AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 218
X X X X Extracts X X X X
X X X X Extracts X X X X
....e in law. That on the facts and in the circumstances of the case Ld. CIT(Appeals) erred in disregarding the facts on record, altogether lacked the legality, fairness and reason in the appellate order. The appellant craves to add, alter or amend ground or grounds of Appeal on or before the date of hearing as may be allowed by appellate authority." 3. Brief facts of the case as culled out from the records are that the assessee is a private limited company engaged in the business as service provider. Return for AY 2012-13 e-filed on 25.09.2012 declaring total income of Rs. 35,380/-. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. During the course of assessment proceedings ld. AO on going through the balance sheet observed that the assessee has received share capital along with share premium totalling to Rs. 4.88 Cr against the issue of 2,94,500/- equity shares having face value of Rs. 10/- and premium of Rs. 157/- per share. Ld. AO asked the assessee to explain the nature and source of the alleged share capital and share premium and also asked the assessee to produce the managing director of the company. Howe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....01.2016 (Hon'ble ITAT, Kolkata Bench) 6. DOT Vs. Global Mercantiles Pvt. Ltd in ITA No. 1669/Kol/2009, dated 13.01.2016 (Hon'ble ITAT, Bench Kolkata) 7. CIT Vs. M/s Nishan Indo Commerce Ltd, Income Tax Appeal No. 52 of 2001 dated 02.12.2013 (Hon'ble Calcutta High Court) 6. Ld. D/R vehemently argued supporting the orders of both the lower authorities and further submitted that the share capital and share premium received from various share applicants are merely in the nature of accommodation entries and all the alleged share applicants are Jama-Kharchi companies having no regular business activity and having poor financial strength which is not sufficient to justify the investment made in the assessee company. 7. We have heard rival contentions and perused the records placed before us. The sole grievance of the assessee is that ld. CIT(A) erred in confirming the addition made by ld. AO u/s 68 of the Act treating the share capital and share premium of Rs. 4.88 Cr received during the year as unexplained cash credit liable to be added u/s 68 of the Act. 8. We observe that the assessee company issued equity shares and charged share premium of Rs. 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... As per the provisions of section 68 of the I.T. Act, the onus is on assessee to prove the above three criteria. Reliance is being placed on the decision of jurisdictional High Court in the case of CIT -vs- Precision Finance Pvt. Ltd. [208 ITR 463] wherein it was observed that:- Further reliance is placed on the judgment of the Hon'ble Calcutta High Court in CIT- v- Ruby Traders and Exporters Ltd, fl34 Taxman 29 (Cal)] which was pleased to hold, 'it is incumbent on the assessee to prove and establish the identity of the subscribers, their creditworthiness and the genuineness of the transaction. Once materials to prove these ingredients are produced, it is for the Assessing Officer to find out as to whether on these materials the assessee was able to establish the ingredients mentioned above.' As to how the onus can be discharged would depend on the facts and circumstances of each case. It is expected of both the sides - the assessee and the assessing authority - to adopt a reasonable approach. This view had been taken in the case of CIT Vs M/s Nipun Builders & Developers Pvt. Ltd. 30 Taxman.com 292 (Delhi) [2013]. The assessee was a private limite....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e predicament of the assessee in so far as any responsible person appears" Further from the analysis of bank statement of the assessee, it is found that almost similar amount was debited from the account of the assessee almost on same day when this share application money was credited to the account of assessee. From the P/L account and Balance sheet of the assessee, it is evident that assessee had not carried out any business activity. The worth of the assessee company, its activity and reputation in the market does not justify such a huge share premium amount for the shares of assessee-company. With the materials on record, it is not clear if the assessee-company has been taken over by any beneficiary - the stage of 'third limb'. In view of the usual trend associated with such cases, I find it prudent and logical to treat the entire share Capital &Premium amount credited in the books of accounts during the year under reference as unexplained and added back u/s 68 of the I.T. ACT, 1961. Considering the facts and circumstances, the sum so credited amounting to Rs. 4,88,00,000/- in the books of the assessee company is hereby treated as bogus and a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the case of M/s. Blessings Commercial Pvt. Ltd, being I.T.A. No. 271/Kol/2014, for the Assessment Year: 2010-11, order dt. 28.06.2017 has held as follows:- "11. The second argument of the Id. Counsel for the assessee, is that the assessee has proved the identity and creditworthiness of the creditor company as well as the genuineness of the transactions. We are not able to agree with the same. A 10 rupees share has been issue at a premium of 990 rupees. On a question, the assessee has not even attempted to justify the amount of share premium. A perusal of the audited statement of accounts of these companies demonstrate that there is hardly any income was disclosed or any expenditure worth mentioning was claimed. There is no activity whatsoever in these companies. The Reserve Bank of India, the Institute of Chartered Accountants of India, and certain other organisations, have laid down various methods based on which the amount of share premium can be decided. None of these methods have been followed in this case. The exorbitant quantum of share premium collected shocks the conscience of any reasonable person. A mockery has been made of the whole system. These are not transa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding financial year and what prompted the assessee to further issue share capital making the reserve surplus reaching at an abnormal figure of Rs. 5.41 Cr approx as on 31.03.2012. Though it is not the issue before us that why the assessee charged the huge share premium but that certainly has the impact to examine the genuineness of the transaction since the share applicant companies have invested in the share capital of the assessee company. Though the transactions are through banking channel and the share applicants are mostly private limited companies and also having reserve and surplus and bank balances to make the said investment but this could hardly prove the identity and to some extent creditworthiness of the share applicants. However, the genuineness of the transaction is still under serious doubt. Provisions of Section 68 of the Act has been invoked in the given case and the same is reproduced as under: "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory....