TMI Blog2019 (1) TMI 1948X X X X Extracts X X X X X X X X Extracts X X X X ..... orate entities. However, without pointing out any defects has arbitrarily without giving any reason by a cryptic order has added the entire share premium which was also given by the very same four corporate entities u/s 68 of the Act. The Ld. AR brought to our notice that the similar additions were made by the same very AO in five cases wherein the AO accepted the share capital but added the share premium which action of the AO was not upheld by the Tribunal. As share premium cannot be added in the hands of the assessee u/s. 68 of the Act since the proviso was inserted u/s 68 of the Act only from AY 2013-14 and similar additions made only on share premium was directed to be deleted and which action has been upheld by the Hon ble Bombay High Court in Pr. CIT Vs. Apeak Infotech [ 2017 (9) TMI 1590 - BOMBAY HIGH COURT] - Decided in favour of assessee. - I.T.A. No. 2274/Kol/2016 - - - Dated:- 9-1-2019 - Shri A. T. Varkey, JM And Dr. A. L. Saini, AM For The Appellant : Shri Pijush Mukherjee, Addl. CIT, Sr. DR For The Respondent Shri Manish Tiwari, AR ORDER Per Shri A.T.Varkey, JM This appeal preferred by the revenue is against the order of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee which receives ... The Ld. CIT, DR submitted that in similar set of facts Hon ble Calcutta High Court in the case of M/s. Rajamandir Estates Pvt. Ltd. vs. CIT (2016) 70 taxmann.com 124 (Cal) has distinguished the decision of M/s. Lovely Exports Ltd. case. It was pointed out that the said decision of Hon ble Calcutta High Court has been confirmed by Hon ble Supreme Court reported in (2017) 77 taxmann.com 284. 4. He also submitted that besides it has been held in various judicial pronouncements that burden of proofs viz. identity of the creditor, his creditworthiness and genuineness of the transaction u/s.68 are required to be discharged by the assessee only. The Hon'ble Jurisdictional High Court in CIT vs. Korlay Trading Co. Ltd. (1998) 232 ITR 820 (Cal) held mere filing of Income Tax File No. of the creditors to prove genuineness of the cash credit. The creditor should be identified, the transaction should be genuine and there should be creditworthiness. The Ld. DR further submitted that in K.M. Sadhukhan and Sons Pvt. Ltd. Vs CIT (1999) 239 ITR 77 (Cal) it has been held that burden lies upon the assessee to prove the noted three conditions. In CIT vs. Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional High Court in CIT vs. Active Traders Pvt. Ltd. has held that the Assessing Officer in the assessment of a company has jurisdiction to ask for information from the shareholders regarding the source of investment made in the company. Their lordships observed that - if a cash credit is shown by the company in its books of accounts and if the source cannot be explained properly the ITO may assess the sum as income of the company from undisclosed source. 7. The Hon'ble Jurisdictional High Court in CIT vs Nivedan Vanijya Niyojan Ltd. (2003) 263 ITR 623 (Cal) has held that where the assessee company did not produce the subscribers of its share capital when required to do so, it failed to establish the identity of the subscribers, prove their creditworthiness and the genuineness of the transaction and therefore addition u/s.68 was justified. In the said decision the Hon'ble Court has placed its reliance on the earlier two decisions of the Calcutta High Court namely M/s. Hindustan Tea Trading Company Ltd. and M/s.Ruby Traders and Exporters Ltd. 8. When the issue arose regarding taxability of share premium which is a capital receipt, the ITAT Kolkata clarified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial statements and income tax acknowledgment for filing of return for AY 2012-13. Thus, the identity of share subscribers is proved. From the bank statement of the share subscribers it was pointed out to the AO that there was no cash deposits prior to issue of cheques to the assessee company. Even the Ld. AR of the assessee explained to the AO the immediate source of payment of share application monies to the assessee company. And the share capital and premium were paid through banking channel to the assessee company. Thus the genuineness of the transaction cannot be disputed. Thus, according to Ld. AR of the assessee, the assessee had discharged the onus casted upon it to prove the identity, creditworthiness and genuineness of the share subscribers. On perusal of the audited Balance Sheet of the share subscribing companies reveal that the shareholders possessed sufficient capital and reserves out of which share subscription amounts were paid through account payee cheques. The chart is given below to better understand the fund position of each share applicant: Name of the company Investible Funds available as per financials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction Projects Pvt. Ltd. ITA No. 2047/Kol/2016 order dated 07.12.2018 13. The Ld. AR drew our attention to the 1st case of Trend Infra Developers Pvt. Ltd., (supra), which according to Ld. AR was a group of company wherein also the same kind of addition was made after accepting the share capital and adding the share premium. According to Ld. AR, share premium cannot be added in the hands of the assessee u/s. 68 of the Act since the proviso was inserted u/s 68 of the Act only from AY 2013-14 and similar additions made only on share premium was directed to be deleted and which action has been upheld by the Hon ble Bombay High Court in Pr. CIT Vs. Apeak Infotech reported in 88 Taxman.com 695 dated 08.06.2017 The Ld. AR drew our attention to page 7 of the case law paper book and drew our attention to the order passed by the Tribunal in Trend Infra Development pvt. Ltd., supra, wherein we note in similar facts the Tribunal was pleased to delete the addition made only on share premium by the AO for AY 2012-13. The Tribunal held as under: 3.3. We have heard the rival submissions. The fact stated hereinabove remain undisputed before us by either of the parties and hence the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e referred to supra is not applicable to the facts of the instant case and is factually distinghuishable. 3.3.1. We find that the reliance placed by the ld. AR in the decision of Hon ble Bombay High Court in Pr. CIT vs. Apeak Infotech reported in 88 Taxmann.com 695 dt 08.06.2017 wherein the question raised before the Hon ble Bombay High Court are as under: A. Whether on the facts and circumstances of the case and in law, the Tribunal was correct to uphold the decision on Commissioner of Income Tax (Appeals) that the share premium received by the assessee-company cannot be taxed under Section 68 of the Act ignoring the ratio laid down by this Court in its decision reported in the case of Major Metals Ltd. vs. Union of India [2013] 359 ITR 450 (Bom)? B. Whether on the facts and circumstances of the case and in law, the Tribunal as well as the Commissioner of Income Tax (Appeals) was right in deleting addition made by the Assessing Officer, by holding that the share premium receipt is capital in nature? The Hon ble Court held as under: Regarding Question A : ( a) The issue raised by the Revenue in this question is to bring to tax the share premiu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act by the Settlement Commission. In the above case, the Settlement Commission arrived at a finding of fact that the subscribers to shares of the assessee company were not creditworthy inasmuch as they did not have financial standing which would enable them to make an investment of ₹ 6,00,00,000 at premium at ₹ 990 per share. It was this finding of the fact arrived at by the Settlement Commission which was not disturbed by this court in its writ jurisdiction. In the present case the person who have subscribed to the share and paid share premium have admittedly made statement on oath before the Assessing Officer as recorded by the Tribunal. No finding in this case has been given by the authorities that shareholder/share applicants were unidentifiable or bogus. ( e) In the above view Question No. A is not being entertained in view of the decision in Tata Chemical Ltd. (supra). Accordingly, the question (A) is not entertained. Regarding Question B : ( a) We find that the impugned order of the Tribunal upheld the view of the Commissioner of Income-tax (Appeals) to hold that share premium is capital receipt and therefore, cannot be taxed as income. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some proof of identity of some of the entries in question. But, from this inference, or form the fact that the transactions were through banking channels, it does not necessarily following that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established. 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the fact of the allegations of the Revenue that the account statements reveal uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of maki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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