TMI Blog2023 (5) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 190/- on the equity shares having face value of Rs. 10/- of a company which has poor track record of earning profits as well as poor turnover. Where the assessee has failed to discharge its primary onus casted upon it to explain the genuineness of the transaction and the explanations offered by the assessee are not sufficient to prove the genuineness of the receipt of share capital and share premium, we are not inclined to make any interference in the well-reasoned finding of ld. CIT(A) confirming the addition made u/s 68 - effective grounds of appeal raised by the assessee are dismissed. - I.T.A. No.: 636/KOL/2019 - - - Dated:- 3-5-2023 - Sri Rajpal Yadav, Vice President And Dr. Manish Borad, Accountant Member For the Assessee : Sh. Narendra Kedia, Adv. For the Revenue : Sh. P.P. Barman, Addl. CIT, (D/R) ORDER PER MANISH BORAD, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the orders passed u/s 250 of the Income Tax Act, 1961 (in short the Act ) by ld. Commissioner of Income-tax (Appeals)-9, Kolkata [in short ld. CIT(A) ] dated 21.01.2019 arising out of the Assessment Order framed u/s 143(3) of the Act dated 24.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the premium was charged has not been explained and no efforts have been made with the help of financial statement to justify the quantum of share premium charged. Ld. CIT(A) accordingly sustained the addition u/s 68 of the Act. 5. Aggrieved, the assessee is now in appeal before this Tribunal. Ld. Counsel for the assessee vehemently argued referring to the written submissions dated 08.02.2023 running into several pages merely enumerating the documents of the share applicants. Ld. Counsel for the assessee also referred to another paperbook dated 02.12.2022 containing 191 pages indicating the financials of the assessee company and the replies given by various share applicants to the notices u/s 133(6) of the Act. It is contended by ld. Counsel for the assessee that the assessee company is engaged in investment and finance activities and the share capital and share premium received from various share applicants are duly supported by documentary evidences explaining the identity and creditworthiness of the share applicants and genuineness of the transaction. Reliance placed on the following decisions: 1. CIT vs. Ganjeshwari Metals, ITA 597/2012, (Delhi High Court) 2. Finleas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4, 88, 00,000/- during the year in question. The assessee has issued 294500 shares having face value of Rs.10/- per share on a premium of Rs. 157/- per share. To verify the genuineness of the said transactions and to verify the identity and creditworthiness of the shareholders of the assessee company, notice u/s 131 of LT. Act was issued on 18/02/2015 to directors of the assessee company asking him to produce the Managing Directors of all the shareholders company to whom shares were allotted during the year under reference. They were asked to appear personally before the undersigned and to produce/ furnish details / documents in support of the justification for the investment made by them in the assessee company and other details as asked for. But, none of them appeared before the undersigned. Subsequently, Show Cause letter was issued to the Managing Director of the assessee company on 05.03.2015 informing the said facts and was asked to explain as to why the credit claimed to the tune of Rs. 4, 88, 00,000/- should not be added back to the total income of the assessee company u/s 68 of the I.T. Act 1961 as the credit in the books of accounts remained unexplained and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riber companies. Section 68 of the I.T. Act provides for charging to income tax on any sum credited in the books of the assessee maintained for any previous year if the assessee offers no explanation about the nature and source thereof or the explanation offered is not, in the opinion of the Assessing Officer, satisfactory, it places no duty upon the Assessing Officer to point to the source from which the money was received by the assessee. Where an assessee fails to prove satisfactorily the source and the nature of certain amount of credit during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature. This view was adopted in the case of A. Govindarajulu Mudaliar vs CIT [1958] 34 ITR 807. Similar view was also taken in the case of:- (i) CIT vs Devi Prasad Viswanath Prasad [1969] 72 ITR 194 (SC), and (ii) Commissioner of Income-tax vs Independent Media (P) Ltd. [2012] 25 taxman.com 276 (Delhi). Reliance is also being placed on the decision of jurisdictional ITAT in the case of M/s Star Griha Pvt. Ltd vs CIT and M/s Bisakha Sales Pvt. Ltd. vs. CIT. wherein Hon ble ITAT has given detailed findings of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es having face value of Rs. 10 per share on a premium of Rs. 157 per share. The Assessing Officer in his assessment order has discussed in detail the general modus operandi adopted in such cases as well as the specifics of this case. To verify the genuineness of the said transactions and to verify the identity and creditworthiness of the shareholders of the assessee company the AO issued summons to the directors of the assessee company asking to produce Managing Directors of all the shareholders company to whom shares were allotted during the year under reference. But none of them attended. During appellate proceedings, no reasons were furnished as to why the compliance as sought by the Assessing Officer was not made. As noted in the assessment order, the appellant company filed return of income disclosing total income of Rs. 35,380. The AO after considering the facts of the case and relying on various case laws made the addition. The AO has discussed the background of the case and facts of the case and the various judgements relied and the same are not reproduced for sake of brevity. Merely furnishing documents in routine way, does not explain the sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout being concerned about the return and safety of such investment. Applying the propositions of law laid down in the case of M/s. Blessings Commercial Pvt. Ltd (supra) and M/s NDR Promoters Pvt. Ltd (supra), I uphold the order of the Id. Assessing Officer and dismiss the appeal of the assessee. 10. Now, on examining the finding of ld. CIT(A) as well as on perusal of plethora of details filed by the assessee and the written submissions as well as reliance placed on various decisions, we proceed to examine the facts of the case, we notice that there is a mismatch of share premium per share and number of equity shares issued. We, on going through the audited balance sheet, note that Rs. 190/- per share is charged as share premium on equity shares of face value of Rs. 10/- and Rs. 4.88 Cr received during the year on this account. We notice that the assessee company has a meagre turnover of Rs. 3,60,214/- during the financial year 2011-12. In the immediately preceding financial year there was no revenue from operation and only other income is shown at Rs. 31,062/-. The income for the current year is declared at Rs. 24,450/- in the profit and loss account and the same was on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or a venture capital company as referred to in clause (23FB) of section 10. 11. From perusal of the above Section and not considering the amendments made after 01.04.2012, we observe that Section 68 of the Act is invoked if any sum is found credited in the books of an assessee for which the assessee either does not offer any explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer. In the given case, though the assessee has given the explanation by filing the financial statements of the share applicants but they are in itself not sufficient to satisfy ld. AO as well as ld. CIT(A) and even we are also not satisfied with the nature and source of the alleged credit. As discussed above that the genuineness of the transaction is in serious doubt because why some private limited companies would invest a huge sum into the share capital of a company having no regular business activity and no concrete plan for any expansion. The assessee has failed to discharge its onus to explain the genuineness of the transaction as to why the share applicants have paid a share premium of Rs. 190/- on the equity sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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