Mistry Construction Co. Pvt. Ltd. Vs ACIT (ITAT Mumbai)
Share Premium Alone Is Not an Accommodation Entry: ITAT Rejects Section 68 Additions Across Two Years
A share premium of ₹240 on shares with a face value of ₹10 prompted the Revenue to question substantial investments in Mistry Construction Co. Pvt. Ltd. Following a search, the Assessing Officer treated share application money and premium as unexplained credits under section 68. The Mumbai Tribunal examined the subscriber records, bank trail and verification carried out during remand. It deleted the additions that the Commissioner (Appeals) had sustained for assessment year 2007–08 and upheld the relief already granted for assessment year 2008–09.
The decision rests on the evidence concerning the investors and the law applicable to assessment years before 2013–14. It does not treat a PAN, cheque payment or same-year refund as an automatic answer to every section 68 enquiry.
Search and the Disputed Share Receipts
Mistry Construction, engaged in real-estate development and contracting, was subjected to a survey on 9 July 2008, which was converted into a search on the same day. Assessments followed under section 143(3) read with section 153A.
For AY 2007–08, the Assessing Officer examined share capital and premium totalling ₹34.79 crore. He accepted ₹17.69 crore received from sister concern Millennium Clothing Pvt. Ltd., but added the remaining ₹17,09,36,100 under section 68. This comprised investments linked by the Revenue to two alleged entry-operator groups, ₹2,01,86,100 from UAE investors, and ₹9.95 crore from 21 other domestic corporate subscribers.
