Case Law Details
ITO Vs BSNI Commercial Pvt. Limited (ITAT Kolkata)
At the outset, we find that the assessee had received share capital of Rs. 57,900/- from six shareholders and Rs. 2,88,92,100/- from the very same shareholders towards share premium. The share capital received by the assessee has been duly accepted by the ld. AO within the ken of section 68 of the Act. However, share premium component has been doubted by the ld. AO. We find that the assessee in the instant case had duly complied with by furnishing the complete details of share subscribers to prove their identity, genuineness of the transaction and creditworthiness of share subscribers beyond doubt. These are duly supported by the documentary evidences which are enclosed in the paper book. The ld. AO had not found any falsity or any adverse inference of the said documents. We find that the Ld. CIT(A) had placed heavy reliance on these documents and had granted relief to the assessee. All the share subscribers are duly assessed to income tax and the transaction with the assessee company are duly routed through banking channels and are duly reflected in their respective audited balance sheets which are also placed on record before us. In any case, once the receipt of share capital has been accepted as genuine within the ken of section 68 of the Act, there is no reason for the ld. AO to doubt the share premium component received from the very same shareholders as bogus. We held that all the three necessary ingredients of section 68 had been duly complied with by the assessee with proper documentary evidences. We find that notices issued u/s 133(6) have been duly complied with. The only grievance of the ld. AO was that the assessee could not produce the directors of the share subscribing companies. In our considered opinion, for this reason alone, there cannot be any addition u/s 68 of the Act as held by the Hon’ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd. reported in 159 ITR 78 (SC).
FULL TEXT OF THE ITAT JUDGMENT
This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-4, Kolkata dated 03.02.2017 and the solitary issue involved therein relates to the deletion by the ld. CIT(Appeals) of the addition of Rs.1,00,80,000/- made by the Assessing Officer on account of share premium.
2. The assessee in the present case is a Company, which filed its return of income for the year under consideration on 21.09.2012 declaring total income of Rs.13,429/-. As noticed by the Assessing Officer, the assessee-company during the year under consideration had raised share capital at a huge share premium of Rs.1,00,80,000/-. Keeping in view that there was no substantial business activity carried on by the assessee-company during the year under consideration except making some investment in land and Bank, the Assessing Officer proceeded to examine the claim of the assessee for huge share premium. In this regard, he issued notices directly to the concerned shareholders and in reply to the said notices, the concerned shareholder companies furnished the details and documents required by the Assessing Officer. The Assessing Officer, however, found that the replies received from the shareholder companies were almost identical in style and some of their Directors and addresses of the Registered Office were common. He, therefore, issued summons under section 131 to the assessee-company requiring it to produce the Directors of the shareholder companies for examination. The assessee-company, however, failed to produce the Directors of the shareholder companies for verification before the Assessing Officer. Keeping in view this failure of the assessee-company, the Assessing Officer held that the creditworthiness of the concerned creditors could not be corroborated by the assessee-company and even the high value of share premium could not be justified by it. He accordingly treated the share premium amount of Rs.1,00,80,000/- received by the assessee-company as unexplained cash credit and made an addition to that extent to the total income of the assessee in the assessment completed under section 143(3) vide an order dated 16.03.2015.
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