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2019 (8) TMI 1118 - AT - Income TaxRevision u/s 263 - Unexplained cash credits - Addition u/s 68 - share application / premium money - HELD THAT - CIT has held in very clear terms that the Assessing Officer had nowhere examined identity, genuineness and creditworthiness of the assessee s share application / premium neither in sec. 143(3) nor in re-assessment proceedings. We notice in this backdrop that the tribunal s co-ordinate bench s decision in Rajmindir Estate Pvt. Ltd. vs. PCIT 2016 (5) TMI 801 - CALCUTTA HIGH COURT has decided the very issue in Revenue s favour stating that, Money allegedly received on account of share application can be roped in u/s 68 if the source of the receipt is not satisfactorily established by the assessee. It was further held that the evidence as tabulated, which was before the AO which should have provoked him to make further investigation. The AO did not attach any importance to that aspect of the matter. We therefore adopt the above extracted detailed discussion mutatis mutandis to affirm the CIT s action to a AO treating the assessee s share application / premium as unexplained cash credits - Decided against assessee. Penalty u/s 271(1)(c) - HELD THAT - The assessee did not appear in the lower proceedings as per para-3 of the CIT s order. Nor there is any discussion in the impugned penalty order as to whether it had filed any representation against the proposed penal action. We thus conclude that the CIT s has rightly imposed the impugned penalty forming subject-matter of the instant. - assessee s appeals are dismissed
Issues Involved:
1. Legitimacy of share capital/premium as unexplained cash credits. 2. Validity of penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Legitimacy of Share Capital/Premium as Unexplained Cash Credits: The Principal Commissioner of Income Tax (CIT) initiated proceedings under Section 263 of the Income Tax Act, 1961, treating the assessee's share capital/premium of ?146,129,455/- as unexplained cash credits. The CIT found that the Assessing Officer (AO) failed to examine the identity, genuineness, and creditworthiness of the assessee's share application/premium during the assessment proceedings under Sections 143(3) and 147. The CIT observed that the assessee had received a substantial share premium totaling ?12,64,29,455/- on a share capital of ?1,97,00,000/- during the year under consideration, despite minimal income-generating activity. This raised suspicion of a collusive transaction aimed at laundering unaccounted income. The CIT highlighted the necessity for a comprehensive enquiry to verify the real source of money and the genuineness of the transactions, which the AO failed to conduct. The CIT referenced the case of CIT Vs Motor General Finance Ltd (254 ITR 449 Del), asserting that adverse inference is legitimate if the assessee fails to produce relevant material. Despite adequate opportunity, the assessee did not provide a credible explanation or material to establish the creditworthiness of the investors. Consequently, the CIT concluded that the transaction was not genuine, and the provisions of Section 68 of the Income Tax Act were applicable, treating the amount of ?14,61,29,455/- as the assessee's income for the assessment year. The tribunal affirmed the CIT's action, referencing the decision in Rajmindir Estate Pvt. Ltd. vs. PCIT, which upheld that money received on account of share application can be taxed under Section 68 if the source is not satisfactorily established by the assessee. The tribunal concluded that the CIT rightly treated the share application/premium as unexplained cash credits, dismissing the appeal. 2. Validity of Penalty Proceedings under Section 271(1)(c): The CIT also initiated penalty proceedings under Section 271(1)(c) for concealment of income. The CIT noted that the assessee did not appear in the lower proceedings nor provided any representation against the proposed penal action. The tribunal upheld the CIT's decision to impose the penalty, concluding that the assessee had concealed particulars of income related to the unexplained cash credits in the nature of share application/premium. Conclusion: Both appeals by the assessee were dismissed. The tribunal affirmed the CIT's action of treating the share capital/premium as unexplained cash credits and upheld the imposition of the penalty under Section 271(1)(c) for concealment of income. The order was pronounced in the open court on 21/08/2019.
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