AI Drafter 
TaxTMI 
TaxTMI 
2020 (4) TMI 519
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....y the Learned Assessing Officer under section 68 of the Act being the premium portion of the share application money received by the Appellant during the year under appeal. 5. The Ld. CIT (A) erred in further enhancing the aforesaid quantum of addition under section 68 of the Act to Rs. 8,99,51,300/-. 6. The Ld. CIT (A) and the Ld. AO failed to appreciate the fact that the Appellant had duly discharged its onus cast upon it under the provision of section 68 of the Act by not only explaining the nature and source of the impugned credits in the books of account but also furnishing name, address, PAN, financial statements, confirmation letters and bank details along with copy of all the share allotment letters. 7. The Ld. CIT (A) erred in holding that the Appellant failed to furnish credible and verifiable oral or documentary evidences to controvert the findings of the Ld. AO, when such obligation is not cast by the provisions of the Act as it stood for the relevant year. 8. The Ld. CIT (A) erred on facts to hold that the valuation of equity shares at premium was illogical/ dissatisfactory without disputing the valuation certificate furnished by the....
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....f the Income-tax Rules, 1962. 18. Notwithstanding anything above, the Ld. AO erred in not providing to the Appellant with a copy of the reports obtained from the Ld. ADIT (Investigation) which was the sole basis for framing the impugned assessment, thereby, violating the basic principle of natural justice. 19. Notwithstanding anything above, the Ld. AO erred in adding a sum of Rs. 3,82,80,000/- with regard to investment by M/s Matajwala Investments and Infrastructures Private Limited wherein the source of investment was already subjected to tax, despite the Appellant submitting the Income tax returns and the Assessment Orders of the said company. The Ld. CIT (A) erred in confirm the said addition. 20. The Ld. CIT (A) erred in upholding the order of Ld. AO levying interest u/s. 234B and 234C of the Act. The Appellant seeks your leave to add, alter, amend or delete any of the grounds urged at the time of hearing. 2. It was submitted by learned AR of the assessee that in the present case, the assessee has established identity and credit worthiness of the investors and has also established genuineness of the transactions and hence, the addition ma....
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.... Hon'ble Apex Court as well as the earlier judgment of Hon'ble Delhi High Court are ex-parte orders and hence, the matter was not properly represented by that assessee before these Courts i.e., Hon'ble Delhi High Court and Hon'ble Apex Court and applicability of these judgments should be examined after comparing the facts in both cases and the same cannot be applied blindly. He pointed out that in that case, it is observed by Hon'ble Apex Court in para No.3.9 of the judgment that some of the investor company were found to be non-existent and almost none of the companies produced bank statements to establish the source of funds for making such a huge investment in the shares even though they were declaring a very meagre income in their returns. He submitted that in the present case, bank statements of all the companies are available along with balance sheet of all these companies and in the reply submitted by them before ADIT, Investigation Unit 4(3), Kolkata, they specifically explained about source of purchase of shares of the assessee company and these replies are available on pages 1 to 73 of the Paper Book No.3. He also submitted that in the case of NRA Iron & Steel Pvt. Ltd. (....
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....to the total income of the Assessee for the assessment year in question. 12. In the present case, the A.O. had conducted detailed enquiry which revealed that : i. There was no material on record to prove, or even remotely suggest, that the share application money was received from independent legal entities. The survey revealed that some of the investor companies were non-existent, and had no office at the address mentioned by the assessee. For example: a. The companies Hema Trading co. Pvt. Ltd. and Eternity Multi Trade Pvt. Ltd. at Mumbai, were found to be non-existent at the address given, and the premises was owned by some other person. b. The companies at Kolkatta did not appear before the A.O., nor did they produce their bank statements to substantiate the source of the funds from which the alleged investments were made. c. The two companies at Guwahati viz. Ispat Sheet Ltd. and Novelty Traders Ltd., were found to be non- existent at the address provided. The genuineness of the transaction was found to be completely doubtful. ii. The enquiries revealed that the investor companies had filed returns for a n....
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....conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be placed on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a legal obligation to prove the receipt of share capital/ premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income Of the Assessee. 15. On the facts of the present case, clearly the Assessee Company - Respondent failed to discharge the onus required under Section 68 of the Act, the Assessing Officer was justified in adding back the amounts to the Assessee's income. 16. The Appeal filed by the Appellant - Revenue is allowed. In the aforesaid facts and circumstances, and the law laid down above, the judgment of the High Court, the ITAT, and the CIT are hereby set-aside. The Order passed by the AO is restored. 6. From the above paras reproduced from the judgment of the Hon'ble Apex Court, it comes out that in that case, some of the investor companies were non-existent....
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....refund of loan Rs. 10 lakhs and Rs. 75 lakhs from M/s. M L M Exports Pvt. Ltd., and M/s. Goel Fintrade Pvt. Ltd., and the address and PAN of both these companies were also provided. This company has also provided justification for premium payment. 7. Similarly, on pages 15 to 18 of this Paper Book is the reply of 4th Company M/s. Eklavya Tradecom Pvt. Ltd. and this company has also provided bank statements, copy of income tax returns along with audited balance sheet and auditors report for the relevant period in which transactions with assessee company has taken place. Regarding the source of investment, it was explained by this company that the source of payment was receipts from sundry debtors and the name two such debtors along with their addresses and PAN was provided i.e., M/s. Rishikesh Tradecom Pvt. Ltd., and M/s. Sewak Vypaar Pvt. Ltd. This company has also given a writeup on justification for premium paid. Similarly, on pages 19 to 22 is the reply of 5th company M/s. Giriraj Housing Pvt. Ltd. This company has also provided bank statements, copy of income tax returns along with audited balance sheet and auditors report for the relevant period in which transactions with a....
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....tification of premium payment. 8. Similarly, the reply of 10th company M/s. Nirbhay Plastic Pvt. Ltd., is available on pages 41-44 of paper book and this company has also provided the same documents i.e. copy of bank statements, copy of income tax returns along with audited balance sheet, directors report and auditors report and regarding source of investment, it was explained by this company that investment was made out of refund of loan along with interest from a company M/s. Zenom Vinimay Pvt. Ltd., on 06.07.2011 and 04.07.2011 and has provided the address and PAN of that company M/s. Zenom Vinimay Pvt. Ltd. Justification for premium payment is also given by this company. The reply of 11th company M/s. Orchid Trexim Pvt. Ltd. is available in pages 45 to 48 of the Paper Book No.3 and all the relevant documents are also provided by this company such as copy of bank statement, copy of income tax returns along with audited balance sheet, directors report and auditors report. This company has also provided details about source of investment as well as justification for premium payment. Reply of 12th company M/s. Overall Realtors Pvt. Ltd. is available in pages 49-53 of the Paper B....
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.... this company that an amount of Rs. 27 lakhs was received from M/s. Link Tradecom Pvt. Ltd., on 04.07.2011 and the address and PAN of this company is provided and it was also submitted that Rs. 25 lakhs was received from M/s. Rishikesh Tradecom Pvt. Ltd. on 05.07.2011 and the address and PAN of this company is also provided. Justification of share premium payment is also submitted by this company. On pages 73-74, is the reply of 18th company M/s. Zenom Vinimay Pvt. Ltd. This company has also provided all the documents such as the copy of bank statement, copy of income tax returns along with audited balance sheet, directors report and auditors report etc. and regarding source of investment, it was explained that on 30.06.2011, the company received refund of loan of Rs. 10 lakhs from Goel Fintrade Pvt. Ltd. of whose address and PAN is also provided. This company has also provided justification for premium paid. 9. 19th investor company is M/s. Matajwala Investments and Infrastructure Pvt. Ltd. from whom an amount of Rs. 382.80 lakhs was received. The documents of this company are not available in Paper Books 2 or 3. Regarding this company, it is seen that on pages 5 to 6 of Assess....
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....sis that the investor company was not able to explain the source of investment, no addition can be made in the hands of the investee company by alleging that the investment amount is the money of the investee company because once the addition is made in the hands of the investor company, source of investment has to be accepted as explained for the purpose of deciding the source of investment in the investee company. 12. Second most important objection of department is regarding receipt of share premium of Rs. 240 per share for having face value of Rs. 10 per share. The judgment of Hon'ble Apex Court in the case of M/s. NRA Iron & Steel Pvt. Ltd., (supra) is also mainly on this basis that the assessee in that case could not explain the justification of share premium of Rs. 190 per share for a share having a face value of Rs. 10 per share. In the present case, the share premium is more at Rs. 240 per share as against Rs. 190 per share in that case but in the present case, the assessee has explained regarding the justification of share premium by producing Share valuation Report of an. Approved Valuer whereas it is noted by Hon'ble Apex Court in para No.12(iii) of that judgment tha....