Shanti Prime Publication Pvt. Ltd.
Section 68 & 153C of the Income-tax Act, 1961 – Cash credit – Claim of share capital and share premium by assessee was bogus and the test of identity of the parties was failed, the test of creditworthiness is also a complete failure and test for genuineness of the share capital and share premium contributions also collapsed on account of non-appearance of the parties before AO.
Facts: AO held that the share capital credited in the books of accounts of assessee is unexplained, and has to be added to the income of the assessee under section 68. Aggrieved by such findings , assessee preferred appeals before CIT(A). Having considered the case on its merits on a thorough reappraisal of the material, CIT(A) issued notice for enhancement under section 251 (2) for all these assessment years 2010-11, 2011-12 and 2012-13 giving an opportunity of being heard to the assessee. CIT(A) concluded that claim of share capital and share premium by the assessee was bogus and the test of identity of the parties was failed, the test of creditworthiness is also a complete failure and test for genuineness of the share capital and share premium contributions also collapsed on account of non-appearance of the parties before the Assessing Officer.
Held, that mere paperwork by the assessee does not take the authorities anyway, when the authorities suspected the existence of the entities that applied and paid for share application and share premium and insisted that a higher degree of proof is required in that respect. The action of AO was illegal and non-compliance with the same had rightly led to the inference that the assessee had rooted their own money in the books of accounts through the fictitious and bogus companies. On this premise we sustain the addition made by AO under section 68. We further find that CIT(A) had followed the procedure established under law for enhancing the additions and such additions are justified by record. Consequently, we dismiss the grounds of appeals – PAR EXCELLENCE LEASING AND FINANCIAL SERVICES P. LTD. Vs. ASSTT. CIT [2020] 181 ITD 437 (ITAT-DELHI)