TaxTMI 
TaxTMI 
2026 (5) TMI 465
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.... Act. Subsequently, on the basis of information received from the Investigation Wing regarding search action in the case of Shri VipulVidur Bhatt, who was stated to be engaged in providing accommodation entries through various entities, the case of the assessee was reopened under section 147 after obtaining approval under section 151, and notice under section 148 was issued on 30.03.2017. In response, the assessee filed return of income on 25.04.2017 declaring the same income. 3. During the course of reassessment proceedings, the assessee furnished certain details including ledger accounts, bank statements and particulars of share capital. The Assessing Officer noted that the assessee company, incorporated on 12.01.2012, had received share capital and share premium aggregating to Rs. 3,00,00,000/- during F.Y. 2011-12 from five private limited companies, namely - i. M/s Sampada Chemicals Ltd., ii. M/s Lunkad Textiles Pvt. Ltd., iii. M/s P. Saji Textiles Ltd., iv. M/s Jagvi Developers Pvt. Ltd. and v. M/s Venkatesh Forwarders Pvt. Ltd., and that shares of face value Rs. 10/- were issued at a premium of Rs. 190/- per share. 4. The ....
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....companies through account payee cheques and duly recorded in the books of account. The assessee furnished documents including share application forms, allotment advice, share certificates, ROC filings, confirmations from subscribers, bank statements of both assessee and investors, income-tax returns and audited financial statements of investor companies, board resolutions and constitutional documents. It was contended that these evidences established identity, creditworthiness and genuineness of the transactions. 8. The assessee further contended that the Assessing Officer had relied solely on general information from the Investigation Wing without bringing any specific material linking the assessee to Shri VipulVidur Bhatt. It was also submitted that neither the investigation report nor the statement recorded under section 132(4) was furnished and no opportunity for cross-examination was provided. The assessee argued that the addition was based on presumption and borrowed satisfaction. On merits, it was contended that share capital and share premium are capital receipts and cannot be taxed merely because the premium was considered excessive, and reliance was placed on various j....
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.... reasoning, the CIT(A) concluded that the assessee failed to satisfactorily explain the nature and source of the credit entries and failed to establish identity, creditworthiness and genuineness of the transactions. Accordingly, the addition of Rs. 3,00,00,000/- made by the Assessing Officer under section 68 was confirmed and the appeal of the assessee was dismissed. 14. The assessee is in further appeal before us and has raised following concise grounds of appeal: 1. In confirming addition, in reference to share capital Rs. 15,00,000/- and share premium Rs. 2,85,00,000/-, making total of Rs. 3,00,00,000/-. It is said that in view of the evidence furnished, the assessee has discharged the onus and therefore, the addition made may please be deleted. 2. The Lower Authority has also erred in not providing information and statement in reference to VipulVidur Bhatt and also erred in not providing cross examination thereof and therefore, the addition made solely based thereon is liable to be deleted. 3. It is further prayed that in any case, the share premium of Rs. 2,85,00,000/- cannot be treated as revenue receipt for the AY 2012-13 and therefore, the addi....
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....asis of search at VipulVidur Bhatt was deleted and it was noted that cross-examination was not allowed. 17. The Ld. AR submitted that the addition made by the Assessing Officer is primarily based on the information and statement of Shri VipulVidur Bhatt. It was contended that the said person has subsequently retracted his statement and, therefore, the same lacks evidentiary value and cannot be relied upon. It was further submitted that the summons under section 131 were issued after an inordinate delay of nearly six years from the date of the transactions, which renders the non-compliance, if any, devoid of adverse inference against the assessee. 18. The Ld. DR supported the orders of the Assessing Officer and the CIT(A) and invited our attention to the findings recorded therein. It was submitted that the assessee company was incorporated on 12.01.2012 and the intrinsic value of the shares of the assessee company as on 12.01.2012 was Rs. 10 per share and as on 31.03.2012 was Rs. 10.04 per share, if the share premium is not included in the capital. Therefore, according to the Assessing Officer, the share premium of Rs. 190/- per share charged by the assessee was not only exces....
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....a) has reiterated this legal position in clear terms by holding that: "The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and creditworthiness of the investors..." (para 11, i.) 22. However, the said principle has to be applied in the context of facts and evidences available on record, and not in a mechanical manner. 23. In the present case, it is an undisputed position that the assessee has furnished the following documentary evidences in respect of the share applicants: * PAN details of all the investor companies * Confirmations from the subscribers * Bank statements evidencing payment through banking channels * Share application forms, allotment details and share certificates * ROC filings and statutory records * Income tax returns and financial statements of the investor companies 24. The Assessing Officer has not disputed the existence of these documents. The addition has primarily been made on the basis of (i) non-compliance of summons issued under section 131, (ii) alleged connection with the entry operator Shri VipulVidur Bhatt, and (iii)....
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....umentary evidences already placed on record. Additionally, the statement of Shri VipulVidur Bhatt is stated to have been subsequently retracted, which materially erodes its evidentiary value. In the absence of independent corroboration, such a retracted statement cannot form the sole basis for sustaining the addition. 31. The Assessing Officer has questioned the charging of premium of Rs. 190/- per share by comparing it with intrinsic value. In this regard, it is pertinent to note that: i. For the year under consideration, i.e., A.Y. 2012-13, there was no provision under section 56(2)(viib); ii. The proviso to section 68 regarding source of source is applicable only from A.Y. 2013-14 onwards. 32. The Hon'ble Bombay High Court in Gagandeep Infrastructure Pvt. Ltd. (supra) has held: "Proviso to section 68... would be effective only from assessment year 2013-14 onwards and not for the subject assessment year" (para 3, (e)) Further, the Hon'ble High Court has also held that once identity, genuineness and capacity are established, addition cannot be made merely on suspicion regarding share premium. 33. The CIT(A) has heavily relied upon the decisio....