Paper Companies, Premium Shares & No Verification – ITAT Sends ₹5 Cr Back for Fresh Scrutiny

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 theref

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