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2021 (4) TMI 243 - AT - Income TaxRevision u/s 263 - Addition u/s 68 - reopening of assessment u/s 147 - Bogus share capital collected by the assessee company - HELD THAT:- In the instant case, the credit is in the form of receipt of share capital with premium from share applicants. The nature of receipt towards share capital is seen from the entries passed in the respective balance sheets of the companies as share capital and investments. In respect of source of credit, the assessee has to prove the three necessary ingredients i.e. identity of share applicants, genuineness of transactions and creditworthiness of share applicants. For proving the identity of share applicants, the assessee furnished the name, address, PAN of share applicants together with the copies of balance sheets and Income Tax Returns. With regard to the creditworthiness of share applicants, a perusal of their respective balance sheets reveals that these Companies are having enough capital and the investment made in the appellant company is only a small part of their capital. These transactions are also duly reflected in the balance sheets of the share applicants, so creditworthiness is proved. Even if there was any doubt if any regarding the creditworthiness of the share applicants was still subsisting, then AO should have made enquiries from the AO of the share subscribers as held by Hon'ble jurisdictional High Court in CIT vs DATAWARE [2011 (9) TMI 175 - CALCUTTA HIGH COURT] which has not been done, so no adverse view could have been drawn. Third ingredient is genuineness of the transactions, for which we note that the monies have been directly paid to the assessee company by account payee cheques out of sufficient bank balances available in their bank accounts on behalf of the share applicants. The share applicants have confirmed the share application in response to the notice u/s. 133(6)of the Act and have also confirmed the payments which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. Thus the assessee has discharged the onus on it; and the AO enquired about it during the reassessment after reopening proceeding for this issue and it has been thoroughly enquired as discussed supra and the view taken by AO is a plausible view in line with the judicial precedence supra and so it cannot be called erroneous. So the Ld. PCIT erred in holding the AO's re-assessment order as erroneous. in the light of the aforesaid judicial precedents and in the light of fact that AO has conducted enquiries in respect of share capital collected by the assessee company before accepting the share subscribers identity, creditworthiness and genuineness of the transaction and being satisfied did not find it necessary to make any addition u/s. 68 of the Act, which action could not have been interfered by the Ld. PCIT u/s. 263 of the Act since the jurisdictional condition precedent for invoking the same is not satisfied in the facts of this case We note that the Ld. PCIT proceeded on wrong, assumption of facts and law. Since the Ld. PCIT has interfered by invoking 263 jurisdiction without satisfying the condition precedent i.e. AO's order to be erroneous as well as prejudicial to the Revenue, the issuance of SCN and consequent impugned action is null in the eyes of law. Therefore, the assumption of revisional jurisdiction is bad in law and so quashed. - Decided in favour of assessee.
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