TaxTMI 
TaxTMI 
2018 (10) TMI 1295
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.... The authorized share capital of the company is Rs. 7,50,000/- (75000 shares of Rs. 10 each) and subscribed capital is Rs. 7,14,000/- (71400 shares of Rs,10 each). The assessee company has not done any business during the year under consideration and only income of Rs. 4.246/- has been offered for taxation. During the year under consideration, the only significant feature of the assessee company is that the assessee has shown Rs. 3,07,00,000/- as securities premium amount. The assessee has made a fresh allotment of 61400 shares of Rs. 10 each at a premium of Rs. 490/- per share. The details of share premium received are as under - Sr. No Name of the Allottee Address of Allottee No.of shares allotted Total amount received 1. Agradooti Vanijya Pvt.Ltd. 1, R.N. Mukherjee Road, Mezanine Floor.Room No. 12, Kolkatta-700001 10400 52,00,000 2. Anuska Vanijya Pvt.Ltd. 1, R.N. Mukherjee Road, Mezanine Floor,Room No. 12, Kolkatta-700001 12000 60,00,000 3. Blue Lagoon Vanijya Pvt.Ltd. Moolchand Lalji Building, Zaobvawadi, Room No. 3, Thakurdwar, Mumbai-400 002. 1800 9,00,000 4. Morning Star Vanijyua Pvt.Ltd. 4, Netaji Subhash....
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....s which clearly suggest that companies who are investing in big ways in various other companies are not doing any business at all. The companies do not have any asset and the investment made by the share applicant is highly risky and there is no guarantee that their investment is either secure or they will receive any return from their investment. Not only this, it is almost certain that, seeing the profile of the assessee company, that the investment made by the share applicant will be lapsed in due course of the time. iv) The name of the Directors in all companies is appearing to be a set of cartel who are involved in the process of just arranging share application money. This fact derive more strength from the fact that the companies who are applying the share application money on premium in the assessee company have also generated money through share application money. Neither the assessee comaaov: nor the applicant company has any business or assets. Therefore, the investment made in the assessee company and investment made in applicant' company by some other parties are totally questionable and their reasonableness are certainly under the grab of suspici....
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....of share prices. Thereafter the A.O. distinguished the decision referred by the assessee. He concluded as under: 16. Therefore, on the basis of discussion as made above, it is amply clear that the whole series of the transaction are structured and created only for the purpose of avoiding payment of taxes by way of share application money. In view of the above stated facts, the share application money of Rs. 307.00 lakhs (including the premium of Rs. 490 per share) shown in the books of the assessee treated as a nongenuine transaction and, therefore, it is added back to the total income/of the assessee by treating the same as unexplained cash credit u/s 68 of the IT. Act, 1961/and penalty u/s 271(1}(c) r.w. Explanation 1 is separately initiated for furnishing the inaccurate particulars of income . 7. Against the above order, the assessee appealed before the ld. CIT(A). 8. The ld. CIT(A) elaborately reproduced the submissions of the assessee. He also admitted additional evidences pertaining to valuation report for the value of the shares. In doing so, the ld. CIT(A) emphasized that the ld. CIT(A) had full power to make further necessary enquiry. In this regard, he refe....
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....IT vs. Lovely Exports (P) Ltd. [2008] 216 CTR 195 (SC). He referred to certain case laws for the proposition that the share premium cannot be treated as revenue receipt. He referred to the decision of the ITAT, Mumbai in the case of Green Infra Ltd. vs. ITO 159 TTJ 728 (Trib-Mum). He also found that the provision of section 56(2)(viia) and 56(2)(viib) cannot be applied for the impugned assessment year as they are applicable for assessment year 2013-14 onwards. He further held that case laws relied upon are distinguishable on facts. He accordingly held that the additions made are not justified. 10. Against the above order, the Revenue is in appeal before us. 11. We have heard both the counsel and perused the records. Upon careful consideration, we note that the A.O. has made a detailed enquiry. He also obtained a report from the Investigation Wing of Kolkata. All the companies who provided share capital to the assessee are from Kolkata. From the analysis of all the reports and business profiles the A.O. has given a finding that these companies do not have credibility, that they have common directors and shareholders. That there addresses are also similar. That these are not....
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....n Shreehari Vinimay Private Limited, Shri Amalesh Sadhu is also of the same. The address of Shri Mangelal Joshi, a director in Anuska Vanijya Private Limtied is also the same. Again Shri Hanuman Mal Paiwal, who is a director in Rockers Tradelink Private Limited also has the same address. There is another shareholders namely, Shri Binod Kumar Saraswat in Rockers Tradelink Private Limited who is son of Shri M. P. Saraswat. Both of the directors of the assessee company are also director in two of the other share applicant companies. 14. There are umpteen such similarities in names, address and common shareholder ship and director-ship which leave no iota of doubt that these companies who have given share application to the assessee company are interlinked. The main activity of these companies has been found by the A.O. to be routing of share capital and share premium. Hence, the observation of the ld. CIT(A) that the A.O. has given misleading information is itself misleading and does not deserve to be sustained. When it is obvious that there is such close proximity in these companies and the evidence has been given by the A.O. that it is a modus operandi to route money in the fo....