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2023 (5) TMI 1325 - ITAT KOLKATAAddition u/s 68 - addition of entire Share Capital & Share Premium - no compliance from assessee by way of which identity, genuineness of the share subscribers and creditworthiness of the transactions can be established - Assessee made investment in land by raising share capital for which cost of land was very low and would fetch good sale price at high profits after its development, claimed ld. Counsel - HELD THAT:- As submitted that assessee had acquired 690.51 decimals of land area. There is nothing on record to demonstrate as to how these lands were acquired in terms of their conveyance deeds. In the written submissions furnished by assessee it is submitted that investment of assessee is in land and at the time of transactions and in view of huge quantity of land, cost of lands was very low but after the development of same, price of the same would be very high and profitable. As stated that “assessee is valuing investments at books value, whereas, the intrinsic or fair market value is much more. While issuing shares, fair market value of the shares has to be taken into account and the person paying the premium has factually benefitted from the purchase of shares at premium.” Assessee also submitted that in order to justify its fair market value had made an attempt to furnish the submissions before AO for which it is stated in the written submission “assessee had during the course of assessment, approached to AO and tried to provide the fair market value of the investment held which proves the reasonableness of the premium, but ld. AO was not interested to do so.” Ongoing through these submissions, we find them to be general and vague in nature and in no way establishes the identity, creditworthiness of the share subscribers and the genuineness of the transaction. It is difficult to comprehend the reason for the investment in the assessee company by the share subscribers when there is no track record for the assessee, this being the broken year and the very first year of incorporation. Preponderance of probabilities weighs in favour of Revenue when the fact on record is that shares have been issued on two consecutive dates, first being on 30/03/2012 to five individuals from whom no share premium has been charged and on the very next date on 31/03/2012, a hefty premium of Rs. 4,990/- has been charged from two share subscribing companies. It is also important to note in this case that none appeared before ld. AO to discharge the onus casted u/s 68 of the Act so as to enable the AO to make the necessary enquiries for establishing the identity and creditworthiness of share subscribers as well as genuineness of transactions. As also observed that the main object clause contained in the Memorandum of Association does not fall in line with the activity of land dealing claimed to have been undertaken by assessee during the year. Also, from perusal of financial statements of two share subscribing companies, it is observed that source of investment by these two companies are also from the share capital and share premium raised by them while issuing their own shares to other closely held companies. Further, the assessee itself has claimed that there is no noticeable business activity during the year. Thus assessee has failed to establish the basic ingredients of Section 68 of the Act - Decided against assessee.
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