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TMI Blog2023 (10) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Act 1961. 3. For that the appellant craves leave to add, alter or amend any ground before or at the time of hearing of appeal." 3. The sole grievance of the assessee is that the ld. CIT(A) erred in confirming the action of the ld. Assessing Officer while making addition under section 68 of the Act at Rs. 72,00,000/-. Facts in brief are that the assessee is a private limited company having rental income and Nil income declared in the return filed on 17/09/2014. Case selected for scrutiny followed by issuance of notice u/s 143(2) & 142(1) of the Act. During the course of assessment proceedings the assessing officer noticed that the assessee issued equity shares at face value Rs. 10/- and charged premium of Rs. 350/- per share thereby receiving Rs. 2,00,000/- towards share capital and Rs. 70,00,000/- towards share premium during the year. Certain details were called for to examine the identity and creditworthiness of the share applicants and genuineness of the transactions. There was no proper compliance by the assessee. Accordingly the ld. Assessing Officer accepted the share capital of Rs. 2,00,000/- but made addition of Rs. 72,00,000/- on account of share premium and made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. (ii) M/s. Goldstar Commosale Pvt. Ltd. (iii) M/s. Pranam Vyapar Pvt. Ltd. (iv) M/s. Rajnandini Vanijya Pvt. Ltd. 7. We notice that during the course of assessment proceedings, the ld. Assessing Officer called for the following details in order to examine the nature and source of alleged sum:- "1. Proof of identity- Voter Card/Passport/Driving License/PAN Card. 2. List of companies where you were directors/shareholders from the A.Y. 2014-15 till date with dates of appointment thereto with your DIN. 3. Proof of acknowledgement of filing the return of income of the company for the A.Y. 2012-13, 2013-14, 2014-15. Also enclose the relevant ledger A/C. 4. Declaration of sources of funds for such payments along with copies of relevant bank statement. Details of immediate source of such funds viz names, complete address and PAN of persons concerned should be furnished. 5. Details of investments made in the said company along with copy of share applications forms. 6. Numbers of shares applied for with details of amounts involved, date modes of payment. Details of premia paid and face value of shares applied for. Reasons for application at premium, if any. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een filed in the form of paper book before us, which contains the following:- M/s. Servoline Vinimay Pvt. Ltd. Copy of Notice u/s 133(6) and its reply along with enclosures consisting: * List of Directors * Income Tax Acknowledgement for Asst Yr 2014-15 * Audited Financial Statements as on 31st March 2014 * Ledger Account * Bank Statements * Share Application Form * Share Allotment Letter (ii) ROC Master Data M/s. Goldstar Commosale Pvt. Ltd. Copy of Notice u/s 133(6) and its reply along with enclosures consisting: * List of Directors * Income Tax Acknowledgement for Asst Yr 2014-15 * Audited Financial Statements as on 31st March 2014 * Ledger Account * Bank Statements * Share Application Form * Share Allotment Letter (ii) ROC Master Data M/s. Pranam Vyapar Pvt. Ltd. Copy of Notice u/s 133(6) and its reply along with enclosures consisting: * List of Directors * Income Tax Acknowledgement for Asst Yr 2014-15 * Audited Financial Statements as on 31st March 2014 * Ledger Account * Bank Statements * Share Application Form * Share Allotment Letter (ii) ROC Master Data M/s. Rajnandini Vanijya Pvt. Ltd. * Copy of Notice u/s 133 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness and financials etc. of each of the share subscriber company individually. However, we note that in the assessment order that the AO has not even mentioned the names of the share subscriber companies and even has not mentioned a word as to which of the share subscriber company or the corresponding transaction thereof was not genuine and on what grounds. The AO, in our view, 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. The Ld. Counsel for the assessee has rightly placed reliance upon the decision of the Hon'ble Bombay High Court in the case of PCIT, Panji vs. Paradise Inland Shipping Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, we note that the ld. CIT(A) while confirming the additions u/s 68 of the Act has relied on the judgment PCIT(Central)-1, Kolkata vs. NRA Iron & Steel Pvt. Ltd. (supra). We note that the Hon'ble Supreme Court in the said case has taken note of the observations made by the Supreme Court in the "the land mark case of Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) laying down the proposition that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that it is the income of the assessee, and there would be no further burden on the revenue to show that the income is from any particular source." 11.1. Thereafter the Hon'ble Supreme court summed up the principles, which emerged after deliberating upon var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Bench of the Tribunal in the case of M/s. Advent Commodities Pvt. Ltd. vs. ITO (supra), wherein under identical circumstances, it was held as under:- "4.2. The legal issue that arises is whether such an addition is sustainable in law as what was brought to tax was only the share premium. 4.3. We now discuss the case law on this issue. The ITAT Kolkata Bench in the case of ITO vs. M/s. Savera Towers Pvt. Ltd. in ITA No. 2275/Kol/2016 for the AY 2012-13 order dated 05/12/2018 held as follows: "6. We have heard the rival submissions. The facts stated hereinabove remain undisputed before us by either of the parties and hence the same are not reiterated for the sake of brevity. At the outset, we find that the assessee had received share capital of Rs. 54,200/- from 4 corporate entities and Rs. 2,70,45,800/- from the very same shareholders towards share premium. The share capital received by the assessee has been duly accepted by the ld. AO within the ken of section 68 of the Act. However, share premium component has been doubted by the ld. AO. We find that the assessee in the instant case had duly complied with by furnishing the complete details of share subscribers to prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium received by the assessee-company cannot be taxed u/s 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 AO, 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 premium received u/s 68 of the Act. We find that the issue of bringing the share premium to tax u/s 68 of the Act was not an issue which was urged by the appellant Revenue before the Tribunal. The only issue which was urged before the Tribunal as recorded in para 11 of the impugned order is the addition of share capital and share application money in the hands of the assessee as income u/s 28(iv) of the Act. We find that the Commissioner of Income-tax (Appeals) did consider the issue of applicability of section 68 of the Act and concluded that it does not apply. The Revenue seems to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on oath before the AO 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. This conclusion was reached by the impugned order following the decision of this court in Vodafone India Services (P.) Ltd. (supra) and of the apex court in G. S. Homes and Hotel (P.) Ltd. (supra). In both the above cases the court has held that the amount received on issue of share capital including premium are on capital account and cannot be considered to be income. (b) It is further pertinent to note that the definition of income as provided u/s 2(24) of the Act at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. This came into the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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