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TMI Blog2020 (1) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting that said document in violation of Rule 46A. There is no reference to the detailed financials of the company in the order of the learned CIT appeals. It is not at all clear that the CIT appeal has examined the sources of fund of the assessee company properly. There is nothing on record to rule out that the amount of share premium granted to the company having a very poor financial record was not out of circuitous route of rotation of share capital with premium. It is also not the case that the CIT appeals had himself examined the issue that assessing officer is doubting the very identity of the company when there was no service of notice u/s.133(6) at the given address. There is no detail as to what was the authorized capital. Whether the assessee company was authorized to raise the said amount of share capital. In this view of the matter since the assessing officer has not been provided adequate opportunity to go through the additional evidences, the examination of the ld. CIT(A) is wholly inadequate. Accordingly, in the interest of justice, we remit the issue to the file of assessing officer. Assessing officer is directed to examine the veracity of the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961 and scrutiny assessment u/s. 143(3) was carried out. Information was received from the CCIT (CCA), Mumbai that the assessee has issued shares on premium, and that the premium amount received works out to ₹ 65/- per share. On observation of the past performance of the assessee company, the Assessing Officer held that it did not justify such a huge premium and the purported transactions were not genuine. The assessment was reopened by issue of notice u/s. 148 of the Act on 28.03.2014. During the assessment proceedings, the Assessing Officer observed that earning per share was loss of Rs. (-) 18.56 as compared to Rs.(-) 0.18 per share for AY 2008-09. Despite a negative earning per share the shares were issued at the premium of ₹ 65/- per share. Thus, the transaction of issue of share on premium was not genuine and income had escaped assessment. 4. The A.O. noted that it was observed from the balance sheet, that the assessee had issued equity shares at a premium and also preference shares. It was perused from the details filed during the course of reassessment proceedings that assessee company has issued Preference Shares (CCPS) and shares at premium to one conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is income is from any particular source - Roshan Di Hatti vs. CIT [1977] 107 ITR 937 (SC)/Kale Khan Mohammad Hanif vs. CIT [1963] 50 ItR 1 (SC). 5.12 When any sum is found to be credited in the books of accounts of an assessee who offers no explanation of the nature an source of the cash credit or if the explanation offered is not found satisfactory or reasonable, the money may be charged to tax as the assessee's income from undisclosed sources. It is not necessary for the Income Tax Officer to locate the exact source of the credits. 5.13 This view finds full support in the case of CIT Vs Deviprasad Khandelwal and Co Ltd. (81 ITR 460) wherein the Hon'ble Bombay High Court had observed as under: Section 68 of the Act, itself provides that where an sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as income of the assessee of the previous year if the explanation offered by the assessee about the nature and source of such sums found credited in the books of the assessee is in the opinion of the Assessing Officer not satisfactory. Such opinion formed itself constitutes a prime facie evidence agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as income of the assessee company from undisclosed sources in accordance with the provisions of section 68 of the Income-tax Act, 1961. 5.16 This view is again reiterated by the jurisdictional Mumbai Tribunal in the decision dated 10th ugust, 2012 in the case of DCIT CC-45 vs. M/s. Pratiksha Mercantile Ltd. (ITA No. 2096/Mum/2011)(ITAT Mumbai Bench C ). 5.17 The cumulative conclusion, in the light of the facts of the case discussed above, when distilled through the judicial rulings referred to above, and also considering the fact that the reply has not been received from KMC Constructions Limited nor any financials of the said company are submitted by the assessee company, is that the assessee claim of receipt of sum totaling to ₹ 3,75,00,000/-, received in the form of application money for Compulsory Convertible Preference Shares (CCPS) is not genuine and represents income of the assessee from undisclosed sources brought under the garb of receipts by way of share cash credits in the books of the assessee and added accordingly to the total income u/s. 68 of the Income Tax Act, 1961. Therefore, penalty proceedings u/s. 271(1)(c) of the I. T. Act are hereby initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d comments on merits of the additional evidences filed by the assessee. He further noted that vide letter dated 27.06.2016, the assessee filed copy of the letter written to A.O. requesting for copy of the order sheet of the assessment proceedings. It was informed that the same had not been provided by the A.O.. The A.O. was further directed to furnish comments on merits also of the additional evidence filed by the assessee latest by 25.01.2017. No report on merits has been received from the A.O.. Case records were requisitioned from the A.O. vide this office letter dated 24.01.2017. The case records were not provided by the A.O.. 10. Thereafter, the ld. CIT(A) observed that now as regards the merits of the addition u/s 68, the appellant has pointed out that two other share applicants had also subscribed to the preference shares at premium for an amount of ₹ 50 lacs and ₹ 3 lacs respectively, which have been accepted by the assessing officer. By this observation, the ld. CIT(A) opined that the addition based on the issue of shares being issued at premium of ₹ 3.75 crores done by the A.O. certainly becomes weak in these facts. He, thereafter observed that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally erred in referring that since share application with premium from other companies for much smaller amount have been accepted by the assessing officer, the present share application should also have been accepted. 14. On the other hand, the ld. Counsel of the assessee relied upon the orders of the learned CIT appeals. He submitted that assessee has given the necessary details before the learned CIT appeals. That the learned CIT appeal has examined the same and founder share application money with premium to be in order. Learned counsel of the assessee submitted various proposition and the catena of case laws in support of the order of the learned CIT appeals. 15. Upon careful consideration we find that assessee has accepted share application and share premium of ₹ 3.75 crores from KMC construction Ltd. The shares were partly paid at FV of ₹ 7.50 and premium of ₹ 67.50. The assessee has not produced any document in support of the identity, creditworthiness and genuineness of the transaction for the assessing officer. In fact assessing officer's notice issued under section 133(6) on the concerned party has remained unresponded. The postal authorities c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily held that from the examination thereof he finds that the share applicant company has sufficient profit and there is confirmation on record. In this regard, there is no reference to the detailed financials of the company in the order of the learned CIT appeals. It is not at all clear that the CIT appeal has examined the sources of fund of the assessee company properly. There is nothing on record to rule out that the amount of share premium granted to the company having a very poor financial record was not out of circuitous route of rotation of share capital with premium. It is also not the case that the CIT appeals had himself examined the issue that assessing officer is doubting the very identity of the company when there was no service of notice u/s.133(6) at the given address. There is no detail as to what was the authorized capital. Whether the assessee company was authorized to raise the said amount of share capital. In this view of the matter since the assessing officer has not been provided adequate opportunity to go through the additional evidences, the examination of the ld. CIT(A) is wholly inadequate. Accordingly, in the interest of justice, we remit the issue to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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