TMI Blog2020 (4) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar, Sr. D.R. ORDER PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of the CIT(A)-1, Indore dated 20.3.2018 pertaining to the assessment year 2012-13. The assessee has raised following grounds of appeal: 1. That the Ld. CIT(A) erred in upholding the addition made by the A.O. of ₹ 15,00,000/- u/s 68 as unexplained cash credit and interest thereon of ₹ 63,123/-. That on the facts and in the circumstances of the case and in law, the said addition being wrong, uncalled for and unjustified, it is prayed that the addition u/s 68 of ₹ 15,00,000/- and interest thereon of ₹ 63,123/- may very kindly be deleted and the order of the Ld. CIT(A) may very kindly be quashed. 2. That the Ld. CIT(A) erred in upholding the addition of ₹ 15,00,000/- without taking into consideration the submissions and the evidences filed before him. That on the facts and in the circumstances of the case and in law, the upholding of said addition of ₹ 15,00,000/- and the interest thereon of ₹ 63,123/- is bad in law. 3. That the Ld. CIT(A) erred in not considering the fact that the A.O. had collected and used certain mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The Ld. CIT(A) has decided this issue by observing as under: 4.1.2 On examination of the fact, it was found that, this company was having merger/nil income and not doing any business activity but only engaged in giving accomodation entries. The appellant had shown total receipt of ₹ 15,00,00/- in the garb of unsecured loan from this entity. Since, the transaction with this entity was Not found to be genuine, therefore, the AO made addition of ₹ 15,00,000/- under section 68 of the IT Act. 4.1.3 I have considered the facts and circumstances of the case, submission of the appellant and perused the assessment order. From the perusal of the details/document filed by the appellant, it is clear that the lender was not having any business activity. It was having loss from which it is clear that it was paper/shell company of meager means and engaged in giving accommodation entries to the beneficiaries in the garb of the unsecured loan. 4.1.4 Onus was on the appellant to prove genuineness of the transactions shown by them by them but they failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the creditors along with the genuineness of the transaction. 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. The fact remains that the appellant is Private Limited company, the Private limited companies are mostly family controlled for which the onus as required u/s 68 of the Act is very heavy to prove identity and capacity of the lenders and genuineness of the transaction. In view of the above discussion, I am of the considered view that merely submission of the name and address of the lender, income tax returns, Balance Sheet/statement of affairs of the lender and bank statement 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. The alleged lender was not found to be in existence and thus, the onus shifts back to the appellant to produce the lender before the AO and if the appellant falters, the additions can be made u/s 68 of the Act, Section 68 of the Act has been amended by Finance Act, 2012 w.e.f. 01-04-2013 whereby the onus is cast upon the appellant to just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dits are not acceptable. Creditworthiness is not proved by showing issue and receipt of a cheque or by furnishing a copy of statement of bank account when circumstances requires that there should be some more evidences of positive nature to ensure that the subscriber had made genuine investment. In the following cases ITAT, Indore bench and other Judicial Authority held as under: 1. Assessee has to establish identity of subscribers to share capital and prove their creditworthiness and genuineness of transaction; furnishing of income-tax file numbers may not be sufficiency to discharged the burden - CIT v. Nivedan Vanijiya Niyojan Ltd. [2003] 130 Taxman 153 (Cal.). 2. Share Application Money - Addition is called for - Assessee obtained loan and also received share application money - AO doubted the identity, genuineness and creditworthiness of these credits - AO made addition for same u/s. 68 - CIT(A) held that the ingredients of section 68 are not satisfied. However, in one of the cases, CIT (A) held that addition, shall be made substantively in the hands of assessee and protectively in the hands of alleged investors in terms of ITAT Judgement in Asst. CIT v. Narmada Extrus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee cannot simply furnish some details and remain quiet when summons issued to shareholders remain un-served and uncomplies. As a general proposition, it would be improper to universally hold that the assessee cannot plead that they had received money, but could do nothing more it was for the AO to enforce shareholders' attendance in spite of the fact that the shareholders were missing and not available. Creditworthiness is not proved by showing issue and receipt of a cheque or by furnishing a copy of statement of bank account, when circumstances required that there should be some more evidence of positive nature to show that the subscribers had made genuine investment- SLP against this decision of Delhi High Court has been dismissed. navodaya castle (p) Ltd. v. CIT (2015) 25 ITJ 552(SC) : (2015) 12 STD 463 : (2015)230 Taxman 268. 6 . Share Application Money - There is evidence and material to show that subscriber was paper company and not a genuine investor -share application money. it was held by the Delhi High Court that certificate of incorporation, PAN etc. are relevant for purchase of identification, but have their limitation when where is evidence and material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table. Vaibhav Cotton Pvt. Ltd. v. ITO (2012) 20 ITJ 422 (Trib. Indore). Following the decision of above Judicial Authorities it is held that the lender company is paper company without any means. The appellant company was obliged to prove:- (a) The identity of the alleged share holders. (b) The credit worthiness of the share holders. (c) The genuineness of the transactions. But it is clear from the facts as discussed above that the appellant could not prove the same, therefore, in the light of above facts and case laws as discussed above, I am of the considered view that the AO was justified to make addition u/s 68 of the IT Act. Therefore, the addition made by the AO amounting to ₹ 15,00,000/- is Confirmed. Therefore, the appeal on these grounds is Dismissed. 4.2 Ground No. 2: Through this ground the appeal, appellant has challenged the addition of ₹ 63,123/- on account of interest paid on unsecured loans. The loan received from the party has been found bogus and same has been adjudicated in the ground No. 1. Therefore, interest payable by appellant is not an allowable expenditure. Therefore, the addition made by the AO amounting to ₹ 63,123 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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