2018 (10) TMI 1295

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.... 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 Road, 1st floor, Kolkatta-700001. 9700 48,50,000 5. Rockers Tradeling Pvt.Ltd. 29B Rabindra....

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.... 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 suspicion. The assessee company's business profile and its share applicant's business profile is not able to convince that they can generate such a huge share premium on....

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....on 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 referred to various decisions including that from the Hon'ble Bombay High Court in the case of Smt. Prabhavati S. Shah vs. CIT [1998] 231 ITR 1 (Bom). The ld. CIT(A) noted that full details have been submitted and verified by the A.O. He n....

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....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 genuine companies. That it appears to be a structured arrangement for routing the money from one company to another. The directors and shareholders are somewhat same and appear to be related. The A.O. has also found the share premium not convincing. 12. Now while rebutting the findings of the A.O., t....