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TMI Blog2018 (11) TMI 1540X X X X Extracts X X X X X X X X Extracts X X X X ..... f the section 68 of Income Tax Act in the assessee's case." 3. "On the facts and circumstances of case and in law, the Ld.CIT(A) erred in deleting the addition without appreciating the fact that the assessee has failed to justify and to prove nature of the premium charged over and above the intrinsic value of share from the investors. 4. "The appellant prays that the order of Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." 3. The ground raised in C.O. by the assessee read as under: 1. The Commissioner of Income Tax(Appeals) - 12, Mumbai erred in confirming the action of AO in re-opening of the assessment by invoking the provisions of section 147 read with section 148 of the Income Tax Act, 1961. The Appellant submits that the findings recorded by the CIT(A) are contrary to the facts on record and the provisions of the Act and hence notice issued u/s 148 and reopening of assessment u/s 147 is bad in law, illegal, ultra- virus and contrary to the provision of the I.T. Act and shall be quashed. 4. In this case, the Assessing Officer (A.O. for short) observed that the case was reopened u/s. 147 of the Income Tax Act, 1961 (the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/- as per the working under Rule 11UA of the IT Rules. That the assessee has allotted shares and charged premium from the above persons for Rs. 585/- per share. He further observed that the assessee in the last four year claimed losses in the return of income. That it was not believable that any investor will be investing at such a huge premium without any basis. Therefore, the A.O. held that the transaction remained unexplained. The A.O. referred to the provision of section 68 and some case laws in this regard on burden of proof. He also referred to the Hon'ble Bombay High Court decision in the case of Major Metals (supra) and concluded as under: Therefore by applying the rations laid down in the above cases, considering the fact of the case and the assessee's submission in the matter, the amount brought in by the assessee in its books as share premium the nature of which is not satisfactorily explained and the source of which is also note credible the A.Y. 2009-10 amounting to Rs. 14,74,78,500/- is treated as unexplained credit within the meaning of section 68 of the Act and taxed as income for the year under consideration. 6. The assessee appealed before the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied provisions of Act are excluded from income. He concluded as under: As per section 68 of the Act 1961, the appellant company has discharged its onus to establish identity, genuineness of the transaction and the capacity of the lender or the depositor. The identity has been established. The genuineness is also established since the entire; transaction has been done through the banking channels duly recorded in the books of account of the appellant company and duly reflected in its financial statement. Here, the capacity of the shareholder is also not in doubt. . Thus, it is seen that the A.O. has erred in invoking the provisions of section 68 of the Act. Reliance is placed on the recent judgments of the Hon. Mumbai ITAT in the case of Green Infra Ltd. Vs ITO (ITA 7762/Mum/2012) dated 23.8.2013 and ACIT Vs Gagandeep Infrastructure P. LTd. (ITA 5784/Mum/2011) dated 23.4.2014 which are binding as being that of jurisdictional ITAT. 8. Against the above order, the Revenue has filed an appeal on merits of the case and the assessee has filed the cross objection against the validity of reopening upheld by the ld. CIT(A). 9. We have heard both the counsel and perused the records. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils were submitted before the authorities below which duly justify the creditworthiness of the investing companies. The ld. Counsel of the assessee further placed reliance upon the following case laws: 1 ACIT Vs. Gagandeep Infrastructure Pvt. Ltd. [40 CCH 128](Mumbai) 2 CIT Vs. Gagandeep Infrastructure Pvt. Ltd. [394 ITR 680](Bombay) 3 Green Infra Ltd Vs. ITO [145 ITD 240](Mumbai) 4 CIT Vs. Green Infra Ltd [392 ITR 7](Bombay) 5 CIT Vs. Orchid Industries Pvt. Ltd. [397 ITR 136](Bombay) 6 ITO Vs. M/s Sringeri Technologies Pvt. Ltd. [ITA No.3924/Mum/2014] (ITAT Mumbai) 7 DCIT Vs. M/s Alcon Biosciences P Ltd [ITA No.l946/M/2016](ITAT Mumbai) 8 Khubchandani Healthparks Pvt. Ltd. Vs. ITO [384 ITR 322](Bombay) 11. We have carefully considered the submissions and perused the records. We find that in this case, the A.O. has held that the assessee company has received huge share premium which according to the A.O. was not justified. The A.O. has noted that the company which has invested huge amount of share premium in the assessee company has only of about Rs. 1 lac share capital and has no other asset except huge investment in the assessee company. The A.O. has also drawn a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not comprehendible. Though the ld. CIT(A) has referred to several case laws from the ITAT, he has not at all referred to the proposition in the said case law and how they are applicable to the facts of the present case. 14. On the overall consideration of the entire conspectus of the case, we are of the considered opinion that the ld. CIT(A) has passed a very cryptic order both on the validity of the reopening and the merits of the case. It is settled law that even the administrative orders have to be consistent with the rules of natural justice. In our considered opinion, it was incumbent upon the ld. CIT(A) to pass a speaking order on both the issue of validity of reopening and the merits of the case. Hence, in our considered opinion, the interest of justice will be served if both the issue of validity of reopening and merits of the addition are remitted to the file of the ld. CIT(A) for fresh adjudication by passing a speaking order on the subject. Needles to add, the assessee should be granted adequate opportunity of being heard. 15. In the result, the Revenue's appeal and the assessee's cross objection are allowed for statistical purposes. Order pronounced in the open court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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