ITO Vs Charan Renewable Energy Pvt. Ltd (ITAT Delhi)
Assessee issued shares at a massive premium of ₹790 (face value ₹10) & raised ₹5 crore from 13 companies. During assessment, AO issued notices u/s 133(6) & summons u/s 131 to verify the share applicants. All notices were returned unserved, except two partial replies. On examining bank statements, AO found immediate fund rotation, negligible income, no real business activity, & no dividend or return on investments, indicating that the investor companies were mere paper entities lacking creditworthiness. AO therefore added ₹5 crore u/s 68.
CIT(A) deleted the addition only on the basis that Assessee filed PAN, ITRs & confirmations, without conducting any further enquiry or addressing the AO’s detailed findings & case law.
Tribunal held that mere paperwork is not enough when surrounding facts show the investors are non-genuine. Since CIT(A) failed to verify identity, genuineness & creditworthiness independently, & ignored AO’s investigation, the order was flawed.
ITAT set aside CIT(A)’s order & remanded the matter back for fresh verification of subscriber companies with proper enquiry.
Result: Addition not deleted; case remanded. Revenue’s appeal partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal is filed by Revenue against the order dated 31.05.2016 passed by Ld. Commissioner of Income Tax (A)-2, New Delhi [“Ld. CIT(A)”] in Appeal No. 80/15-16 of CIT(A)-2 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 24.03.2015 passed u/s 143(3) of the Act pertaining to assessment year 2012-13.
