TMI Blog2023 (10) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee observing that AO could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. Once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Thus we delete the addition made u/s 68 of the Act and allow all the effective grounds raised by the assessee. - DR. MANISH BORAD, HON BLE ACCOUNTANT MEMBER SHRI SONJOY SARMA, HON BLE JUDICIAL MEMBER For the Appellant : Shri Sunil Surana, FCA For the Respondent : Smt. Ranu Biswas, Addl. CIT D/R ORDER PER DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgement of the Hon ble Supreme Court in the case of Principal Commissioner of Income Tax (Central-1) vs. NRA Iron Steel Pvt. Ltd. arising out of SLP (Civil) No. 29855 of 2018) and confirmed the action of the Assessing Officer. Aggrieved, the assessee is now in appeal before this Tribunal. 4. The ld. Counsel for the assessee submitted that the action of the Assessing Officer was not justified since the ld. Assessing Officer was satisfied with the share capital received from the alleged four share applicants and only added the share premium even though total amount of share capital and share premium were received from same share subscribers and same banking channel. He referred to the decision of this Tribunal in the case of M/s. Advent Commodities Pvt. Ltd. vs. ITO in ITA No. 522/Kol/2020; order dt. 27/01/2021 and in the case of ITO vs. M/s. Gateway Enclave Pvt. Ltd. in ITA No. 2269/Kol/2016; order dt. 01/05/2019, wherein it has been held that if certain sum received from a share applicant has been accepted and no addition has been made u/s 68 of the Act and share premium money is received from these share applicants, then addition u/s 68 for the share premium money cannot be h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to the share premium at Rs. 72,00,000/-. In other words, out of the total sum of Rs. 74,00,000/-, received from the above stated share applicants, the ld. Assessing Officer accepted the genuineness and credit worthiness of the share capital of Rs. 2,00,000/- but only doubted the share premium amount of Rs. 72,00,000/-. 8. Though, in the appellate proceedings, the assessee failed to succeed before the ld. CIT(A), however, before us the ld. Counsel for the assessee, in its contention has referred to the decision of the Coordinate Bench in the case of M/s. Advent Commodities Pvt. Ltd. (supra) and M/s. Gateway Enclave Pvt. Ltd. (supra). Perusal of both these orders indicate that in the case of M/s. Gateway Enclave Pvt. Ltd. (supra) reliance was placed on the decision of M/s. Advent Commodities Pvt. Ltd. (supra) and the finding of this Tribunal was that once the assessee has proved to the identity and creditworthiness of the share applicants as well as the genuineness of the transactions with regard to the share capital, the revenue authorities should not doubt the share premium received from the very same share applicants. Based on this observation itself, the assessee des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 31 st March 2014 Ledger Account Bank Statements Share Application Form Share Allotment Letter (ii) ROC Master Data 9.1. A perusal of the above details show that all the share applicants have duly responded to the notice u/s 133(6) of the Act and have filed all relevant documents. The ld. Counsel for the assessee also filed a certificate of the Chartered Accountant dt. 27/01/2015, placed at page 12 of the paper book, to show that the fair market value per share was Rs. 370/- at the time of allotment of the equity shares to the share applicants and, therefore, it was a genuine investment by the share applicants in the assessee company. 10. We find that under the given facts, where the share applicants have duly responded to the notices u/s 133(6) of the Act and all documentary evidences have been filed by the assessee to discharge its primary onus explaining the nature and source of the alleged share premium and the ld. Assessing Officer having failed to find any discrepancy in these details, the decisions of this Tribunal in the case of M/s. Mahalakshmi Vinimay (P) Ltd. vs. ITO in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Further the jurisdictional Calcutta High Court in the case of Crystal networks (P) Ltd. vs CIT (supra) has held as under: We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney are credited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit- worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. 11.2. The Hon ble Supreme court, thus, has held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound to conduct an independent enquiry to verify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditworthiness of share subscribers beyond doubt. These are duly supported by the documentary evidences which are enclosed in the paper book. The ld. AO had not found any falsity or any adverse inference of the said documents. We find that the Ld. CIT(A) had placed heavy reliance on these documents and had granted relief to the assessee. All the share subscribers are duly assessed to income tax and the transaction with the assessee company are duly routed through banking channels and are duly reflected in their respective audited balance sheets which are also placed on record before us. In any case, once the receipt of share capital has been accepted as genuine within the ken of section 68 of the Act, there is no reason for the ld. AO to doubt the share premium component received from the very same shareholders as bogus. We held that all the three necessary ingredients of section 68 had been duly complied with by the assessee with proper documentary evidences. We find that notices issued u/s 133(6) have been duly complied with. The only grievance of the ld. AO was that the assessee could not produce the directors of the share subscribing companies. In our considered opinion, for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge this issue before the Tribunal. Mr. Bhoot, ld. counsel appearing for the Revenue also fairly states that the issue of applicability of section 68 of the Act was not urged by the Revenue before the Tribunal. (b) It is a settled position in law as held by this court in CIT v. Tata Chemicals Ltd. [2002] 122 Taxman 643/256 ITR 395 (Bom.) that in an appeal u/s 260A of the Act, the High Court can only decide a question if it had been raised before the Tribunal even if not determined by the Tribunal. Therefore, no occasion to consider the question as prayed for arises. (c) In any case, we may point out that the amendment to section 68 of the Act by the addition of proviso thereto took place with effect from April 1, 2013. Therefore, it is not applicable for the subject assessment year 2012-13. So for as the pre-amended section 68 of the Act is concerned, the same cannot be invoked in this case, as evidence was led by the respondents-assessees before the AO with regard to identity, capacity of the investor as well as the genuineness of the investment. Therefore, admittedly, the AO did not invoke section 68 of the Act to bring the share premium to tax. Similarly, the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect from April 1, 2013 and thus, would have, no application to the share premium received by the respondent/assessee in the previous year relevant to the assessment year 2012-13. Similarly, the amendment to section 68 of the Act by addition of proviso was made subsequent to previous year relevant to the subject assessment year 2012-13 and cannot be invoked. It may be pointed out that this court in CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245/394 ITR 680 (Bom.) has while refusing to entertain a question with regard to section 68 of the Act has held that the proviso to section 68 of the Act introduced with effect from April 1, 2013 will not have retrospective effect and would be effective only from the assessment year 2013-14. (c) In view of the above, question No. B as proposed also does not give rise to any substantial question of law as it is an issue concluded by the decision of this court in Vodafone India Services (P.) Ltd. (supra) and in the apex court in G. S. Homes and Hotels (P.) Ltd. (supra). Thus not entertained. Therefore, all the six appeals are dismissed. No order as to costs. 6.2. We find that the issue under d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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