TaxTMI 
TaxTMI 
2022 (5) TMI 212
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....twithstanding the above grounds of appeal, the Ld. CIT(A), Bathinda has erred on facts and law in confirming the action of the AO of making an addition of Rs.2,58,00,000/- u/s 68 of the Income Tax Act, 1961 on account of share capital/premium received by the assessee while rejecting the contention of the assessee that the Proviso to section 68, putting the onus on the person in whose name credit is recorded in the books of the assessee company to offer an explanation about the nature and source of sum so credited, was brought on the statute w.e.f A.Y. 2013-14 but the case of the assessee company related to A.Y. 2012-13. Hence the provisions of the amended section 68 did not apply to the case of the assessee company and, thus, the CIT (A) has ignored the binding judgment of Hon'ble Supreme in the case of Roshan Di Hatti as reported in 107 ITR 938. 4. That the Ld. CIT(A), Bathinda erred on facts and law in confirming the action of the AO of making an addition of Rs.2,58,00,000/- u/s 68 of the Income Tax Act, 1961 on account of share capital/premium received by the assessee despite the fact that this was the first year of incorporation of the company and it was not possible for asse....
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.... Shri Akshay Bharadwaj was investigated independently at Faridabad by the Investigation Wing of the Department and was found to be involved in making such shell companies and routing unaccounted money through a web of such companies. Report of such investigation was forwarded to the Assessing Officer. It can, thus, be called an investigation by the AO for the purposes of forming his opinion as to the genuineness of the share creditors. Empty formality of merely providing the names of the subscribers of share capital do not establish the genuineness in any manner whatsoever. The paper *documentation of filing returns in the ROC regarding the existence of the companies is all too well known to be considered as genuinely genuine. In the circumstances and also preponderance of the surrounding facts, it is apparent that the unaccounted money of the promoters of the appellant company have been brought in and clothed as share capital and premium. It cannot but be treated as income exigible to tax under the provisions of section 68 of the Act. All the grounds of appeal pertaining to this issue are, thus, rejected. It is ordered accordingly." 6. The ld. Counsel for the assessee has argued ....
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.... in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. Domains Enterprises Pvt. Ltd. 30 to 40 Confirmation of the amount contributed as 'Share Capital' and 'Share Premium' in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. M/s. Nachiketa Agotech Pvt. Ltd. 41 to 54 Confirmation of the amount contributed as 'Share Capital' and 'Share Premium' in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. M/s. Kabir Enterprises Pvt. Ltd. (Now known as Blooms Tax Pvt. Ltd.) The document of change of name is attached at page 56. 55 to 70 Confirmation of the amount contributed as 'Share Capital' and 'Share Premium' in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. M/s. Legacy Mercantile Pvt. Ltd. 71 to 96 Confirmation of the amount contributed as 'Share Capital' and 'Share Premium' in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. 9. It was argued by the Ld. Counsel that before the CIT(A), sub....
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....of law before the Hon'ble High Court and referred to para 6 at page 112 of the said judgment wherein, the Hon'ble Bombay High Court has relied upon the judgment of the 'Vodafone India Services (P) Ltd.' vs. Union of India and also the judgment of the Apex Court in the case of G. S. Homes & Hotels P. Ltd. and also one unreported judgment of the Hon'ble Bombay High Court in the case of 'Idea Cellular Ltd. vs Union of India' reported in 40 taxmann.com 112 and whereby dismissing the appeals of the revenue, it was held that the Share Premium being on capital account cannot be brought to tax as income and finally, same dictum have been by rendered by the Hon'ble High (CLPB-II, Pg. 114). 12. The Ld. Counsel further relied upon the decision of the Bombay Bench of the ITAT in the case of 'Arogya Bharti Health Park Pvt. Ltd.', reported in ITA NO. 2943/Mum/2014 (Mumbai), (CLPB. Pg. 89 to 109) and in that judgment, on the same issue of the share capital, where the addition was made u/s 68 on the basis that amendment in Section 68 by Finance Act, 2012 had a retrospective in nature for the year involved was Assessment Year 2010-11 wherein after considering each & every aspect in detail and at l....
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.... 16. The Ld. Counsel also relied upon the decision of the Hon'ble Apex Court in the case of 'Adamine Construction (P) Ltd.' reported in [2018] 99 taxmann.com 45 (SC) and also on the other decisions placed on the paper book to substantiate that no fault has been found by the lower authorities about the PAN Numbers of the subscribers and the confirmations received by the Assessing Officer on the basis of the enquiries made u/s 133(6) and it was argued, that while the Assessing Officer made the addition by relying upon the report of the 'Investigation Wing', which was not valid as per the decision of the Delhi High Court in the case of 'PCIT vs. Krishna Devi' reported in 431 ITR 361, copy placed at paper book 49 to 57, in which, similar facts are there and rather the facts in the case of the assessee were strong in the sense that enquiries u/s 133(6) were made, which were replied by the respective subscribers to the Share Capital/Share Capital and, thus, the confirmation of addition by the CIT(A) on the preponderance of the surrounding facts was not proper and he prayed for the deletion of the addition. 17. The Ld. DR relied upon the findings of the Assessing Officer and the CIT(A) ....
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.... Ltd. (Supra). In both the above cases the court has held that the amount received on issue of share capital including premium are on capital account and cannot be considered to be income." 20. It is seen that there was an amendment in Section 68 by Finance Act, 2012 w.e.f. 01.04.2013, which placed heavy onus on the assessee-company, where the sum credited consists of the Share Capital, Share Application Money and Share Premium which was not there upto AY 2012- 13. Similarly, there is an amendment to Section 56(viib) by Finance Act, 2012 w.e.f. 01.04.2013, coupled with the definition of income as per clause (xvi) of Section 2(24) of the Income Tax Act, 1961 which was also amended from 01.04.2013. Thus, all these sections were amended from 01.04.2013 and which have been analyzed at length by the Bombay Bench of ITAT in the case of 'Arogya Bharti Health Park P. Ltd. (supra)', copy placed at CLPB, pages 81 to 109 and this issue of Section 68, 56(2)(viib) and Section 2(24) has been threadbare discussed and also analyzed the provisions of Section 68 r.w.s. 56(2)(viib) along with the amendment to Section 2(24) of the Act and it was held in para 18 & 19 of that judgment, that all these t....