Case Law Details
DCIT Vs Hemadari Machine Tools Pvt. Ltd (ITAT Mumbai)
ITAT Mumbai held that assessee has duly discharged identity, creditworthiness and genuineness of the transactions of receipt of share premium of Rs. 2.25 crore received from 19 share subscribers and hence addition towards unexplained cash credit u/s 68 is unsustainable.
Facts-
The A.O held that the share premium of Rs. 2.25 crore received by the assessee company were sourced out of the funds siphoned from the charitable/educational institutions of Podar group. As regards the Share Valuation Report, dated 16.09.2010 prepared by D.N Shetty & Co. that was filed by the assessee, it was observed by the A.O that the valuer had adopted the DCF method and valued the shares at Rs. 113.18 per share. It was observed by the A.O, that though the valuer had shown a discounted cash flow of Rs. 19,50,963/- in the F.Y 2015-1 6, however, no such sign of growth could be noticed from the return of income filed by the assessee. It was, thus, observed by the A.O that the valuation of shares was just an eye wash and the same did not command such huge premium. It was observed by the A.O that as the assessee had failed to explain and justify the source and receipt of share premium of Rs. 2.25 crore, therefore, the same was to be held as an unexplained cash credit under Sec. 68 of the Act. Backed by his aforesaid deliberations, the A.O vide his order passed u/s. 143(3) r.w.s 147, dated 28.12.2018 assessed the income of the assessee company at Rs. 2,25,00,000/-.
Aggrieved, the assessee assailed the assessment order passed by the A.O before the CIT(A). CIT(A) vacated the addition made by AO.
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