Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 350 - AT - Income TaxAddition u/s 68 - bogus share premium and share capital during the assessment year under consideration - whether shareholding companies are only paper companies not carrying out any substantial business activities? - HELD THAT:- The assessee company has not commenced its business activity at the time of preparation of valuation report by the Auditor and subscription of share by 35 companies, as the clearance for mega project was accorded by the Competent Authority on 18-2-2009. It is preposterous and against the human probability that the third party company would buy shares with such huge share premium of a paper company which has no business background and track record, without looking into the assets, business, model and strong fundamentals of the company. All these aspects have been meticulously examined by the Assessing Officer in the assessment order. Ironically the CIT(A) has glossed over the findings recorded by the Assessing Officer CIT(Appeals) had merely decided the appeal on the lines of findings recorded by the Hon’ble Supreme Court in the case of Lovely Exports [2008 (1) TMI 575 - SC ORDER] - We do not concur with the view adopted by the CIT(A) while allowing the appeal of the assessee. No exercise was carried out by the learned CIT(A) to go into the root of the matter and find out the actual business carried out by the assessee and the investing companies and he had also not examined the issues from the prospective of a prudent businessman , i.e. whether the prudent business man would like to invest and buy shares of a paper company having a negative NAV at a premium of ₹ 190/- per share or not. CIT(Appeals) has not dealt with any of the findings recorded by the Assessing Officer on merit whereby he had brought on record the financial status of these companies, the working of these companies from the same premises through the key person. The Ld. CIT(Appeals) has not discussed anything with respect to the report of the Inspector and operation of these companies being carried out by Shri Praveen Kumar Jain. We deem it appropriate to remand this matter to the file of Ld. CIT(Appeals) to decide the appeal in accordance with the decision of the Hon’ble Supreme Court in the matter of NRA Iron & Steel Pvt. Ltd. [2019 (3) TMI 323 - SUPREME COURT] and also in the matter of NDR Promoters Pvt. Ltd. [2019 (1) TMI 1089 - DELHI HIGH COURT] Needless to say, the primary onus to prove genuineness, creditworthiness and identity of the 35 shareholders companies is on the assessee as per parameter mentioned in Para 11 of the decision in the matter of Principal Commissioner of Income Tax (Central)-1 Vs. NRA Iron & Steel Pvt. Ltd. (supra) Para 13 of the NDR Promoters Pvt. Ltd. (supra. Delhi High Court). The assessee is required to discharge the same. In the light of above, we direct the Ld. CIT(Appeals) to decide the issue afresh - Decided in favour of revenue for statistical purposes.
|