TMI Blog2019 (4) TMI 2090X X X X Extracts X X X X X X X X Extracts X X X X ..... se companies attended before the Assessing Officer and the document containing audited financial statements, balance sheet confirmation etc. have only been filed by post and that too when this fact of non-compliance by the share applicants was brought to the notice of the assessee. During physical verification by the Inspector of the office of the Assessing Officer, none of the share applicants was found at their given address. Relying on the decision of NRA Iron and Steel Private Limited [ 2019 (3) TMI 323 - SUPREME COURT] we set aside the finding of the Ld. CIT(A) on the issue in dispute and hold that the assessee failed to discharge its onus as required under section 68 and the Assessing Officer is justified in treating the amount received against share application money as unexplained cash credit under section 68 of the Act. The corresponding commission amount is also held as unexplained. Accordingly, the grounds of the appeal of the Revenue are allowed. - ITA No.303/Del/2014 - - - Dated:- 9-4-2019 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER Appellant by : Ms. Parmita M. Biswas, CIT(DR) Respondent by : Shri Suresh Kumar Gup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences filed by the assessee, deleted the addition. Aggrieved, the Revenue is in appeal before the Tribunal raising grounds as reproduced above. 3. Before us, the Ld. DR submitted that the assessee failed to produce the Directors of the share applicant companies before the Assessing Officer in assessment proceedings as well as in remand proceedings. She submitted that in view of no business activities carried out by the assessee company, the share premium of Rs.90 per share was not justified and no genuine investor would invest in such a company at such a high premium. She referred to the paper book filed by the assessee and submitted that in the bank statement of the share applicants, money has been deposited and same has been withdrawn within a small period leaving a nominal balance in their bank accounts, which indicates that no worthwhile activities were carried out by those share applicant companies except providing of accommodation entries. She submitted that the huge investment in the shares of the assessee company despite very small amount of income shown by the share applicant companies in their regular return of income, defy the financial rational. According to the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Multitech Semiconductor Pvt. Ltd. S No- 1, B-l 14, Nr. Balaji Dharamshala Shakarpur, Delhi 15,00,000 9. Oracle Cables Pvt. Ltd. 301, Himalaya Palace, 65 A, Vijay Block, Nr. Child Junction L Nagar, Delhi-92 15,00,000 TOTAL 2,65,00,000 6. During the assessment proceeding for verification of the investment by these companies, the Assessing Officer issued summons under section 131 of the Act to directors of those companies to attend personally in his office alongwith documents including copy of bank account, copy of ledger account of the assessee in their books of accounts, copy of tax audit report, balance sheet etc, period of holding of the shares, if sold the details of sales etc. However the summon remained non-complied and thus the assessee was asked to produce those persons. Despite specific request, the assessee did not produce those directors before the Assessing Officer. According to the Ld. Assessing Officer, the Private companies are restrained from raising money from pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housing loans and on making further enquiry he was apprised that M/s. Jain Associates were in no way connected with the above companies and The persons there had heard the name of these companies for the first time. As regard M/s. Multitech Semiconductor (P) Ltd. M/s. Indlon Hosiery IP) Ltd. the inspector in his report has submitted that at the address as given by the assessee and as per confirmations received from B-114. Post office Gali. Shakarpur. Delhi-92 this is a residential premises presently occupied Shri Raghuvir Prasad Gupta and Shri Anil Kumar Gupta and they have also heard about M/s. Multitech Semiconductor (PI Ltd. M/s. Indlon Hosiery (P) Ltd. for the first time. It is thus inferred that the assessee himself has manipulated the replies sent by registered post. In the form of confirmation of the above companies. 7. In view of the above observation, and relying on the various decision cited in the assessment order, the Ld. Assessing Officer held that the assessee failed to establish identity, creditworthiness of the share applicant and genuineness of the transaction, and accordingly, he made addition for the amount received of Rs.2,65,00,000/- as share applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be dubious or doubtful, or lack creditworthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. 11. Further, in paras 12, 13 and 14 of the decision, the Hon ble Supreme Court has observed specific facts in relation to the case as under: 12. In the present case, the A.O. had conducted detailed enquiry which revealed that : i. There was no material on record to prove, or even remotely suggest, that the share application money was received from independent legal entities. The survey revealed that some of the investor companies were non-existent, and had no office at the address mentioned by the assessee. For example: a. The companies Hema Trading Co. Pvt. Ltd. and Eternity Multi Trade Pvt. Ltd. at Mumbai, were found to be non-existent at the address given, and the premises was owned by some other person. b. The companies at Kolkata did not appear before the A.O., nor did they produce their bank statements to substantiate the source of the funds from which the alleged investments were made. c. The two companies at Guwahati viz. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l cases the investor companies were found to be non-existent, and the onus to establish the identity of the investor companies, was not discharged by the assessee. 14. The practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be placed on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee. 12. In the instant case also on perusal of the paper book, we find that very nominal income was shown by the share applicant in their return of income filed. For example, M/s Chinta Purani Builders Private Limited (AY 2009-10: Rs.4,410/- and AY 2011- 12: Rs. 5372), M/s Kela Devi Builders Private Limited ( AY 2009- 10; Rs.5,540/- and AY 2011-12: Rs. 2235/-), M/s Kay Buildwell Private Limited (AY: 2009-10: Rs. 5090/- and AY 2011-12: Rs.23,634/-), M/s Dhanvridhi Financial Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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