9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (11) TMI 1170 - AT - Income TaxUnexplained cash credit under section 68 - Bogus share premium amount - creditworthiness as well as the genuineness of the share premium amount - Held that - Relevant documentary evidence in the form of Annual Reports, Bank statements, copies of PAN Card, etc. of the shareholder companies was produced before the Assessing Officer in order to establish the identity as well as creditworthiness of the said shareholder companies. The notices issued by the Assessing Officer were also duly responded by the said shareholder companies by filing their replies. It is observed that the AO, however, doubted their creditworthiness as well as the genuineness of the share premium amount mainly on the ground that the assessee-company failed to produce the Directors of the shareholder companies for examination. He, however, accepted the share capital amount received from the concerned shareholder companies and treated mainly the share premium amount paid by them as unexplained. As pointed out by the ld. Counsel for the assessee, the share premium charged by the assessee-company was duly justified before the ld. CIT(Appeals) by furnishing the relevant facts and figures - Decided in favour of assessee.
Issues Involved:
1. Deletion of addition made by the Assessing Officer on account of share premium. Issue-wise Detailed Analysis: 1. Deletion of Addition Made by the Assessing Officer on Account of Share Premium: The appeal was preferred by the Revenue against the order of the Commissioner of Income Tax (Appeals)-4, Kolkata, which deleted the addition of ?1,00,80,000/- made by the Assessing Officer on account of share premium. The assessee, a company, filed its return of income declaring a total income of ?13,429/-. The Assessing Officer noticed that the assessee raised share capital at a significant share premium of ?1,00,80,000/- despite having no substantial business activity except for some investments in land and bank. The Assessing Officer issued notices to the shareholders, who provided the required details. However, the Assessing Officer found the replies almost identical and noted common directors and addresses among the shareholder companies. The assessee failed to produce the directors for verification, leading the Assessing Officer to treat the share premium as unexplained cash credit and add it to the total income. The assessee appealed to the CIT(A), arguing that the share premium was justified and all necessary compliances were met. The company provided detailed documents, including bank statements, ITR acknowledgements, allotment advice, and financial statements of both the company and the investor companies. The CIT(A) found merit in the assessee's submissions, noting that the Net Asset Value (NAV) of the shares was ?203 per share, and the shares were issued at ?250 per share, which was near the NAV. The CIT(A) concluded that the share premium was justified, and the identity and creditworthiness of the shareholders were established. Consequently, the CIT(A) deleted the addition made by the Assessing Officer. The Revenue appealed to the Tribunal, arguing that the creditworthiness of the shareholders was not established as the directors were not produced for examination. The Revenue contended that the CIT(A) overlooked the money trail of the share premium. The assessee's counsel argued that all relevant aspects were considered by the CIT(A), and the share premium was justified with supporting documents. The Tribunal noted that the documentary evidence provided by the assessee established the identity and creditworthiness of the shareholder companies. The Tribunal observed that the Assessing Officer accepted the share capital but doubted the share premium without justifiable reason. Citing a similar case (M/s. Trend Infra Developers Pvt. Limited), the Tribunal upheld the CIT(A)'s order, stating that the share premium component was justified and the addition by the Assessing Officer was not sustainable. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition of ?1,00,80,000/- on account of share premium, as the assessee had provided sufficient evidence to justify the share premium and establish the identity and creditworthiness of the shareholders.
|
