AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 488
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..../- from ten share applicants. This share capital including premium received by the assessee has been treated as an unexplained cash credit and added with the aid of section 68 of the Income Tax Act by the ld. Assessing Officer. Out of ten share applicants, assessments were made under section 143(3) in the cases of seven (7) share applicants under section 143(3) in this very assessment year. Therefore, assessee wants to place on record copies of those assessment orders in order to prove the identity of these share applicants. 4. The ld. D.R., on the other hand, submitted that the assessee did not participate the hearing seriously with the ld. Assessing Officer. Before the ld. CIT(Appeals), it has filed written submission, which has duly been reproduced by the ld. CIT(Appeals) in the impugned order, which would goad to us to construe that these submissions have been considered by the ld. 1st Appellate Authority. The assessment orders were passed in these cases way back in 2015. The appeal was also instituted before the ld. CIT(Appeals) on 28.05.2015. The assessee has neither applied under Rule 46A for production of these assessment orders nor taken any step upto now. 5. We have dul....
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....reen and shine Trading (P) Ltd 325000 1 0 325000 M/s. Hanumanth Dealcom (P) Ltd. 325000 1 0 325000 M/s. Rankini Tracom (P) Ltd. 9000 1 589 5310000 M/s. Hariom Vincom (P) Ltd. 12000 1 589 7080000 M/s. Natraj Mercantile (P) Ltd. 8000 1 589 4720000 M/s. Gangotri Sales (P) Ltd. 10000 1 589 5900000 M/s. Kushal Commodities (P) Ltd. 11000 1 589 6490000 M/s. Energy Distributors (P) Ltd. 12000 1 589 7080000 M/s. Swarnalaxmi Dealcom (P) Ltd. 13000 1 589 7670000 M/s. Monitor Suppliers (P) Ltd, 5000 1 589 2950000 TOTAL 830000 47950000 8. The ld. Counsel for the assessee has filed written submissions and we deem it appropriate to take note of these submissions also:- "At the outset we would like to submit that all the grounds of appeal are in connection to addition of Rs. 47944500/- made towards increase in share capital invoking the provision of section 68 of the Income Tax Act, 1961, to the total income of the appellant by the Ld. A.O. Your Honour, for the sake of convenience we would like to recite the provision of section 68 of the Income Tax Act, 1961; 68. Cash Credits "Where any sum is found credited in the books....
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....ithout any verification and logical reasoning. Such additions made on surmises and conjunctures are liable to be deleted and should not sustained. Your Honour, the appellant had provided complete details of the share subscribers to the Ld. A.O. at the time of assessment and also to the Ld. CIT(A) at the time of first appellate proceedings. However, the Ld. A.O. had not mentioned any points about the details of the share subscribers. It is a mechanical finding, without proper application of mind, that the Ld. A.O. has made an addition of Rs. 4,79,44,500/- towards share capital including premium. Your Honour, the total value of share capital including premium is Rs. 4,79,50,000/-. However, the Ld. A.O. without making any verification of the books of accounts, or the submission made by the appellant, has passed a stereotype order, relying only on certain decisions, which are not applicable in the present facts of the case. This shows that the Id. A.O. has not lend any credence to the submission made by the appellant and had made the addition with a biased mind. Your Honour, it was also mentioned to the Id. CIT(A) about the quantum of capital, however, the Id. CIT(A) also failed to n....
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....d all the details to substantiate the nature and source of the share capital. Your Honour, the Ld. A.O. has not pointed out any infirmity in the details provided by the appellant. Also, the Ld. A.O. failed to mention what further details was required by him, which could satisfy him about the nature and source. Your Honour the Ld. A.O. insisted for personal appearance of the directors of the subscriber companies without even going through and discussing about the discrepancies, if any, in the documents furnished by the appellant as well as by the share subscriber companies to prove the identity and creditworthiness of the subscribers and the genuineness of the transaction. Your Honour without examining those documents how could the Ld. A.O. came to a conclusion that the transactions in question were not genuine. The Ld. A.O. has not pointed out in the assessment order as to what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence. Your Honour there are plethora of judgements that nonappearance of directors cannot be ground to make the additions once all documentary evidences w.r.t genuineness, creditworthiness etc. file....
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....022 in the case of M/s. Vishnu Distributors Pvt. Limited, wherein after putting reliance upon the judgment of the Hon'ble High Court under similar circumstances, additions have been deleted by the ld. CIT(Appeals) and such an order has been upheld by the ITAT. 11. We have duly considered the written submission of the assessee as well as the submission of the ld. D.R., before we embark upon an inquiry on the facts of the present appeal, in order to find out whether the share capital and share premium money received by the assessee during the year is required to be treated as its unexplained credit and deserves to be added under section 68 of the Income Tax Act, 1961, we deem it appropriate to bear in mind certain basic principles/tests propounded in various authoritative pronouncements of the Hon'ble High Courts and Hon'ble Supreme Court. We take cognizance of some of them. It is pertinent to observe that in so far as companies incorporated under Indian Companies Act are concerned, whether Private Limited or Public Limited Companies, they raise their share capital through shares, though manner of raising share capital in Private Limited Company on one hand and Public Limite....
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....ions that section 68 contemplates that there should be a credit of amounts in the books of an assessee maintained by the assessee, (b) such amount has to be a sum received during the previous year, (c) the assessee offers no explanation about the nature and source of such credit found in the books, or (d) the explanation offered by the assessee is not, in the opinion of the Assessing Officer, satisfactory. The Hon'ble Delhi High Court in the case of CIT v. Novadaya Castles (P.) Ltd. 367 ITR 306 has considered a large number of decisions including the decision of Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad [1971] 82 ITR 540 (SC). According to the Hon'ble Delhi High Court, basically there are two sets of judgments. In one set of cases, the assessee produced necessary documents/evidence to show and establish identity of the shareholder and bank account from which payment was made. The fact that payment was received through bank channels, filed necessary affidavit of the shareholders or confirmations of the directors of the shareholder company. But thereafter no further inquiry was made by the AO. The second set of cases are those where there was evidence and ....
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....material into judicial conclusions would be improper, more so when the assessee produced material. The least that the Assessing Officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the Assessing Officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of section 68. Having regard to the entirety of facts and circumstances, the court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (supra)" 15. We also deem it appropriate to take note of some of observations of the Hon'ble Delhi High Court from the decision of Fair Finvest Ltd. (supra). The Hon'ble Court has noticed proposition laid down by the Hon'ble Delhi High Court in the case of CIT Vs. Victor Electrodes Ltd., 329 ITR 271 (Delhi) regarding non-production of s....
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.... facts, there is no reconciliation which could exhibit that this contribution of Rs. 64,90,000/- is by way of certain shares whose ownership has been transferred in favour of the assessee. The next applicant is M/s. Swarnalaxmi Dealcom Pvt. Limited, whose assessment order is available on page no. 27. This assessee has also raised huge share premium. Addition has been made in its hand. Nothing is available on the record that there is any exchange of ownership of shares between this and the assessee. The finding of the ld. Assessing Officer in the scrutiny assessment of assessee's case is that it is a paper company not doing any business. It has also declared taxable income of Rs. 22,430/- only but gave a huge share premium to the assessee. The value of the shares is only Rs. 13,000/- and on each share, it paid a premium of Rs. 589/- and thus purchased the shares of assessee at Rs. 76,70,000/-. We are unable to understand what is the source of this premium and for what purpose, it has been given. Why investment is being made in a company, which has no business plan. We have minutely examined each and every assessment order placed before us including the details of the assessee and we....