TaxTMI 
TaxTMI 
2021 (6) TMI 607
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....ncome Tax failed to appreciate- that the Assessing officer erred in adding a sum of Rs. 6,22,00,000/- being introduction of share capital by the directors of the appellant company during the impugned assessment year as unexplained share capital u/s.68. 4. For that the provisions of Section68 are not invocable in the facts and circumstances of the case. 5. For that the commissioner of Income Tax (Appeals) and the Assessing Officer failed to appreciate that the appellant having proved the identity and creditworthiness of the shareholders and the genuineness of transaction, the addition uls.68 was not warranted in the facts and circumstances of the case. 6. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer erred in making the above addition on mere conjectures, surmises and suspicions. 7. For that the Commissioner of lncome Tax (Appeals) erred in not considering the explanation and submissions furnished by the appellant. 8. For that the appellant objects to the levy of interest u/s 234A, 234B and 234C of the Act. 3. At the outset, we find that the appeal filed by the assessee is time barred....
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.... financial statements to prove creditworthiness and further filed confirmation letters along with their bank statements to prove genuineness of transactions. The ld.CIT(A) after considering relevant submissions of the assessee, has held that although, the assessee has proved identity and creditworthiness of subscribers to the share capital but, failed to prove genuineness of transactions in order to escape from provisions of section 68 of the Act. Therefore, he opined that so called increase in share capital was not proved beyond doubt and hence, for the detailed reasons stated in his appellate order confirmed additions made by the AO. The relevant findings of the ld.CIT(A) are as under: 6. The above table shows all instances where cash is introduced by the directors/shareholders, which is seen reinvested into TDRs during the same day itself or within the next few days. Some of the TDRs are closed on 3112.2015 and 30.01.2016 respectively. Since these funds were invested in the form of TDRs during 314th of the year, it cannot be considered to be available for working capital requirement during the entire year. Omkara Assets Reconstruction Pvt Ltd has increased its paid up c....
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....of Companies. As per the disclosure before the Registrar of Companies, there is no stamp duty paid by Omkara Assets Reconstruction Pvt Ltd. The date of incorporation of the company is given as 19.03.2014 i.e. F.Y. 201 3-14. As per Form No PAS-4 which is private placement offer letter dated 20.11.2015 Point No 2 under the heading 'particulars of the offer' to the query amount which the company intends to raise by way of securities, it is mentioned as Rs. 8 crores. Another question raised is contribution being made by the promoters or directors either as part of the offer or separately in furtherance of such objects is given as 2,88,00,000/-. This means the promoter/director contribution is only Rs. 2.88 crores. 8. As per section 68 of the Income Tax Act, 1961, any credit appearing in the books in the form of share application money, share premium, share capital or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless the person in whose name such credit is recorded in the books of such company offers an explanation about the nature and source of such sum so credited and such explanation in th....
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....e purpose of running the company The Board resolution dated 23.11.2015 as well as the details of private placement offer has specifically stated that the purposes and objects of the private placement offer (here in this case share capital introduced) was keeping in view the expansion and growth of the company. 10. Based on the above discussion it is held that the share capital introduced by the directors/shareholders in Omkara Assets Reconstruction Pvt Ltd has not been satisfactorily explained before the assessing officer as well as before the CIT (Appeals). The addition of Rs. 6,22,00,000/- made by the A.O. under sec 68 of the IT Act, 1961, is upheld. 11. Some of the case laws identified by the assessee like High Court of Bombay Pr.CIT Vs Real Value Realtors (Pvt) Ltd (2020) 113 taxmann.com 62 (Bombay) held that, since the substantial part of share application money was received in earlier A.Ys. addition could not be made in the current A.Y.. In the case of Pr.CIT-2, Thane Vs Shri Rajalakshmi Textile Park (Pvt) Ltd (2020) 113 taxmann.com 2 (Bombay), it was held that since all parties who had subscribed to shares appeared before A.O. and submitted confirmation let....
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....ral Circle-2 Jaipur, it was held that since the assessee produced the copy of the share of application, copy of PAN and Bank Account to prove identity, genuineness and creditworthiness of the cash credited, share application money could not be added u/s 68. 13. The assessee's case is distinguishable from above discussed cases. Here in the assessee's case the share capital introduced was never utilized for the purpose it was meant to be and invested in the form of FD. It is only investment in FD made by the company camouflaged in the guise of share capital introduced. The addition made by the A.O. u/s 68 as unexplained share capital introduced to the tune of 6.22 crores is upheld as it has not been satisfactorily explained. 5. The ld.AR for the assessee submitted that the ld.CIT(A) having accepted the fact that the assessee has proved identity and creditworthiness of subscribers of share capital has failed to confirm additions made by the AO on share capital u/s.68 of the Act, by holding that genuineness of transactions was not proved beyond doubt only for simple reason that the assessee has not furnished share certificates issued to subscribers of share capital. The ....