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TMI Blog2019 (5) TMI 1748X X X X Extracts X X X X X X X X Extracts X X X X ..... editworthiness to make investment of the subscribers. 2. The appellant craves leave to add/alter/modify the grounds of appeal." 2. The ld. Departmental Representative, Mr. Robin Choudhury, submitted that ld. CIT(A) has failed to appreciate that the assessee has not been able to prove the genuineness of the transaction, as well as the creditworthiness of the share applicants. He relied on the order of the Assessing Officer and submitted that the assessee company had allotted share to share subscribing companies i.e. M/s Aggressive Vincom Pvt. Ltd. and M/s Flabby Sales Pvt. Ltd. at a huge premium. He relied on the judgment of Hon'ble Apex Court in the case CIT vs. Durga Prasad More 82 ITR 540 and in the case of Sumati Dayal vs. CIT 214 ITR 801 and submitted that the surrounding circumstances and human probability are to be taken into account by the revenue authorities for arriving at an appropriate decision. He pointed out that summons u/s 131 of the Act was issued to Shree Pankaj Bharech, Director of the assessee company for personal appearance and to produce the investors but none of them appeared. He relied on the decision of the Calcutta High Court in the case of CIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LP(C) No.1992/2019 order dated 18-02-2019 wherein the finding of the Hon'ble High Court had held that the valuation of share premium is a commercial decisions. He relied on the number of other case laws in support of these contentions, which we will discuss as and when necessary. As regards judgment of the case of Trinetra Commerce & Trade (P) Ltd. (supra) relied upon by the Ld. D/R, he distinguished the same on facts by stating that, Mr. K.P. Kedia had filed an application in the Settlement Commission reflecting undisclosed income and it was not clear as to how the funds of Mr. K.P. Kedia has gone to the beneficiary companies. On these facts the High Court had arrived at the particular conclusions. He submitted that the case of the assessee company is that the funds from the share applicants have been taxed in the hands of the share applicants themselves in orders passed by the Assessing Officer u/s 143(3) of the Act and hence the same cannot be taxed once again as the source is accepted by the Department. 5. Rival contentions heard. On a careful consideration on the facts and circumstances of the case, perusing the papers on record and orders of the authorities below as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal under similar circumstances, in the case of DCIT vs. M/s. Maa Amba Towers Ltd.; ITA No.1381/Kol/2015; Assessment Year 2012-13, order dt. 12th October, 2018, had held as follows:- "3. Mr. Choudhury vehemently contends during the course of hearing that the Assessing Officer had rightly made the impugned addition since the taxpayer had failed to prove identity, genuineness and creditworthiness of the share premium money. He terms the impugned share subscription premium Rs.690/- per share having face value of Rs.10/- each as highly exorbitant. Case laws Sumati Dayal vs. CIT(1995) 214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) is further quoted during the course of hearing that the relevant evidence submitted during the course of assessment has to be considered as per the human probabilities by removing all blinkers. Our attention is thereafter invited to the relevant nuances of such share subscription routing involving multiple layers to plough back unaccounted monies back to the books. We find no merit in the Revenue's instant grievance in the light of relevant facts on record. There is no dispute about the assessee's having declared its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the impugned order is set aside. The appeal is allowed accordingly. No order as to costs. 47. In the instant case before us, we also note that the share subscribing companies are duly assessed to income tax. The Ld AR had placed on record the copies of the assessment orders framed in the cases of the share subscribing companies, as noted above. It therefore cannot be disputed that the share subscribing companies are not in existence. From the assessment orders, it is noted that the share subscribing companies are duly assessed to income tax and their income tax particulars together with the copies of respective income tax returns with their balance sheets are already on record. We also find that the Ld. CIT(A) had categorically stated that the scrutiny assessments were framed on the share subscribing companies for the Asst Year 201011 which shows their existence is genuine and transactions carried out by them were the subject matter of examination by the income tax department in scrutiny proceedings. This fact has not been controverted by the Revenue before us. 48. We may gainfully refer to the judgment in the case of Pr. CIT Vs Paradise Inland Shipping (P) Ltd (84 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act cannot reappreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration. 49. We also find that the Hon'ble Apex Court recently in the case of Principal CIT vs Vaishnodevi Refoils & Solvex reported in (2018) 96 taxmann.com 469 (SC) wherein the SLP of the Revenue has been dismissed by the Hon'ble Apex Court. The brief facts of that case were that the addition u/s 68 of the Act was made by the Assessing Officer in respect of capital contributed by the partner of the firm. The Hon'ble Gujarat High Court noted that when the concerned partner had confirmed before the Assessing Officer about his fact of making capital contribution in the firm and that the said investment is also reflected in his individual books of accounts, then no addition could be made u/s 68 of the Act. The decision of Hon'ble Gujarat High Court is reported in (2018) 89 taxmann.com 80 (Guj HC) . The SLP of the revenue against this judgment was dismissed by the Hon'ble Supreme Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions. While dismissing this plea raised by the Revenue, the Hon'ble Bombay High Court held as under: (e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre-proviso Section 68 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the form of balance sheets income-tax returns, PAN details etc. While arriving at the conclusion that he did, the Assessing Officer did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee's account to the share applicants' account. As held concurrently by the Commissioner (Appeals) and the Tribunal, these conclusions were clearly baseless and false. This Court is constrained to observe that the Assessing Officer utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents." 51. We also rely on the following judgments of the Coordinate Bench of ITAT Kolkata, where based on same facts, and identical and common grounds and coordinate Bench deleted the addition: (1) M/s Jagannath Banwarilal Texofabs Pvt Ltd, in ITA No. 1762/Kol/2016, For A.Y. 2012- 13, order dated 26.10.2018. (2) M/s Wiz-Tech Solutions Pvt Ltd, in ITA No.1162/kol/2015,for A.Y. 2012-13, order dated 14.06.2018. 52. To conclude, Section 68 of the Act provides that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) Copy of Balance Sheet, Profit and loss account of all share applicant companies. 4) Details of investments sold by all share applicant companies. 5).Transaction with the assessee was duly highlighted in the bank statement 6). Explanation along with evidence of source of source of the funds of the share applicant Companies. 7). Audited Accounts of the share holders. 8) Relevant address proofs / Form filed by the share applicants with ROC. 9). Income Tax Return of share applicant companies. 10) Copy of the Bank Statement of Share applicant companies where from the amount was debited. 11) Copies of Bank statement of the assessee company where the share application money and premium were credited. 12). Cheque Number, the amounts subscribed by shareholders along with the name of bank its branch address and the number of shares allotted to them with face value on the date of allotment. 13) Common Director of the share applicant companies ( who is director in assessee company as well as share applicant companies) appeared before the assessing officer in response to notice u/s 131 of the Income Tax Act and submitted documents and evidences before the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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