receipt of money through banking channel, etc., no doubt, prove the identity of the creditor, but, furnishing of such details does not conclusively prove that all the ingredients of section 68 have been established. One of the most important features is to prove the genuineness of transaction. If the genuineness of a transaction is not proved, notwithstanding the fact that the assessee proved the identity and capacity of the cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In CIT vs. N R Portfolio Pvt. Ltd. (2013) 263 CTR 456 (Del), the assessee received share application money for which addition was made u/s 68. The addition was deleted on the ground of documentary evidence. Setting aside the Tribunal order, the Hon'ble High Court restored the addition. A detailed discussion has been made in this judgment laying down the duty of the assessee in establishing the genuineness of transaction. It has been specifically laid down that mere furnishing the name, address, PAN and entries in the Registrar of Companies, etc., do not lead to the discharge of onus u/s 68. The Hon'ble Delhi High court in CIT vs. Jansampark Advertising and Marketing Pvt. Ltd. (2015) 375 ITR 373 (Del) did not agree with the routing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to the identity of the company has been established there is only income of Rs. 3,28,250/- on account of profit on sale of investment. On the other hand, assets have been shown at Rs. 481,120,675/-. The nature of business activity of the company appears to be vague and accounts of the party gives the impression of it, being a shell company. ii) Mega Top Promoters Pvt. Ltd. On going through the Income Tax Return for A.Y. 2008-09, the total income has been shown at Rs. 18,015/-. In this case also, the only income shown in the profit and loss account is interest on loan and profit on sale of investment. The assets shown in the Balance Sheet as on 31.03.2008 amount to Rs. 164,107,423/-. In this case also the nature of business activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the above five companies are claiming to have invested a sum of Rs. 5 lac each in the assessee company, but, the facts about their total income vis-à-vis the value of assets, do not prove the genuineness of transaction. It is further relevant to note that the assessee is claiming to have issued its share with face value of Rs. 10/- at a premium of Rs. 90/-. It is beyond my comprehension as to why a person will purchase the shares of the assessee company at such a huge premium, more so, when there is no payment of any dividend, etc. No prudent investor will park his funds at such a high premium without the expected return commensurate with the investment. When all the facts and circumstances are seen in entirety, it becomes eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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