| The Tax Publishers2020 TaxPub(DT) 0781 (Del-Trib) : (2020) 181 ITD 0437 : (2020) 207 TTJ 1133 INCOME TAX ACT, 1961
Section 68
Mere paperwork furnished by assessee could not take the authorities anyway, when AO suspected existence of the entities that applied and paid for share application and share premium and insisted that a higher degree of proof was required in that respect. Accordingly, AO was justified in taxing share capital/premium under section 68 as assessee had routed its own money in books of account through fictitious and bogus companies.
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Income from undisclosed sources - Addition under section 68 - Receipt of share capital/premium - Subscribers being paper entities relevance of documents filed by assessee
Assessee-company claimed to have received share capital/premium and furnished names and addresses of the shareholders, copies of their share application forms, Board resolution, confirmations and Memorandum and Articles of Association, etc. However, AO treated subscriber entities as paper companies and accordingly treated amount involved as unexplained credit under section 68. Held: Undisputedly, AO required assessee to produce controlling persons of share applicant companies along with supportive documentary evidence for examination. Assessee though filed certain parties' details, however, failed to produce them. No valid reasons were forthcoming for such conduct of assessee. Even, field enquiries in respect of share applicant companies revealed that such companies never existed at in the given addresses and people in the vicinity never knew of the same. On the face of this fact finding based on the field visits, it was difficult to hold that merely because certain documents were filed by the assessee, the identity and creditworthiness of the share applicants and the genuineness of transactions stood proved, and therefore, AO was justified in making addition under section 68.
Relied:Pr. CIT v. NDR Promoters Pvt. Ltd. (2019) 410 ITR 379 (Del) : 2019 TaxPub(DT) 886 (Del-HC) and Pr. CIT v. NRA Iron & Steel Pvt. Ltd. (2019) 412 ITR 161 (SC) : 2019 TaxPub(DT) 1628 (SC).
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2010- 11 to 2012-13
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