AI Drafter 
TaxTMI 
TaxTMI 
2023 (5) TMI 221
X X X X Extracts X X X X
X X X X Extracts X X X X
....the dates of hearing on14.03.2018, 08.05.2018, 03.08.2022, 07.12.2022, 08.12.2022 & today also i.e. on the given date of hearing there is no representation on behalf of the assessee. Similarly, in the case of I.T.A. No.: 2569/KOL/2018 in the past on 10.08.2022, 07.12.2022, 08.12.2022 & even today none appeared on behalf of the assessee even when notices were sent through registered post. Both these appeals are at the instance of the Revenue and in the records, we are able to lay hand on paperbook containing 92 pages and in the top of the paperbook date of hearing is mentioned 11.09.2018. This paperbook has been given only in the case of M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. Since then there is no representation on behalf of the assessee and since the appeals are of year 2016 & 2018 i.e. almost 7 years & 5 years old, we deem it proper to adjudicate these appeals ex-parte qua the assessee based on the material available on record and considering the submissions of ld. D/R. Facts in I.T.A. No.: 2038/KOL/2016, M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd.: 3. Facts in brief are that the assessee is a private limited company. Income of Rs. 2,56,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O but the assessee failed to explain the alleged sum. Ld. AO accordingly accepted the share capital of Rs. 4 lakh received from the group companies but for the remaining sum of 2.75 Cr made the addition u/s 68 of the Act for unexplained cash credit and further, made an addition by disallowing the commission expense of Rs. 6 lakh allegedly paid by the assessee to arrange for the alleged bogus share capital. Income assessed at Rs. 2,84,86,840/-. 5. Aggrieved, both the assessees preferred appeal before ld. CIT(A) against the additions made by ld. AOs and filed the details of the share subscribers and their financial statements and ld. CIT(A) was satisfied with those details and deleted the additions made u/s 68 of the Act in case of both the assessees and also deleted the disallowance of commission expense. 6. Aggrieved, the Revenue is now in appeal before this Tribunal raising following grounds: I.T.A. No.: 2038/KOL/2016, M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd.: "1. On the facts and in circumstances of the case Ld. CIT(A) had erred to allow relief on this ground on the view that all the share applicants are existing assessees and no adverse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9 lakh (no share premium) 3 Blossom Vinimay Pvt. Ltd. 1.93 Cr (share premium of Rs. 190/- per share) 4 Baliraja Distributors Pvt. Ltd. 50 lakh (share premium of Rs. 190/- per share) Total 2.61 Cr 9. In the case of another assessee i.e. M/s. Dreamz Movies & Entertainment Pvt. Ltd. in I.T.A. No.: 2569/KOL/2018, the addition for unexplained share capital and share premium was made by ld. AO towards the sum received from the following share subscribers: Sl. No. Name Share Premium 1 Baliraja Distributors Pvt. Ltd. 50 lakh (share premium of Rs. 190/- per share) 2 Blossom Vinimay Pvt. Ltd. 2.25 Cr (share premium of Rs. 190/- per share) Total 2.75 Cr 10. From above, we notice that equity shares have been allotted by both the assessee companies to four share subscribers of which two namely Dreamz Pbc Web Length Pvt. Ltd. and Dreamz Wealth & Consultancy Pvt. Ltd. which prima facie seems to be group companies, ld. AO made the addition for share capital of Rs. 18 lakh received from group concerns only in the case of I.T.A. No.: 2038/KOL/2016 since there was no proper representation by the assessee. Ld. CIT(A) ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ltd. and Blossom Vinimay Pvt. Ltd 25,000 and 112500 respectively face value @ 10 and premium @190. Notice u/s. 133(6) of the IT Act was issued on 25.7.2014 to aforesaid two parties to verify the transactions. It appears from the reply received in response to aforesaid notice u/s. 133(6) that Blossom Vinimay Pvt. Ltd. has been merged with Dreamz PBC Web Length Pvt. Ltd from 22.01.2014. It is seen from the reply that during the relevant year Blossom Vinimay had almost no business activity. It has shown other income service charge of Rs. 25,000 /-. Immediate source ^investment shown by the allotee company was made from sale of investment of unquoted shares. In order to verify the transactions, source of investment and creditworthiness of the party summons u/s. 131 of the I. T. Act was issued on 12.02.2015 giving opportunity of hearing on 27.02.2015. The-party has made no compliance. The assessee company was also requested through this office summons dated 17.02.2015 to produce the directors of share allottees for verification. The assessee did not comply with said summons/ notice till date. Notice u/s. 133(6) of the IT Act dated 25.7.2014 could not be served in the case of Ba....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tworthiness was required to be established. The appearance of the director of the assessee company as well as the directors of the said allottee companies who had invested fresh share capital in the assessee company was necessary to authenticate the transaction of share capital and creditworthiness of the applicants. It is worth noting to mention that the necessary investigation /enquiries could have been carried out to come to the logical conclusion of authenticity of share capital raised. i) Personal appearance of the directors of the assessee company as well as the directors of the share holding companies who had fresh share application and premium in the said A.Y. ii) Detailed narration of all debit and credit entries found in the bank statement of F.Y. 2011-12. iii) Bank Statement for the said F.Y.2011-12 i.e. A.Y.2012-13 iv) All the books of account and supporting evidences for cross verification. M/s Blossom Vinimay Pvt Ltd has not complied with this office summons. The other allottee though complied but could not furnish details / information as required to establish genuineness of transactions and creditworthiness. The assessee ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment and to channelize the black money through issuing share premium. Reference is also invited to the decision of the Hon'ble ITAT in the cases of: M/s Star Griha Pvt. So it was highly required to investigate what was the actual motive in the mind of the share holders who invested their funds in this assessee company to come to the logical conclusion about the true nature of the said transactions involved in the course of share transfers between the assessee company and the purported investors. In the light of the ratio of the decisions as discussed earlier in the cases mentioned judicial pronouncements vis-a-vis the facts and circumstances in the instant case as well as the assessee's inability to discharge its own burden of proof to substantiate its claim of introduction of fresh share capital even after given several number of opportunities, it is held that the purported fresh capital along with the premium aggregating to Rs. 2,75,00,000 /- is nothing but the assessee's own money conducted under the garb of fresh share capital into the assessee's business. Therefore, Rs. 2,75,00,000 /- is hereby treated as unexplained cash credit found....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to explain the nature and source of the alleged sum received against issue of equity shares. Provisions of Section 68 of the Act has a direct bearing on this issue and for necessary adjudication, we reproduce below the said provision: "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, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: [Provided that] where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it was just Rs. 36,493/-. Except this entry of revenue from operations, there are no other expenses except the one claimed under the head 'other expenses'. Here also the story remains the same as no regular business activities seem to be carried out, no fixed assets are held by the assessee and only the non-trade investments are appearing that too in around 68 private limited companies which are not fetching any income to the assessee. Prima facie both these companies look to be jama-kharchi/shell companies/accommodation entry providers and in absence of any representation on behalf of the assessee which may have helped the assessee to discharge the primary onus casted upon it under the provisions of Section 68 of the Act to explain the nature and source of the alleged sum, we fail to find any merit in the finding of ld. CIT(A) giving relief to the assessee without discussing the financials of both the share subscriber companies. Ld. CIT(A) has also not dealt the issue as to what prompted the alleged share subscribers to invest in the equity shares of the assessee company at a whopping premium of Rs. 190/- per share without there being any regular business activity of the assessee ....