2023 (4) TMI 41 - AT - Income Tax

Addition u/s 56(2)(viib) of share premium and unexplained cash credits u/s.68 - HELD THAT - The factual position is hardly found to be any different qua the former issue of sec.56(2)(viib) addition(s) as well wherein both these assessees have not filed all the requisite details, and more particularly, the justification for having received varying sums of exorbitant share premium. We make it clear that this statutory provision casts onus on the concerned taxpayer to justify its share premium vis- -vis fair market value as per the prescribed methods. It is in this backdrop that we note from a combined perusal of both these case files that not only the assessees have failed to file all the supporting evidences during the course of assessments dated 23.03.2016 but also in remand proceedings before the Assessing Officer in light of CIT(A)'s corresponding directions. We, therefore, adopt judicial consistency in this factual backdrop and affirm both the learned lower authorities action making these twin additions u/s.56(2)(viib) and that of unexplained cash credits u/s.68 - Decided against assessee.

Summary

Issues involved: Appeal against CIT(A)'s order for assessment year 2013-14 regarding additions of share premium under sec.56(2)(viib) and unexplained cash credits under sec.68 of the Income Tax Act, 1961.

Additions of Share Premium under sec.56(2)(viib): The twin assessees challenged the correctness of the lower authorities' action regarding the additions of share premium. The CIT-DR argued that similar addition in a previous case was upheld by the tribunal, emphasizing the need to prove genuineness and creditworthiness of the transactions. The assessees failed to provide necessary details and justification for the exorbitant share premium received, which is required to be justified vis-à-vis fair market value. The tribunal affirmed the lower authorities' actions, stating that the onus is on the taxpayer to justify the share premium as per prescribed methods.

Unexplained Cash Credits under sec.68: Similar to the issue of share premium additions, the assessees failed to provide all supporting evidence during assessments and subsequent remand proceedings. The tribunal noted the lack of justification for receiving varying sums of unexplained cash credits. Citing legal precedents, the tribunal emphasized the importance of proving the identity, genuineness, and creditworthiness of such transactions. In this context, the tribunal upheld the lower authorities' actions in making additions under sec.68 of the Act.

Jurisdiction and Transfer Petition: The assessees filed transfer petitions citing their head offices' location in Mumbai and financial constraints. However, the tribunal referred to legal decisions stating that the situs of the Assessing Officer determines the appellate jurisdiction. The Assessing Officer's jurisdiction in this case fell under the Pune Benches of the tribunal, as per the Income Tax Appellate Tribunal Rules. The tribunal dismissed the transfer petitions and concluded that the appeals were to be decided based on the jurisdiction of the Assessing Officer.

Conclusion: The appeals of the twin assessees were dismissed, upholding the additions of share premium and unexplained cash credits. The tribunal's decision was pronounced in open court on 30.03.2023.