TaxTMI 
TaxTMI 
2019 (5) TMI 1748
X X X X Extracts X X X X
X X X X Extracts X X X X
....to prove visual activity of business and creditworthiness to make investment of the subscribers. 2. The appellant craves leave to add/alter/modify the grounds of appeal." 2. The ld. Departmental Representative, Mr. Robin Choudhury, submitted that ld. CIT(A) has failed to appreciate that the assessee has not been able to prove the genuineness of the transaction, as well as the creditworthiness of the share applicants. He relied on the order of the Assessing Officer and submitted that the assessee company had allotted share to share subscribing companies i.e. M/s Aggressive Vincom Pvt. Ltd. and M/s Flabby Sales Pvt. Ltd. at a huge premium. He relied on the judgment of Hon'ble Apex Court in the case CIT vs. Durga Prasad More 82 ITR 540 and in the case of Sumati Dayal vs. CIT 214 ITR 801 and submitted that the surrounding circumstances and human probability are to be taken into account by the revenue authorities for arriving at an appropriate decision. He pointed out that summons u/s 131 of the Act was issued to Shree Pankaj Bharech, Director of the assessee company for personal appearance and to produce the investors but none of them appeared. He relied on the decisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of PCIT vs. Chain House International (P) Ltd. in SLP(C) No.1992/2019 order dated 18-02-2019 wherein the finding of the Hon'ble High Court had held that the valuation of share premium is a commercial decisions. He relied on the number of other case laws in support of these contentions, which we will discuss as and when necessary. As regards judgment of the case of Trinetra Commerce & Trade (P) Ltd. (supra) relied upon by the Ld. D/R, he distinguished the same on facts by stating that, Mr. K.P. Kedia had filed an application in the Settlement Commission reflecting undisclosed income and it was not clear as to how the funds of Mr. K.P. Kedia has gone to the beneficiary companies. On these facts the High Court had arrived at the particular conclusions. He submitted that the case of the assessee company is that the funds from the share applicants have been taxed in the hands of the share applicants themselves in orders passed by the Assessing Officer u/s 143(3) of the Act and hence the same cannot be taxed once again as the source is accepted by the Department. 5. Rival contentions heard. On a careful consideration on the facts and circumstances of the case, perusing the papers on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nces, i.e. when the share applicant companies have been taxed on the source of funds in their accounts then an addition can be made u/s 68 of the Act. 8. This Bench of the Tribunal under similar circumstances, in the case of DCIT vs. M/s. Maa Amba Towers Ltd.; ITA No.1381/Kol/2015; Assessment Year 2012-13, order dt. 12th October, 2018, had held as follows:- "3. Mr. Choudhury vehemently contends during the course of hearing that the Assessing Officer had rightly made the impugned addition since the taxpayer had failed to prove identity, genuineness and creditworthiness of the share premium money. He terms the impugned share subscription premium Rs.690/- per share having face value of Rs.10/- each as highly exorbitant. Case laws Sumati Dayal vs. CIT(1995) 214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) is further quoted during the course of hearing that the relevant evidence submitted during the course of assessment has to be considered as per the human probabilities by removing all blinkers. Our attention is thereafter invited to the relevant nuances of such share subscription routing involving multiple layers to plough back unaccounted monies back ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndoned. Leave granted. Heard learned counsel on both sides. We have examined the position. We find that the shareholders are genuine parties. They are not bogus and fictitious. Therefore, the impugned order is set aside. The appeal is allowed accordingly. No order as to costs. 47. In the instant case before us, we also note that the share subscribing companies are duly assessed to income tax. The Ld AR had placed on record the copies of the assessment orders framed in the cases of the share subscribing companies, as noted above. It therefore cannot be disputed that the share subscribing companies are not in existence. From the assessment orders, it is noted that the share subscribing companies are duly assessed to income tax and their income tax particulars together with the copies of respective income tax returns with their balance sheets are already on record. We also find that the Ld. CIT(A) had categorically stated that the scrutiny assessments were framed on the share subscribing companies for the Asst Year 201011 which shows their existence is genuine and transactions carried out by them were the subject matter of examination by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed at by the authorities below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the substantial question of law, this Court in an Appeal under Section 260A of the Income Tax Act cannot reappreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration. 49. We also find that the Hon'ble Apex Court recently in the case of Principal CIT vs Vaishnodevi Refoils & Solvex reported in (2018) 96 taxmann.com 469 (SC) wherein the SLP of the Revenue has been dismissed by the Hon'ble Apex Court. The brief facts of that case were that the addition u/s 68 of the Act was made by the Assessing Officer in respect of capital contributed by the partner of the firm. The Hon'ble Gujarat High Court noted that when the concerned partner had confirmed before the Assessing Officer about his fact of making capital contribution in the firm and that the said investment is also reflected in his i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not been approved by the Supreme Court. [Para 54]" (b) In the case of CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245/394 ITR 680 the Revenue contended that the fact that the shares were issued at high premium raised suspicion on the genuineness of the transactions. While dismissing this plea raised by the Revenue, the Hon'ble Bombay High Court held as under: (e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tment was available but not discussed by the Assessing Officer. Had he cared to do so, the identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants would have been apparent. Even otherwise, the share applicants' particulars were available with the Assessing Officer in the form of balance sheets income-tax returns, PAN details etc. While arriving at the conclusion that he did, the Assessing Officer did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee's account to the share applicants' account. As held concurrently by the Commissioner (Appeals) and the Tribunal, these conclusions were clearly baseless and false. This Court is constrained to observe that the Assessing Officer utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents." 51. We also rely on the following judgments of the Coordinate Bench of ITAT Kolkata, where based on same facts, and identical and common gro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eness therefore no disallowance can be made. Besides, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the these three share applicants by submitting the following documents and evidences: 1) Return of ROC, that is, form No. 2 submitted before R.O.C. 2) PAN Number copies of each share subscriber. 3) Copy of Balance Sheet, Profit and loss account of all share applicant companies. 4) Details of investments sold by all share applicant companies. 5).Transaction with the assessee was duly highlighted in the bank statement 6). Explanation along with evidence of source of source of the funds of the share applicant Companies. 7). Audited Accounts of the share holders. 8) Relevant address proofs / Form filed by the share applicants with ROC. 9). Income Tax Return of share applicant companies. 10) Copy of the Bank Statement of Share applicant companies where from the amount was debited. 11) Copies of Bank statement of the assessee company where the share application money and premium were credited. 12). Cheque Number, the amounts subscribed b....