AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 38
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....ss examination and hence failed to discharged its onus to prove the genuineness of the transaction and creditworthiness of the Investor parties. 2. On the facts and circumstances of the case and in law, the ld.CIT(A) erred in deleting the disallowance made by the AO on account of Unexplained share/capital at premium u/s. 68 of Rs.10,00,00,00/- by ignoring the decision of the APEX Court in the case of PCIT vs NRA Iron & Steel Pvt. Ltd. [2019] 103 taxmann.com 48 (SC) wherein it is held that "practice of conversion of unaccounted 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 know of the assessee. The assessee is under legal obligation to prove receipt of share capital/ premium to the satisfaction of the A.O. failure of which would justify addition. 3.The appellant prays that the order of CIT(A) on the above ground be set aside and that of Assessing Officer be restored." 03. The brief facts of the case shows that, assessee is a company engaged in the business o....
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....er: " In the light of the facts of the case and various submissions made by the appellant, the judicial pronouncements relied upon by the appellant, it is concluded as under:- The provisions of section 68 of the IT Act, 1961 before amendment (i.e. prior to A.Y. 2013-14) stated as under: Where any sum is found credited in the books of a assessee maintained for any previous year, and the assessee offers no explanation about the nature addition source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. Perusal of these provisions divulges that there is an obligation on the part of the assessee to prove the identity, genuineness and creditworthiness of the person from where the money is actually received. The above three ingredients have been taken as basic parameters to be satisfied by the appellant. Further, under what circumstances the invocation of section 68 of the IT Act, 1961 can be restored to Thus, from the above (a) When the assessee fails to prove the genuineness of the transaction that has entered into his ....
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....on similar facts the decisions of the Hon'ble ITAT's are to be applied to the facts of the appellant, is accepted. 2.8 Thus, it has to be said that the appellant has done everything in its wisdom to prove the 3 ingredients required to prove the satisfactory nature of the said share capital received from 8 companies. In these circumstances, the onus had shifted to the AO, but AO did not proceed further to bring any contrary finding on record. Thus, the unequivocal conclusion is that all the 3 ingredients having been satisfied, the impugned Investment in share capital plus premium has to be treated as explained satisfactorily and the AO was not justified in disregarding the supporting evidence. No cogent material was adduced by him to show that the share capital and premium were unexplained. Therefore the impugned additions, made in the assessment order, have failed on several counts- 1) reliance on mere statement of third party that is totally inadequate 2) failure to make available any incriminating material (reports, statements etc.) forming basis for action by the AO; 3) failure to give due opportunity to the appellant to cross examine witnesses, whose statement might hav....
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....or unless there is any restriction on the amount of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. 53.Once the genuineness creditworthiness and identity are established the revenue should not justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the role of ascertaining how much is a reasonable premium having regard to the circumstances of the case. 54. There is no dispute about the receipt of funds through banking channel nor there is any dispute about the identity, creditworthiness and genuineness of the investors and, therefore, the same has been established beyond any doubt and there should not have been any question or dispute about premium paid by the inventors therefore, unless there is a limitation put by the law on the amount of premium the transaction should not be questioned merely because the assessing authority thinks that the investor could have managed by paying a lesser amount as Share premium as a prudent businessman The fest of prudence by substituting its own view in place of the businessman's has not been approved by ....
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....te development filed its return of income at Rs Nil. Subsequently, information was received that assessee has received share capital and share premium from 8 different companies aggregating to Rs. 10 crores which is operated by one entry operator Mr.Dilip C Mehta. Mr. Dilip Mehta also referred to the name of the person who is at the helm of affairs of this company, i.e.Mr. Amar Natwar Shah. The assessee on reopening of the assessment merely submitted the documents showing identity, creditworthiness and genuineness of the transaction such as address details, MCA Details, Annual Accounts etc. the ld. AO issued notices u/s 133 (6) of The Act and found that address of The Shareholders are not correct. The learned assessing officer issued notices u/s 133 (6) to the directors of the assessee company as the addresses provided by them to show the identity of the company were not found to be correct. The assessee company did not give new address of shareholders. However, submitted the confirmation of the shareholders by post. The learned assessing officer once again asked the assessee to prove the identity, creditworthiness and genuineness of the transaction. The assessee was provided with ....
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....statement of Mr. Dilip C Mehta, who is an accommodation entry provider, confirmation of that statement by one of the people who is at the helm of affairs of the assessee companyi.e.,Mr. Amar Natwarlal Shah , as well as several other persons, who confirmed that the amount of share capital of Rs 10 Cr is merely an accommodation entry. The learned CIT - A also referred to several judgments. But merely because in those judgments, the addition with respect to Mr.Dilip C Mehta operated companies were deleted, it automatically cannot be applied to the facts of the present case for deleting the above addition. The necessary ingredients u/s 68 of the income tax act is required to be satisfied by the assessee before any such addition can be deleted. The learned CIT - A is further incorrect in stating that assessee has done everything in its wisdom to prove the 3 ingredients which are required to prove in nature of the share capital received from 8 companies. He conveniently forgot to refer to the fact that the AO has specifically asked the assessee to produce those shareholders before him for examination, which was not complied with by the assessee. Looking to the facts of the present case, ....