“paper company”

Cash Credits & Unexplained ItemsSection 68Section 68582 judgments

The decision most relied on for paper company is (Central)-1 v. NRA Iron & Steel (P) Ltd. (103 Taxmann.com 48), cited in 696 judgments on BharatTax.

Leading authorities on paper company

(Central)-1 v. NRA Iron & Steel (P) Ltd.

103 Taxmann.com 48 · 2019 · Supreme Court

696

citing judgments

When assessing cash credits, share capital, or loans, the assessee bears the onus to prove the identity, creditworthiness, and genuineness of transactions. This burden is not discharged merely by documentary evidence if field inquiries reveal accommodation entries or dealings with paper/shell companies.

Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd.

342 ITR 169 · 2012 · High Court

658

citing judgments

To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.

CIT v. Oasis Hospitalities P. Ltd.

333 ITR 119 · 2011 · High Court

292

citing judgments

When explaining cash credits under Section 68, the assessee must establish the identity of the creditor, their creditworthiness or financial capacity, and the genuineness of the transaction. Merely proving identity does not discharge this initial onus, which shifts to the Assessing Officer once these three elements are prima facie proven.

CIT v. Nipun Builders & Developers

350 ITR 407 · 2013 · High Court

264

citing judgments

For any sum credited in an assessee's books, including share application money, the assessee must prove the identity and creditworthiness of the creditor and the genuineness of the transaction. Failure to discharge this onus under Section 68 renders the amount taxable.

CIT v. N.R. Portfolio (P.) Ltd.

42 Taxmann.com 339 · 2014 · High Court

252

citing judgments

For cash credit additions under Section 68, establishing the 'identity' of a creditor requires more than just producing PAN or assessment particulars; it necessitates demonstrating their actual business operations, place of work, staff, and public recognition. This rigorous standard ensures the assessee proves the identity, creditworthiness, and genuineness of the transaction.

CIT v. Steller Investment Ltd.

251 ITR 263 · 2001 · Supreme Court

233

citing judgments

An increase in a company's subscribed share capital cannot be treated as the company's undisclosed income under section 68, even if the subscribers to the capital are found not to be genuine. The amount of share capital cannot be regarded as undisclosed income of the company itself.

Glass Lines Equipments Company Ltd. v. CIT

253 ITR 454 · 2002 · High Court

150

citing judgments

The Assessing Officer cannot selectively accept parts of a statement or seized evidence that are favourable to the revenue while rejecting other parts favourable to the assessee without proper investigation; the evidence must be considered as a whole. Additions cannot be made based on mere presumptions or surmises without further inquiry.

CIT v. MAF Academy (P) Ltd.

361 ITR 258 · 2014 · High Court

132

citing judgments

Amounts received from bogus share transactions, where a private limited company sells shares to unrelated parties at a huge premium and then repurchases them at a loss shortly after, are taxable as unexplained cash credits under Section 68. The onus to prove identity, creditworthiness, and genuineness of such transactions lies solely on the assessee.

Judgments citing paper company

Shrifal Impex Pvt. Ltd., Surat vs. Income Tax Officer, Ward - 2(1)(3), Surat

ITA 190/SRT/2023[2011-12]Status: DisposedITAT Surat29 Dec 2023AY 2011-12

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita Nos.190 To 191/Srt/2023 Assessment Year: (2011-12 To 2012-13) (Physical Hearing) Shrifal Impex Private Limited, Vs. The Ito, No.504, 5Th Floor, H. No.6/B/1739- Ward-2(1)(3), 1380, Parshwa Complex Thoba Sheri, Surat Mahidharpura, Surat – 395003. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaocs4409E (Appellant) (Respondent) आयकर अपील सं./Ita No.250/Srt/2023 Assessment Year: (2014-15) Shrifal Impex Private Limited, Vs. The Ito, No.504, 5Th Floor, H. No.6/B/1739- Ward-2(1)(3), 1380, Parshwa Complex Thoba Sheri, Surat Mahidharpura, Surat – 395003. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaocs4409E (Appellant) (Respondent)

Section 143(3)Section 148

whom have claimed to have made purchases from local Surat based companies are also mere ITA Nos. 190 - 191 &250/SRT/2023 Shrifal Impex Pvt. Ltd. paper company. The assessee company has not performed any business on the address available on record. (iv) In this ease, information has been received dated

ITO, New Delhi vs. M/S Priceless Overseas Ltd., New Delhi

In the result, the appeal of the Revenue is allowed for statistical purposes

ITA 6320/DEL/2016[2012-13]Status: DisposedITAT Delhi14 Dec 2023AY 2012-13

Bench: Shri Pradip Kumar Kedia & Shri Yogesh Kumar Us

For Appellant: Shri Vinod Bindal, CAFor Respondent: Ms. Beenu, Sr.DR

Section 133(6)Section 143(3)Section 68

statement of the subscriber companies and concluded that the transaction shown to have been made by way of share subscription are transactions typical of paper companies providing accommodation entries. Reply of the assessee was considered in the light of the decision of the Co-ordinate Bench of Tribunal ... which were founded upon inquiries conducted and the surrounding circumstances pointing out that such subscription in question is typical of accommodation entries received from paper companies. The ld. DR referred to and relied upon the observations made in the assessment order, large number of judgments quoted by the I.T.A. No.6320/Del/2016

Income Tax Officer-5(1)(1), Mumbai vs. M/S. Flagship Housing Development P. Ltd.( Formerly Known As M/S. Absolute Building Company Private Limited, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 4642/MUM/2017[2007-08]Status: DisposedITAT Mumbai11 Dec 2023AY 2007-08

Section 143(1)Section 143(3)Section 147Section 148Section 68

basis on the basis of documentary evidence such as PAN, IT return, confirmation, Bank Statement etc without considering the facts that subscriber was a paper company and not a genuine investor.” 5. "On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting ... Kalpana Steelcon Pvt. Ltd was strike off at much later stage. Thus, he submitted that it cannot be said that these companies are mere paper companies or bogus. The details as submitted are as under:- Sr. Name of the Status MCA Profit before 133( 133(6) Date of Redeem

Macro Township Pvt Ltd, 288-289 Mahaveer Nagar Durgapura Jaipur vs. DCIT CC -2 Jaipur, Lic Building Jaipur

In the result, the appeals of the assessee are allowed

ITA 399/JPR/2023[2015-16]Status: DisposedITAT Jaipur05 Dec 2023AY 2015-16

Bench: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri C.M. Agarwal, CAFor Respondent: Shri Arvind Kumar (CIT)

Section 153CSection 250Section 69

registered office and also the notices sent were duly served and were complied with, thus observation of ld. AO that lender company is a paper company is totally misplaced and therefore, the addition made based on such misplaced observation deserves to be deleted. 4.2: That the Ld. AO has further ... share premium and are almost exclusively utilizing all this capital for extending loans and advances or investing in unlisted equities. This is typical of paper companies that provide accommodation entries out of bogus unsecured loans and share premium in their accounts. 8.2 During the search proceedings, residence

Macro Township Pvt Ltd, 288-289 Mahaveer Nagar Durgapura Jaipur vs. DCIT CC-2 Jaipur, Lic Building Jaipur

In the result, the appeals of the assessee are allowed

ITA 398/JPR/2023[2014-15]Status: DisposedITAT Jaipur05 Dec 2023AY 2014-15

Bench: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri C.M. Agarwal, CAFor Respondent: Shri Arvind Kumar (CIT)

Section 153CSection 250Section 69

Macro Township Pvt Ltd, 288-289 Mahaveer Nagar Durgapura Jaipur vs. DCIT CC -2 Jaipur, Lic Building Jaipur

In the result, the appeals of the assessee are allowed

ITA 397/JPR/2023[2013-14]Status: DisposedITAT Jaipur05 Dec 2023AY 2013-14

Bench: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri C.M. Agarwal, CAFor Respondent: Shri Arvind Kumar (CIT)

Section 153CSection 250Section 69

Jitendra Udaylal Jain, Mumbai vs. National Faceless Assessment Centre, Delhi

In the result, appeals filed by the assessee is allowed

ITA 2042/MUM/2023[2012-2013]Status: DisposedITAT Mumbai24 Nov 2023AY 2012-2013

Bench: Shri Narender Kumar Choudhry, Hon’Ble & Shri S. Rifaur Rahman, Hon'Blejitendra Udaylal Jain V. National Faceless Assessment Centre(Nfac) C/O. M/S. Alankar Jewellers Shop Delhi No.1 Municipal Building R.A. Kidwai Road, Wadala Mumbai- 400037 Pan: Aabpj5480E (Appellant) (Respondent) Assessee Represented By : Shri. Vimal Punmiya Department Represented By : Shri. Ujjawal Kumar Chavan

Section 10(38)Section 131Section 143(2)Section 148Section 250

case wherein either the directors/promoters of the aforesaid Companies, in which the assessee had invested, has accepted that the company is merely a paper company and provides the benefit of bogus long-term capital Page No. 22 Jitendra Udaylal Jain gains to its shareholders. Further, despite the Revenue having

Cpi India I Limited, Mumbai vs. ACIT, Int.Tax. Circle-1(2)(1), Delhi

In the result, the appeal is partly allowed, as indicated

ITA 382/DEL/2023[2016-17]Status: DisposedITAT Delhi21 Nov 2023AY 2016-17

Bench: Shri G.S. Pannu, Vice- & Shri Saktijit Dey, Vice-Assessment Year: 2016-17 . Cpi India Ltd., Vs. Acit, C/O- Vasa Chauhan & International Taxation, Associates Off. No. 41, Circle -1(2)1), 3Rd Floor, High Life Premises, Delhi P.M. Road, Santacruz West, Mumbai Pan :Aadcc1505G (Appellant) (Respondent)

Section 112(1)(c)Section 144C(13)Section 147Section 148Section 48Section 48(1)

India – Mauritius Double Taxation Avoidance Agreement (DTAA) on the reasoning that the assessee is not entitled to treaty benefits, as it is mere a paper company created in Mauritius to avail treaty benefits. Thus, after allowing unabsorbed long-term capital loss pertaining to assessment year 2012-13, the Assessing Officer ... India – Mauritius tax treaty. However, both the Assessing Officer and learned DRP have rejected assessee’s claim by holding that assessee being a mere paper company is not entitled to treaty benefits. 15. In our view, the reasoning, on which, the departmental authorities have denied assessee’s claim of benefit

Mohan Thakurdas Gurnani, Navi Mumbai vs. Dy CIT -CC-5(2), Mumbai

The appeal of the assessee is partly allowed for assessment year 2014 – 15 also

ITA 718/MUM/2021[2016-17]Status: DisposedITAT Mumbai17 Nov 2023AY 2016-17

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Pradip Kapasi CAFor Respondent: Shri Mahesh Akhade CIT DR

Section 10Section 132Section 139Section 143Section 153A

Mohan Thakurdas Guranani are not at all into any business and are only the paper companies. viii. it was submitted that the receipt and payment through banking channels, no material found seized during the course of search relevant to the addition, entries for purchase and sale of shares made

Mohan Thankurdas Gurnani, Navi Mumbai vs. Dy CIT -CC-5(2), Mumbai

The appeal of the assessee is partly allowed for assessment year 2014 – 15 also

ITA 713/MUM/2021[2015-16]Status: DisposedITAT Mumbai17 Nov 2023AY 2015-16

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Pradip Kapasi CAFor Respondent: Shri Mahesh Akhade CIT DR

Section 10Section 132Section 139Section 143Section 153A

Mohan Thakurdas Gurnani, Navi Mumbai vs. Dy CIT -CC-5(2), Mumbai

The appeal of the assessee is partly allowed for assessment year 2014 – 15 also

ITA 712/MUM/2021[2013-14]Status: DisposedITAT Mumbai17 Nov 2023AY 2013-14

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Pradip Kapasi CAFor Respondent: Shri Mahesh Akhade CIT DR

Section 10Section 132Section 139Section 143Section 153A

Mohan Thakurdas Gurnani, Navi Mumbai vs. Dy CIT -CC-5(2), Mumbai

The appeal of the assessee is partly allowed for assessment year 2014 – 15 also

ITA 711/MUM/2021[2012-13]Status: DisposedITAT Mumbai17 Nov 2023AY 2012-13

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Pradip Kapasi CAFor Respondent: Shri Mahesh Akhade CIT DR

Section 10Section 132Section 139Section 143Section 153A

Mohan Thakurdas Gurnani, Navi Mumbai vs. Dy CIT -CC-5(2), Mumbai

The appeal of the assessee is partly allowed for assessment year 2014 – 15 also

ITA 710/MUM/2021[2011-12]Status: DisposedITAT Mumbai17 Nov 2023AY 2011-12

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Pradip Kapasi CAFor Respondent: Shri Mahesh Akhade CIT DR

Section 10Section 132Section 139Section 143Section 153A

Mohan Thakurdas Gurnani, Navi Mumbai vs. Dy CIT -CC-5(2), Mumbai

The appeal of the assessee is partly allowed for assessment year 2014 – 15 also

ITA 709/MUM/2021[2014-15]Status: DisposedITAT Mumbai17 Nov 2023AY 2014-15

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Pradip Kapasi CAFor Respondent: Shri Mahesh Akhade CIT DR

Section 10Section 132Section 139Section 143Section 153A

Mohan Gurnani, Navi Mumbai vs. DCIT Central Cirle - 5(2), Mumbai

The appeal of the assessee is partly allowed for assessment year 2014 – 15 also

ITA 2089/MUM/2021[2010-11]Status: DisposedITAT Mumbai17 Nov 2023AY 2010-11

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Pradip Kapasi CAFor Respondent: Shri Mahesh Akhade CIT DR

Section 10Section 132Section 139Section 143Section 153A

Lokenath Investment Consultants P.Ltd, New Delhi vs. ACIT, Central Circle-8, New Delhi

In the result, the assessee’s appeal is dismissed

ITA 2206/DEL/2019[2014-15]Status: HeardITAT Delhi16 Nov 2023AY 2014-15

Bench: Shri Shamim Yahya & Shri Kul Bharatlokenath Investment Consultants P. Ltd., Vs. Acit, Central Circle 8, 2Nd Floor, 19, Local Complex, New Delhi. Near Pushpa Bhawan, Madangir, New Delhi – 110 062. (Pan : Aabcl5792L) (Appellant) (Respondent) Assessee By : None Revenue By : Ms. Nimisha Singh, Cit Dr Date Of Hearing : 16.11.2023 Date Of Order : 16.11.2023

For Appellant: NoneFor Respondent: Ms. Nimisha Singh, CIT DR

Section 37

protective basis. Thereafter, AO also made ADDITION for unexplained expenditure by observing as under :- “It is established that the assessee company is a paper company and has been utilised for channelizing the unaccounted funds of M/s. Surya Agrotech Infrastructure Pvt. Ltd. Generally the entry operators charge 2-3% of total

DCIT, Central Circle Ajmer, Ajmer vs. Puja Synthetics Private Limited, Bhilwara

In the result, the appeal of the Revenue is dismissed

ITA 87/JPR/2023[2009-10]Status: DisposedITAT Jaipur09 Nov 2023AY 2009-10

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Mukesh Soni (Adv.)For Respondent: Shri A.S. Nehra (Addl.CIT)

Section 115JSection 153ASection 263

only Rs. 10,79,909/-. Thus from these financial information it is very well evident that the investor company is the shell paper company. The ld. DR also drawn our attention to page 169, and argued that there is no stock movement in the financial year 2008-09 in respect ... company is on account of some other credit received in the account of the investor company. Therefore it clearly establish that this companies are paper company register office address that this companies 10 DCIT vs. Puja Synthetics Pvt. Ltd. are at the residential address. The ld. DR also submitted that

ITO, Thane vs. Rajendra Hastimal Mehta, Thane

In the result, the appeal filed by the revenue is dismissed

ITA 2400/MUM/2023[2011-12]Status: DisposedITAT Mumbai01 Nov 2023AY 2011-12

Bench: Shri Pavan Kumar Gadaleito, Ward – 2(1), Vs. Shri Rajendrahastimal Room No. 25, B-Wing Mehta (Huf), 6Th Floor, Ashar It Park Flat No.101/102, Wagle Industrial Estate, C-62, Sector-5, Shanti Thane (W)-400604, Nagar, Mira Road (E), Maharashtra. Thane-401107, Maharashtra. Pan/Gir No. : Aaahr4446M Appellant .. Respondent

For Appellant: Shri.Rajendra.H.Mehta.ARFor Respondent: Shri .G.J. Ninawe.Sr. DR

price reaches the desired level the beneficiary who bought the shares at a nominal price are made to sell it to a dummy paper company of the operator For this, unaccounted cash is provided by the beneficiary which is routed through a few layers of paper companies by the operator ... finally is parked with the dummy paper company that will buy the shares Therefore the AO asked the Appellant to furnish certain details to prove the genuineness of the share purchase transactions of the companies mentioned above. The reply submitted by the Appellant was not found satisfactory

Accion Africa-Asia Investment Company, Noida vs. ACIT International Taxation Circle 1(1)(1), New Delhi

In the result, the appeal is allowed, as indicated above

ITA 1815/DEL/2023[2020-21]Status: HeardITAT Delhi26 Oct 2023AY 2020-21

Bench: Shri Saktijit Dey, Vice- & Dr. B.R.R. Kumarassessment Year: 2020-21 . Accion Africa-Asia Vs. Acit, Investment Company, International Taxation, C/O- Ankul Goyal, Advocate Circle-1(1)(1), Azb & Partners, A-8, Sector-4, New Delhi Noida Pan :Aajca1104H (Appellant) (Respondent)

Section 143(3)Section 144C(13)

aforesaid analysis of facts, the Assessing 3 | P a g e AY: 2020-21 Officer observed that the assessee is merely a paper company set up for availing treaty benefits. Accordingly, he issued a show- cause notice to the assessee to explain, why the exemption claimed under the treaty provisions

Himanshu Goyal, Dhamtari vs. Pr. CIT-1, Raipur

In the result legal grounds raised by the assessee under present appeal is allowed

ITA 144/RPR/2022[2012-13]Status: DisposedITAT Raipur25 Oct 2023AY 2012-13

Bench: Shri Ravish Sood, Jm & Shri Arun Khodpia, Am आयकर अपील सं./Ita No.144/Rpr/2022 (Assessment Years: 2012-2013) Himanshu Goyal, Vs Pr.Cit, Raipur-1, Raipur Nawagaon Road, Dhamtari, 793773, (C.G.) Pan No. :Agtpg1746Q (अपीलाथ" /Appellant) (""यथ" / Respondent) .. िनधा"रती क" ओर से /Assessee By : Shri Praveen Khandelwal & Praveen Goyal, Cas राज"व क" ओर से /Revenue By : Smt. Ila M. Parmar, Cit-Dr सुनवाई क" तार"ख / Date Of Hearing : 09/10/2023 घोषणा क" तार"ख/Date Of Pronouncement : 25/10/2023 आदेश / O R D E R

For Appellant: Shri Praveen KhandelwalFor Respondent: Smt. Ila M. Parmar, CIT-DR

Section 143Section 263

received huge funds of Rs.30,50,206/- as per the report of the DDIT, Kolkata, the said DLS Exports Pvt. Ltd. was a paper company having no financial credentials and carrying out no business activities. It was the belief of the AO while recording the reasons u/s.148 ... case of Mr. 18 Yogesh Goyal also the basis of reopening u/s 147 was that the assessee has received huge funds from Paper Company M/s DLS Exports Pvt. Ltd. having no financial credentials and carrying out no business activity. It was the contention of Ld. AR that the revisionary proceeding