TaxTMI 
TaxTMI 
2022 (7) TMI 1298
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.... appeal is as to whether the ld. PCIT was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case. The interconnected issue involved therein is as to whether the ld. PCIT was justified in directing the ld. AO to make an addition of Rs.85,39,480/- in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. The assessee is a private limited company engaged in the business of manufacturing of "insulation foam" in the form of rolls, sheets and tubes. The return of income for the A.Y.2016-17 was filed by the assessee company on 23/11/2016 declaring total loss of Rs.2,00,51,836/-. The return of income was s....
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.... full address of the Shareholders 142(1} notice dated 09 February 2018 03 March 2018 Identity Form FCGPR submissions 142(1} notice dated 09 February 2018 OS March 2018 Genuineness Minutes of the board meeting held on 11 July 2015 and 07 September 2015 approving allotment of shares to the Shareholders 142U) notice dated 09 February 2018 05 March 2018 Genuineness Note on share capital Showcause notice dated 30 November 2018 04 December 2018 Bank statement of Mr Girish Hiranandani showing the payments made to the Assessee Showcause notice dated 30 November 2018 04 December 2018 Genuineness and creditworthi ness Fund transfer form authorising transfer of funds from Mr Mani....
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....iz. identity of shareholders, creditworthiness of shareholders and genuineness of transactions. The ld. AO, however, observed in his order that no details were filed by the assessee and accordingly, made an addition of Rs.8,53,94,800/- representing 85,39,480 shares of Rs.10/- as unexplained cash credit u/s.68 of the Act in the assessment. In the said assessment, the premium component of Re.1/- per share was omitted to be taxed u/s.68. The assessee had preferred an appeal before the Commissioner of Income Tax (Appeals) against the order of assessment, and the same is pending. In order to bring the said premium component of Re.1/- per share to tax, the ld. PCIT invoked revision jurisdiction u/s.263 of the Act and issued a show-cause notice to....
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.... assessee and reiterated the findings of the ld. AO by stating that assessee had not proved the three necessary ingredients of Section 68 of the Act and directed the ld. AO to bring to tax the share premium component also u/s.68 of the Act subject to modification of the figure thereon to the extent of Rs.46,03,578/- instead of Rs.85,39,480/-. Aggrieved, the assessee is in appeal before us. 3.2. The ld. AR argued that assessee had received share capital from its two non-resident shareholders in Foreign Direct Investment (FDI) route. The assessee had allotted shares to its non-resident shareholders at a premium of Re.1/- per share. Hence, the total allotment price is Rs.11/- per share. This allotment price of Rs.11./- per share is duly jus....
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....at bank account to the bank account of the assessee company. These bank statements are enclosed in pages 26-35 of the paper book. The assessee had also furnished independent Chartered Accountant valuation certificate justifying the issue of shares at a premium using DCF method. The ld. AR argued that all these documents collectively prove that the share holders have sufficient creditworthiness to make investment in assessee company. Further, the shareholders had made investment in automatic FDI route by way of transfer of funds through regular banking channels in compliance with FEMA gruidelines and RBI approvals. The assessee had also furnished Foreign Inward Remittance Certificate (FIRC) for monies received from non-resident shareholders.....
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.... stating that no addition towards share capital and share premium could be made u/s.68 of the Act in the hands of the assessee company. The fact of this letter being filed by the assessee has been graciously and duly acknowledged by the ld. PCIT in para 3 of his order. 3.5. What is in appeal before us is only the addition of share premium of Re. 1/- per share contemplated by the ld. PCIT by assuming revision jurisdiction u/s.263 of the Act on the premise that assessee had not furnished any details either before the ld. AO or before him. One more premise of the ld. PCIT is that the addition has been made by the ld. AO after considering all the submissions made by the assessee during the course of assessment proceedings. We are conscious o....