2010 (1) TMI 1234 - AT - Income Tax

Addition u/s 68 - Unexplained credit - share application money and share premium money - Addition made as there is no basis on which the shares of the assessee company can command premium of ₹ 490/- per share - reliance on Tribunal order in the preceding year in deleting addition by CIT(A) - HELD THAT - We find that the relevant para of this Tribunal decision rendered in the case of the assessee in assessment year 2000-01 this aspect was not there in that year that the share application money was received by the assessee company at a high premium of ₹ 490/- per share whereas in the present year, this is the main basis on which addition was made by the Assessing Officer. Hence, merely on this basis of the Tribunal order in the preceding year, the issue in the present year cannot be decided and in the same, this aspect has to be examined as to whether the receipt of high share premium of ₹ 490/- per share in the present year is reasonable and in spite of this high premium, the transaction of receipt of share application money in the present year can be accepted as a genuine transaction. Regarding judgment of Lovely Exports 2008 (1) TMI 575 - SC ORDER , we feel that judgment is not squarely applicable in the present case because the facts are different. In that case, it was not the allegation of the revenue that because of high amount of share premium on per share, that the transaction in question was not genuine. Hence, we feel that this matter should go back to the file of the Ld CIT(A) for afresh decision. We set aside the order of the Ld CIT(A) on this issue to the extent of addition deleted by him on amount received by the assessee company during this year and restore this matter back to the to his file for a fresh decision.Appeal of the revenue stands allowed for statistical purposes.

Summary

Issues:
- Appeal against order of Ld CIT(A) for assessment year 2001-02.
- Deletion of addition of Rs. 56,00,000 made under section 68 of the IT Act.
- Failure to prove source and creditworthiness of creditors/share applicants.

Analysis:

Issue 1: Appeal against Ld CIT(A) Order
The revenue appealed against the order of the Ld CIT(A) for the assessment year 2001-02. The grounds raised by the revenue included the contention that the Ld CIT(A)'s order was erroneous and contrary to facts and law.

Issue 2: Deletion of Addition under Section 68
The Assessing Officer made an addition of Rs. 80.85 lakhs on account of share capital received during the year, with a premium of Rs. 490 per share. The Ld CIT(A) deleted the addition of Rs. 56 lakhs, citing that it was received from reputed companies through account payee cheques, and all companies were income tax assesses with PAN numbers and income tax returns. The remaining balance addition was also deleted by the Ld CIT(A) as it was not received during the year under consideration. The revenue contended that the shares of the assessee did not command a premium of Rs. 490 per share, and this aspect needed further examination.

Issue 3: Failure to Prove Source and Creditworthiness
The revenue argued that the assessee failed to discharge the onus of proving the source and creditworthiness of the creditors/share applicants. The Ld CIT(A) was requested to pass a speaking order on whether the receipt of high premium share of Rs. 490 per share was reasonable and if the transaction was genuine, providing an opportunity for both sides to be heard.

In conclusion, the Tribunal set aside the Ld CIT(A)'s order regarding the deletion of Rs. 56 lakhs and restored the matter back to the Ld CIT(A) for a fresh decision. The Ld CIT(A) was instructed to examine whether the receipt of high premium shares was reasonable and if the transaction was genuine, providing a speaking order and adequate opportunity for both parties. The appeal of the revenue was allowed for statistical purposes.