Under s.68, assessee discharges onus for share capital by proving identity, genuineness via documents/banking, creditworthiness; burden shifts to revenue to disprove with evidence, not mere suspicion or reports. (32 words)

ORDER

PER C.N. PRASAD, JM,

This appeal is preferred by the Assessee against the order dated 30.10.2023 of the Ld. Commissioner of Income-tax (Appeals)-3 (hereinafter referred to as CIT(A)), Gurgaon for the Assessment Year 2011-12 in partly sustaining the addition made by the Assessing Officer U/s 68 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2. The relevant facts emanating from the record and submissions are that the Assessee is a Private Limited company incorporated on 03-07-1995 and admittedly is engaged in the business of construction and running hotels and restaurants. Search and seizure proceedings were carried out in the group cases of M/s Bestech, Gurgaon. The assessee was also covered u/s 132(1) of the Act as a part of the said search proceedings. Accordingly notice u/s 153A of the Act was issued in this case on 18.03.2013. In response to the said notice the assessee filed its return of income on 22.08.2013 declaring NIL income. The AO had observed from the balance sheet of the assessee, that it has received following share capital/share application money during the financial year 2010-11 relevant to the assessment year 2011- 12 as under:

2.1 In the course of assessment proceedings the AO required the assessee to explain the source of the above share capital. Ongoing through the documents furnished by the Assessee in this respect and other material available on record, it was observed by the AO that M/s Apoorva Leasing Finance & Investment Co. Ltd was managed and controlled by one Shri S.K. Jain, an accommodation entry provider. Further M/s Micro Management Ltd has received share capital/ share premium from M/s Transnational Growth Fund Ltd and the said company M/s Transnational Growth Fund Ltd was also managed and controlled by Shri S.K. Jain.

2.2 As per the AO, independent search proceedings u/s 132 have also been carried out in the case of Shri S.K. Jain by the Investigation Wing, Delhi and it was alleged that Shri S.K Jain through various paper companies such as M/s Apoorva Leasing Finance & Investment Co. Ltd, M/s Transnational Growth Fund Ltd etc. were engaged in providing accommodation entries.

3. With regard to investment from M/s Apoorva Leasing Finance and Investment Co. Ltd it was found that it has applied for 10 lacs shares @ 1000/- i.e., total share application money of Rs.100 crores; out of which an amount of Rs.25 crores was received on 16.02.2011 (25% total share capital). However no further payment was received. Further, Shri S.K. Jain is one of the Directors of M/s Apoorva Leasing. During the course of assessment proceedings statement of one of Directors of M/s Apoorva Leasing was also recorded by the AO, copy of the same was provided to the Assessee. According to AO, M/s Apoorva Leasing has not shown any income it its return of income for AY 2011-12 and in its bank account there were credit entries immediately before date of giving share application money to the Assessee. Further in its balance sheet as on 31.03.2010, it has got share premium of Rs.94,99,90,500/- and fresh share capital introduced of Rs.9,99,99,900/- during FY 2009-10 itself. It was thus concluded by AO that it was beyond human probability that M/s Apoorva Leasing could mobilize such huge share premium in the ratio of 1:99 on the basis of such financial profile. It has no fixed assets and in it’s profit and loss account no business activities have been shown to have carried