NDLI: Principal Commissioner of Income Tax (central)-i Vs. Nra Iron & Steel Pvt. Ltd.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Income Tax Act 1961 s.68 Cash credits failed to discharge onus Assessee
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Income Tax Act, 1961 (43 of 1961)
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Income Tax Act, 1961 – s.68 – Cash credits – Money received through Share Capital/Premium from various companies – Assessing Officer (A.O.) issued show cause notice to respondent-assessee to establish the genuineness of the transaction – Assessee inter alia submitted that the entire Share Capital was received 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 – A.O.issued summons to the representatives of the investor companies –None appeared on behalf of any of the investor companies – A.O.independently got field enquiries conducted with respect to the identity and credit-worthiness of the investor companies – Enquiries were made at Mumbai, Kolkatta, and Guwahati where these Companies were stated to be situated – On the basis of the enquiries conducted, A.O. held that the assessee had failed to prove the genuineness of the transaction – On appeal, held: The assessee isunder a legal obligation to prove the genuineness of the transaction,the identity of the creditors, and credit-worthiness of the investorswho should have the financial capacity to make the investment in question, to the satisfaction of the A.O., so as to discharge the primary onus – If the enquiries and investigations reveal the identity of the creditors to be dubious or doubtful, or lack credit-worthiness,then the genuineness of the transaction would not be established –In such a case, the primary onus contemplated by s.68 of the Act is not discharged – In the instant case, the survey conducted by A.O.revealed that some of the investor companies were non-existent,and had no office at the address mentioned by the assessee – The companies at Kolkatta did not appear before the A.O., nor did they produce their bank statements to substantiate the source of the funds from which the alleged investments were made – Also, there was no explanation whatsoever offered as to why the investor companies had applied for shares of the assessee Company at a high premium of Rs. 190 per share, even though the face value of the share wasRs. 10/- per share – Furthermore, none of the so-called investor companies established the source of funds from which the high sharepremium was invested – Assessee failed to discharge the onus required under s.68 – Therefore, A.O. was justified in adding back the amounts to the assessee’s income.
Judge	Hon'ble Ms. Justice Indu Malhotra
Neutral Citation	2019 INSC 314
Petitioner	Principal Commissioner Of Income Tax (central)-i
Respondent	Nra Iron & Steel Pvt. Ltd.
SCR	[2019] 4 S.C.R. 163
Judgement Date	2019-03-05
Case Number	2463

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