TMI Blog2024 (2) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... edited in the books of the assessee company, which had been disclosed by the latter as an amount received by it as share application money from the aforementioned share subscriber companies, then, the assessee company remains under a statutory obligation to substantiate the nature and source of the said sum credited as per the mandate of Section 68 of the Act, failing which, the same is to be treated as unexplained cash credit in its hand. There is no material available on record that would conclusively prove to the hilt that the assessee company had merely acted as a facilitator for routing the unaccounted money to the latters coffer; therefore, the said claim of the assessee cannot be accepted. We are of the considered view that as the aforesaid contention of the Ld. AR that it had merely acted as a facilitator for routing the funds from the share subscriber companies, is devoid and bereft of any merits, thus, the same does not merit acceptance. We, thus, in terms of our aforesaid observations, find no infirmity in the view taken by the CIT(Appeals), who had rightly concluded that the amount received by the assessee company in the garb of share application money was rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es/investment in shares; and (iii) investment in unlisted equities during the year. 3. During the course of the assessment proceedings, the A.O observed that the assessee company which though had not carried out any business during the year under consideration had received a substantial amount of share capital/premium aggregating to an amount of Rs. 4,13,41,500/- from the following 19 persons/ companies: Accordingly, the A.O. called upon the assessee company to furnish the details of the shareholders and substantiate their creditworthiness as well as the genuineness of the transaction of receipt of share capital/ premium from them. As the assessee failed to furnish the requisite details, the A.O. issued notice u/s. 133(6) of the Act to two share subscriber companies, viz. (i) M/s. Eagle Commotrade Pvt. Ltd.; and (ii) M/s. Krishnakali Distributors Pvt. Ltd. Insofar as the notice issued u/s. 133(6) of the Act by the A.O. to M/s. Eagle Commotrade Pvt. Ltd. was concerned; the same was received back unserved, while no reply was received in the case of M/s. Krishnakali Distributors Pvt. Ltd. The A.O. brought the aforesaid fact to the notice of the assessee company and directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditworthiness of the share subscriber companies, as well as genuineness of the transaction of receipt of share capital/premium from them. The A.O. fortified his aforesaid conviction by the fact that the notices issued to the Kolkata-based investor companies u/s. 133(6) of the Act either remained unserved or were not complied with. Also, the fact that the assessee company had, despite specific directions, failed to produce before him for necessary examination the directors of the Kolkata-based investor companies, which, as per the report of the Inspector, were not available at their respective addresses as was provided by the assessee company, had weighed in the mind of the A.O while dubbing the transactions of receipt of share capital/premium by the assessee company as a sham. Accordingly, the A.O., backed by his aforesaid observations, held the entire amount of share capital/premium of Rs. 4,13,41,500/- as unexplained cash credit u/s. 68 of the Act. 5. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). It was, inter alia, the claim of the assessee that, it had during the year under consideration, only received an amount of Rs. 1.87 crore (approx.) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was invested towards share capital/premium with the assessee company, therefore, the same had rightly been held by the A.O as unexplained cash credit u/s. 68 of the Act. Accordingly, the CIT(Appeals) being of the view that the assessee company had failed to discharge the onus that was cast upon it u/s. 68 of the Act, therein, sustained the addition of Rs. 1.87 crore made by the A.O observing as under: 6.1.3 Decision:- I have carefully considered the submission put forth 86 the documents furnished on behalf of the appellant, perused the facts of the case and the observation of the AO both in the impugned assessment order, remand report rejoinder thereon and other material evidences brought on record and these grounds of appeal relating to the addition of Rs. 4,13,41,500/- made on account of unexplained share application money and premium received are decided as under:- 1. Admittance of Additional evidences (i) The assessee has filed the following papers as additional evidences:- 1. Share Application a/c for AY 2013-14, 2012-13, 2011-12 2. Company master data of Eagle Commotrade Pvt. Ltd. as obtained from MCA site 3. ITR, Audited Balance Sheet Profit Loss a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is direction the addition of Rs. 2,26,41,500/- is deleted for statistical purpose (iv) The assessee has received share application of Rs. 1,87,00,000/- during the previous year relevant to assessment year 2014-15 from the following companies :- 12. M/s. Eagle Commotrade Pvt. Ltd. 1,01,00,000/- 13. M/s. Krishnakali Distributors Pvt. Ltd. 86,00,000/- Total - 1,87,00,000/- (i) The assessee in respect of share application money of Rs. 1,01,00,000/- received from M/s Eagle Coomotrade Pvt Ltd. has filed the following papers during the assessment proceedings and as additional evidence:- 1. Copy of account of shareholder in the books of appellant 2. Copy of account of appellant in the books of M/s. Eagle Commotrade Private Limited 14. Bank account of appellant with following banks: HDFC Bank, Raigarh Punjab National Bank, Angul 15. Bank statement of M/s. Eagle Commotrade Pvt. L with following banks: HDFC Bank, Kolkata ICICI Bank, Kolkata 16. Company master data on 07.02.2018 17. Audit Report final accounts of M/s. Eagle Commotrade Pvt. Ltd. for AY 2014-15 18. ITR for A.Y. 2014-15 19. ITR for A.Y. 2013-14 along with audited Balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment towards share capital/premium with the latter; therefore, the aforementioned amount could not be treated as unexplained cash credit u/s. 68 of the Act in the hands of the assessee company. Elaborating further on his aforesaid contention, the Ld. AR submitted that the amount of Rs. 1.87 crore (supra) that the assessee company had paid to M/s. Rashi Steel Power Ltd. had, thereafter, been assessed as the latter s income from undisclosed sources via an order passed by the ITO, Ward-21(1), New Delhi u/s. 143(3) of the Act dated 29.12.2016. The Ld. AR had drawn our attention to the aforesaid order passed u/s. 143(3), dated 29.12.2016 in the case of M/s. Rashi Steel and Power Ltd. for A.Y.2014-15, Page 15-33 of APB. The Ld. AR, in order to buttress his claim and dispel all doubts as regards his aforesaid claim, had drawn our attention to Page 27 of APB, wherein there was a specific reference of receipt of an amount of Rs. 2.59 crore (approx.) by M/s. Rashi Steel and Power Ltd from the assessee company, which formed part of the addition of Rs. 35.63 crore (approx.) that was made in the hands of the latter u/s. 68 of the Act. 9. Backed by the aforesaid facts, the Ld. AR submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 13. As observed by us hereinabove, the CIT(Appeals) had approved the treating of the share capital/premium of Rs. 1.87 crore (supra) received by the assessee company from the aforementioned share subscriber companies as unexplained cash credit u/s. 68 of the Act, inter alia, for the reason that the assessee company had failed to substantiate the source of the sum that the share applicant companies had received, which in turn was invested with the assessee company as share capital/premium. Admittedly, as per the mandate of Section 68 of the Act, i.e., post- amended vide the Finance Act, 2012 w.e.f. 01.04.2013, where the sum credited in the books of the assessee company consists of share application money, share capital, share premium, or any such amount by whatever name called, an additional onus is cast upon the assessee company, as per which the person being a resident in whose name such credit is recorded in the books of the assessee company is required to offer to the satisfaction of the A.O an expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by the share applicant companies, viz., (i) M/s. Eagle Commotrade Pvt. Ltd.; and (ii) M/s. Krishnakali Distributors Pvt. Ltd. from certain other companies, but there is no whisper about the nature of the said receipts. We, thus, in terms of our aforesaid observations, are of the considered view that as the assessee had failed to discharge the onus that was cast upon it as per the mandate of post-amended Section 68 of the Act, therefore, no infirmity emerges from the view taken by the lower authorities who had rightly held/sustained the same as unexplained cash credit u/s. 68 of the Act. 16. Adverting to the Ld. AR s alternative novel claim that as the assessee had merely acted as a facilitator to route the money from the aforementioned share subscriber companies, viz., (i) M/s. Eagle Commotrade Pvt. Ltd.; and (ii) M/s. Krishnakali Distributors Pvt. Ltd. to the real beneficiary, i.e. M/s. Rashi Steel and Power Ltd., which, thereafter, had been assessed as the latter s income from undisclosed sources, the same, thus, could not have been assessed as unexplained cash credit u/s.68 of the Act in the hands of the assessee company, the same does not find favor with us. 17. At ..... 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