2023 (2) TMI 559 - AT - Income Tax

Addition u/s 68 - identity of the share applicant, their creditworthiness and the transactions are genuine transactions not proved - HELD THAT - After perusal of the record, we are of the view that the assessee is a paper company without any real worth. Nobody is prosecuting this litigation. We fail to understand, as to how the assessee filed the appeal against orders of the authorities below but not interested in prosecuting the appeal before the revenue authorities and also before the Tribunal. There is nothing on the record which can demonstrate the genuineness of the transactions or the identity and creditworthiness of the alleged share applicant who have contributed Rs.9,90,00,000/- as premium. The assessee failed to demonstrate its financial health which can attract such huge premium on subscription of its shares. Therefore, we do not have any hesitation in concurring with the findings of the ld. CIT(A) and upholding the same. - Decided against assessee.

Summary

Issues:
1. Addition of Rs.10,01,00,000 under Section 68 of the Income Tax Act on account of bogus share capital and premium.
2. Addition of Rs.21,650 under Section 14A of the Income Tax Act.

Analysis:
1. The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeal) for Assessment Year 2012-13. The primary grievance of the assessee was the addition of Rs.10,01,00,000 as bogus share capital and premium, along with an additional Rs.21,650 under Section 14A. The assessee failed to appear before the authorities despite multiple notices. The Assessing Officer found discrepancies in the share capital raised by the assessee and issued summons for clarification, which went unheeded. The Commissioner dismissed the appeal due to lack of new evidence. The Tribunal noted the lack of prosecution by the assessee and upheld the additions made by the authorities, emphasizing the absence of proof regarding the genuineness of the transactions or the financial health of the company to justify the premium amount.

2. The Tribunal observed that the assessee, deemed a paper company without substantial value, failed to provide evidence supporting the legitimacy of the share transactions and the financial standing to warrant the premium amount. Despite filing the appeal, the assessee did not actively pursue the case before the revenue authorities or the Tribunal. The Tribunal concurred with the Commissioner's findings and upheld the additions, ultimately dismissing the appeal. The decision was made ex-parte as the assessee did not participate in the proceedings, leading to the rejection of the appeal and the affirmation of the additions made by the Assessing Officer and the Commissioner.

This detailed analysis of the judgment highlights the issues raised by the assessee, the actions taken by the authorities, and the Tribunal's decision based on the evidence and lack of participation from the assessee.