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2018 (12) TMI 528 - AT - Income TaxAddition towards share premium u/s 68 - summons issued u/s 131 remained uncomplied and the assessee did not produce the directors of the investor companies before the AO - Held that - The issue under dispute was the subject matter of adjudication on exactly similar facts by this tribunal in the case of ITO vs Trend Infra Developers Pvt Ltd 2018 (11) TMI 1131 - ITAT KOLKATA for Asst Year 2012-13, wherein the addition made towards share premium was deleted concluding that only grievance of the AO was that the assessee could not produce the directors of the share subscribing companies In our considered opinion, for this reason alone, there cannot be any addition u/s 68 of the Act as held by the Hon ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd. 1986 (3) TMI 3 - SUPREME COURT - Decided in favour of assessee.
Issues Involved:
1. Justification of deletion of addition towards share premium under Section 68 of the Income Tax Act, 1961. 2. Compliance with documentary evidence requirements to substantiate share capital and share premium. 3. Validity of Assessing Officer's (AO) predetermined stance on share premium genuineness. 4. Applicability of judicial precedents and legal provisions to the case. Issue-wise Detailed Analysis: 1. Justification of Deletion of Addition Towards Share Premium Under Section 68 of the Income Tax Act, 1961: The primary issue in this appeal is whether the deletion of an addition of ?1,98,00,000 towards share premium under Section 68 of the Income Tax Act, 1961, by the Commissioner of Income Tax (Appeals) [CIT(A)] was justified. The AO had initially doubted the genuineness of the share premium received, alleging it to be unexplained cash credit. However, the CIT(A) found that the assessee had provided sufficient documentary evidence to substantiate the share premium received, including letters of allotment, bank statements, PAN details, and audited financial statements of the share subscribers. The CIT(A) concluded that the identity, creditworthiness, and genuineness of the transactions were satisfactorily proven. 2. Compliance with Documentary Evidence Requirements to Substantiate Share Capital and Share Premium: The assessee company provided extensive documentation to support the receipt of share capital and share premium, including letters of allotment, bank statements, PAN details, audited financial statements, and income tax return acknowledgements of the share subscribers. Notices issued under Section 133(6) of the Act to the share subscribers were duly complied with, and the directors of the assessee company appeared before the AO with the necessary documents. The CIT(A) found that the transactions were routed through proper banking channels and were reflected in the respective books of accounts, proving the genuineness of the transactions beyond doubt. 3. Validity of Assessing Officer's Predetermined Stance on Share Premium Genuineness: The CIT(A) observed that the AO had adjudicated the issue with a predetermined mindset that the share premium received by the assessee was not genuine. The AO's conclusion was based on the non-compliance of summons under Section 131 by the directors of the investor companies. However, the CIT(A) found that the AO had accepted the receipt of share capital as genuine but doubted the share premium component from the same shareholders, which was inconsistent. The CIT(A) held that all three ingredients of Section 68 - identity, creditworthiness, and genuineness - were proven by the assessee. 4. Applicability of Judicial Precedents and Legal Provisions to the Case: The tribunal relied on several judicial precedents, including the decision of the Hon’ble Bombay High Court in Pr. CIT vs. Apeak Infotech and the Hon’ble Delhi High Court in Novo Promoters and Finelease Pvt. Ltd. The tribunal noted that the amendment to Section 68 by the addition of a proviso took effect from April 1, 2013, and was not applicable to the assessment year 2012-13. The tribunal also referenced a similar case adjudicated by the tribunal in ITO vs. Trend Infra Developers Pvt Ltd, where the addition towards share premium was deleted. The tribunal concluded that the CIT(A) had rightly granted relief to the assessee, and the grounds raised by the revenue were dismissed. Conclusion: The tribunal upheld the CIT(A)'s decision to delete the addition of ?1,98,00,000 towards share premium under Section 68 of the Act. The tribunal found that the assessee had provided sufficient documentary evidence to substantiate the share premium received, and the AO's predetermined stance on the genuineness of the share premium was not justified. The tribunal also noted that the judicial precedents and legal provisions supported the CIT(A)'s decision. Consequently, the appeal of the revenue was dismissed.
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