TaxTMI 
TaxTMI 
2025 (1) TMI 367
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....s. 68 of the Act on account of share capital and share premium totaling to Rs. 4,78,50,000/- and this Tribunal decided in favour of the assessee deleting the addition made u/s. 68 of the Act. 3. The revenue challenged the order of this Tribunal before the Hon'ble jurisdictional High Court and Hon'ble Court vide order dated 10.04.2024 set aside the order of this Tribunal and remanded the matter to this Tribunal to take a fresh decision on merits and in accordance with law and pass a reasoned order. The finding of the Hon'ble court reads as under: "We have heard Mr. Tilak Mitra, learned standing Counsel appearing with Mr. Prithu Dudhoria, learned Advocate for the appellant revenue and Ms. Sutapa Roy Chowdhury, learned Counsel appearing for the respondent. The Assessing Officer while completing the assessment under Section 143(3) of the Act by order dated 24th March, 2015 held that the assessee has failed to prove anyone of the three ingredients which are required to be proved under Section 68 of the Act. Several decisions were referred to and the Assessing Officer concludes that there was no documents produced by the assessee to substantiate their claim. This ord....
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....he end of the assessee company or from the end of the alleged subscriber company. This finding recorded by the Assessing Officer as affirmed by the CIT(A), if required to be set aside by the learned Tribunal, reasons have to be assigned. Therefore, we find that the conclusion arrived at by the learned Tribunal in paragraph 11 is insufficient to support its ultimate conclusion in allowing the assessee's appeal. Therefore, we are of the view that the matter has to be remanded back to the Tribunal for fresh consideration. Accordingly, the appeal is allowed. The order passed by the learned Tribunal is set aside and the matter is remanded to the Tribunal to take a fresh decision on merits and in accordance with law and pass a reasoned order. Consequently, substantial questions of law are left open. The stay application GA 2 of 2024 stands disposed of. Considering the fact that the assessment is of the year 2012-13 and the assessment order was passed on 24.3.2013 pursuant to a direction issued under section 263 of the Act, we request the learned Tribunal to give some precedence to the matter so that the appeal can be disposed of at the earliest. Wh....
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.... of the assessee almost on the same day when share application money was credited. P&L Account also shows that no major business activity is carried out and the work of the assessee company its activity and reputation in the market does not justify such a huge premium. Accordingly, Ld. AO concluded the assessment making the addition u/s. 68 of the Act at Rs. 4,78,50,000/-. 6. Aggrieved, assessee preferred appeal before the Ld. CIT(A) but failed to succeed as the view taken by the Ld. AO was confirmed by Ld. CIT(A) making reference to various decisions mainly in the case of Blessings Commercial Pvt. Ltd. ITA No. 271/Kol/2014 dated 28.06.2017 and that of PCIT Vs. NDR Promoters Pvt. Ltd., ITA No. 49/ 2018 dated 17.01.2019. Aggrieved, assessee is now in appeal before this Tribunal. 7. Ld. Counsel for the assessee made twofold arguments, firstly submitted that sufficient documents and evidence have been putforth in reply to each of the alleged share applicant to prove their identity, creditworthiness and genuineness of the transaction and submitted that all the share applicants are income tax assessees and have replied to notice u/s. 133(6) of the Act. Director of the assessee com....
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....ving no effect on the business related yield. He also submitted that the share premium was also not justified considering the financials of the company. Lastly, making reference to various judgments, he stated that assessee failed to establish identity and creditworthiness of the share applicants and genuineness of the transaction. 10. We have heard rival contentions and perused the material placed before us. We find that assessee is aggrieved with the finding of the Ld. CIT(A) confirming the addition made u/s. 68 of the Act for the unexplained share capital and share premium received from five share applicants. We notice that assessee issued 10000 equity shares at Rs. 10/- and 2,38,750 equity shares at Rs. 200/- per share comprising of share premium of Rs. 190/- and face value of Rs. 10/- each. This fact has been examined from the audited financial statement but the details of 10000 equity share issued at Rs. 10/- are not emanating from the records but the details of share applicants subscribing 2,38,750 equity shares is as under: Sl. No. Name of Subscribers of Share capital No. of share allotted Total amount 1. Swastik Polyplast Pvt. Ltd. 76,500 1,53,00....
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....hat effect. 13. Though there is no standard operating procedure stated under the Act adhering to which one can prove the nature and source of such sum but in the past Hon'ble Apex Court in the case of the land mark judgment of Kale Khan Mohammad Hanif Vs. CIT (1963) 50 ITR 1 (SC) and Roshan-Di-Hatti Vs. CIT (1977) 107 ITR 938 laid down the proposition that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and creditworthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that it is the income of the assessee, and there would be no further burden on the revenue to show that the income is from any particular source. Thereafter the Hon'ble Supreme court summed up the principles, which emerged after deliberating upon various case laws, as under: "11. The principles which emerge where sums of money are credited as Share C....
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....h the appellant company. (ii) Acknowledgement of Income Tax Return filed (iii) Audited Balance Sheet, Profit and Loss Account and annexure to the financial statement (iv) PAN number The above documents are filed in Paper Book in Sl. No. 4, Pages 34 to 46 C. Up Agro Farm & Export Pvt. Ltd In response to notice u/s 133(6) of the Act the company had confirmed the transaction and provided the following documents. (i) Confirmation: In response to notice u/s 133(6) of the Act this company has confirmed the transaction with the appellant company. (ii) Acknowledgement of Return filed (iii) Audited Balance Sheet, Profit and Loss Account and annexure to the financial statement (iv) PAN number The above documents are filed in Paper Book in Sl. No. 5, Pages 47 to 59 D. Mukta Commosale Pvt. Ltd In response to notice u/s 133(6) of the Act the company had confirmed the transaction and provided the following documents. (i) Confirmation: In response to notice u/s 133(6) of the Act this company has confirmed the transaction with the appellant company. (ii) Acknowledg....
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.... Now, the alleged sum received by the assessee from Swastik Polyplast Pvt. Ltd. is only Rs1.53 Cr. and considering the credit available with the share applicant, it is discernible that there was sufficient fund available in the share applicant to make the investment. Next in line with the share applicant namely, UP Account Law Services Pvt. Ltd. which is having share capital, reserve surplus and unsecured loans of approx Rs. 10.9 Cr. which is much more than the investment of Rs. 1.50 Cr received by the assessee company. 13(b). M/s. UP Agro Firm & Export Pvt. Ltd. which has invested Rs. 1.56 Cr. in the equity share of the assessee company was available with the funds to the tune of Rs. 10.45 Cr. in its Balance Sheet. Mukta Commosale Pvt. Ltd. has invested only Rs. 5 lakh in the equity of assessee but is having its own interest free funds of approx Rs. 5.70 Cr. Baisakhi Commercial Pvt. Ltd. has only invested Rs. 50 lakh but is having substantial reserves of share capital approx Rs. 5.10 Cr. Last in the row is of One Stop Commosale Pvt. Ltd. which apart from having any regular business activity also has share capital and reserve and surplus as on 31.03.2012 at Rs. 6.70 Cr. but it h....
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....- and on dividing the same by number of equity shares i.e. 2,97,000 the book value per share is Rs. 193.63 and the same is more than the share premium of Rs. 190/- per share charged by the assessee. We, therefore, considering the facts of the case are satisfied that the assessee has successfully proved the genuineness of the transaction. 15. At this stage, we would like to place reliance to the judgment of Hon'ble jurisdictional High court in the case of PCIT Vs. Sreeleathers (2022) 448 ITR 332 wherein it has been held as under: "Section 68 of the Income-tax Act, of 1961, deals with cash credits. It states that 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. The crucial words in the provision are "the assessee offers no explanation". This would mean that the assessee offers no proper, reasonable and acceptable explanation as regards the amount credited in t....
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.... relevant Act is markedly different. The order passed by the Assessing Officer was utterly perverse and had been rightly set aside by the Commissioner (Appeals). The Tribunal had rightly deleted the additions under section 68." 16. Respectfully following the judicial precedence and on examining the facts of the instant case, we find force in the first fold of the contention made by the ld. Counsel for the assessee and are satisfied that the assessee has been able to explain the identity and creditworthiness of share applicant and genuineness of transaction and, therefore, there was no justification of invoking sec. 68 of the Act on the given transaction of receiving alleged share capital and share premium. 17. Though we are satisfied with the first fold argument and have deleted the impugned addition but for academic purpose, we would also like to deal with the second fold of the contention of the Ld. Counsel for the assessee, wherein it has been claimed that the alleged share applicants have themselves been scrutinized u/s. 143(3) of the Act for AY 2012-13 and subjected to the addition and the details of the same is mentioned below: l. No. Name of subscribers of share ....