INDU MALHOTRA, J. - (1.) Leave granted. The present appeal arises out of the Judgment and Order dated 26.02.2018 passed by a division bench of the Delhi High Court in Income Tax Appeal No. 244 of 2018. The Revenue has challenged the judgment of the High Court by way of the present Appeal.
(2.) The issue which arises for consideration is that in a case where Share Capital/Premium is credited in the books of account of the Assessee company, the onus of proof is on the assessee to establish by cogent and reliable evidence of the identity of the investor companies, the credit-worthiness of the investors, and genuineness of the transaction, to the satisfaction of the Assessing Officer.
(3.) The facts of the case, briefly stated are as under : 3.1. The instant case pertains to the Assessment Year of 2009-10, for which the Respondent Company - Assessee had filed the original Return of Income on 29.9.2009 declaring a total income of Rs. 7,01,870. A Notice was issued u/S. 148 of the Act to re-open the assessment on 13.04.2012 for the reasons recorded therein. 3.2. The Assessee filed submissions on 23.04.2012 to the Notice u/S. 148, and objections on 30.04.2012. The objections were rejected on 13.08.2012. A Show Cause Notice was issued on 13.01.2014. The Assessee filed detailed Written Submissions on 22.01.2014. 3.3. The Assessee Company in its Return showed that money aggregating to Rs. 17,60,00,000/- had been received through Share Capital/Premium during the Financial Year 2009-10 from the following companies situated at Mumbai, Kolkata, and Guwahati: JUDGEMENT_13_LAWS(SC)3_2019_1.html It is pertinent to mention that the shares had a face value of Rs. 10 per share, were subscribed by the investor companies at Rs. 190 per share. 3.4. The issue before the Assessing Officer (hereinafter referred to as "AO") was whether the amount of Rs. 17,60,00,000/-allegedly raised by the Respondent through share capital/premium were genuine transactions or not. 3.5. The Respondent Company - Assessee was called upon to furnish details of the amounts received, and provide evidence to establish the identity of the investor companies, credit-worthiness of the creditors, and genuineness of the transaction. The AO issued a detailed questionnaire to the Assessee to provide information with respect to the amount of Rs. 17,60,00,000 shown to have been received as Share Capital/Premium from various legal entities. The AO gave various opportunities to the A.R. of the Assessee to attend the proceedings, and file necessary clarification on the queries raised. 3.6. The Assessee inter alia submitted that the entire Share Capital had been received by the Assessee through normal banking channels by account payee cheques/demand drafts, and produced documents such as income tax return acknowledgments to establish the identity and genuineness of the transaction. It was submitted that, there was no cause to take recourse to Section 68 of the Act, and that the onus on the Assessee Company stood fully discharged. 3.7. The AO had issued summons to the representatives of the investor companies. Despite the summons having been served, nobody appeared on behalf of any of the investor companies. The Department only received submissions through dak, which created a doubt about the identity of the investor companies. 3.8. The AO independently got field enquiries conducted with respect to the identity and credit-worthiness of the investor companies, and to examine the genuineness of the transaction. Enquiries were made at Mumbai, Kolkata, and Guwahati where these Companies were stated to be situated. The result of the enquiry is summarised by the A.O. in his Order as under : JUDGEMENT_13_LAWS(SC)3_2019_2.html The AO recorded that the enquiries at Mumbai revealed that out of the four companies at Mumbai, two companies were found to be non-existent at the address furnished. With respect to the Kolkata companies, the response came through dak only. However, nobody appeared, nor did they produce their bank statements to substantiate the source of the funds from which the alleged investments were made. With respect to the Guwahati companies - Ispat Sheet Ltd. and Novelty Traders Ltd., enquiries revealed that they were non-existent at the given address. 3.9. On the basis of the detailed enquiries conducted, the A.O. held that the Assessee had failed to prove the existence of the identity of the investor companies and genuineness of the transaction. The A.O. found that: i. None of the investor-companies which had invested amounts ranging between Rs. 90,00,000 and Rs. 95,00,000 as share capital in the Respondent Company - Assessee during the A.Y. 2009-10, could justify making investment at such a high premium of Rs. 190 for each share, when the face value of the shares was only Rs. 10; ii. Some of the investor companies were found to be nonexistent; iii. Almost none of the companies produced the bank statements to establish the source of funds for making such a huge investment in the shares, even though they were declaring a very meagre income in their returns; iv. None of the investor-companies appeared before the A.O., but merely sent a written response through dak. The AO held that the Assessee had failed to discharge the onus by cogent evidence either of the credit worthiness of the so-called investor-companies, or genuineness of the transaction. As a consequence, the amount of Rs. 17,60,00,000/- was added back to the total income of the Assessee for the assessment year in question. ;