ITO Vs Indic Wisdom Pvt. Ltd. (ITAT Mumbai)
CBDT Circular Shields 56(2)(viib), Not 68 — Yet Addition Deleted for Lack of Enquiry- Startup Share Premium Not Unexplained: ITAT Mumbai Upholds CIT(A)’s Deletion of ₹1.04 Cr u/s 68
Revenue appealed against CIT(A)’s deletion of ₹1,04,79,916 added u/s 68 towards share premium received by Assessee, a DPIIT-registered startup engaged in manufacturing natural FMCG products such as cold-pressed oils. Assessment was completed u/s 143(3) r.w.s 144 after selection for scrutiny owing to large share premium receipts & mismatch between turnover as per ITR & GSTR-9C. AO held that Assessee failed to establish identity, creditworthiness & genuineness of investors, & treated the entire share premium as unexplained u/s 68, despite Assessee’s reliance on DPIIT notification dated 19.02.2019 & CBDT Circular dated 10.10.2023 prohibiting examination of share premium for eligible startups with respect to s.56(2)(viib).
Before CIT(A), Assessee filed extensive additional evidence including PANs, ITRs, bank statements, DCF valuation reports, Form PAS-3 & submissions detailing funds received through banking channels. The detailed tabular evidence reproduced in the appellate order reflects documents investor-wise, including Form 16A, passport copies & NRE account trails. CIT(A) called for remand reports multiple times, but AO did not submit any response. CIT(A) held that Assessee had discharged the initial onus u/s 68 & AO had failed to rebut the evidence or conduct independent enquiry.
