2021 (6) TMI 733 - AT - Income Tax

Addition of share application and share premium u/s 68 - assessee explained that assessee company submitted complete details of share application money and shares premium received by the assessee company and clearly submitted that assessee company has not received a single penny as a gift from anyone - Commissioner (Appeal) held that the transactions were made through the NRE account and deleted the addition - HELD THAT - Commissioner (Appeals) independently examined the evidences filed before him and concluded that the assessee proved the identity and status of Girish Bodra being NRI at Dubai who is having income from Director s remuneration and profit share in Bodra Trading Company LLC and Shyam Trading Co. (LLC). After examining the worth of investor held that the investor has sufficient capacity to invest in the assessee company. The transaction was routed through NRE account. Commissioner (Appeals) also held that the assessee filed details of gift in the name of one director of the company. Further no discrepancy was pointed out by the assessing officer. On the above observation the ld. Commissioner (Appeals) deleted both the additions. In our view the assessee has fully discharged its onus and proved the transaction of share application and share premium money as genuine. We further concur with the findings of the learned Commissioner (Appeals) that there is no discrepancy in the Gift to the director of the assessee company. The donor is the real brother of recipient of the Gift. In our view the learned Commissioner (Appeals) has passed the order after due deliberation on the facts of the case and the documentary evidences furnished by the assessee which we affirm. No contrary fact to take other view is brought over notice. In the result the grounds of appeal raised by revenue are dismissed.

Issues involved:
1. Addition under section 68 for share application and share premium, and gift amounting to ?90.85 lakhs and ?1.99 Crore respectively.
2. Discrepancies in furnishing complete details regarding the genuineness of the transaction.
3. Verification of identity, creditworthiness, and genuineness of the transaction by the assessing officer.
4. Appeal by the assessee to the learned Commissioner (Appeals) against the additions made by the assessing officer.
5. Assessment of the documentary evidence and submissions made by the assessee.
6. Decision by the learned Commissioner (Appeals) to delete both additions.
7. Arguments presented by the revenue and the assessee before the Tribunal.
8. Upholding the decision of the learned Commissioner (Appeals) by the Tribunal.

Detailed Analysis:
1. The appeal by the revenue was against the orders of the Commissioner (Appeals) regarding the additions made under section 68 for share application and share premium of ?90.85 lakhs and a gift of ?1.99 Crore. The substantial grounds of appeal focused on the deletion of these additions. The assessing officer noted discrepancies in the details provided by the assessee regarding the transactions.
2. The assessing officer requested details from the assessee to verify the identity, genuineness, and creditworthiness of the investor. Despite the assessee's submissions, the assessing officer found the details unsatisfactory and referred the matter to the Foreign Tax and Tax Research division. No information was received from the UAE authorities, leading to the additions being made at the time of passing the assessment order.
3. The assessee explained before the Commissioner (Appeals) that the gift was received by one of the directors in his individual capacity and not by the company. The assessing officer's doubts regarding the source of income of the investor were raised, and various case laws were cited to support the addition made under section 68.
4. The Commissioner (Appeals) considered the documentary evidence provided by the assessee, including details of the NRE account through which the transactions were made. The assessing officer's failure to point out any discrepancies in the documents led to the deletion of both additions by the Commissioner (Appeals).
5. The Tribunal heard arguments from both the revenue and the assessee. The revenue supported the assessing officer's decision, emphasizing the doubts raised about the investor's income sources. The assessee argued that all necessary evidence was furnished, and the assessing officer did not provide any findings on the documents submitted.
6. The Tribunal reviewed the orders of the lower authorities and the documentary evidence. It noted the efforts made by the assessing officer to verify information from the UAE authorities but found that no adverse information was received. The Tribunal agreed with the Commissioner (Appeals) that the assessee had proven the genuineness of the transactions and upheld the deletion of the additions.
7. The Tribunal concurred with the Commissioner (Appeals) that the assessee had fulfilled its burden of proof and that there were no discrepancies in the documents provided. The identity and creditworthiness of the investor were established, leading to the dismissal of the revenue's appeal.
8. Ultimately, the Tribunal dismissed the revenue's appeal, affirming the decision of the Commissioner (Appeals) to delete both additions, with no order as to costs.

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