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TMI Blog2019 (5) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... eason by a cryptic order has added the entire share premium which was also given by the very same six corporate entities u/s 68 of the Act. AR brought to our notice that the similar additions were made by the Assessing Officer in five cases wherein the AO accepted the share capital but added the share premium which action of the AO was not upheld by the Tribunal. As decided in APEAK INFOTECH, YOGESH INFOTECH, AMPLY INFOTECH, WESTLINE TRADING COMPANY, JASPER COMMERCE, INEX INFOTECH [ 2017 (9) TMI 1590 - BOMBAY HIGH COURT] the amendment to section 68 of the Act by the addition of proviso thereto took place with effect from April 1, 2013. Therefore, it is not applicable for the subject assessment year 2012- 13. So for as the pre-amended section 68 of the Act is concerned, the same cannot be invoked in this case, as evidence was led by the respondents- assessees before the Assessing Officer with regard to identity, capacity of the investor as well as the genuineness of the investment. Therefore, admittedly, the Assessing Officer did not invoke section 68 of the Act to bring the share premium to tax. - Decided in favour of assessee - I.T.A. No. 2269/Kol/2016 - - - Dated:- 1-5-2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve some indication of the identity of these subscribers. It may not apply in circumstances where the shares are allotted directly by the company / assessee or to creditors of the assessee. This is why this Court has adopted a very strict approach to the burden being laid almost entirely on an assessee which receives ... The Ld. DR submitted that in similar set of facts Hon ble Calcutta High Court in the case of M/s. Rajamandir Estates Pvt. Ltd. vs. CIT (2016) 70 taxmann.com 124 (Cal) has distinguished the decision of M/s. Lovely Exports Ltd. case. It was pointed out that the said decision of Hon ble Calcutta High Court has been confirmed by Hon ble Supreme Court reported in (2017) 77 taxmann.com 284. 4. The ld. DR also submitted that besides it has been held in various judicial pronouncements that burden of proofs viz. identity of the creditor, his creditworthiness and genuineness of the transaction u/s.68 are required to be discharged by the assessee only. The Hon'ble Jurisdictional High Court in CIT vs. Korlay Trading Co. Ltd. (1998) 232 ITR 820 (Cal) held mere filing of Income Tax File No. of the creditors to prove genuineness of the cash cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closely held company is required to be examined by the AO in terms of the sec.68 and the failure of the assessee to satisfy the AO calls for an addition u/s.68. The said decision of the High Court has been upheld by the Hon'ble Supreme Court as reported in Navodaya Castles Pvt. Ltd. vs. CIT (2015) 230 Taxmann 268 (SC). 6. According to him, the Hon'ble Jurisdictional High Court in CIT vs. Active Traders Pvt. Ltd. has held that the Assessing Officer in the assessment of a company has jurisdiction to ask for information from the shareholders regarding the source of investment made in the company. Their lordships observed that - if a cash credit is shown by the company in its books of accounts and if the source cannot be explained properly the ITO may assess the sum as income of the company from undisclosed source. 7. The Hon'ble Jurisdictional High Court in CIT vs Nivedan Vanijya Niyojan Ltd. (2003) 263 ITR 623 (Cal) has held that where the assessee company did not produce the subscribers of its share capital when required to do so, it failed to establish the identity of the subscribers, prove their creditworthiness and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited financial statements, (iv) Copies of relevant bank statements in respect of accounts from which share application monies were paid, (v) PAN, address of share subscribers for the year ended 31.03.2012. (vi) Copy of the return allotment in Form 2 evidencing the allotment of shares to the six share applicants, vii) Certificate of incorporation of share applicants viii) Confirmation by share-subscribers and they replied to notices u/s 133(6) of the Act. 12. We note that the share subscriber companies were regularly assessed to tax and the payments were made through the bank accounts and pursuant to the notice issued by the AO u/s. 133(6) and 131 of the Act to all the six share subscribers, the notices were served and the share subscribers furnished the requisite documentary evidence as requisitioned by the AO. The share applicants have furnished their audited financial statements and income tax acknowledgment for filing of return for AY 2012-13. Thus, the identity of share subscribers is proved. From the bank statement of the share subscribers it was pointed out to the AO that there was no ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company was not significant. We note that the AO did not point out any defect or infirmity in the documents placed on record by the assessee as well as the share subscribers. Thus the creditworthiness of the aforesaid share subscribers cannot be disputed. 13. We note that the assessee had produced the aforesaid documents to explain the nature and source of the share capital along with share premium of the six corporate shareholders. We note that the AO had accepted the share capital subscribed by these six corporate entities. However, without pointing out any defects has whimsically without giving any reason by a cryptic order has added the entire share premium which was also given by the very same six corporate entities u/s 68 of the Act. The Ld. AR brought to our notice that the similar additions were made by the Assessing Officer in five cases wherein the AO accepted the share capital but added the share premium which action of the AO was not upheld by the Tribunal. The following cases are given below: i) ITO Vs. Trend Infra Developers Pvt. Ltd. Happy Bagans Pvt. Ltd., ITA No. 2270/Kol/2016 2273/Kol/2016 order dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said documents. We find that the Ld. CIT(A) had placed heavy reliance on these documents and had granted relief to the assessee. All the share subscribers are duly assessed to income tax and the transaction with the assessee company are duly routed through banking channels and are duly reflected in their respective audited balance sheets which are also placed on record before us. In any case, once the receipt of share capital has been accepted as genuine within the ken of section 68 of the Act, there is no reason for the ld. AO to doubt the share premium component received from the very same shareholders as bogus. We held that all the three necessary ingredients of section 68 had been duly complied with by the assessee with proper documentary evidences. We find that notices issued u/s 133(6) have been duly complied with. The only grievance of the ld. AO was that the assessee could not produce the directors of the share subscribing companies. In our considered opinion, for this reason alone, there cannot be any addition u/s 68 of the Act as held by the Hon ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd. reported in 159 ITR 78 (SC). We find that the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y states that the issue of applicability of section 68 of the Act was not urged by the Revenue before the Tribunal. (b) It is a settled position in law as held by this court in CIT v. Tata Chemicals Ltd. [2002] 122 Taxman 643/256 ITR 395 (Bom.) that in an appeal under section 260A of the Act, the High Court can only decide a question if it had been raised before the Tribunal even if not determined by the Tribunal. Therefore, no occasion to consider the question as prayed for arises. (c) In any case, we may point out that the amendment to section 68 of the Act by the addition of proviso thereto took place with effect from April 1, 2013. Therefore, it is not applicable for the subject assessment year 2012-13. So for as the pre-amended section 68 of the Act is concerned, the same cannot be invoked in this case, as evidence was led by the respondentsassessees before the Assessing Officer with regard to identity, capacity of the investor as well as the genuineness of the investment. Therefore, admittedly, the Assessing Officer did not invoke section 68 of the Act to bring the share premium to tax. Similarly, the Commissioner of Income-tax (Appeals) on c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, would have, no application to the share premium received by the respondent assessee in the previous year relevant to the assessment year 2012-13. Similarly, the amendment to section 68 of the Act by addition of proviso was made subsequent to previous year relevant to the subject assessment year 2012-13 and cannot be invoked. It may be pointed out that this court in CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245/394 ITR 680 (Bom.) has while refusing to entertain a question with regard to section 68 of the Act has held that the proviso to section 68 of the Act introduced with effect from April 1, 2013 will not have retrospective effect and would be effective only from the assessment year 2013-14. (c) In view of the above, question No. B as proposed also does not give rise to any substantial question of law as it is an issue concluded by the decision of this court in Vodafone India Services (P.) Ltd. (supra) and in the apex court in G. S. Homes and Hotels (P.) Ltd. (supra). Thus not entertained. Therefore, all the six appeals are dismissed. No order as to costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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