TaxTMI 
TaxTMI 
2022 (7) TMI 77
X X X X Extracts X X X X
X X X X Extracts X X X X
....s submitted that it be so held now and the addition made be deleted. 2.0 The learned CIT(A) erred in law and on facts in relying upon the Hon'ble ITAT, Ahmedabad decision in the case of Pavankumar M. Sanghvi v/s ITO reported at 81 Taxmann.com 308, wherein facts were entirely different and were distinguishable. Your appellant respectfully submits that it has complied with all the requirements as requires u/s. 68 of the Act like identity of the payer, genuineness of transactions and creditworthiness of the payer as well as even the source of the payer for making investment in the share capital of the appellant and hence the additions made u/s. 68 is legally unjustified. It is submitted that it be so held now and the addition of Rs.55,00,000/- made u/s. 68 be deleted. Your appellant prays for leave to add, alter and /or amend all or any of the grounds before the final hearing of appeal." 3.The facts of the case which can be stated quite shortly are as follows: The assessee before us, is a Private Limited Company and engaged in the business of manufacturing and trading of cloth. The original return of income for assessment year 2012-13 was filed by the assessee company on 28.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty to repay the said unsecured loan. As far as the genuineness of the transaction is concerned when M/s Lily enclave Pvt. Ltd has introduced Rs.55 lakhs as share capital in the books of assessee-company from the amount it was not due to receive, the transaction cannot be termed as genuine. Accordingly, Rs.55 lakhs of share capital introduced in the books of the assessee company was treated as cash credit u/s 68 and added to the income of the assessee. 5.Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the addition made by the Assessing Officer. Aggrieved, the assessee is in appeal before us. 6.The Learned Counsel for the assessee submitted that transactions were through banking channels and assessee submitted PAN Number, financial statements of share applicants, therefore assessee has proved the source of the money. The ld Counsel also submitted that assessee need not to prove source of the source, hence, ld Counsel prays that addition made by the Assessing Officer may be deleted. 7.On the other hand, the Ld. DR for the Revenue has submitted that M/s Lily Enclave Pvt. Ltd. is a shell company whose ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ission of the appellant. The assessing officer has made the addition of Rs.55,00,000/- u/s. 68 in respect of share capital received from M/s. Lily Enclave Pvt. Ltd. The assessing officer has held that M/s. Lily Enclave Pvt. Ltd. is a paper company and the credit worthiness is not established. The appellant has contended that it has proved identity, creditworthiness and genuineness of the transaction, therefore, no addition can be made u/s. 68 of the I. T. Act, 1961. Appellant has submitted that source of money of M/s. Lily Enclave Pvt. Ltd. was unsecured loan from M/s. Texworld Fashion Pvt. Ltd. and M/s. Sita Fabric Mills Pvt. Ltd. 2.4. It has been found that M/s. Lily Enclave Pvt. Ltd. is a shell company whose name has been struck off recently by the Ministry of Corporate Affair. The allegation of assessing officer that appellant company is a paper company is correct. The Honourable ITAT, Ahmedabad in the case of Pavankumar M. Sanghvi Vs. ITO, Wd. 3(1)(2), Baroda [2017] 81 Taxmann.com 308 hasobserved on such type of transaction as under:- "8. As I proceed to deal with genuineness aspect, it is important to bear in mind the fact that what is genuine and what is not genuine is a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the assessing officer to examine the status of the assessee company (when the original assessment was going on) in ROC records, hence we have to remit this issue back to the file of the assessing officer to examine the status of assessee- company. 11.On merits, we note that ld DR for the Revenue stated that credit-worthiness of the company is not established and the amount introduced as share capital is that of received from M/s Texworld Fashions Pvt. Ltd. and M/s Sita Fabric Mills Pvt. Ltd and these two companies had no liability to repay the said unsecured loan. As far as the genuineness of the transaction is concerned when M/s Lily enclave Pvt. Ltd has introduced Rs.55 lakhs as share capital in the books of assessee-company from the amount it was not due to receive, the transaction cannot be termed as genuine. 12.We note that Assessing Officer can examine the source of the source, and when assessing officer put query before the assessee, then it was the duty of the assessee to reply it. However, the assessee need not to prove source of the source from his side for assessment year 2012-13 under consideration, as held by the Hon`ble Bombay High Court in the case of Gagandeep....