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TMI Blog2023 (2) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing is available on the record. Neither the share applicant companies have any financial strength as noticed by the ld. CIT(Appeals). They have not given any explanation of the source of money in their hands for making payments to the assessee as share application money in cash. Therefore, revenue authorities have rightly treated it as bogus and sham transactions. AO has rightly made the addition - Decided against assessee. - I.T.A. No. 218/KOL/2020 - - - Dated:- 18-1-2023 - Shri Rajpal Yadav, Vice-President (KZ) And Shri Girish Agrawal, Accountant Member Shri Shashi Murarka, Advocate, appeared on behalf of the assessee Shri Vijay Kumar, Addl. CIT, appeared on behalf of the Revenue ORDER Per Rajpal Yadav, Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n addition of Rs.1,43,50,000/-. 5. The ld. 1st Appellate Authority has taken note of various details from the record including the details of the applicants for subscribing assessee s shares. The finding recorded by the ld. CIT(Appeals) is worth to note reads as under:- 3.1. 1 have gone through the submission of the appellant and perused the assessment order and relevant records. The AO had disallowed share capital and premium amounting to Rs. 1,43,50,000/- u/s 68 of the IT Act as the appellant company had not responded to the show cause notice as to why the entire transaction amounting to Rs.1,43,50,000/- would not be treated as income of the company. On perusal of the records, it is noticed that the subscriber to the share capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Nikhil Oilfiled Supply Service Pvt Ltd 7200 36,00,000/- 0 3 M/s Shree Ranisati Commercial Pvt Ltd 7200 36,00,000/- 0 4 M/s Sidhanta Vyapar Pvt Ltd 7200 36,00,000/- 0 The perusal of the ITR of the share allottee companies revealed that all the share applicants have NIL income. The fact that the companies have invested huge amounts in the appellant company raises doubts about the creditworthiness of these companies. These doubts are strengthen that the share appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mium of Rs.1,43,50,000/- in assessment year 2012-13. What was interesting to note was that in the financial year 2011-12, relevant to the A.Y 2012- 13, the assessee company had declared Nil income. The high premium for shares of the company with nil income, has given rise to serious doubts about the genuineness of the transactions. The share capital including premium was also subscribed by companies reflecting Nil income as discussed hereinabove. Moreover, the high premium which is not supported by the fundamentals of the company has been adversely commented upon in a number of judicial decisions. The appellant company had not issued any dividend and the high premium for shares raises the suspicion that they are bogus. Similar is the case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hods based on which the amount of share premium can be decided. None of these methods have been followed in this case. The exorbitant quantum of share premium collected shocks the conscience of any reasonable person. A mockery has been made of the whole system. These are not transactions which can be justified by any stretch of imagination. Thus, in our view, the genuineness of these transactions is not proved. The Jurisdictional Bench of the ITAT, confirmed the addiction u/s 68 of the Act, on the ground that the appellant could not justify the huge premium, and therefore held that the genuineness of the transactions was in doubt. The appellant company has hardly any economic activity. There is no logical reason why share premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it s not having any taxable income, however, when we ask him the source of funds, how it contemplates to run its business, what are the project reports and what circumstance an share applicant would infuse his money in a start-up company, but nothing is available on the record. Neither the share applicant companies have any financial strength as noticed by the ld. CIT(Appeals). They have not given any explanation of the source of money in their hands for making payments to the assessee as share application money in cash. Therefore, revenue authorities have rightly treated it as bogus and sham transactions. The ld. Assessing Officer has rightly made the addition. We do not find any merit in this appeal. It is dismissed. 7. In the resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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