TMI Blog2019 (11) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... is heading for liquidation. Rather recent decision of Hon ble Supreme Court in the case of PCIT v. NRA Iron and Steel Private Limited [ 2019 (3) TMI 323 - SUPREME COURT] support the stand of Revenue. An application filed by assessee to recall aforesaid judgment of Hon ble Supreme Court in the case of NRA Iron and Steel Private Limited(supra) has been dismissed by Hon ble Supreme Court in the case of PCIT v. NRA Iron and Steel Private Limited reported in [ 2019 (10) TMI 1178 - SUPREME COURT] . Thus, in our considered view , no case whatsoever has been made by assessee for stay of demand on all the grounds of Prima-facie case, balance of convenience, irreparable loss and financial difficulties before and hence this stay petition stand dismissed. - Stay Petition No.302/Chny/2019 (In ITA No.3080/Chny/2019) - - - Dated:- 8-11-2019 - Shri George Math An, Judicial Member And Shri Ramit Kochar, Accountant Member For the Appellant : Mr.B.Ramakrishnan, FCA For the Respondent : Mr. A.R.V.Sreenivasan, JCIT ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: The assessee has filed this Stay Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar amount out of which investment in shares of the assessee company were made. This led learned Assessing Officer to reopen concluded assessment u/s 147 of the 1961 Act by issuance of notice dated 09.06.2017 u/s 148 of the 1961 Act to the assessee for impugned ay 2011-12, as in the opinion of the AO income of the assessee chargeable to income-tax has escaped assessment. No assessment was originally framed by Revenue for impugned ay : 2011-12 u/s 143(2) of the 1961 Act . It is further observed by authorities below that the assessee has never paid any dividends as in the view of Revenue , when the assessee is not able to generate sufficient profits , then how investors at Kolkatta having meager incomes could have invested huge amount of ₹ 3.50 crores and that too at share premium of ₹ 900 per share as against face value of ₹ 100 per share. It is further observed by authorities below that assessee is a closely held private company and investments in such closely held companies can only be made by promoters, family members , relatives or known persons and it was not known that how these Kolkatta entry operators have made such a huge investments in share capital a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the 1961 Act. It is also stated in the said stay petition that these entities have duly replied to notices u/s 133(6) of the 1961 Act.The assessee has in its stay petition also relied upon provisions of Section 68 of the 1961 Act and its amendment by Finance Act, 2012 to submit that no additions are warranted in the hands of the assessee. The assessee has also relied upon in the stay petition on large number of cases to contend that no additions at the first place was warranted in the hands of the assessee and hence stay of outstanding demand of tax and interest be granted to the assessee.. The learned DR has objected to the grant of stay of outstanding demand of income-tax and interest accrued thereon to the assessee. We have gone through the stay petition as well orders of authorities below We have observed that Section 68 of the 1961 Act has three ingredients which the assessee has to satisfy for which the onus is on the assessee as the amount stood credited in books of accounts of the assessee. Firstly, identity of creditors; secondly , creditworthiness of creditors and thirdly, genuineness of the transactions. Unless these three ingredients are cumulatively satisfied , burde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction of the AO. Thus, section 68 of the Act cast obligation on the assessee where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of credit thereof or the explanation offered by the assessee is found not satisfactory in the opinion of the AO, the sum so credited may be treated as income and charged to income-tax as income of the assessee of that previous year. The burden/onus is cast on the assessee and the assessee is required to explain to the satisfaction of the AO cumulatively about the identity and capacity/creditworthiness of the creditors along with the genuineness of the transaction to the satisfaction of the AO. All the constituents are required to be cumulatively satisfied. If one or more of them is absent, then the AO can make the additions u/s. 68 of the Act as an income. There are companies which are widely held companies in which public are substantially interested which comes out with an initial public offers wherein shares are listed on stock exchanges and widely traded, wherein members of public make subscriptions in pursuance to the Prospectus issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh credit. The use of the word any sum found credited in the books ' in Section 68 indicates that it is widely worded and the AO can make enquiries as to the nature and source thereof. The AO can go to enquire/investigate into truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of accounts and in case the AO is not satisfied with the explanation of the assessee with respect to establishing identity and credit worthiness of the creditor and the genuineness of the transactions, the AO is empowered to make additions to the income of the assessee u/s. 68 of the Act as an unexplained credit in the hands of the assessee company raising the share capital because the AO is both an investigator and adjudicator. Merely submission of the name and address of the creditor, income tax returns, Balance Sheet/statement of affairs of the creditor and bank statement of the creditor is not sufficient as the AO is to be satisfied as to their identity and creditworthiness as well as to the genuineness of the transaction entered into. In this case Revenue has made enquiries with all the nine entities and have come to conclusion that all these ..... X X X X Extracts X X X X X X X X Extracts X X X X
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