TaxTMI 
TaxTMI 
2018 (12) TMI 816
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....thereof." 3. As the learned Counsel for the assessee has not pressed this issue and want to withdraw under instructions of the assessee. The learned Departmental Representative was asked and he has not objected. Hence, we dismiss this issue of re-opening as withdrawn. 4. The next issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO on share premium treating the same as unexplained under section 68 of the Act. For this assessee has raised the following ground No. 2: - "2. On the facts and in law, the learned CIT(A) has erred in confirming the addition of Rs. 6,10,50,000/- made by the AO under section 68 of the I.T. Act, 1961.." 5. Briefly stated facts are that during the course of assessment proceedings the AO noticed that the assessee has received share premium from the following parties: - Name of the persons/ investors Amount Radhe Krishna Chemicals and Minerals pvt. Ltd. 4650000 Ambuj Mercantile Pvt. Ltd. 1500000 Amul Mercantile Pvt. Ltd 2500000 Vibhuti Mercantile Pvt. Ltd 1800000 Rawgold Securities Pvt. Ltd 5000000 Aries Mercantile Pvt. Ltd 1500000 Frank Mercantile Pvt. ....
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.... concerns accounts. 11) Closely held companies usually receive share capital subscriptions from friends, relatives and not from unrelated/ unknown third parties/ general public. In this case, there is no relationship or connection between the investors and the assessee 12) Merely producing PAN number or balance sheet etc. of investing company, do not establish the identity of the person The actual and true identity of the person or a company is the business undertaken by them. In the present case no business activity is being carried out by the investing companies except for providing the accommodation entries of various types in lieu of cash. 13) Identity. creditworthiness or genuineness of the transaction is not established by merely showing that the transaction was through banking channels or by account payee instrument." 7. According to AO although these companies exists on MCA (Ministry of Corporate Affairs) website but despite summon issued under section 133(6) of the Act, which could not be served on the given addresses, the parties did not attend to the proceedings. According to AO, the share premium of Rs. 6,10,50,000/- is unexplained in view ....
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....e director Shri Vinit Aggarwal stated in his deposition that he do not know shareholders personally. The learned Counsel explained that at the time of issuance of shares, the issue of share was handled by the director Mr. Bhupendra Ballala, who unfortunately died in a road accident on 02.09.2010 and hence, the director who attended before the AO did not know much about shareholders. The learned Counsel for the assessee stated that since all the primary details were properly filed before the AO and who did not make any enquiry or no effort on the part of the revenue was made to ascertain the veracity of these shareholders either genuine of transaction or sources or creditworthiness of transaction. The learned Counsel for the assessee stated that identity of the parties are proved beyond doubt as these shareholders have been on the register of MCA and on the Register of Income Tax Department as their PAN No. is filed before the Assessing Officer. All are assessed to Income Tax regularly and even latest returns of income were made available to the Assessing Officer. Even the capacity of the person is also proved beyond doubt as the shareholders had given share premium and share capita....
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....isdiction, ITR acknowledgement, confirmation dated 1.7.14, bank statement, audit report balance sheet 31.3.09 of aarika steels and metal private limited. (vi) Company master details, AO jurisdiction, ITR acknowledgement, confirmation dated 1.7.14, audit report balance sheet 31.3.09 of raw gold securities private limited (vii) Company master details, AO jurisdiction ITR, conformation dated 1.7.14, bank statement, audit report balance ehseet 31.3.10 ITR acknowledgement of amul mercantile private limited. (viii) Company master details, AO jurisdiction, ITR acknowledgement, confirmation dated 1.7.14, bank statement, PAN card, audit report balance sheet 31.3.09 of frank mercantile private limited. (ix) Company master details, AO jurisdiction, ITR acknowledgement, confirmation dated 1.7.14, of aries mercantile private limited (x) Company master details, AO jurisdiction, ITR acknowledgement, confirmation dated 1.7.14, of aries mercantile private limited (xi) Company master details, AO jurisdiction, ITR acknowledgement, confirmation dated 1.7.14, bank statement, audit report balance sheet 31.3.09 of Radhe Krishna chemicals & minerals private limited (....
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.... the Act. 12. We have gone through the case laws relied on by the assessee of Hon'ble Bombay High Court in the case of CIT vs. Orchid Industries Pvt. Ltd. (2017) 397 ITR 136 (Bom.) wherein honorable High court has considered the decision of division Bench of Bombay High Court in the case of CIT vs. Gagandeep Infrastructure P. Ltd (2017) 394 ITR 680 (Bom) & Hon'ble Supreme Court in the case of CIT vs. Lovely Exports (P) Ltd (2008) 216 CTR (SC) and held as under: - "5. The Assessing Officer added Rs. 95 lakhs as income under Section 68 of the Income Tax Act only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account. 6. The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing pay....
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....tated that he has not met any of the above parties and the purchases were made through broker. According to the AO, the assessee failed to establish the genuineness of the purchase and accordingly, he made addition of unproved purchase at Rs. 14,815,693/- to the return income of the assessee. The AO estimated the profit rate at 12.5% being possible profit by observing in Para 3.8 as under: - "3.8 In this case, the assessee is a trader. It has not produced any substantial evidence, which would prove the genuineness of its purchases. Therefore, considering the facts of the case and existing legal position, the 12.5% of purchases of Rs. 14,815,693/- i.e. the amount of Rs. 1,851,960/- is added back to the total income of the assessee. As the assessee has filed inaccurate particulars of income, the penalty proceedings are initiated separately under section 271(1)(c) of the Income-tax act 1961." Aggrieved, assessee preferred the appeal before CIT(A), who restricted the addition at 4% of the bogus purchases amounting to Rs. 5,92,630/- by observing as under: - "6.6 I have considered the submissions carefully. The parties were not produced before the assessing officer n....