G.L. Jain Buttons Pvt. Ltd., Ludhiana V. ACIT, C-2, Ludhiana

ITA 852/CHANDI/2019

AI Insights

The case involves G.L. Jain Buttons Pvt. Ltd., which appealed against the order of the CIT(A)-1, Ludhiana, pertaining to the Assessment Year 2017-18. The primary issue was the addition of Rs. 25,00,000 as undisclosed income under section 68 of the Income Tax Act, which was received as share application money. The Assessing Officer (AO) had treated this amount as income after finding that the subscribing company was a 'paper company' with no real business activity. The CIT(A) upheld the AO's decision, leading to the present appeal. The Tribunal dismissed the appeal, agreeing with the lower authorities' findings on the lack of genuineness and creditworthiness of the transactions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135457 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-10-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-09-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 28-05-2019
• Other Referred Cases: CIT vs. United Commercial & Industrial Company Pvt. Ltd. [1991] 187 ITR 596 (Cal), CIT vs. Precision Finance Pvt. Ltd. [1994] 208 ITR 465 (Cal), Lovely Exports vs. CIT, Nova Promoters & Finlease (P.) Ltd., 342 ITR 169, Subhalakshmi Vanijya (P.) Ltd., [ITA No. 1104/Kol/2014], CIT vs. Durga Prasad More [1971] 82 ITR 540, Sumati Dayal vs. CIT [1995] 214 ITR 801, SEBI Vs. Kishore R. Ajmera [2016] 6 SCC 368, Nipun Builders & Developers (P.) Ltd. in ITA No. 120 of 2012
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Search and seizure; Accommodation entries
• Section: 131; 68; 148; 208; 264; 119

Judgement Text

आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “ए ” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “ A ”, CHANDIGARH ᮰ी आकाश दीप जैन, उपा᭟यᭃ एवं ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA NO. 852/Chd/2019 िनधाᭅरण वषᭅ / Assessment Year : 2012-13 G.L. Jain Buttons Pvt. Ltd. Shop No. 7177, City Palace, Chauri Sarak, Ludhiana बनाम The Asst. CIT Circle-2, Ludhiana ᭭थायी लेखा सं./PAN NO: ABFPB7839N अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : None राज᭭व कᳱ ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 26/09/2023 उदघोषणा कᳱ तारीख/Date of Pronouncement : 03/10/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-1, Ludhiana dt. 06/03/2019 pertaining to Assessment Year 2017-18. 2. At the outset, it is noted that inspite of notice being served on the assessee through the Revenue authorities on the email address as available in the IT data base scheduling the hearing for 26/09/2023, none has appeared on the scheduled date of hearing nor any adjournment application was filed. The report of DCIT Circle 1, Ludhiana dated 20/09/2023 is available on record wherein it has been submitted that in view of business premises situated at 1284/95A, Rahon road, Guru Nanak Dev Nagar, Ludhiana been sold by the assessee company and residential premises situated at civil lines been sold by the director of the assessee company, hearing notice have been sent on registered email address as available in IT data base. Given that the matter is pending since 11/12/2019 and has been adjourned from time to time on numerous occasions, we deem it appropriate not to adjourn the matter any further and decide the same basis the material available on the record. 2 3. In the present appeal, the Assessee has raised the following grounds of appeal: 1. Because the learned CIT (Appeal) has erred in dismissing the appeal and confirming the order of the Assessing Officer assessing income at Rs. 41,16,000/- against income returned at Rs 16,16,000/. 2. Because the Ld CIT (Appeal) has erred both in facts & law of the case in conforming the additions of Rs 25,00,000/-_u/s_68 of the IT Act on account of share capital issued by the assessee company and holding the same to be the undisclosed income of the assessee company , which is unjustified , arbitrary , contrary to law and facts and bad in law. 3. Because the action is being challenged on facts and law as share application money received cannot be regarded as undisclosed income u/s 68 as Proviso to sec 68 has been inserted by the Finance Act ,2012 applicable from Assessment year 13-14 & not A.Y 2012-13. 4. Because the action of Assessing Officer as well as of CIT (A) is under challenge since not having appreciated the facts, documents, paper book, evidence, decision relied & provision of act in its true sense & spirits. 4. Brief facts of the case are that the assessee company is engaged in the business of trading of button, threads, elastic, knitted cloth etc. For the assessment year under consideration i.e. A.Y.2012-13, the assessee company had declared an income of Rs. 16,16,000/-. However, the AO had information in his possession regarding receipt of share application money from a dubious and suspect company by the name of M/s V A Realcon Pvt. Ltd and basis the same, the AO assumed the jurisdiction to assess the assessee by the issuance of the requisite notice under the provisions of section 148 of the Act, after following the due formalities in this regard. 4.1 In the ensuing assessment proceedings, the assessee company was called upon to prove the credit of Rs.25 lakhs in its account in the shape of share capital and share premium, in terms of the identity of the subscriber of the said share applicant, its credit worthiness and above all the genuineness of the transactions. Complying with the aforesaid requisition, the assessee company submitted the details of the shareholder, namely, M/s V A Realcon Pvt. Ltd. in 3 terms of photo copy of PAN card, date of incorporation, copies of ITRs for A.Ys.2012-13 & 2013-14, copy of bank statement from which payment of application money of Rs. 25 Lacs rupees was made, a photo copy of the resolution passed by the Board of Directors to purchase the shares, a copy of application form for equity shares, a copy of Company Master Data downloaded from the website in which the status of the company was shown to be active on 19/09/2017 and the change of the registered Office of the company. 4.2 From the aforesaid details/documents, the AO gathered that the subscriber company was located in Delhi, whose return reflected negligible income. The address of the subscriber company at 104-A, Single Story, Ramesh Nagar, New Delhi, was also found to be non-existent while making enquiries in respect of another case of M/s Sharmanji Fabrics Pvt. Ltd.. This fact was confronted to the assessee company by the AO, whereupon a new address was intimated to the AO, which was at Patel Nagar in New Delhi. The AO deputed his inspector to make physical verification of the new address given by the assessee company. 4.3 Summons under the provisions of section 131 dated 20/12/2017 was issued to the Director of the subscribing company, namely, Shri Pawan Kumar Gupta. The said summons was stated to have been ignored in as much as Shri Gupta did not attend before the AO. 4.4 For ascertaining the credit worthiness of the subscribing company and the genuineness of the transaction, the AO analysed and made a close study of the documents submitted by the assessee company. From the said analysis, it emerged that the aforesaid subscribing company was actually a paper company with practically no activity. Taking note of the entire circumstances and placing reliance on and gathering support from various judicial precedents, the AO treated the aforesaid amount of Rs. 25 lakhs as income chargeable to 4 tax within the meaning of section 68 of the Act, raising an additional tax and interest demand of Rs. 13,28,140/-. 5. Against the said findings, the assessee went in appeal before the Ld. CIT(A). The Ld. CIT(A) has returned a finding which read as under: “9. On a careful examination of the facts on record, the impugned order of assessment and the appellant's submissions, it is evident that the impugned addition has been occasioned on account of the appellant company's inability to satisfy the AO about the credit worthiness of the share subscriber and the genuineness of the receipt of share application money alongwith premium. There is no dispute about the basic legal postulate of section 68, which provides that where any sum is found credited in the books of account of an assessee maintained for any previous year, and the assessee offers no explanation about the "nature & source" thereof, or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sum so credited may be charged to Income Tax as income of the assessee of the previous year. The expression "nature & source" appearing in section 68 has to be understood as a requirement of the genuineness of the source. It is also a settled legal position that the onus of the assessee, of explaining the genuineness of the sources does not get discharged merely by demonstrating that the transactions are done by the banking channels or even by filing the income tax assessment particulars. In view of the various decisions including that of CIT vs. United Commercial & Industrial Company Pvt. Ltd. [1991] 187 ITR 596 (Cal) and CIT vs. Precision Finance Pvt. Ltd. [1994] 208 ITR 465 (Cal), there is absolutely no escape from proving the genuineness of the transaction before the AO, so as to escape the rigours of section 68 of the Act. 10. As one proceeds to deal with the aspect of genuineness, it is important to bear in mind the fact that what is genuine and what is not genuine is a matter of perception based on facts of the case vis-a-vis the ground realities. The facts of the case cannot be considered in isolation with the ground realities. The ground reality is that the appellant company has organised funds by way of fictitious share application money from bogus, dubious and paper company which also did not have the worth to make such subscription. There is a well-established racket of organising the aforesaid accommodation entries which operate with the finesse of genuine transaction with all the completed paperwork in respect of the dubious companies only on paper. Such non-existent and worthless companies do the financial manoeuvring to legitimise and launder illicit and untaxed monies in the form of share capital. These companies have every semblance of a genuine company - existence of identity, a statutory documentation as necessary for a legitimate business concern and other documentation trail as a legitimate company would normally have. The only thing which sets it apart from a genuine company is lack of genuineness in its actual operations. The operations carried out by these companies, are only to facilitate financial manoeuvring for the benefit of its clients or, with the predominant underlying objective, to give the colour of genuineness to these entities. These kind of paper companies are routinely used to launder unaccounted money and this information is not uncommon. 5 11. Now coming to the specifics of the instant case, it is noted that the subscribing company could not be traced by the AO on physical inspection. The appellant company also could not produce the Director of the subscribing company. The ITRs of the subscribing company revealed that it had little or no worth and only a nominal income was returned. The bank account clearly reflected the credit of the amounts immediately prior to the issuance of the like amount for subscription of the shares of the appellant company. From the aforesaid, it can safely be deduced that despite the apparent compliance to the formalities in terms of transactions through banking channels etc., the appellant company miserably failed in proving the identity, credit worthiness and above all the genuineness of the transaction of receipt of share application money alongwith premium. 12 Reliance on the decision of the Hon'ble Supreme Court in the case of Lovely Exports is also misplaced as the context, then, was public issue, where the subscribers to the shares were not known to the promoters of the company. This distinction was clearly brought out in the case of Nova Promoters & Finlease (P.) Ltd., 342 ITR 169. It would be instructive to see the observations of the Kolkatta Bench of the ITAT in the case of Subhalakshmi Vanijya (P.) Ltd., [ITA No. 1104/Kol/2014]: "...The Hon'ble Delhi High Court in Nova Promoters (supra), while discussing the factual matrix in the case of Lovely Exports (supra) noticed that the reasoning of accepting the genuineness of share capital, even if the shareholders are bogus, must apply a fortiori to large-scale subscriptions to the shares of a public company where the latter may have no material other than the application forms and bank transaction details to give some indication of the identity of the subscribers. The Hon'ble Court further observed that it may not apply in circumstances where the shares are allotted directly by the company/assesse or to creditors of the assessee. The Hon'ble Delhi High Court in CIT V. Navodaya Castles Pvt. Ltd. [2014] 367ITR 0306, following the principle laid down in Nova Promoters (supra) has held that the share capital in case of a closely held company is required to be examined by the AO in terms of section 68 and the failure of the assessee to satisfy the AO, calls for addition under section 68. It is useful to mention that the SLP filed by the assessee against this judgement has been dismissed by the Supreme Court which has been since reported as Navodaya Castles Pvt. Ltd., Vs. CIT[2015] 230 taxmann 268 (SC) " 13. While seriously doubting the genuineness of the impugned transactions, one is reminded of the Hon'ble Supreme Court's observation in the case of CIT vs. Durga Prasad More [1971] 82 ITR 540, to the effect that "science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities". Similarly, in a later decision in the case of Sumati Dayal vs. CIT [1995] 214 ITR 801, the Hon'ble Supreme Court rejected the theory that it is for alleger to prove that the apparent is not real and observed that "this, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities...... Similarly the observation that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available.......In our opinion, the majority opinion after considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about 6 the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amount has been rejected unreasonably." 14. The AO would have been superficial in his approach in case he examined the claim of the appellant on the basis of only documents and affidavits filed by it overlooking the clear and unusual pattern in the documents and pretending to be oblivious of the ground realities. As Hon'ble Supreme Court has observed in the case of Durga Prasad More (supra), " .......It is true that apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real party who relies on the recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents." 15. The appellant cannot also insist on proof or direct evidence regarding allegation of use of unaccounted and untaxed cash emanating from its coffers. Presumption plays a critical role in coming to a finding in the circumstances, as to the involvement of unaccounted cash to obtain the benefit of laundering. The connivance and understanding between the parties to this manipulation is in the special knowledge of the conspiring parties and hence direct evidence may not be available. Since it is exceedingly difficult to prove facts which are especially within the knowledge of the parties concerned, the legal proof in such circumstances partakes the character of a prudent person's estimate as to the probabilities of the case. 16. The Hon'ble Supreme Court in the case of SEBI Vs. Kishore R. Ajmera [2016] 6 SCC 368, while emphasizing that in the quasi-judicial proceedings, the standard of proof is "preponderance of probability" held as under: "26. It is a fundamental principle of law that proof of an allegation leveled against a person may be in the form of direct substantive evidence or, as in many cases, such proof may have to be inferred by a logical process of reasoning from the totality of the attending facts and circumstances surrounding the allegations/charges made and levelled. While direct evidence is a more certain basis to come to a conclusion, yet, in the absences thereof, the Courts cannot be helpless. It is the judicial duty to take note of the immediate and proximate facts and circumstances surrounding the events on which the charges/allegations are founded and to reach what would appear to the Court to be a reasonable conclusion therefrom. The test would always be that what inferential process that a reasonable/prudent man would adopt to arrive at a conclusion."!Emphasis provided] 17. It would also be instructive to quote hereinbelow the relevant paragraphs of the decision of the Hon'ble High Court of Delhi in the case of Nipun Builders & Developers (P.) Ltd. in ITA No. 120 of 2012, pronounced on 7 th of January, 2013: 7 "We are in agreement with the contention of the revenue. Under section 68 the onus is upon the assessee to prove the three ingredients, i.e. identity and creditworthiness of the person from whom the monies were taken and the genuineness of the transaction. As to how the onus can be discharged would depend on the facts and circumstances of each case. It is expected of both the sides - the assessee and the Assessing authority - to adopt a reasonable approach. The assessee here is a private limited company. It cannot issue shares in the same manner in which a public limited company does. It has to generally depend on persons known to its directors or shareholders directly or indirectly to buy its shares. Once the monies are received and shares are issued, it is not as if the share-subscribers and the assessee-company lose touch with each other and become incommunicado. Calls due on the shares have to be paid; if dividends are declared, the warrants have to be sent to the shareholders. It is a continuing relationship, even granting that it may not be of the same degree in which it exists between a debtor and creditor. The share-subscribers in the present case have each invested substantial amounts in the assessee's shares, as the chart at pages 2-3 of the assessment order would show. Most of them, barring two or three, are themselves private limited companies. It cannot therefore be contended, as was contended before us on behalf of the assessee, that if the summons issued u/s 131 to the subscribing companies at the addresses furnished by the assessee returned unserved, the AO is duty-bound to enforce their attendance with all the powers vested in him. The unreasonableness of such a general proposition is writ large in the face of the contention. The assessee- company received the share monies; it even says that the communications sent by it at the addresses did not return unserved, yet when the AO requested it - that too only after trying to serve the summons unsuccessfully - to produce the principal officer of the subscribing companies, the assessee developed cold feet and said it cannot help if those companies did not appear and that it was for the Assessing Officer to enforce their attendance. It needs to be remembered that the AO did not merely stop with issuing summons; he followed it up with a visit by the inspector who confirmed that no such companies functioned from the addresses furnished by the assessee. Let us see the attitude of the assessee towards discharging its onus in such circumstances. It says that the AO may get the addresses from the ROC's website. We do not think that an assessee can take such an unreasonable attitude towards his onus u/s 68, little realising that when the finding is that the subscribing companies have not been found existing at the addresses given by the assessee, it is open to the AO to even hold thgt the identity of the share-subscribers has not been proved, let alone their creditworthiness and the genuineness of the transactions. It was not open to the assessee, given the facts of this case, to direct the AO to go to the website of the company law department/ROC and search for the addresses of the share- subscribers and then communicate with them for proof of the genuineness of the share subscription. That is the onus of the assessee, not of the AO. So far as the creditworthiness of the share subscribers is concerned, the contention of the assessee before us is was proved by the bank statements of those subscribers submitted before the AO. The AO has not referred to them in the assessment order but it is not in dispute that the copies of the bank statements were furnished before him. Even assuming that the bank statements were filed before the AO, that by itself may not be sufficient to prove the creditworthiness without any explanation for the deposits in the accounts and their source. The usual argument in all such cases, including the present case, is 8 that it is not for the assessee to prove the source of source and origin of origin of the receipts. We are alive to the difficulty that may be faced by an assessee to unimpeachably establish the creditworthiness of the share subscribers but at the same time we are of the opinion that mere furnishing of the copies of the bank accounts of the subscribers is not sufficient to prove their creditworthiness. There must be, in our opinion, some positive evidence to show the nature and source of the resources of the share subscribers himself and therefore it is necessary for him to come before the AO and confirm his sources from which he subscribed to the capital. In the present case the assessee did not produce the principal officer of the companies who subscribed to the shares; it merely filed a letter at the "dak" counter of the AO, stating that the communications sent by it to the share subscribers have not come back unserved. This is not compliance with the direction of the AO who had issued notice to the assessee to produce the principal officers of the subscribing companies. As is well known, in the case of private limited companies, it cannot be denied that there is a continuing contact and relationship with the shareholders and if the assessee was serious enough to establish its case, it ought to have produced the principal officers of the subscribing companies before the AO so that they can explain the sources from which the share subscription was made. That would also have taken care of the difficulty of the assessee in proving the creditworthiness of the subscriber companies. It was, therefore, in the assessee's own interest to have actively participated and cooperated in the assessment proceedings and complied with the direction of the AO to produce the principal officers of the subscribing companies. Instead, the assessee took an adamant, if we may use that expression, attitude and failed to comply with the direction of the AO; not only that, it challenged the AO's finding that the summons sent to the companies came back unserved with the remark "no such company", which was also supported by the report of the inspector who made a visit to the addresses. The assessee thus took a very extreme stand which was in our opinion not justified; certainly it did nothing worthwhile to discharge the onus to prove the creditworthiness of the subscribing companies." "It was then contended on behalf of the assessee with considerable vehemence that there was nothing to show that the monies represented the undisclosed income of the assessee brought in under the guise of share subscription. It was submitted that it was incumbent upon the AO to show that the monies emanated from the coffers of the assessee in order to sustain the addition under Section 68. We are afraid that these are untenable propositions and were rejected at least on three occasions by the Supreme Court. In A. Govindarajulu Mudaliar v. CIT11958134ITR 807 such a contention was rejected in the following words:- Now the contention of the appellant is that assuming that he had failed to establish the case put forward by him, it does not follow as a matter of law that the amounts in question were income received or accrued during the previous year, that it was the duty of the Department to adduce evidence to show from what source the income was derived and why it should be treated as concealed income. In the absence of such evidence, it is argued, the finding is erroneous. We are unable to agree. Whether a receipt is to be treated as income or not, must depend very largely on the facts and circumstances of each case. In the present case the receipts are shown in the account books of a firm of which the appellant and Govindaswamy Mudaliar were partners. When he was called 9 upon to give explanation he put forward two explanations, one being a gift of Rs.80,000/- and the other being receipt of Rs.42,000/-from business of which he claimed to be the real owner. When both these explanations were rejected, as they have been, it was clearly open to the Income Tax Officer to hold that the income must be concealed income. There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income Tax Officer is entitled to draw the inference that the receipts are of an assessable nature. The conclusion to which the Appellate Tribunal came appears to us to be amply warranted by the facts of the case. There is no ground for interfering with that finding, and these appeals are accordingly dismissed with costs." 18. While dictating this order, this appellate authority chanced upon the decision of the Hon'ble Supreme Court rendered a day before on 05/03/2019 in the case of Principal CIT (Central)-l Vs. N R A Iron & Steel Pvt. Ltd., [arising out of SLP (Civil) No. 29855 of 2018]. After examining some landmark and oft-quoted decisions like (i) Kale Khan Mohammad Hanif Vs. CIT [1963] 50 ITR 1 (SC), (ii) Roshan Di Hatti [1977] 107 ITR (SC), (iii) CIT Vs. Oasis Hospitalities Private Limited [2011] 333 ITR 119 (Delhi), (iv) Shankar Ghosh Vs. ITO [1985] 23 TTJ (Cal), (v) CIT Vs. Kamdhenu Steel & Alloys Ltd. & Ors.[2012] 206 taxman 254 (Delhi), (vi) Sumati Dayal Vs. CIT [1995] 214 ITR 801 (SC), (vii) CIT Vs. P. Mohankala, 291 ITR 278 (SC), (viii) CIT-6 Vs. NDR Promoters private Ltd, 410 ITR 379 (Delhi), (ix) Nemi Chand Kothari Vs. CIT [2003] 264 ITR 254 (Gau), (x) CIT Vs. N.R. Portfolio (P.) Ltd. [2014] 42 taxmann.com 339 (Delhi), (xi) CIT Vs. Divine Leasing & Financing Ltd., [2007] 158 taxmann 440, & (xii) CIT Vs. Value Capital Service (P.) Ltd., [2008] 307 ITR 334, the Hon'ble Supreme Court summarised the principles emerging, where sums of money are credited as share capital/premium (Paras 11,13 & 14): "11 (i). The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. (ii). The Assessing Officer is duty bound to investigate the credit worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name lenders. (iii). If the enquiries and investigations reveal that the identity of the creditors is dubious or doubtful, or lack credit worthiness, 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." "13. The lower appellate authorities appear to have ignored the detailed findings of the AO from the field enquiry and investigations carried out by his office. The authorities below have erroneously held that merely because the respondent company-assessee had filed all the primary evidence, the onus on the assessee stood discharged. The lower appellate authorities failed to appreciate that the investor companies which had filed income tax returns with a meagre or nil income had to explain 10 how they had invested such huge sums of money in the assessee company- respondent. Clearly the onus to establish the credit worthiness of the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which are revealed that in several cases the investor companies were found to be nonexistent, and the onus to establish the identity of the investor companies, was not discharged by the assessee. "14. The practice of conversion of unaccounted money through the cloak of share capital/premium must be subjected to carefully 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. 19. Taking a holistic view of the matter, in the light of surrounding circumstances, preponderance of probabilities and ground realities, rather than being swayed by the not at all convincing, but apparently in order documents, and on the basis of detailed analysis set out earlier in this order, it is held that the purported transaction of share capital and premium cannot be held to be genuine on the peculiar facts and circumstances of the case.” 6. Against the said findings and the direction of the Ld. CIT(A) the assessee is in appeal before us. 7. None has appeared on behalf of the assessee nor have any written submissions been filed before us. The ld. DR has relied on the findings of the Lower authorities. 8. We have heard the ld DR and perused the material available on the record. We have gone through the findings of the AO as well as that of the Ld. CIT(A) and find that the ld CIT(A) taking into consideration the entirety of facts and circumstances of the present case has rightly held that the assessee has failed to discharge the onus cast on it in terms of identity, creditworthiness and genuineness of the share application money alongwith share premium. The ld CIT(A) has rightly returned a finding that the subscribing company could not be traced by the AO on physical inspection. The appellant company also could not produce the Director of the subscribing company. The ITRs of the subscribing company revealed that it had little or no worth and only a nominal income was returned. The bank account clearly reflected the credit of the amounts immediately prior to the issuance of the like amount for subscription of the 11 shares of the appellant company. From the aforesaid, it can safely be deduced that despite the apparent compliance to the formalities in terms of transactions through banking channels etc., the appellant company miserably failed in proving the identity, credit worthiness and above all the genuineness of the transaction of receipt of share application money alongwith premium. Further, the ld CIT(A) has relied on various authorities on the subject. In light of the same, we do not find any justifiable basis to interfere with the findings of the Ld. CIT(A), hence the same are hereby confirmed and the appeal filed by the Assessee is hereby dismissed. 9. The Registry is directed to sent a copy of this order on the two registered email- id’s of the assessee company as provided in the letter dated 20/09/2023 of DCIT, Circle 1, Ludhiana. Order pronounced in the open Court on 03/10/2023 . Sd/- Sd/- आकाश दीप जैन िवᮓम ᳲसह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा᭟यᭃ / VICE PRESIDENT लेखा सद᭭य/ ACCOUNTANT MEMBER AG Date: 03/10/2023 आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 5. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar