2023 (2) TMI 742 - AT - Income Tax

Addition u/s 68 - bogus share capital including share premium raised by the assessee - HELD THAT - There is no discussion on the nature of evidence, who are the share applicants, what was their financial health etc.The assessee did not file statement of facts either before the CIT(A) or before the ITAT. It has not file any confirmation from the share applicants, their financial health or any evidence demonstrating their identity or creditworthiness. The assessee has not filed its own financial status which can demonstrate whether it can command a premium on the shares - Thus, the assesse company evidently does not have any specific business. It has filed a loss return of Rs.9,171/-. We are convince that it is a paper company devoid of any business. Hence, Revenue authorities have rightly held the alleged share application money as bogus and rightly made the addition. We do not find any error in the order of the ld. Revenue authorities. Accordingly, appeal of the assessee is dismissed.

Summary

Issues:
Appeal against addition of share capital and premium as bogus - Lack of representation by assessee - Adjournment requests denied - Addition upheld by CIT(A) and ITAT Kolkata.

Analysis:
The appeal was filed by the revenue against the order of the Commissioner of Income Tax (Appeal) regarding the addition of Rs.9,67,59,171/- as share capital and premium by the Assessing Officer under section 68 of the Income Tax Act for Assessment Year 2012-13. The assessee did not appear for the hearing despite multiple adjournment requests, leading to the appeal being disposed of ex-parte. The Tribunal noted a trend of shell companies delaying proceedings and decided to proceed with the case due to the nature of the issue. The assessee had declared a total loss of Rs.9,171/- and failed to provide any evidence or details regarding the share applicants' financial health. The CIT(A) concurred with the Assessing Officer's decision as there was no representation or evidence provided by the assessee. The lack of financial status and confirmation from share applicants led to the conclusion that the assessee was a paper company without any genuine business, justifying the addition of the alleged share application money as bogus. The appeal was dismissed by the ITAT Kolkata, upholding the decision of the revenue authorities.

In summary, the judgment highlighted the importance of providing necessary evidence and representation during proceedings, especially in cases involving share capital and premium. The failure of the assessee to substantiate the legitimacy of the share application money resulted in the addition being deemed as bogus. The decision serves as a reminder for companies to maintain transparency and provide adequate documentation to support their financial transactions to avoid adverse judgments.