TMI Blog2018 (10) TMI 1651X X X X Extracts X X X X X X X X Extracts X X X X ..... O failed to examine the reply filed by the assessee whcih explains the identity, capacity of the investor and genuineness of the transaction. The share application money was received by the assessee by account payee cheques through regular banking channels. it is well-settled that in order to discharge the onus, the assessee must prove (i) the identity of the creditor,(ii) the capacity of the creditor to advance money; and (iii) the genuineness of the transaction. After the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts to the department but we find that the AO has failed in the instant case to find fault with the submissions made by the assessee. The AO could have made investigations to find ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case and in law, the Learned CIT(A) erred in holding that only own funds have been utilized by Bhawana Computers Pvt. Ltd. for making share application of ₹ 2,44,50,000/-, despite the fact that the share applicant has failed to explain the nature and source of deposits which preceded the payments of share application money. 4. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in negating the action of AO in view of the fact that Bhawana Computers Pvt. Ltd, had no accumulated profit as on 31.03.2010. 5. On the facts and in the circumstances of the case and in law, the Learned CIT(A) failed to take notice of decision of Hon'ble Delhi High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO came to a finding that BCPL had no business credentials to command security premium as huge as ₹ 37,85,81,940/-. To ascertain the facts, the AO issued notice u/s 133(6) to BCPL and in response to it, he received a copy of its bank account indicating payment of share application money to the assessee. The AO on perusal of the bank statement found that the payment of share application money were preceded by deposits of money from unknown sources. BCPL had not explained the source and nature of such deposits. Though BCPL claimed to have been engaged in the business of share trading, the AO found that almost all the payments and receipts in the above bank account are in round figures. In response to a query raised by the AO to exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) observed that in case of BCPL, the assessee had discharged its onus relating to the identity, capacity of the subscriber and genuineness of the transaction. Further, the share application money of ₹ 2,44,50,000/- was received by account payee cheques. The Ld. CIT(A) found that (i) the audited financial statement of BCPL for the relevant period and the bank statements show that it had creditworthiness, (ii) BCPL is also regularly filing its annual accounts with ROC and the same is available for public inspection. In view of the above facts, the Ld. CIT(A) relying on the decision in CIT v. Sophia Finance Ltd. (1993) 113 CTR (Del) (FB) 472, CIT v. Dolphin Canpack Ltd. (2006) 204 CTR (Del) 50, CIT v. Lovely Exports (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1956 in his order dated 07.03.2014 and rightly held that the utilization of the share premium by the investor company to invest in shares of the assessee-company has nothing to do with the income of the assessee-company. Further relying on the order of the Ld. CIT(A), the Ld. counsel submits that in the instant case the assessee has discharged its burden regarding identity, creditworthiness of the shareholder, and the genuineness of the transaction. 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for decisions are given below. We find that the assessee has made a disclosure in its Notes to Accounts and Form No. 3CD, the details of payments made to parties covered u/s 40A(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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