TaxTMI 
TaxTMI 
2025 (11) TMI 1904
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....case, Ld CIT(A) is justified in deleting the addition of Rs. 1,04,79,916/- made by the assessing officer by disallowing the share premium without appreciating the fact that the assessee company did not provide relevant supporting documents during the assessment proceedings. 2. Whether on the facts and circumstances of the case, Ld CIT(A) is justified in deleting the addition of Rs. 1,04,79,916/- made by the assessing officer by disallowing the share premium without appreciating the fact that the assessee company did not provide relevant supporting documents during the assessment proceedings. Whether on the facts and circumstances of the case, Ld. CIT(A) is justified in deleting the addition of Rs. 1,04,79,916/- made by the assessing officer by disallowing the share premium without appreciating the fact that the CBDT circular No. F. No. 173/149/2019-ITA-I dated 10.10.2023 does not relevant for the purpose of section 68 of the Act. 3. "The appellant craves leave to add, alter, amend or delete all or any of the aforesaid grounds of appeal." 3. The brief facts of the case are that the assessee is a start-up FMCG company (DPIIT Registration No. DIPP18237), primarily....
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....ounds. 4. The Ld. DR argued that the addition was rightly made by the Ld. AO under section 68 of the Act due to the assessee's failure to establish the identity, creditworthiness, and genuineness of the transactions relating to the share subscribers. According to the Ld. DR, failure to satisfy even one of these essential limbs mandates an addition under section 68. While the assessee may be protected by the CBDT circular dated 10/10/2023 in respect of proceedings under section 56(2)(viib), there is no bar on examining the share premium under section 68. The Ld. DR, therefore, prayed for restoration of the addition made by the Ld. AO. 5. The Ld. AR submitted that although the assessee could not furnish the required documents during the assessment proceedings, complete documentary evidence was placed before the Ld. CIT(A) as additional evidence. The Ld. AR drew our attention to paragraphs 2.4 to 2.4.4 of the appellate order, which reads as under:- "2.4 On perusal of the details filed by the appellant following facts were found: 2.4.1 The appellant has not submitted any document in respect to share premium received from Ms. Swati Khandre, Ms. Surpriya Prasad Ch....
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....late proceedings. Despite repeated reminders dated 15.04.2025, 05.05.2025, 20.05.2025, 30.05.2025 and 13.06.2025, the AO has not furnished any remand report. Therefore, this appeal is adjudicated on merits based on the material available on record. 6.2 The appellant is a DPIIT-registered startup engaged in manufacture and distribution of natural products. During the year under consideration, it issued equity shares at a premium aggregating Rs. 1,04,79,916/-. The AO added the said sum under section 68 of the Act, alleging that the identity and creditworthiness of the investors, and genuineness of the transactions, were not satisfactorily established. 6.3 The appellant contends that all relevant details were submitted before the AO, including names and PANs of subscribers, bank statements, valuation reports by a registered valuer using the DCF method, Form PAS-3, and ITRs where available. However, due to procedural lapses in the faceless proceedings-including insufficient time to respond to the show cause notice dated 24.02.2024-the final submission was filed belatedly through grievance mechanisms and email after the assessment was concluded." 8. The Ld.AR argued....
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....ect has been specifically pointed out in the valuation methodology; the AO's observation that the valuer increased the share value "without reason" is general and unsubstantiated. The Circular and the rules do not empower the AO to substitute his own valuation in place of a recognized valuer's report unless shown to be patently incorrect or manipulated. 6.8 Most crucially, the CBDT Circular dated 10.10.2023, being binding on the Department under section 119, squarely applies to the appellant's case and prohibits verification of share premium received by recognized startups during assessment proceedings. Ignoring such a circular without any contrary instruction or notification renders the assessment flawed. 6.9 In view of the above legal and factual matrix, I am of the considered opinion that: 6.9 In view of the above legal and factual matrix, I am of the considered opinion that: * The appellant has discharged the initial onus under section 68 by submitting relevant documentary evidences; * The AO has failed to rebut such evidences or conduct any independent inquiry; * The assessment violates the CBDT's instructions applicable to startups....
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....issed. As a result, the appeal of the revenue stands partly allowed. 11. Since the revenue's appeal has been adjudicated on merits and partly allowed and the legal ground raised by the assessee in its cross-objection remains merely academic and is therefore left open. Accordingly, the cross-objection is dismissed as infructuous. 12. In the result, the appeal of the revenue bearing ITA No.5922/Mum/2025 is partly allowed & assessee's CO-304/Mum/2025 is dismissed. Order pronounced in the open court on 26th November 2025 ============= Document 1 Indic Wisdom Pvt Ltd AY 2022-2,3 Sr.No Name of Subsciber issue Price No. of Shares Total Value Particulars Submitted before AC Additional Evidence Swati Khandre (NR) 8277 60 4,96,620 Identity PAN Yes [Annexure "A" of Submission filed on 18.10.2023) Passport Yes (Page 73) Genuineness Bank Statement Yes (Page 9) Form PAS-3 Yes (Annexure "E" of Submission filed on 18.10.2023) Creditworthiness Bank Statement Yes (Page 9) 2 Supriya Chavan [NR 8277 60 4,96,620 Identity PAN Yes (Annexure "A" of Submission filed on 18.10.2023) Foreign Return of Income Yes (Page 12-15) Genuineness Bank Statement Yes (Pag....