TaxTMI 
TaxTMI 
2023 (7) TMI 691
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....atutory notices under Section 142(1) and 143(2) of the Act were issued to petitioner. 3. During the course of the assessment proceedings, petitioner was, by a letter dated 24th March 2015, called upon to explain huge share application money and share premium received by petitioner. Petitioner by its letters dated 14th November 2014, 27th February 2015 and 27th March 2015 replied and also provided all documents. Petitioner also provided the valuation report and the explanation for the share premium charged as also the details of the two subscribers, viz., Shubhshree Hirise Pvt Ltd (SHPL) and Subhdrishti Complex Pvt Ltd. (SCPL). Respondent no. 3 proceeded to pass the assessment order dated 30th March 2015 under Section 143(3) of the Act and added as income under Section 68 of the Act, a sum of Rs. 3,00,00,000/- that petitioner had received as share application money. The face value of the share was Rs. 10 and was subscribed by SHPL and SCPL at the premium of Rs. 9 each. Respondent No. 3 added under Section 68 of the Act, not only the face value of the share, i.e., Rs. 10/- but also the premium paid for the shares as income of petitioner. Against return of income of Rs. 1,05,318/-, r....
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....nd mentioned that petitioner had taken accommodation entry in form of bogus share capital /premium from the paper companies by Mr. Agarwal. Respondent no. 3 further stated that assessee had failed to disclose true and complete information regarding the share capital/premium and it was not a case of change of opinion. Assessee had failed to make requisite full and true disclosure of all material facts necessary for assessment and petitioner had taken accommodation entries in form of share capital/premium and had availed the benefit of Rs. 2,50,00,000/-. Respondent no. 3 specifically mentioned at the end of the page 3 of the satisfaction note that petitioner had filed a copy of audited Profit and Loss account and balance sheet along with the return of income where various information/material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment had not been made. 6. Petitioner replied by its letter dated 25th June 2019 and called upon respondent no. 3 to provide certain information mentioned therein. Thereafter, petitioner filed its objections. Respondent no. 3 specifically passed an order rejecting petitioner's objections, a....
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....der Section 143(3) of the Act. Respondent no. 3 made additions to the income of petitioner by referring to Section 68 of the Act. Respondent no. 3 has also ignored the fact that during the original assessment proceedings the then AO had not only directed petitioner to prove the identity, creditworthiness of SHPL and SCPL as well as the genuineness of the transaction but had also issued notices under Section 133(6)of the Act to both the entities. f) More importantly, the notice under Section 148 of the Act has been issued after the expiry of 4 years from the end of the relevant assessment year. As per the first proviso in Section 147 of the Act, an assessment can be reopened after a period of 4 years only where income chargeable to tax has escaped assessment by reason of the failure on the part of assessee to make a return or to disclose fully and truly all material necessary for his assessment for that assessment year. In the case at hand, petitioner had furnished all the necessary details about the share and premium money during the original assessment proceedings. Respondent no. 3, however, without even alleging what was the failure on the part of petitioner to furnish and wha....
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....dered during the original assessment proceedings under Section 143(3) of the Act. At the time of original scrutiny, it is true that the AO had made investigation about the claim of share premium receipt from SHPL and SCPL in the order under Section 143(3) of the Act. The genuineness of the transaction was not proved and hence AO had added Rs. 3,00,00,000/- claimed by assessee as share premium receipt under Section 68 of the Act. Fresh information received by respondent no. 3 clearly establishes that SHPL and SCPL are shell companies and assessee is one of the beneficiaries who has taken accommodation entry in the form of share capital/premium. At the time of filing the return of income and also during the course of scrutiny proceedings under Section 143(3) of the Act, assessee was well aware of the fact which shows assessee has failed to disclose fully and truly all material facts necessary for the assessment of that assessment year. There was nothing vague or unspecific in the reasons to believe because reasons to believe for re-opening may come from external sources or even from material on record or may be derived from fresh facts. The notice has been issued following due proces....
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....i Complex Pvt Ltd & M/s Subhshree Hirise Pvt Ltd. Details are as under: Sr. No. Name of Beneficiary PAN A.Y. Amount of transaction 1 M/s Rajshree Realtor Pvt Ltd. AABCR6447V 2012-13 2,50,00,000 3. In his statement Shri Praveen Agarwal confessed that he has provided accommodation entries to the beneficiaries through the paper companies floated by him. He has admitted in his statement under oath that he has floated this company / concern to provide various accommodation entries. Thus it is revealed that the assesse company M/s. Rajshree Realtor P Ltd has taken an accommodation entry in the form of bogus share capital/premium from the paper companies floated by Shri Praveen Agarwal. 4. The investigation report was perused. After appraisal of the report, there is substantial basis for the formation of reason to believe to initiate re-assessment proceedings u/s 147 of the IT. Act. Further this is a fresh information received by the undersigned that there is an escapement of assessment of income in the hands of the assessee. 5. In this case scrutiny u/s 143(3) has been completed. Though the issue under cons....
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....gus share capital / premium from bogus paper companies SHPL and SCPL, were not disclosed. There is nothing to indicate anywhere, even assuming respondent no. 3 could have relied on the statement of Mr. Agarwal to implicate petitioner, that petitioner was always aware before the original assessment order under Section 143(3) was passed, that SHPL and SCPL were two such paper companies floated by Mr. Agarwal to provide accommodation entry in form of bogus share capital / premium from bogus paper companies. 13. Moreover, during the original assessment proceedings, by a notice dated 17th July 2014 petitioner was called upon to furnish details of increase in the share capital, share application money and share premium alongwith sources thereof, of the same. In reply, petitioner by its letter dated 27th February 2015, furnished the details as sought. With the said letter, petitioner had also provided valuation reports of petitioner, and also explained that due diligence and valuation was also carried out by SHPL and SCPL etc. 14. Thereafter, petitioner received from respondent no. 3 another letter dated 24th March 2015 on the same issue of share capital contribution and the letter read....
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....n report of shares to justify the premium charged on shares. It is seen that the valuation report was prepared by Chaturvedi & Chaturvedi, Chartered Accountants, and signed by its partner Ishwar P Mehta having membership no. 034609. The value per share was worked out at Rs. 100.04 on discounted cash flow method. The premium charged on issue of shares was, therefore, not without any basis. The Hon'ble jurisdictional Tribunal in the case of Green Infra Ltd Vs. ITO (supra) had also held that it is a prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of the shareholders whether they want to subscribe to such a heavy premium and that the revenue authorities cannot question the charging of such huge premium without any bar from any legislated law of the land. The Assessing Officer's view that this was a clear case of money laundering and diversion of the appellant's own funds through issuing shares at huge premium to close sister companies / concerns is also not justified as there is nothing on record to indicate that the funds emanated from the coffers of the appellant The Hon'ble Delhi High Court in the case of CIT vs. V....
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....cluding their names and addresses, PAN, income-tax returns, copies of financial statements, bank statements, letter of allotment, etc. In fact both subscribers have replied to notices issued u/s 133(6) alongwith whatever details sought by the AO. In this factual background, if we examine the share capital received from the above 2 subscribers, undoubted fact emerges that the AQ failed to make out a case of credit, which falls within the ambit of provisions of section 68 of the Act, except doubting genuineness of transactions on suspicion and surmise only for the reason of charging higher premium on shares. The provisions of section 68 deal with cases where sum found credited in the books of account, the assessee needs to prove identity, genuineness of transactions and creditworthiness of the parties. Once assessee discharges its initial burden cast by section 68 of the Act, by filing necessary evidences, then the burden shifts to the AO to prove otherwise In order to fix a particular credit within the ambit of section 68 of the Act, the AO has to bring on record further evidences to prove that the sum found credited in the books of account of the assessee represents undisclosed inc....