| The Tax Publishers2019 TaxPub(DT) 4484 (Del-Trib) INCOME TAX ACT, 1961
Section 68
Assessee was under a legal obligation to prove receipt of share capital/premium to the satisfaction of AO failure of which would justify addition of the said amount to the income of assessee under section 68.
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Income from undisclosed sources - Addition under section 68 - Receipt of share capital along with premium - Assessee failed to prove identity, creditworthiness and genuineness of creditors
Assessee-company raised share capital of Rs. 9,00,000 and share premium of Rs. 1,71,00,000 from eight parties. AO required information from assessee about source of share capital/share premium amount, assessee filed confirmation along with copies of ITR acknowledgement from share subscribers, however, other information as required under section 68 including identity, genuineness and creditworthiness of share subscribers were not filed. Accordingly, AO made addition.Held: Investment by cash was not a normal phenomena because both assessee-company and share subscriber companies in normal course were expected to transact through banking channel. Making investment through cash in itself raised doubt and therefore it was the onus of assessee to explain the source of cash invested by way of share capital/share premium into its cashbook. The assessee had merely furnished confirmation,of subscriber without any detail of source of cash in the hands of subscribers companies. Assessee even failed to produce books of accounts and vouchers, etc. of assessee-company before AO. In independent enquiry made by AO through Inspector, those companies were not found at the addresses given and in response to summons issued, none appeared on behalf of those companies before the AO to explain source of cash in their hands. In such circumstances, it could not be said that assessee had discharged onus of explaining nature and source of credit as required under section 68. In such circumstances, AO was justified in making addition.
Relied:CIT v. Lovely Exports (P) Ltd. (2009) 319 ITR 5 (SC) : 2009 TaxPub(DT) 261 (SC) and Pr. CIT (Central)--1 v. NRA Iron & Steel (P) Ltd. (2019) 412 ITR 161 (SC) : 2019 TaxPub(DT) 1628 (SC).
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2007-08
INCOME TAX ACT, 1961
Rule 46A
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