TaxTMI 
TaxTMI 
2024 (8) TMI 427
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.... the Assessing Officer vide order dated 28.03.2014 passed u/s. 143(3) of the Income-tax Act, 1961 (hereinafter also called 'the Act') at a loss of Rs. 10,79,29,069/- after making addition of Rs. 20,23,884/-. 2.2 Subsequently, the AO formed an opinion that income escaped assessment to tax based on the information that the assessee company issued shares of Face Value of Rs. 10/- at a high premium of Rs. 1584/- per share and received share capital/share premium of Rs. 30,00,00,364/-, accordingly issued notice u/s. 148 of the Act on 09.11.2017. In response to notice u/s. 148, the assessee company vide letter dated 04.12.2017 submitted that the return of income filed originally be treated as return in response to notice u/s. 148. Against the said return of income, the assessment was completed by the AO vide order dated 30.12.2018 passed u/s. 143(3) r.w.s. 147 of the Act at a total income of Rs. 19,20,71,300/-. While doing so, the AO made addition of share capital/share premium as unexplained money of assessee company. 3. The factual background of the case is as under : 3.1 During the previous year relevant to the assessment year under consideration, the assessee company had iss....
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....cause the investor company, i.e. Rainbow Ventures Limited is incurring losses cannot be a reason to disbelieve the investment made by it. The ld. CIT(A) also held that the decision of Hon'ble Bombay High Court in the case of Major Metal Ltd. Vs. Union of India 207 taxmann.com 185 was in the context of proceedings before the Hon'ble Settlement Commission, hence no application to the facts of the case. Thus, the CIT(A) concluded that the essential ingredients, viz., Identity, creditworthiness and genuineness of the transaction with Rainbow Ventures Limited stood satisfied, accordingly directed the AO to delete the addition. 6. Similarly, with regard to the share capital received from Ambit Pragma Fund Scheme amounting to Rs. 5,85,41,244/-, the learned CIT(A) taking cognizance of the fact that it is Venture Capital Fund registered with SEBI on 10.07.2008 proceeded to hold that essential ingredients of Identity, Creditworthiness and Genuineness of the transaction with this company u/s. 68 of the Act stand satisfied. 7. Being aggrieved by the decision of CIT(A) upholding the validity of reassessment proceedings, the assessee company is in Cross Objection. The Revenue is in appeal ....
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....ndia Pvt. Ltd. (supra). 11. In the result, the cross objection filed by the assessee company is dismissed. Revenue's Appeal No.871/PUN/2023 12. Now we shall take up the Revenue's appeal challenging the correctness of the finding of the CIT(A) deleting the addition on account of receipt of share capital/share premium of Rs. 30,00,00,364/- from the following three parties : Sl.No. Name Amount 1 Rainbow Ventures Limited, Mauritius Rs. 24,14,59,120/- 2 Ambit Pragma Fund Scheme-1 Rs. 5,85,41,244/- 13. During the course of assessment proceedings, the assessee company received the share capital/share premium from the above parties to the tune of Rs. 30,00,00,364/-. The AO called upon the assessee company to prove Identity, creditworthiness of investors and genuineness of the transaction. A perusal of the assessment order would show that the assessee company had failed to discharge the onus cast upon it to prove the Identity, creditworthiness and genuineness of the transaction with the above parties. It is settled legal position that the assessee is under obligation to prove the Identity, creditworthiness as well as the genuineness of the transaction ....
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.... of CIT Vs. N.R. Portfolio (P) Ltd. (2014) 42 taxmann.com 339 and Pr.CIT Vs. Swati Bajaj 446 ITR 56 (Cal) held as follows : "20. With regard to the identity, creditworthiness and genuineness of the transaction and the onus of prove the Hon'ble Court held as follows:- 30. What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the decisions, controls and ma....
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....applicants procured the requisite funds by selling the shares and the rest of the applicants of shares, in the share capital of the assessee company, did not disclose the nature of receipt at their end though the source of funds were identified. Further the shares were offered to and subscribed by closely held companies owned by the promoter/director or their close relatives and friends. After noting the facts, the Hon'ble Court held that the identity of the alleged shareholders is known but the transaction was not a genuine transaction. The transaction was nominal rather than real; creditworthiness of the alleged shareholders is also not established because they did not have money of their own, each one of them received from somebody and that somebody received from a third person and therefore prima facie, shareholders are near namelenders. 22. In Pr. CIT v. NRA Iron and Steel (P.) Ltd. (2019) 15 SCC 529/[2019] 103 taxmann.com 48/262 Taxman 74/412 ITR 161 (SC) the issue which fell for consideration is when share capital/premium is credited in the Books of Account of the assessee company, the onus of prove is on the assessee to establish by cogent and reliable evidence....
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....ot be established. In such a case, the assessee would not have discharged the primary onus contemplated by section 68 of the Act. 24. In Pr. CIT v. Swati Bajaj 2022 SCC Online Cal 1572/[2022] 139 taxmann.com 352/288 Taxman 403/446 ITR 56 (Cal.) this court considered as to in what manner the allegation against the assessee has to be proved. It was held that to prove the allegation against the assessee, it can be inferred by a logical process of reasoning from the totality of the attending facts and circumstances surrounding the allegation/charges made and levelled and when direct evidence is not available it is the duty of the court to take note of the immediate and proximate facts and circumstances surrounding the events on which the charges/allegations are founded so as to reach a reasonable conclusion and the test would be what inferential process that are reasonable/prudent man would apply to arrive at a conclusion. It was further held that the proximity of time and prior meeting of minds is also very important factor especially when the income tax department has pointed out the unnatural rise in prices of the scripts of very little known companies. 25. While o....