TMI Blog2021 (12) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee failed to do so. The contention of the assessee as raised in the ground of appeal that the statement furnished by Shri bagrecha was retracted on the later date cannot help the assessee. It is for the reason that there are many more circumstantial evidences, as discussed above, which are sufficient to hold that the transactions are sham business contracts. Accordingly, we don t find any reason to interfere in the order of learner CIT (A). Hence, the ground of appeal raised by the assessee is dismissed. - ITA No. 124/AHD/2019 - - - Dated:- 29-11-2021 - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Assessee : None For the Revenue : Shri R.R. Makwana, Sr.D.R ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-2, Ahmedabad dated 26/11/2016 arising in the matter of assessment order passed under s. 144 r.w.s. 147 of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2010-11. 2. The assessee has raised the following grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reason to keep the matter pending before us. Accordingly, we decide to proceed to adjudicate the appeal after hearing the learner DR appearing on behalf of the Revenue. 4. The only issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by sustaining the disallowance of ₹ 4.11 crores under the provisions of section 68 of the Act. 5. The facts in brief are that the assessee in the present case is a public limited company and engaged in the business of manufacturing of laminates sheets. The assessee in the year under consideration has issued 102750 shares to different companies. The face value of the share was ₹10 and premium of ₹ 390 per share aggregating to ₹400 per share. The shares were issued to the following companies: Sr.No Name of Shareholder Amount of shares issued Amount of Share Capital received. Amount of Share Premium received (i) Jay Adhyashakti Marketing 'Pvt. Ltd 16500 165000 643500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also issued shares in the financial year 2014-15 at ₹70 only comprising of ₹10 face value and ₹60 share premium against the value of the shares issued in the year under consideration at ₹400 only. As such, the shares were issued for the year under consideration at much higher value than the fair market value as worked out above. 5.2 Based on the above information, the AO was not satisfied with the share capital received by the assessee in the year under consideration and sought clarification from the assessee. But there was no reply from the side of the assessee. In the absence of any reply and considering the facts as discussed above, the AO treated the share capital received by the assessee as bogus and added the same to the total income of the assessee under the provisions of section 68 of the Act. 6. Aggrieved assessee preferred an appeal to the learned CIT (A). 7. The assessee before the learned CIT (A) submitted that it has discharged the onus imposed upon it under the provisions of section 68 of the Act by filing the copies of the PAN, ledger, statement of income, income tax return, audited financial statements and the bank statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we note that the case on hand has been listed for hearing time and again on several occasions but we did not get any reply from the side of the assessee. 11.1 The issue in the given facts and circumstances revolves whether the share capital received by the assessee in the year under consideration represents the sham transaction. A sham transaction is a transaction which appears to be true and correct if the same is evaluated based on the documentary evidence. It is because such transactions are arranged in a manner to give a colour of genuine contract. On the Contrary, when such transactions are gauged on the parameters of circumstantial and surrounding evidences, it is generally revealed that such deals have been made using the colourable device to escape from the tax liability. In the present case, the shares have been allotted at a huge premium to the companies which in turn have sold the same to another company which is controlled and managed by the assessee company. The shares were sold within a short period of time and that too at a very low price. Such kind of transactions do not prevail in the business world. Thus the circumstantial surrounding evidences strongly sug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry letters, or demonstrating that the transactions are done through the banking channels or even by filing the income tax assessment particulars. There is thus no escape from proving genuineness of a transaction. As long as subject-matter of the disallowance or addition is the same, there is no bar on examination of any related aspect by the Tribunal.[Para 7] The facts of the case cannot be considered in isolation with the ground realties. It will, therefore, be useful to understand as to how the shell entities, which the loan creditors are alleged to be, typically function, and then compare these characteristics with the facts of the case and in the light of well settled legal principles. A shell entity is generally an entity without any significant trading, manufacturing or service activity, or with high volume low margin transactions- to give it colour of a normal business entity, used as a vehicle for various financial manoeuvres. A shell entity, by itself, is not an illegal entity but it is their act of abatement of, and being part of, financial manoeuvring to legitimise illicit monies and evade taxes, that takes it actions beyond what is legally permissible. These enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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