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TMI Blog2023 (12) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... ditworthiness of the share applicant company M/s. Attentive Share Trading Pvt. Ltd. has also not been established by the assessee. Further, so far as the genuineness of the transaction is concerned, no justifiable reason has been furnished as to how and on what basis the valuation of share premium of Rs. 9,990/- per share was arrived at. Therefore, looking into the instant facts we find no infirmity in the order of Ld. CIT(A) in holding that the genuineness of the transaction and identity and creditworthiness of the parties has not been established in the instant facts and accordingly, we uphold the order passed by Ld. CIT(A). We need to further mention that simply because a transaction has been carried out through banking channels or confirmation of the parties has been furnished would not make a non-genuine transaction into genuine one, and all the concerning facts of the case to be looked into in totality. Courts have taken a consistent position that the assessee is expected to establish proof of identity of creditors, capacity of creditors and genuineness of creditors in order to discharge onus cast on assessee. Mere production of party or confirmation from party will not suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 17,53,83,610 and the Ld. CIT(A) have also erred in confirming the said demand. 6. Your appellant craves a leave to add, amend or alter the grounds of appeal, if occasion demands." 3. The assessee has also raised the additional grounds of appeal:- "a. The Ld. ITO have erred on facts and in law in not issuing any valid notice and in not validly serving/ not validly affixing the same stated to have issued on dtd. 18/09/2013 u/s. 143(2) of the Act and even the Ld. CIT (A) have also erred in law and on facts in not considering this aspect while upholding the impugned order, b. The Ld. ITO have erred on facts and in law in issuing a further notice u/s. 143(2)of the Act on dtd.09.09.2014 without ascertaining validity of notice and service thereof even though, the notice dtd.18/09/2013 was not valid / not validly served, the subsequent notice dtd.09.09.2014 was time barred. Even the Ld. CIT (A) have also erred in law and on facts in not considering this aspect while upholding the impugned order. c. Ld. AO has erred in law and on facts in initiating the assessment proceedings based on invalid notice issued u/s. 143(2) and thereby has also erred in law in issuing various notices u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult, the additional Ground No. d filed by the assessee is dismissed. We shall now discuss the case of the assessee on merits 8. We observe that Ground Nos. 1, 5 and 6 of the assessee's appeal are general in nature and do not require any specific adjudication. 9. We further observe that Ground Nos. 2 and 3 have been incorrectly framed and hence we are not inclined to adjudicate on the same. We shall now discuss the Ground No. 4 of the assessee's appeal which deals with the additions confirmed by the Ld. CIT(A) on merits. Ground No. 4:- Ld. CIT(A) erred in confirming additions of Rs. 40,34,00,000/- made by the Ld. AO by holding that share capital is not genuine. 10. The brief facts in relation to this ground of appeal are that the assessee company received share capital amounting to Rs. 4,03,400/- along share premium of Rs. 40,29,96,600/- (totally to Rs. 40,34,00,000/-) from a concern namely M/s. Attentive Share Trading Pvt. Ltd. The Assessing Officer observed that the assessee company had issued 40,340 shares to M/s. Attentive Share Trading Pvt. Ltd. having face value of Rs. 10, which were issued on at a premium of Rs. 9,990/- per share. The Assessing Officer observed that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of appellate proceedings submitted additional evidences in the form of confirmation, copy of account which were forwarded to AO. It is evident that appellant company is incorporated on 22/09/2012 and has authorised share capital of Rs. 5,05,000/-. During the year, total revenue of the company is Rs. 43,700/-. The appellant has received share capital of Rs. 40.34 cores for 40340 shares at a premium of Rs. 9990/- per share. As per the account, there is nothing in the company that share of Rs. 10/- will command premium of Rs. 9990/- per share. As regard to M/s. Attentive Share trading Pvt. Ltd. which has subscribed the share capital at the premium of Rs. 9990/-, the company is incorporated on 15/09/2011. The company has revenue of Rs. 44,058/- with Nil revenue from operation. The authorised capital of the company is Rs. 7,25,000/-. This company in turn has received share premium for 62347 shares at the premium of Rs. 9990/- per share. From the very face of it, these companies appear to be a paper company with no real business. 4.8. The Honourable ITAT, Ahmedabad in the case of Pavemkumar M. Sanghvi Vs. ITO, Wd, 3(1)(2), Baroda (2017) 81 Taxmonn.com 308 has observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of brevity, we do not extract the same. 9.1. Merely furnishing PAN Numbers in routine way, does not explain the source or the creditworthiness of the party. The basis on which I.T.A. No. 605/Kol/2015 Assessment Year: 2007-08 Advance PowerInfra Tech Ltd premium has been charged for the shares has not been explained. A perusal of the financial statements do not justify the quantum of share premium charged. This Tribunal in the case of M/s. Blessings Commercial Pvt. Ltd, being I.T.A. No. 271/Kol/2014, for the Assessment Year: 2010-11, order dt. 28.06,2017 has held as follows:- "11. The second argument of the id. Counsel for the assessee, is that the assessee has proved the identity and creditworthiness of the creditor company as well as the genuineness of the transactions. We are not able to agree with the same. A 10 rupees share has been issue at a premium of 990 rupees. On a question, the assessee has not even attempted to justify the amount of share premium. A perusal of the audited statement of accounts of these companies demonstrate that there is hardly any income was disclosed or any expenditure worth mentioning was claimed. There is no activity whatsoever in these compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. Accordingly, clearly the creditworthiness of the share applicant company M/s. Attentive Share Trading Pvt. Ltd. has also not been established by the assessee. Further, so far as the genuineness of the transaction is concerned, no justifiable reason has been furnished as to how and on what basis the valuation of share premium of Rs. 9,990/- per share was arrived at. Therefore, looking into the instant facts we find no infirmity in the order of Ld. CIT(A) in holding that the genuineness of the transaction and identity and creditworthiness of the parties has not been established in the instant facts and accordingly, we uphold the order passed by Ld. CIT(A). We need to further mention that simply because a transaction has been carried out through banking channels or confirmation of the parties has been furnished would not make a non-genuine transaction into genuine one, and all the concerning facts of the case to be looked into in totality. 13. The Courts have taken a consistent position that the assessee is expected to establish proof of identity of creditors, capacity of creditors and genuineness of creditors in order to discharge onus cast on assessee. Mere production of party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uineness of transactions or his creditworthiness by proving his monetary ability to make such gifts of substantial amount, gift amount was to be treated as undisclosed income. The facts of this case were that assessee claimed to have received gift from his NRI brother. The Assessing Officer treated it as assessee's undisclosed income on ground that same was not real and genuine. The Assessee's brother, apart from furnishing his employment particulars, confirmed that he had made the gift. However, assessee's brother did not make any endeavour to explain genuineness of transactions or his creditworthiness by producing necessary documents proving his monetary ability to make such gift of substantial amount. 15. The Hon'ble Supreme Court in the case of Pr. CIT v NRA Iron & Steel (P.) Ltd [2019] 103 taxmann.com 48 (SC) held that that where assessee received share capital/premium, however there was failure of assessee to establish creditworthiness of investor companies, Assessing Officer was justified in passing assessment order making additions under section 68 for share capital / premium received by assessee company. 16. The High Court of Andhra Pradesh in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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