Sec. 68 additions justified if assessee failed to prove identities & creditworthiness of investors: HC

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Sec. 68 additions justified if assessee failed to prove identities & creditworthiness of investors: HC

 

SRM Systems and Software (P.) Ltd
[2021] 127 taxmann.com 298 (Madras)
Where assessee company allotted shares and received share capital of certain amount, since assessee did not furnish any details with regard to names of allotees, their addresses, PAN numbers, cheque numbers, name of bank etc. so as to prove their identities, creditworthiness and genuineness of transactions, Assessing Officer was justified in making addition under section 68 on account of said share capital amount received by assessee
Short Overview of the case:
The case was pertaining to addition under Section 68 of the Income-tax Act, 1961
Addition was done on account of Cash credit (Share Capital) related to Assessment year 2006-07
Assessee company had allotted 88,24,200 shares having face value of Rs. 10 per share and received share capital of certain amount
Assessee did not furnish any details with regard to names of allottees, their addresses, Permanent Account Numbers (PAN), cheque numbers, name of bank or any other proof so as to proove their identities and creditworthiness and genuineness of transactions
Assessee had also not produced even details such as confirmation letter, bank account evidencing receipt of share application money
 It had not produced even one person to verify genuineness of receipt of share application money
 The issue before court was whether in absence of any evidence on record to prove identities of share applicants, their creditworthiness and genuineness of transactions, Assessing Officer was justified in making impugned addition under section 68 on account of said amount of share capital received by assessee as its undisclosed income
The court held it in favour of the revenue by holding that Assessing Officer was justified in making addition under section 68 on account of said share capital amount received by assessee.

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