Principal CIT Vs. NRA Iron & Steel Pvt. Ltd. (Supreme Court)
Hon’ble SC held practice of conversion of unaccounted money through the cloak of share capital/premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be placed on the assessee since the information is within the personal know of the assessee. The assessee is under a legal obligation to prove receipt of share capital/premium to the satisfaction of AO, failure of which, would justify addition.
In this unrepresented case by assessee, SC upheld addition under section. 68 for share capital and premium due to not satisfactorily explained source and genuineness and holding that a deeper scrutiny is desired in case of privately placed shares.
FULL TEXT OF THE SUPREME COURT JUDGEMENT / ORDER IS AS FOLLOWS:-
1. The present appeal arises out of the Judgement and Order dated 26.02.2018 passed by a division bench of the Delhi High Court in Income Tax Appeal No. 244 of 2018. The Revenue has challenged the judgement of the High Court by way of the present Appeal.
2. The issue which arises for consideration is that in a case where Share Capital/ Premium is credited in the books of account of the Assessee company, the onus of proof is on the assessee to establish by cogent and reliable evidence of the identity of the investor companies, the credit-worthiness of the investors, and genuineness of the transaction, to the satisfaction of the Assessing Officer.
3. The facts of the case, briefly stated are as under :
3.1. The instant case pertains to the Assessment Year of 2009-10, for which the Respondent Company – Assessee had filed the original Return of Income on 29.9.2009 declaring a total income of Rs.7,01,870.
A Notice was issued u/ S. 148 of the Act to re-open the assessment on 13.04.2012 for the reasons recorded therein.
3.2. The Assessee filed submissions on 23.04.2012 to the Notice u/ S. 148, and objections on 30.04.2012. The objections were rejected on 13.08.2012. A Show Cause Notice was issued on 13.01.2014. The Assessee filed detailed Written Submissions on 22.01.2014.
3.3. The Assessee Company in its Return showed that money aggregating to Rs. 17,60,00,000/- had been received through Share Capital/Premium during the Financial Year 2009-10 from the following companies situated at Mumbai, Kolkatta, and Guwahati:
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