TMI Blog2019 (8) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... ation / premium as unexplained cash credits - Decided against assessee. Penalty u/s 271(1)(c) - HELD THAT:- The assessee did not appear in the lower proceedings as per para-3 of the CIT s order. Nor there is any discussion in the impugned penalty order as to whether it had filed any representation against the proposed penal action. We thus conclude that the CIT s has rightly imposed the impugned penalty forming subject-matter of the instant. - assessee s appeals are dismissed - ITA No. 1627 & 1628/Kol/2017 - - - Dated:- 21-8-2019 - Shri S.S. Godara , Judicial Member And Dr. A.L. Saini , Accountant Member For the Assessee : None For the Respondent : Shr Radhey Shyam CIT-DR ORDER PER S.S. GODARA , JUDICIAL MEMBER:- These two assessee s appeal(s) for assessment year 2009-10 arise against the Principal. Commissioner of Income Tax-3 Kolkata s common order dated 04.11.2015 passed in case No. Pr.CIT-3/U/S.263/2015-16/8718-20, treating its share capital / premium of ₹146,129,455/- as unexplained cash credits thereby levying corresponding penalty of ₹745,44, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium in the books of the assessee and genuineness of the transaction but this was not done. The AO also failed to examine the veracity of the reason that weighed with the investors in absence of any history of the concern to generate substantial return on capital to prompt them to pay unusually high share premium of the face value. How the share premium has been fixed is not forthcoming. Allowing the assessee claim by not conducting any enquiry to ascertain and examine the crucial facts as above, severe prejudice to revenue has been caused and also the assessment order suffers from infirmity due to lack of proper and adequate enquiry. Thus, the genuineness of the said transactions of receipt of share capital and share premium remains unverified. While the AO made certain enquiries, it was restricted to ascertaining the claim of transaction; no enquiry was made to ascertain whether the investors had the capacity to make the impugned investments and whether the transactions were genuine. No enquiry was rr.ade to rule out the possibility of the transaction being collusive and sham and the activity being an attempt to launder back unaccounted income. No enquiry ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessment In the case was completed u/s. 143(3)/147 on 29.03.2014, on assessed income of ₹ 1,18,990/- against returned of income of ₹ 2372/- 2. On perusal of the assessment records, P L A/c, Balance sheet other documents if is seen that there has been investments in unquoted shares of the various companies totaling to ₹ 15,07,20,000/-.It was also seen that the share premium was received by the assessee totaling to ₹ 12,64,29,455/- during the year under consideration on share capital of ₹ 1,97,00,000/-. 3. The P L A/c and the Balance Sheet for the period ending 31.03.2009 reveals that meager income generating activity has been undertaken during this year. Therefore there is no justification for huge share premium which appears to be a collusive transaction aimed at laundering unaccounted income in the garb of share capital premium. From the assessment record, I find that the AO has not examined this aspect to verify as to the justification for the share premium of the face value of a concern which did not carry out any substantial commercial activity during the year or in the past to generate such income or return on capital w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is required to be assessed as the assessee's income for the instant year. Further, despite opportunity having been granted as pointed out above the assessee failed to establish credit worthiness and capacity of the investors. In consideration of the above facts, I hold that the sum of ₹ 14,61,29,455/- (₹ 1,97,00,000/- being share capital and ₹ 12,64,29,455/- being share premium) received by the assessee during the period under consideration is income of the assessee for the instant assessment year. The assessed income as per assessment order dt.29.03.2014 is enhanced. The A.O. is accordingly directed to pass consequential assessment order giving effect to this order. The income of ₹ 12,64,29,455/- is unaccounted, concealed income of the assessee. The penalty proceeding u/s. 271(1)(c) is initiated separately. 3. We have given our thoughtful consideration to assessee s grievance in the instant quantum appeal. The CIT has held in very clear terms that the Assessing Officer had nowhere examined identity, genuineness and creditworthiness of the assessee s share application / premium neither in sec. 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuine as was held in the case of CIT -Vs- Nova Promoters and Finlease (P) Ltd. (supra). Similar views were expressed by this Court in the case of CIT -Vs- Precision Finance Pvt. Ltd. (supra). We need not decide in this case as to whether the proviso to Section 68 of the Income Tax Act is retrospective in nature. To that extent the question is kept open. We may however point out that the Special Bench of Delhi High Court in the case of Sophia Finance Ltd. (supra) held that the ITO may even be justified in trying to ascertain the source of depositor . Therefore, the submission that the source of source is not a relevant enquiry does not appear to be correct. We find no substance in the submission that the exercise of power under Section 263 by the Commissioner was an act of reactivating stale issues. In the case of Gabriel India Ltd. (supra) the CIT was unable to point out any error in the explanation furnished by the assessee. Whereas in the present case we have tabulated the evidence which was before the assessing officer which should have provoked him to make further investigation. The assessing officer did not attach any importance to that aspect of the matter as discussed abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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