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TMI Blog2020 (1) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies duly proving the three necessary ingredients of Section 68 viz. identity of the investors, creditworthiness of the investors and genuineness of the transactions. None of these documentary evidences were controverted by the AO by proceeding to make further enquiry in this regard. None of these facts were even denied by the AO or any deficiencies were found thereon by the AO and we also take note of the fact that all the investors, who had invested monies in the assessee company, have filed bank statements proving credit worthiness. CIT(A) had placed reliance on the coordinate bench decision of this Tribunal in the case of ACIT vs. Gagandeep Infrastructure Pvt. Ltd. [ 2014 (11) TMI 479 - ITAT MUMBAI] wherein it was held that the amendment to Section 56(2)(viib) and proviso to Section 68 of the Act are only prospective in nature and applicable only from A.Y.2013-14 onwards and not earlier. We find that this judgment has been subsequently approved by the Hon ble Jurisdictional High Court. We find that the Ld. DR vehemently relied upon the decision of Hon ble Delhi High Court in the case of Navodaya Castles (P) Ltd. [ 2014 (8) TMI 905 - DELHI HIGH COURT] . We hold that the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on 04/03/2011. On perusal of information available on record and information received form the office of the CCIT(CCA), Mumbai, it is noticed that the assessee has issued 3,20,000 equity shares having fact value of ₹ 10/- on a premium of ₹ 90/-. Accordingly, on issue of 3,20,000 equity shares during the year, the assessee has received share premium of 2,88,00,000/-. This is the first year of the business operation of the assessee company and therefore the intrinsic value of equity shares issued by the assessee company can only be considered at the face value of ₹ 10/-. Accordingly, the nature of receipt of the entire share premium of ₹ 2,88,00,000 is unexplained. Therefore, the receipt of share premium to the extent of ₹ 2,88,00,000/ in the nature of unexplained cash credit within the meaning of section 68 of the Act. In view of the above, I have a reason to believe that income chargeable to tax to the extent of ₹ 2 88,00,000 has escaped assessment in the hand of the assessee." 4. This issue was raised before CIT(A) The CIT(A) upheld the reopening. Aggrieved, as sessee has raised this issue in its cross objection. 5. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that the shares of face value of ₹ 10/- per share, allotted to various companies on premium of ₹ 90/- per share, have been subsequently transferred to the directors of the assessee company at the face value of ₹ 10/- without charging any premium. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 3,60,00,000/- made by the AO on account of unexplained cash credit u/s 68 of the Act without appreciating the facts of the case elaborately discussed by the AO in the Assessment order u/s 143(3) r.w.s 147 of the Act." 7. Briefly stated facts are that the AO on perusal of information received from the office of CCIT (CCA), Mumbai, that the assessee has issued equity share of 3.20 lakhs having face value of ₹ 10 on a premium of ₹ 90/-. The AO noticed that this is the first year of business operation of the assessee and therefore, the strength value of equity share issued by assessee company could only be considered at the face value of ₹ 10. According to AO, the nature of receipt of entire share premium of ₹ 2.88 lakhs was unexplained. According to AO, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details of these shareholders clearly shows that all the shareholders are active and maintained proper accounts which were duly audited. It is also submitted that the shareholders are having Income Tax Pan Number. It is further observed from the assessment order that the appellant company had filed confirmation, copy of ITR, and copy of bank statements of the share applicants. The appellant in its written submission has quoted and relied on the legal proposition enunciated by decisions of the Hon'ble Courts and ITAT on the issue as reproduced above. 4.7 It is noted that the A.O. has held that the appellant has introduced income from undisclosed sources brought under the garb of share capital and premium of 3,60,00,000/- from different shareholders and hence this amount of issue of the share application money and share premium was assessed as income of the appellant u/s 58 of the Act. In this case the appellant had received share capital and share premium from shareholders which are regularly assessed to tax, these shareholders had submitted the copies of the accounts, copy of PAN, copy of Bank account etc. The A.O. had concluded that based on the test of human probabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Vs. Lovely Exports (P) Ltd., 216 CTR 295. Whilst, the A.O. acted legitimately in enquiring into the matter, the inferences drawn by him were not justified at all in the circumstances of the case. Whether the assessee company charged a higher premium or not, should not have been the subject matter of the enquiry In the first instance. Instead, the issue here was whether the amount invested by the share applicants was from legitimate sources. The objective of Section 68 is to avoid inclusion of amounts which are suspect. Therefore, the emphasis is on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is peculiar in the present case is when the assessment was being completed the A.O. has not made much investigation except issuing of notices u/s 133(6) which were served on the share applicants and these investor shareholders were required to file confirmation, balance sheets and Bank details etc. which would have established that the identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants. It has been submitted that these details called for by the AO were duly filled by the share applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation bank, Goregaon (West) Branch. The relevant evidence is enclosed at assessee's paper book at pages 4 and 5. Similarly, in the case of Shri Sharad Rathi a sum of ₹ 19 lakhs was invested from HDFC Bank account vide cheque No.232568 on 08.10.2008. Further, in the case of Yashman Vypar Pvt. Ltd. of ₹ 2 crores, these were transferred on 10.04.2008 vide cheque no. 536540 of ₹ 1 crores and another 1 crores was transferred on 15.04.2008 vide cheque No.536541. This amount was transferred from Tamilnad Mercantile Bank Ltd. Calcutta Branch. In the case of Real Gold Trading Co. Ltd a sum of ₹ 20 lakhs was received on 10.10.2008 vide cheque No.4 93905 and a sum of ₹ 35 lakhs was received on 10.10.2008 vide cheque No. 493906 from corporation bank. In the case of Stocknet Investment & Finance Ltd. as sum of ₹ 20 lakhs was transferred on 17.10.2008 by way of transfer from the bank account of Stocknet International to the assessee. Similarly, in the case of Doldrum Investment & Finance Ltd. the amount of ₹ 20 lakhs was transferred on 16.10.2008 of ₹ 10 lakhs and another 10 lakhs again on 16.10.2008. In the case of Artillengence Bio Innovatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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