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TMI Blog2024 (8) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings assessee had furnished documents so as to establish identity and creditworthiness of investor and genuineness of transaction and also valuation report of CA for premium amount, impugned addition made u/s 68 in respect of such share capital and premium amount was unjustified. In the case of Kunjal Synergies (P.) Ltd. 2024 (3) TMI 103 - ITAT KOLKATA] ITAT held that where assessee-company had raised Share capital/share premium by issuing equity shares to five subscribers at a premium of Rs. 990 per share and assessee had filed all evidences consisting of copies of ITRs, audited accounts, certificates of incorporation, Memorandum and Articles, Annual Returns etc., to prove identity and creditworthiness of share subscribers, impugned addition made under section 68 was to be deleted. Assessee appeal allowed. - Smt. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Appellant : Shri Dhinal Shah, A.R. For the Respondent : Shri Ravindra, Sr. DR ORDER PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short Ld. CIT(A) ), Nati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as called for vide notice under Section 133(6) of the Act. Further, the assessee has also not been able to substantiate as to why such a hefty premium of Rs. 390 per share was received by the assessee company over and above the face / nominal value of the shares. Accordingly, the Assessing Officer held that in absence of any reply from the shareholders and any plausible explanation by the assessee, the genuineness and creditworthiness of the allottees cannot be verified. Accordingly, the total share premium of Rs. 27,16,350/- received by the assessee was added to the total income of the assessee, by treating the aforesaid amount as unexplained income under Section 68 of the Act. 5. The assessee filed appeal before Ld. CIT(A), and before the Ld. CIT(A) the assessee submitted that at time of allotment of shares, the requisite Form No. 2 related to allotment of shares has been filed with the registrar of companies alongwith complete details of allottees and certified copy of Board Resolution dated 22.03.2010. It was submitted that during the year, the assessee had allotted 215 shares to Mr. Naithani, who is a promoter director of the company and 6750 shares have been allotted to Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax return filed alongwith computation of total income for the relevant year, copy of PAN card, copy of pass port, copy of bank statement with ICICI bank showing that the amount of Rs. 27,00,000/- was given by Shri Ghanshyambhai to the assessee company for share application, copy of Form No. 32 filed to the ROC regarding appointment of Shri Ghanshyambhai as the Director of the assessee company. 6. With regards to the second allottee, Mr. Vedprakash Govindprasad Naithani the assessee submitted that he is a promoter / director of the company since the incorporation of the company itself and Mr. Naithani has been regularly filing his income tax return for the last 25 years and the share application has been paid by Mr. Naithani from his own funds. The assessee submitted copy of acknowledgement of income tax return of Mr. Naithani. Further, the assessee also enclosed From No. 2 filed with the ROC for allotment of shares to Mr. Naithani before Ld. CIT(A). Further, the assessee also submitted an undertaking to the effect that he has purchased the shares of the assessee company from his own sources, which are verifiable from his bank statement. 7. However, Ld. CIT(A) did not agree with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imply he mentioned that on the basis of plan growth of the company, the share premium has decided but he failed to produce the details on the basis of which the premium has been decided. The production of Income-tax return and copy of bank statement of Mr. Ghanshyambhai Nandlal Charandas and Mr. Vedprakash Govindprasad Naithani does not serve the purpose of justification for working premium at Rs. 390/- per share. Mere receiving the money through banking channel does not substantiate for issue of share at premium. The appellant should have produced justification/how the premium has been decided at Rs. 390/- per share. The appellant has also Tailed to prove that the factors which influence/contribute for the growth of business of the appellant. The appellant cannot generally and vaguely decide the premium. There should be scientific approach considering the various factors to decide the premium. The Hon'ble Supreme Court, in the case of Chuharmal v. CIT [1988] 172 ITR 250 / 38 Taxman 190 highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human probability has to be the guiding principle, since the AO is not fet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn unaccounted money which has flown back to it in the form of premium on share allotment. Thirdly, the assessee has furnished all possible details regarding the genuineness of the transaction viz. income tax return, relevant Board Resolution approving allotment of shares at a premium, the fact that money has been received from banking channels, the assessee has produced requisite Form No. 2 file before ROC at the time of allotment of shares to these two persons and that the share allottees are not third parties unknown too the assessee, but are the existing Directors of the assessee company etc. Accordingly, the assessee submitted that in this case, there is no basis for confirming the additions, since the only reason cited by the CIT(A) for confirming the addition is that the assessee has not given a precise working / computation for working out the amount of share premium received from the share allottees. Accordingly, in the instant facts, the addition is not liable to be sustained. 10. In response, Ld. D.R. placed reliance on the observations passed by the Ld. A.O. and Ld. CIT(A) in their respective order. 11. We have heard the rival contentions and perused the material on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing addition under section 68 of the Act. 15. In the case of SLS Energy (P.) Ltd. 154 taxmann.com 400 (Bombay) , the High Court held that where Assessing Officer had no doubt with regard to existence of entities in whose favour allotment of shares had been made by assessee-company upon receipt of share money as also amount of premium paid on said shares, reopening of assessment on ground that receipt of share premium amount was excessive and much beyond intrinsic value of shares of assessee-company was not justified 16. In the case of Enrich Agro Food Products (P.) Ltd. the High Court held that where assessee-company received share capital including share premium from an investor and during assessment proceedings assessee had furnished documents so as to establish identity and creditworthiness of investor and genuineness of transaction and also valuation report of CA for premium amount, impugned addition made under section 68 in respect of such share capital and premium amount was unjustified. 17. In the case of Kunjal Synergies (P.) Ltd. 161 taxmann.com 672 (Kolkata - Trib.) , the ITAT held that where assessee-company had raised Share capital/share premium by issuing equity shares ..... X X X X Extracts X X X X X X X X Extracts X X X X
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