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Case Law Details

Case Name : M/s Royal Rich Developers Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Appeal Number : ITA No. 1835/Mum/2014
Date of Judgement/Order : 24/08/2016
Related Assessment Year : 2006-07
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M/s. Royal Rich Developers Pvt. Ltd. Vs DCIT (ITAT Mumbai)

We are of the considered view that the onus is on the assessee company to bring on record the cogent evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction which in the instant case the assessee is not able to prove the same as per the facts emerging from the records and material before us as set out above and in our considered view in the instant case the transactions were nominal rather than real . The creditworthiness of the shareholders is not proved because they did not had their own money as every cheque/draft issued in favour of the assessee is preceded by deposit of cash/cheque in the bank account of the shareholder and these share holders are merely name lenders. The genuineness of the transactions is also not proved as to how such a huge sum of money got invested by the share subscribers and that too at a huge premium when the company was merely a paper/shell company having no business/project worth in its hand. The shareholders could not be interrogated by the AO which was essential to unearth the truth as the assessee did not produced the shareholders nor they appeared before the AO in response to summons issued u/s 131 of the Act. The Directors namely Mr. Vinod K Faria and Mr Suresh V. Faria of the assessee company have admitted in their statement recorded on oath u/s 132(4)/131 of the Act that these share subscription was bogus and were merely accommodation entries. The blank transfer forms and receipts from the shareholders were found during survey with respect to transfer of these shares from shareholders to the persons to be nominated by the promoters, all the share application forms were filled in the same handwriting, there was no serial numbers in share application form, the acknowledgment of receipt of share application forms were not given to the share subscribers by the assessee and these are not usual conduct of the carrying on of business . Under these circumstances keeping in view of cumulative reasons and summation of our discussions as set out above, we are of the considered view that the Revenue has rightly made the addition of Rs.1.60 crores received as share subscription as unexplained cash credit u/s. 68 of the Act which we sustained and we do not found any infirmity in the orders of the learned CIT(A) which we sustain/upheld. We order accordingly.

Read High Court Judgment- Bogus Share Capital- Onus is on assessee to prove genuineness of transaction

FULL TEXT OF THE ITAT JUDGEMENT

These two appeals filed by the assessee company for the assessment years 2006-07 and 2007-08 are directed against two separate appellate orders of the learned Commissioner of Income Tax (Appeals)- 40, Mumbai (Hereinafter called “the CIT(A)”) both dated 24th February, 2014, the appellate proceedings before the learned CIT(A) arising from the two separate assessment orders dated 14.12.2009 and 18.12.2009 respectively passed by the learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) read with Section 147 of the Income Tax Act,1961 (Hereinafter called “the Act”) and Section 143(3) of the Act respectively.

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