2018 (10) TMI 1651

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..... 2. The grounds of appeal filed by the revenue read as under: 1. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in deleting the addition of Rs. 2,44,50,000/- made under section 68 of the Income tax Act, on the ground that the identity and creditworthiness of the share applicant as well as the genuineness of the transaction were proved? 2. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in deleting the addition of the aforesaid amount on the ground that the addition was perverse having regard to the evidence and the material on record. 3. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in holdin....

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....k statement of BCPL. The AO drew a conclusion that BCPL might be an associate/group company of the assessee. He also observed that as per the balance sheet, BCPL had no accumulated profits; in fact it had accumulated loss of Rs. 1,33,413/-. The total capital base of the company was Rs. 39,24,060/- and the entire reserve and surplus of Rs. 37,85,81,940/- was the security premium received by BCPL. During the Financial Year (FY) 2009-10, BCPL had received share capital subscription of Rs. 12,98,000/- along with share premium of Rs. 12,85,02,000/- @ Rs. 99 per share. The company had no investment or fixed asset. With the above observations, the AO came to a finding that BCPL had no business credentials to command security premium as huge as Rs.....

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....edit u/s 68 of the Act. 4. Aggrieved by the order of the AO the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) observed that the AO safely ignored the reply filed by the assessee on 11.03.2013 which explained fully the identity, capacity of the investor and genuineness of transaction. The investor company is in existence for a period of more than six years and its own funds aggregated to Rs. 38,25,06,000/-. Moreover, the said investor company i.e. BCPL was not having secured or unsecured loans, which suggested that its own funds were used in making share application of Rs. 2,44,50,000/-. Thus the Ld. CIT(A) observed that in case of BCPL, the assessee had discharged its onus relating to the identity, capacity of the subscr....

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.... section 78(2) of the Companies Act. Also reliance is placed by him on the decision in CIT v. Precision Finance P. Ltd. (Cal) 208 ITR 465 for the proposition that cash credit can be assessed even if transaction is through cheques. It is stated by him that the genuineness of transaction is in doubt in the instant case as brought out by the AO. Thus the Ld. DR submits that the AO has rightly made the addition of Rs. 2,44,50,000/- u/s 68 and the same be restored. 6. On the other hand, the Ld. counsel of the assessee submits that the Ld. CIT(A) has dealt with the issue of section 78(2) of the Companies Act, 1956 in his order dated 07.03.2014 and rightly held that the utilization of the share premium by the investor company to invest in share....