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2019 (4) TMI 556 - AT - Income TaxReopening of assessment - addition on account of share premium - CIT-A deleted addition observing that the share capital and share premium was received by the assessee in the preceding year and not during the year under consideration - HELD THAT - Additional evidence filed before the ld. CIT(A) was sent by him to the Assessing Officer for his comments and the Assessing Officer in his remand report stated that in compliance to the letter U/s 133(6) the assessee has furnished written reply on 12/6/2014 and in the reply, the assessee has accepted that the share premium was received during the A.Y. 2009-10 and no details has been furnished during the assessment proceedings. The findings recorded by the CIT(A) is contrary to the observation of the Assessing Officer in his remand report. Therefore, in all the fairness, we restore the matter back to the file of the AO for deciding the issue afresh after considering the audited balance sheet of the assessee for the year under consideration as well as the balance sheet for the preceding year. If the Assessing Officer found that the amount on account of share capital and share premium was received and credited in the preceding year, no addition is warranted during the year under consideration. Accordingly, the Assessing Officer is to decide the issue afresh in terms of our above direction. - Decided in favour of revenue for statistical purposes.
Issues Involved:
1. Whether the addition of ?73,50,000/- made by the Assessing Officer (AO) on account of unexplained share premium was justified. 2. Whether the share application money was correctly declared in the balance sheet for FY 2008-09 relevant to AY 2009-10. 3. Whether the share application money was credited during AY 2009-10. 4. Whether the assessee failed to provide bank statements and confirmations during the assessment proceedings. Issue-wise Detailed Analysis: 1. Addition of ?73,50,000/- on Account of Unexplained Share Premium: The AO made an addition of ?73,50,000/- under Section 68 of the Income Tax Act, 1961, treating the share premium received by the assessee as unexplained income. The AO contended that the assessee failed to prove the identity, creditworthiness of the share applicants, and the genuineness of the transactions. The AO also questioned the justification for the high premium charged by the appellant company. However, the CIT(A) deleted the addition, noting that the AO did not invoke the provisions of Section 56 but made the addition under Section 68. The CIT(A) observed that the share capital and share premium were received together, and the AO's acceptance of share capital but not the share premium was inconsistent. The CIT(A) further noted that the provisions of Section 56(2)(viib) were applicable from AY 2013-14 onwards and could not be applied retrospectively to AY 2009-10. 2. Declaration of Share Application Money in Balance Sheet for FY 2008-09: The CIT(A) noted that the share capital and share premium were received during the FY 2007-08 relevant to AY 2008-09, not during the FY 2008-09 relevant to AY 2009-10. The balance sheet as of 31.03.2008 showed share application money of ?75 lakh under 'Current Liabilities & Provisions'. The CIT(A) concluded that the sum could only be taxed in the year it was received, i.e., AY 2008-09, and not in AY 2009-10. 3. Crediting of Share Application Money During AY 2009-10: The AO's remand report stated that the assessee admitted to receiving the share premium during AY 2009-10. However, the CIT(A) found no corroborative evidence supporting this claim. The CIT(A) emphasized that for an addition under Section 68, the sum must be credited in the books during the relevant year. Since the share capital and premium were received in the preceding year, they could not be added in AY 2009-10. 4. Failure to Provide Bank Statements and Confirmations: The AO noted that the assessee failed to furnish bank statements and confirmations during the assessment proceedings. However, the CIT(A) observed that the AO ignored the appellant's submission that the share capital was received in the preceding year. The CIT(A) also pointed out that the AO did not make necessary verifications during the remand proceedings despite having sufficient time. Conclusion: The ITAT upheld the CIT(A)'s decision, noting that the share capital and premium were received in the preceding year and could not be added in AY 2009-10. The ITAT directed the AO to re-examine the issue, considering the audited balance sheets for the relevant years. If the AO finds that the amounts were credited in the preceding year, no addition should be made for AY 2009-10. The appeal was allowed for statistical purposes with directions for the AO to decide the issue afresh.
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