TMI Blog2016 (9) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability. In the absence of the details of shareholders and the basis for valuation of share at ₹ 5400/- per share, the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. Section 68 of the Act clearly says that when the Assessing Officer found credit in the books of account and the assessee could not offer any explanation or the explanation offered by the assessee is not satisfactory, then the entries found in the books have to be treated as income of the assessee. - Decided against the assessee. - ITA No.871/Mds/2016 - - - Dated:- 1-9-2016 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For the Appellant : Shri V.S. Jayakumar, Advocate For the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s able to issue shares without receiving any money or asset from the shareholders and what was the net worth of the company for the purpose of issuing the additional shares to the shareholders, the Ld.counsel could not clarify the query. On another query from the Bench, how the value of the shares having face value of ₹ 10/- was arrived at ₹ 5400/- per share, the Ld.counsel submitted that this was valued as per discounted cash flow method. However, the Ld.counsel could not produce any details. According to the Ld. counsel, when, admittedly, there was no physical movement of money or asset from the shareholders to the assessee-company, there cannot be any addition under Section 68 of the Act. For the purpose of making addition un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the assessee to produce the valuation report before the CIT(Appeals), the copy of valuation report was not produced before the CIT(Appeals). Therefore, it is for the assessee to produce the necessary material to prove the creditworthiness of credit entries found in the books. 5. The Ld. D.R. further submitted that the assessee has also claimed to have entered into a settlement between M/s Shriram Auto Finance and Mrs. Vathsala Ranganathan. This arrangement with M/s Shriram Auto Finance and Mrs. Vathsala Ranganathan and agreements with other companies are only colourable device for the purpose of introducing cash credit by way of share premium and share capital to the assessee-company. Therefore, by placing reliance on the observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/- and the assessee itself admitted before the Assessing Officer the market value of share is ₹ 171.34 per share. 7. For the purpose of revaluation, the net worth of the company has to be examined. The Ld.counsel for the assessee could not explain the net worth of the company for the purpose of estimating the valuation of share at ₹ 5400/- per share. From the orders of the authorities below it appears that there was agreement between assessee-company and M/s Shriram Auto Finance and Mrs. Vathsala Ranganathan and there was also shareholder agreement with M/s Carcare and M/s VROne Energy Pvt. Ltd. and M/s Trilok Vincom Pvt. Ltd. The assessee claimed before the CIT(Appeals) that the asset was nothing but a loan received from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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