2023 (5) TMI 996 - AT - Income Tax

Addition u/s 68 - assessee has raised fresh paid-up share capital which includes share premium by issue of fresh share during the instant previous year - AO straightway discussed position of law and then observed that assessee failed to submit specific details hence he made the addition - HELD THAT - According to the ld. CIT(Appeals) it is highly improbable that some genuine company would pay the premium as shown by the assessee. The simple reason is that there should some scientific study for commanding the premium and here in this case the assessee has taken premium @ Rs.249/- per share as well as Rs.499/- per share. The face value of the share is only Rs.1/- in both the cases. As taken note of this finding of CIT(Appeals) in the order - The assessee failed to submit plausible details before AO as well as CIT(Appeals). It has not filed any paper book before the Tribunal. After going through the well reasoned finding of the ld. 1 st Appellate Authority we do not find any reason to interfere in it. Hence this appeal of the assessee is dismissed.

Summary

Issues Involved:
1. Addition of Rs.11,04,51,450/-.
2. Charging of interest under sections 234B & 234C.
3. Initiation of penalty proceedings under section 271(1)(c).

Summary:

Issue 1: Addition of Rs.11,04,51,450/-
The assessee filed a return of income declaring 'NIL' income, which was selected for scrutiny. The Assessing Officer (AO) added Rs.11,04,51,450/- under section 68 for unexplained share capital and premium, citing the assessee's failure to provide specific details. The CIT(Appeals) elaborated that the assessee did not report any revenue from operations and had minimal financial activity, making it improbable to justify the high share premium. The companies subscribing to the shares lacked the financial capacity to pay such premiums. The CIT(Appeals) noted discrepancies in the premium rates charged and emphasized the lack of due diligence and verification, concluding that the transactions lacked genuineness and creditworthiness. The Tribunal upheld the CIT(Appeals)'s findings, dismissing the appeal.

Issue 2: Charging of Interest under Sections 234B & 234C
The Tribunal noted that charging interest under section 234B is mandatory and consequential. Therefore, this ground of appeal was rejected.

Issue 3: Initiation of Penalty Proceedings under Section 271(1)(c)
The challenge to the initiation of penalty proceedings under section 271(1)(c) was deemed premature. The Tribunal highlighted that the assessee has an independent remedy, and a separate appeal can be filed if a penalty is imposed. Consequently, this ground of appeal was also rejected.

Conclusion:
The Tribunal dismissed the appeal of the assessee, affirming the findings of the CIT(Appeals) regarding the addition of Rs.11,04,51,450/-, the mandatory nature of charging interest under section 234B, and the premature challenge to the initiation of penalty proceedings under section 271(1)(c).