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TMI Blog2025 (5) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting the addition made u/s 68 of the Act on account of bogus share capital & premium amounting to Rs. 32,50,42,000/- ignoring the Assessing Officer's remand report dated 20/07/2022 wherein it had been categorically stated that the share applicant companies had no credit worthiness to invest in the assesse company. (2) Whether the Learned Income Tax Appellate Tribunal has committed substantial error in law in ignoring the fact that the CIT (A) had not taken cognizance of the fact that the investor companies had filed their income tax returns showing negligible taxable income and their reserve and surplus mostly consisted of share capital? (3) Whether the Learned Income Appellate Tribunal has substantially erred in law in ignoring that CIT (A) held that assesse had established the identity and creditworthiness of the share applicants and genuineness of transaction merely based on the fact that transaction were through banking channels, when it been held by the Jurisdictional High Court in the case of CIT vs Precision Finance Pvt Ltd that mere payment by account payee cheque is neither sacrosanct nor can it make a nongenuine transaction genuine which view has also been endo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been submitted cannot be explained. 4. The assessing officer therefore came to the opinion that the assessee company and the other companies are paper/shell companies and to channelise the black money the assessee company made its increased capital and that the amount of share premium including face value which was found credited in assessee account are unexplained. Accordingly, the assessment was completed. The assessee carried the matter on appeal before CIT (A) raising various grounds. The CIT (A) called for a remand report from the assessing officer upon perusal of the documents and details furnished by the assessee which documents and details were also placed before the assessing officer during the assessment. Upon perusal of the remand report the CIT (A) observed that the assessing officer has examined the directors of the assessee company and the share subscribing companies by recording their statements under Section 131 of the Act and after examination of the documents filed by the assessee as well as the share subscriber companies before whom the assessing officer did not point out any infirmity in the matter relating to the information sought for in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (A) found that the enquiry done by the assessing officer were in addition to the field enquiry already made by the assessing officer at the time of the first remand proceedings when he had deputed the departmental inspector to conduct field enquiries in order to ascertain the physical existence of the 26th share applicant at the addresses provided. 7. The CIT (A) had pointed out that in the course of remand the enquiry was enlarged to the examination of the principles officers/directors of the share applicant companies in person and that one of the important factors which emerged from the remand report is that not only did the assessing officer conducted enquiry by issuing notices under Section 131 of the Act but in the first remand stage he went a step further and deputed a departmental inspector to conduct field enquiry. Ultimately, the CIT (A) had allowed the assessee's appeal which was challenged before the learned tribunal by the revenue and affirmed by the learned tribunal. 8. Mr. Soumen Bhattacharjee, learned senior standing counsel for the appellant would strenuously contend that the financials of the company may be looked into for which the learned advocate had elabora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y identity of the investors, their creditworthiness and the genuineness of the transaction. 12. After we have elaborately heard the senior standing counsel for the appellant revenue, we find that the CIT (A) while considering the appeal had called for two remand reports, we need not discuss the findings of the assessing officer in both the reports but suffice to observe that the identity and the creditworthiness of the share applicant companies stands established. Therefore, the third factor is with regard to the genuineness of the transaction. The learned senior standing counsel would vehemently contend that the aspect regarding abnormally high share premium was never considered by the CIT (A) and has been brushed set aside. To consider the correctness of this submission, we have carefully perused the order passed by the CIT (A) and we find that this aspect was dealt with by the CIT (A), in our view in an elaborate fashion. At this juncture, it will be beneficial to extract a portion of the finding recorded by the CIT (A) on this aspect namely with regard to the alleged high share premium:- It has been explained that this premium was paid on account of the anticipated future pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by over three times between assessment years 2011-2012 and the assessment year 2012- 2013. Further during the same period, the earning per share of the assessee company had grown from two and half times to 16% per share of Rs. 10 and therefore the CIT (A) on facts held that the assessee company was showing good returns and were showing good profits for its investors and it is a growing company. Therefore, the submission of the revenue that the allegation that unduly high premium was charged was not examined by the CIT (A) is incorrect. In fact, this aspect was also examined by the assessing officer to certain extent as pointed out by the CIT (A). When the matter travelled on appeal to the learned tribunal at the instance of the revenue, the factual aspects were re-examined. The tribunal notes that the paper book containing 1029 pages were filed and all documents were placed before the learned tribunal and after noting the facts the learned tribunal came to the conclusion that the CIT (A) was well justified in deleting the addition made under Section 68 of the Act. 14. The decision in the case of NR Portfolio Private Limited and Navodaya Castles Private Limited have to be applied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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