Shivam Infra Projects Pvt. Ltd. Vs ITO (ITAT, Jaipur Bench)
Share Premium Cannot Travel Across Assessment Years at Revenue’s Convenience: ITAT Deletes ₹53.10 Lakh Addition When Department’s Own Records Proved Receipt in Earlier Year
Summary: The Jaipur Bench of the Income Tax Appellate Tribunal has held that share premium allegedly representing an accommodation entry cannot be assessed in a year in which it was admittedly not received. Since the Department’s own records established that the share premium of ₹53,10,000 was received and disclosed in the preceding assessment year, the addition made in AY 2009-10 was deleted.
The Tribunal further held that the CIT(A) ought to have decided the issue on the basis of the material already available in the Department’s records instead of setting aside the assessment to the AO merely because the original order had been passed ex parte u/s 144.
Reopening Based on Alleged Accommodation Entry
The assessee-company’s assessment for AY 2009-10 was reopened on the basis of information received from the Investigation Wing. The information originated from a pilot project undertaken by the DIT (Investigation & Criminal Investigation), Mumbai, in coordination with the Registrar of Companies and the Ministry of Corporate Affairs.
The investigation allegedly revealed that certain companies had issued shares at abnormally high premiums to inflate the cost of shares in the hands of subscribers. Thereafter, bonus shares would be issued, resulting in dilution of the value of the original shares. The subscribers would then sell the original shares and claim substantial losses against their other taxable income.
