TaxTMI 
TaxTMI 
2019 (7) TMI 745
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....t the assessee company filed its return of income for the assessment year 2011-12 on 29.9.2011 at declaring total income of Rs. 33,93,309/-. The case of the assessee was taken up under scrutiny and statutory notice u/s. 143(2) of the Income Tax Act, 1961 (in short "Act") was issued to the assessee company on 26.9.2012 and served upon the assessee company. Later on detailed questionnaire dated 29.10.2013 was sent to the assessee company alongwith notice u/s. 142(1) of the Act. In response to the same the assessee's AR attended the proceedings from time to time. During the year the assessee company engaged in the business of manufacturing and trading of chemicals. During the course of assessment proceedings, AO observed that that the assessee company has received a share application money of Rs. 1,25,00,000/-. Such share application money was received for the allotment of 12500 equity share of Rs. 10/- each at a premium of 990/-. AO vide notice dated 26.3.2014, asked the assessee to establish the credit worthiness and genuineness of transactions of share application money failing which it would be added as unexplained credit. The assessee has invited share application at a premium....
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....e Act and stated that during the year under consideration assessee raised share application money of Rs. 1,25,00,000/- which would be evident form page 7-9 of the Paper Book from four shares holders and the shares were allotted on 31.3.2012 which would be evident from annual return at page no. 90-94 of the Paper Book. He further submitted that the said allotment was made by issuing shares at Rs. 10/- per share and share premium at Rs. 990/- per share. He further submitted that the AO had made the addition of Rs. 1,21,17,750/- and has accepted the share capital and part share premium and while arriving to the said conclusion he held that the net asset value as per equity share of assessee was Rs. 30.58 per share and, therefore, balance sum was brought as income u/s. 68 of the Act. He further submitted that the AO has invoked provision to section 68 and section 56(2)(viia) and (viib) of the Act. But none of the provisions are applicable to the instant year and infact they are applicable only for the assessment year 2013-14. He further submitted that in identical situation the ITAT, Mumbai in the case of ACIT vs. Goldmohur Design & Apparel Park Ltd. Reported in 96 taxmann.com 375 has ....
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.... especially the Written Submissions and the case laws cited therein submitted by both the parties. We note that the main issue involved in this appeal is relating to addition of Rs. 1,21,17,750/- made u/s. 68 of the Act and during this year assessee raised share application money of Rs. 1,25,00,000/- which is evident from page 7-9 of the Paper Book from four shares holders and the shares were allotted on 31.3.2012 which is evident from annual return at page no. 90-94 of the Paper Book. The aforesaid allotment was made by issuing shares at Rs. 10/- per share and share premium at Rs. 990/- per share. The AO had made the addition of Rs. 1,21,17,750/- and has accepted the share capital and part share premium and while arriving to the said conclusion he held that the net asset value as per equity share of assessee was Rs. 30.58 per share and, therefore, balance sum was brought as income u/s. 68 of the Act. We further note that AO had invoked provision to section 68 and section 56(2)(viia) and (viib) of the Act. But none of the provisions are applicable to the instant assessment year i.e. 2011-12 and infact they are applicable only for the assessment year 2013- 14. We further find that o....
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....e, the Hon'ble High Court held that the three essential tests while con tinning the section 68 laid down by the COUl1 namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on fact it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders. i.e. they are bogus. The Apex Court in a case in this context to the preamended section 68 has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income- tax Officer to proceed by reopening the assessment of such shareholder and assessing officer to tax in accordance with law. It does not entitle the revenue to add the same to the assessee's income as unexplained cash credit. Incidentally in the caseof Green Infra vs. ITO (2013) 38 taxman.com 253/145 ITD 240 (Mum. - Trib.), decided in favour of the assessee and this order was confirmed by Hon'ble High Court in CIT vs. Green Infra Ltd. (2017) 78 taxmann.com 340 392 lTR 7 (Born.). ....
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....case laws relied on by A.O. The material on record clearly support the explanation of assessee that not only in assessment year under appeal but in earlier years also, Mis. STL made investment in assessee company through banking channel supported by the documentary evidence. The Ld. ClT(A) on proper appreciation of the evidence before him, correctly deleted the addition. Therefore, no interference is required in the finding of fact recorded by the Ld. CIT(A). The Departmental appeal has no merit. Same is accordingly dismissed. In the result, Departmental Appeal is dismissed. 5.2 We further note that ITAT, Mumbai in the case of DCIT vs. Varsity Education Management (P) Ltd. 54 CCH 0156 (Mum) has observed as under:- 40. The amendment brought in sec.68 of the Act w.e.f. 1.4.2013 has been held to be applicable from AY 2013-14 onwards by Hon'ble Bombay High Court in the case of Gagandeep infrastructure P Ltd (supra). Even otherwise, the amendment will not apply to the assessee herein as the investor is a SEBI registered Venture Capital Fund. The amendment brought in sec. 2(24) and sec.56(2)(vii) of the Act relating to assessing of excess share premium as income, has been....