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TMI Blog2021 (2) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Department u/s 143(3) of the Act. When the assessments of the share applicant companies are completed u/s 143(3) of the Act, the identity of the shareholder companies cannot be doubted. When the share applicant companies who have invested in the share capital of the assessee company, and when their respective assessments are completed u/s 143(3) of the Act, no addition can be made in the hands of the assessee company u/s 68 - See M/S. C.P RE-ROLLERS LTD. VERSUS D.C.I.T, CIR-1, DURGAPUR [ 2019 (4) TMI 557 - ITAT KOLKATA] We hold that the assessee in this case has proved the identity and creditworthiness of the share applicant companies and the genuineness of the transaction. The Revenue has not brought out any contrary evidence on record. Under these circumstances, we delete the addition made u/s 68 of the Act and allow the appeal of the assessee. - I.T.A. No. 2183/Kol/2019 - - - Dated:- 3-2-2021 - Sri J. Sudhakar Reddy, Accountant Member And Sri Aby T. Varkey, Judicial Member For the Assessee : Sh. Manish Tiwari, FCA For the Revenue : Sh. Jayanta Khanra, JCIT ORDER PER J. SUDHAKAR REDDY, AM: This appeal filed by the assessee is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmation from each of the subscriber companies confirming subscribing of share capital, f) copy of the certificate of valuation of shares to justify share premium and g) photo identity proof and address proof of all the necessary parties. Thus, he submits that the assessee has furnished all necessary documents to prove the identity as well as the creditworthiness of the transaction. As regards the genuineness of the transaction, he submits that a certificate from the Registered Valuer is furnished to justify the share premium. He further submitted that the assessments of share applicant companies were done u/s 143(3) of the Act by the Income Tax Department. He furnished copies of the same and submitted that the issue in question is covered in favour of the assessee by a number of decisions of the Tribunal where it was held that, when the assessment of the share applicant company is completed u/s 143(3) of the Act by the Income Tax Department, the identity and creditworthiness of the share applicant companies and genuineness of the transaction cannot be doubted. We would discuss the case law as and when needed. He submitted that the ld. CIT(A) has wrongly stated that the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se share applicant companies is evident from the following table: Name of the Shareholder Investible Funds available as per Financials (Rs) Amount Invested in the appellant company (Rs) Percentage(%) of investment in the assessee company Aakansha Commercials Pvt Ltd 5,19,37,788 15,00,000 2.88 Pingle Commotrade Pvt Ltd 5,76,16,596 25,00,000 4.34 Sunview Tradelinks Pvt Ltd 5,27,73,053 45,00,000 8.53 Trimudra Credit Ltd 57,21,16,395 10,00,000 0.17 Walden Barter Pvt Ltd 5,99,51,394 30,00,000 5.00 A perusal of the same proves the creditworthiness of the transaction. 6.3. As far as the justification for the question of share premium is concerned, the assessee has furnished a share valuation certificate. The AO has not pointed out any infirmities or errors in this share v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77;3,01,00,000/-. Case file suggests that the assessee has placed on record their income tax acknowledgement of the impugned assessment year 2012- 13, directors' report along with audited financial statements, explanation regarding source of investments, bank statements, share application forms and board's resolution(s) followed by their respective regular assessment orders pertaining to very assessment year u/s. 143(3) of the Act. Their Assessing Officer(s) made u/s 68 unexplained cash credits additions of share premium amounting to ₹67,03,00,000, ₹44,85,00,000/-, ₹24,42,00,000/- ₹21,70,00,000/- in case of first four entities and accepted similar credits of ₹20,45,00,000/- to be genuine satisfying all parameters of identity, genuineness and creditworthiness. It can therefore be safely assumed that all these additions sums forming subject-matter of the impugned additions to be accepted as genuine in respective investors entities' end as the source of the amount(s) in issue totalling to ₹3,01,00,000/-. Learned Departmental Representative fails to dispute that the same very amount cannot be added twice in payees and recipients' ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have given our thoughtful considerations to the rival contentions of the learned Counsel and we have also gone through the records. The basic contention of the learned Counsel appearing for the Appellants revolves upon the stand taken by the Appellants whether the shareholders who have invested in the shares of the Respondents are fictitious or not. In this connection, the Respondents in support of their stand about the genuineness of the transaction entered into with such Companies has produced voluminous documents which, inter alia, have been noted at Para 3 of the Judgment of the CIT Appeals which reads thus : The assessment is completed without rebutting the 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows : 1. Sony Financial Services Ltd. - CIN U74899DL1995PLC068362- Date of Registration 09/05/1995 6. On going through the documents which have been produced which are basically from the public offices, which maintain the records of the Companies. The documents also include assessment Orders for last three preceding years of such Companies. 7. The Appellants have failed to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was unable to give any justifiable reason for issuing shares at a premium. The Hon ble Madhya Pradesh High Court did not agree with this reasoning given by the AO for making addition u/s 68, holding as under: Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to day market, unless and until, the rates is fixed by any Govt. Authority or unless there is any restriction on the amount of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. [Para 52] Once the genuineness, creditworthiness and identity of investors are established, the revenue should not justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the role of ascertaining how much is a reasonable premium having regard to the circumstances of the case. [Para 53] There is no dispute about the receipt of funds through ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in Lovely Exports (P.) Ltd.(supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit. (f) In the above circumstances and particularly in view of the concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law. Thus not entertained. (c) In CIT Vs Anshika Consultants Pvt Ltd (62 taxmann.com 192), the AO had added the share application monies treating it to be their unaccounted monies routed though accommodation entries since the shares were issued at a high premium. The Hon ble Delhi High Court did not agree with this contention put forth by the Revenue, by observing as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved was fully explained by the assessee. We note that the share application money and share premium money which were received by the assessee company from the two share applicant companies viz: M/s. Prism Vintrade Private Limited, and M/s. Gannet-Vintrade Private Limited, during the period December, 2012 to March, 2013 had already been suffered disallowance under section 68 of the Act. As these two share applicant companies invested the same money in the assessee company, therefore, no further disallowance is warranted in the hands of the assessee company. Once taxed income cannot be taxed again. In the case of third company, M/s Haven Vincom Pvt. Ltd, the assessment, pertaining to the AY. 2010-11 was not revised by the Department. That is, M/s Haven Vincom Pvt. Ltd has raised share capital and share premium which has not been treated by the Department as cash credit under section 68 of the Act and has not been disallowed by the assessing officer in the assessment of M/s Haven Vincom Pvt. Ltd ( vide assessment order-paper book pg.173) . We note that M/s Haven Vincom Pvt. Ltd has utilized the same money (which it received by raising share capital/premium and not disallowed by A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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