Case Law Details
ITO Vs. Aravali Prime Consultants Pvt. Ltd. (ITAT Jaipur)
In this case, it is noted that the AO during the course of assessment proceeding made the addition of Rs. 2,63,15,000/- (138500 shares x Rs. 190 per share) on account of share premium received on issue of shares by the assessee company. Thus the AO observed that the amount of Rs. 2,63,15,000/- is an undisclosed income of the assessee u/s 68 of the Act and made the addition accordingly. In appeal before the ld. CIT(A), Kota, the amount of Rs. 2,63,15,000/- on account of share premium attributable to the share capital subscribed was deleted by the ld. CIT(A) by observing as under:-
‘’ In view of the discussion made on the facts and legal precedents enumerated above in this order, from the material available on record, it emerges that assessee discharged its primary onus in terms of Section 68 of the Act. I am therefore not inclined to uphold the addition of Rs. 2,63,15,000/-made by the A.O. on account of Share Premium attributable to the share Capital subscribed. The same is directed to be deleted. This ground of appeal is treated as allowed.”
It is not imperative to repeat the facts of this case as ld. CIT(A) has elaborately discussed the issue in question. However, we have deeply gone through this case of the assessee and observed the ld. CIT(A) has dealt with this issue meticulously that the order of the AO is not based on any worthwhile enquiry or correct appreciation of the legal principles involved in the issues. The AO has not been able to prove that the premium charged by the assessee is unjustified or bogus or sourced from undisclosed or unexplained funds/ source. It is also noted from the available records that most of the corporate subscribers were filing returns and they were being regularly assessed to tax. The AO has not brought any adverse findings against them. It is also noted from the records that the assessee had submitted a valuation report for charging of premium before the AO during the assessment proceeding but the same had neither been mentioned nor controverted in the assessment order by the AO. It is further noted that if the AO had any doubts regarding the source of investment of the subscribers, he could have examined the bank accounts from where the investment was routed. The AO is duty bound to investigate the creditworthiness of the creditors/ subscribers, verify the identity of the subscribers and ascertain whether the transaction is genuine or these are bogus entries of name lenders but it was not properly done. Hence, taking into consideration all these facts, circumstances of the case and decisions cited by the ld. CIT(A), we concur with the findings of the ld. CIT(A). Hence the appeal filed by the Revenue is dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
Please become a Premium member. If you are already a Premium member, login here to access the full content.
