TaxTMI 
TaxTMI 
2024 (12) TMI 1481
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.... attention or rehabilitation and to provide medical relief to the public in all branches of medical sciences by all available means. 2.1 The captioned appeal ITA No.6178/Del/2019, filed by appellant no. 1, is against the order of CIT(A) u/s 250(6) of IT Act, 1961 dated 29.03.2019. The appeal is directed against the order involving the issues relating to: A. Whether the Ld.CIT(A) was correct in confirming the addition of Rs. 48,00,000/- confirmed u/s 68 of the Act on account of share capital? B. Whether the Ld.CIT(A) was correct in enhancing of income by Rs. 70,87,500/- u/s 56(2)(viib) of the Act on protective basis for share premium charged by rejecting the valuation report furnished under Rule 11UA(2)(b) i.e. Discounted Cash Flow Method? 3. The appellant no 2, ITA No.6179/Del/2019, is a company is carrying on the business to process, produce, mix, pack, preserve, freeze, extract, refine, manufacture, import, export, buy, sell, trade and deal in processed foods, health foods, protein foods, food products, agro foods, fast foods, packed foods, poultry products, sea foods, milk foods, bakery products and confectionery items etc. and the assessee filed the Inco....
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....94,50,000/- 6. During the course of the assessment, the return of income was taken up for scrutiny and the Ld.AO assessed the income of the appellant at Rs. 96,69,430/- as against the returned income of Rs. 2,19,430/-. While computing the aforesaid income, Ld.AO framed the assessment order u/s 143(3) while making an addition of Rs. 94,50,000/- u/s 68 of the Act for shares allotted to shareholders on premium during the year. The Ld.AO in the assessment order raised the question of identification of the shareholders, creditworthiness and genuineness of the transaction. That mere production of audit report, balance sheet, payment through bank is not sufficient in order to satisfy the test of genuine transaction. 7. In this connection, the Ld.AO issued notices u/s 133(6) of the Act to the investor companies for providing requisite details. In response to which investor companies submitted various documents including ITR, Computation of Income, Audit report, and Share Certificates etc. Further, the Ld.AO issued a detailed show cause notice (SCN) on 18.12.2017 stating that on perusal of information and documents it has been found that these are shell companies and have no real busi....
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....,500/- u/s 251(1) of the Act by invoking provisions of section 56(2) (viib) of the Act. 11. Hence, the assessee is in appeal before this Tribunal raising following grounds: "1. The Ld. CIT(A) has erred in law as well as on facts in confirming the assessment framed by Ld. AO u/s 143(3) of the Income Tax Act' 1961. 2. The Ld. CIT(A) has erred in law as well as on facts in confirming the addition of Rs. 48,00,000/- u/s 68 of the Act on account of alleged unexplained share premium and share capital. 3. The Ld. CIT(A) has erred in law as well as on facts in enhancing the income of appellant assessee by sum of Rs. 70,87,500/- u/s 251(1) of the Act by invoking section 56(2)(viib) of the Act wherein rejecting the valuation method taken by appellant assessee. 4. The Ld. CIT(A) has erred in law as well as on facts in enhancing the income of appellant assessee by not issuing valid show cause notice as mandated. 5. The Ld. CIT(A) has erred in law as well as on facts in confirming and enhancing the addition without giving cogent reasons and by recording incorrect facts and by disregarding all the documentary evidences furnished by assessee. ....
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.... its products, tanning chemicals and solvents of all type intermediates etc. This company has invested Rs. 25,00,000/-. Subsequently, the assessee company has allotted 62,500 shares @ Rs. 40/- during the year in concern. A list of documents have been annexed to the Paper Book in order to prove the identity & creditworthiness of the investors and the genuineness of the transaction. S.No Particulars Page no. of the Paper Book 1. Copy of Certificate of Incorporation, along with MOA & AOA Attached with this synopsis. 2. Copy Auditor's report, Balance Sheet and trading and profit & loss account as on 31.3.2015 along with notes to financial statement. 159-169 3. Copy of acknowledgement of return of income for AY 2015-16 along with computation of income tax. 170-171 5. Copy of share application form. 172 6. Copy of Share Certificate of Investor Company issued by the Assessee Company 173 7. Copy of confirmation of accounts dated 01.04.2015 from the period of 01.04.2014-31.3.2015 from the assessee company showing the net amount of Rs. 25,00,000/- received from the investor company by the assessee company. 174 8. Copy of in....
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....ificate as per the Rule 11UA(2)(b) of the Income Tax Rules, 1962. 14. The Ld. AR has placed reliance on catena of judgments including the judgment of the Hon'ble Jurisdictional High Court in the case of CIT vs. M/s Kamdhenu Steel and Alloys Ltd. reported in 361 ITR 220 wherein it has held that, no addition can be made in respect of share capital received from shareholders, whose necessary evidence has been placed on record and, the Ld. AO has not led any material to the contrary. It was held therein as under: 14 The important question which arises at this stage is as to whether on the basis of these facts, could it be said that it is the assessee which has not been able to explain the source and receipt of money. According to the assessee, he had given the required information to explain the source and was not obligated to prove the source of the money. It is the submission of the assessee that even in case there is some doubt about the source of money in giving into coffers of the share applicants which they invested with the assessee, it would not automatically follow that the said money belongs to the assessee and becomes unaccounted money. According to us, the asses....
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....borating details have not been furnished to substantiate the cash flow from the equity for Rs. 20.97 lacs and 22.13 lacs for FY 2015-16 and 2016-17 relevant to assessment year 2016-17 and 2017-18, is not sufficient unless assessee is show caused for explaining it. The Ld.CIT(A) has concluded on the that appellant has no business worth or tangible/intangible assets to justify such kind of cash flow. Ld. AR has pointed that despite having huge funds, only Rs. 10.52 lacs and 11.26 lacs was stated to be spent on the operating cost for year ending 31.03.2016 and 31.03.2017 respectively, on which profit was earned of Rs. 3.51 lacs and 3.75 lacs which is quite normal in the business. The assessee has calculated and estimated the projected figures at the lowest and even then, the value arrived at Rs. 20.97 lacs and 22.13 lacs for year ending 31.03.2016 and 31.03.2017 respectively. After reducing from the present value factor at the rate of 14% year wise because of diminishing value of the money, the value of the enterprise value arrived at Rs. 20.97 lacs and 22.13 lacs and value per share arrived at Rs. 40 per share. This clearly justified the value of premium received 17. The case of a....
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....m PAS-3 and copy of share certificates along with the written reply which was filed physically. Further the said documents have been annexed again in the paper book before us. 21. Aggrieved by the order of Ld.AO, the assessee filed an appeal before Ld.CIT(A). The Ld.CIT(A) partly allowed the appeal of assessee and sustained the addition of Rs. 35,00,000/- u/s 68 of the Act for the share premium received by the assessee company from the investor M/s Goodluck Industries Pvt Ltd. during the relevant assessment year. Further the total addition to the tune of Rs. 13,50,000/- was deleted by the Ld. CIT(A) as amount paid by the shareholders namely M/s Zeya Developers Pvt. Ltd. and M/s GharondaNirman Pvt. Ltd. of Rs. 10,00,000/- and 3,50,000/- respectively pertains to earlier years and the same was corroborated by the Bank Statements of the respective investor companies. 22. Further, the Ld. CIT(A) rejected the valuation report justifying the premium charged in respect of such shares as furnished by the appellant as per Rule 11UA(2)(b) i.e., Discounted Cash Flow Method. (PB 70-72). With regard to the valuation report which was filed as per the Rule 11UA(2)(b) i.e., Discounted Cash Fl....
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....along with MOA & AOA Attached with this synopsis. 2. Copy Auditor's report, Balance Sheet and trading and profit & loss account as on 31.3.2015 along with notes to financial statement. 108-118 3. Copy of acknowledgement of return of income for AY 2015-16 along with computation of income tax. 119-120 5. Copy of share application form. 121 6. Copy of confirmation of accounts dated 01.04.2015 from the period of 01.04.2014-31.3.2015 from the assessee company showing the net amount of Rs. 35,00,000/- received from the investor company by the assessee company. 122 7. Copy of Share Certificate of Investor Company issued by the Assessee Company 123 8. Copy of investor company's bank account statement showing the debit entry of Rs. 10,00,000/-, 20,00,000/- and Rs. 5,00,000/- on 05.03.2015, 04.02.2015 and 13.12.2014 respectively 124-127 25. The case of appellant no. 2 here is squarely covered by our discussion with regard to genuineness of the investor M/s Goodluck Industries Ltd., as discussed in the case of appellant no. 1 above. 26. As with regard to the valuation of the shares. It is submitted that in the appellate proceeding....