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TMI Blog2023 (10) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee observing that AO could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. Once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Thus we delete the addition made u/s 68 of the Act and allow all the effective grounds raised by the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... Principal Commissioner of Income Tax (Central-1) vs. NRA Iron & Steel Pvt. Ltd. arising out of SLP (Civil) No. 29855 of 2018) and confirmed the action of the Assessing Officer. Aggrieved, the assessee is now in appeal before this Tribunal. 4. The ld. Counsel for the assessee submitted that the action of the Assessing Officer was not justified since the ld. Assessing Officer was satisfied with the share capital received from the alleged four share applicants and only added the share premium even though total amount of share capital and share premium were received from same share subscribers and same banking channel. He referred to the decision of this Tribunal in the case of M/s. Advent Commodities Pvt. Ltd. vs. ITO in ITA No. 522/Kol/2020; order dt. 27/01/2021 and in the case of ITO vs. M/s. Gateway Enclave Pvt. Ltd. in ITA No. 2269/Kol/2016; order dt. 01/05/2019, wherein it has been held that if certain sum received from a share applicant has been accepted and no addition has been made u/s 68 of the Act and share premium money is received from these share applicants, then addition u/s 68 for the share premium money cannot be held to be justified. Reference made to paper book pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74,00,000/-, received from the above stated share applicants, the ld. Assessing Officer accepted the genuineness and credit worthiness of the share capital of Rs. 2,00,000/- but only doubted the share premium amount of Rs. 72,00,000/-. 8. Though, in the appellate proceedings, the assessee failed to succeed before the ld. CIT(A), however, before us the ld. Counsel for the assessee, in its contention has referred to the decision of the Coordinate Bench in the case of M/s. Advent Commodities Pvt. Ltd. (supra) and M/s. Gateway Enclave Pvt. Ltd. (supra). Perusal of both these orders indicate that in the case of M/s. Gateway Enclave Pvt. Ltd. (supra) reliance was placed on the decision of M/s. Advent Commodities Pvt. Ltd. (supra) and the finding of this Tribunal was that once the assessee has proved to the identity and creditworthiness of the share applicants as well as the genuineness of the transactions with regard to the share capital, the revenue authorities should not doubt the share premium received from the very same share applicants. Based on this observation itself, the assessee deserves to succeed in the instant appeal as on the one hand the ld. Assessing Officer has accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate of the Chartered Accountant dt. 27/01/2015, placed at page 12 of the paper book, to show that the fair market value per share was Rs. 370/- at the time of allotment of the equity shares to the share applicants and, therefore, it was a genuine investment by the share applicants in the assessee company. 10. We find that under the given facts, where the share applicants have duly responded to the notices u/s 133(6) of the Act and all documentary evidences have been filed by the assessee to discharge its primary onus explaining the nature and source of the alleged share premium and the ld. Assessing Officer having failed to find any discrepancy in these details, the decisions of this Tribunal in the case of M/s. Mahalakshmi Vinimay (P) Ltd. vs. ITO in ITA No. 35/Kol/2020; Assessment Year 2008-09; order dt. 18/05/2023, holding in favour of the assessee, in application adjudicating similar issue observing as under:- "7. We have considered the rival submissions of the ld. representatives of the parties and also gone through the record. In this case a perusal of the Assessment order would reveal that the AO has duly acknowledged the receipt of the relevant documents/evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding." 8. It has to be further noted that though powers of the ld. CIT(A) are co- terminus with the AO and the ld. CIT(A) had all the plenary powers as that of the AO. The Hon'ble Delhi High Court in the case of Commissioner of Income-tax vs. Manish Build Well (P.) Ltd. reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act." 11.2. The Hon'ble Supreme court, thus, has held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound to conduct an independent enquiry to verify the same. However, as noted above, the Assessing Officer in this case has not made any independent enquiry to verify the genuineness of the transactions. The assessee having furnished all the details and documents before the Assessing Officer and the Assessing Officer has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed above, the assessee having discharged initial bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 decision of Hon'ble Delhi High Court in the case of Novo Promoters and Finelease Pvt. Ltd. reported in 342 ITR 169 (Del) vehemently relied upon by the ld. DR before us, is not applicable in the instant case, as in the facts before the Hon'ble Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 respondents-assessees before the AO with regard to identity, capacity of the investor as well as the genuineness of the investment. Therefore, admittedly, the AO did not invoke section 68 of the Act to bring the share premium to tax. Similarly, the Commissioner of Income-tax (Appeals) on consideration of facts, found that section 68 of the Act cannot be invoked. In view of the above, it is likely that the Revenue may have taken an informed decision not to urge the issue of section 68 of the Act before the Tribunal. (d) We may also point out that decision of this court in Major Metals Ltd. v. Union of India [2012] 19 taxmann.com 176/207 Taxman 185/[2013] 359 ITR 450 Bom. proceeded on its own facts to uphold the invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 6.2. We find that the issue under dispute was the subject matter of adjudication on exactly similar facts by this tribunal in the case of ITO vs Trend Infra Developers Pvt Ltd in ITA No. 2270/Kol/2016 dated 26.10.2018 for Asst Year 2012-13, wherein the addition made towards share premium was deleted. The findings given therein are not reiterated for the sake of brevity." 4.4. The ITAT in the above case has held that share premium cannot be brought to tax. The judgement of the Hon'ble Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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