9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (9) TMI 1509 - AT - Income TaxAddition u/s 68 - Bogus share capital and share premium received - identity and creditworthiness of the subscriber companies and the genuineness of the transactions not proved HELD THAT - There is no justification for the huge premium charged by the assessee nor the assessee has been able to establish the same before the Ld. AO nor even before the Ld. CIT(A). As discussed above , mere identity of the creditor is not sufficient but the genuineness of the transaction as well as the creditworthiness of the creditor has to be established which the assessee has miserably failed to do. The onus is heavy on the assessee in case of private placement of shares as the details are in the knowledge of the assessee and it ought to have established the creditworthiness of the share applicants/shareholders and the genuineness of the transactions. The directors also failed to appear before the Ld. AO. Most of the applicants are not having any regular source of income except for income under the head income from other sources nor have strong financials to justify the investment with huge premium, as would be evident from Annexure SP which forms part of the order. Neither the applicants are likely to receive any dividend nor the assessee has carried out any valuation to justify the huge premium charged. Accordingly, the transactions relating to issue of shares are not genuine nor the creditworthiness of the creditors has been established. Hence in view of the decision of BST Infratech Ltd. 2024 (4) TMI 989 - CALCUTTA HIGH COURT and others and the discussion made out by the Ld. CIT(A) to demonstrate that the applicants are shell companies, there does not appear to be any justification to interfere with the order of the Ld. CIT(A) and his order is hereby confirmed - Decided against assessee.
Issues Involved:
1. Confirmation of addition made by the AO on account of share capital and share premium received during the previous year amounting to Rs. 4,91,00,000/- under Section 68 of the Income Tax Act, 1961. 2. Arbitrary disallowances and additions under different heads by the CIT(A). Issue-Wise Detailed Analysis: 1. Confirmation of Addition under Section 68: The primary issue in this appeal is the confirmation of the addition made by the Assessing Officer (AO) on account of share capital and share premium received by the assessee during the previous year, totaling Rs. 4,91,00,000/-. The AO had made this addition under Section 68 of the Income Tax Act, 1961, which deals with unexplained cash credits. Facts of the Case: The assessee company filed its return of income for the assessment year declaring a total income of Rs. 3,518/-. The case was selected for scrutiny due to the large share premium received. Despite multiple notices and summons, the assessee did not appear before the AO. Consequently, the AO made an addition of Rs. 4,91,00,000/- under Section 68, which included Rs. 4,91,000/- as share capital and Rs. 4,86,09,000/- as share premium. The AO relied on various judicial pronouncements, including CIT Vs. Precision Finance Pvt. Ltd. and CIT Vs. M/s Nipun Builders & Developers Pvt. Ltd., to justify the addition. CIT(A) Observations: The CIT(A) confirmed the AO's addition, noting that the subscriber companies did not have the financial capacity or standing to justify the substantial premium paid for the shares. The CIT(A) observed that the subscriber companies had no core business activities, fixed assets, or inventories, and their financials did not justify the premium charged. The CIT(A) relied on the decision of the Ahmedabad Bench of the Tribunal in the case of MAP Steels (India) Pvt. Ltd., which characterized the subscriber companies as shell companies. Tribunal's Analysis: The Tribunal considered the written submissions of both the assessee and the Departmental Representative (DR). The Tribunal noted that the identity, creditworthiness, and genuineness of the transactions had not been established by the assessee. The Tribunal referred to several judicial pronouncements, including the decisions of the Hon'ble Jurisdictional High Court in the cases of Principal Commissioner of Income-tax v. BST Infratech Ltd. and Principal Commissioner of Income-tax v. One Point Commercial (P.) Ltd., which emphasized the need to establish the genuineness of the transactions and the creditworthiness of the investors. The Tribunal also referred to the decision of the Hon'ble Supreme Court in the case of Principal Commissioner of Income Tax, (Central - 1) v. NRA Iron and Steel Private Limited, which held that the onus is on the assessee to prove the identity, creditworthiness, and genuineness of the transactions. The Tribunal observed that the assessee had failed to discharge this onus. Conclusion: The Tribunal upheld the addition made by the AO and confirmed by the CIT(A), concluding that the assessee had failed to establish the genuineness of the transactions and the creditworthiness of the investors. The Tribunal dismissed the appeal of the assessee. 2. Arbitrary Disallowances and Additions: The assessee also raised a ground regarding arbitrary disallowances and additions under different heads by the CIT(A). However, this issue was not separately adjudicated as it was considered general in nature. Conclusion: The Tribunal did not find any merit in the assessee's contention regarding arbitrary disallowances and additions and dismissed this ground as well. Final Judgment: The Tribunal dismissed the appeal of the assessee and upheld the order of the CIT(A), confirming the addition of Rs. 4,91,00,000/- made by the AO under Section 68 of the Income Tax Act, 1961. The Tribunal emphasized the need for the assessee to establish the identity, creditworthiness, and genuineness of the transactions, which the assessee had failed to do. The Tribunal's decision was based on a thorough analysis of the facts and relevant judicial pronouncements.
|
