M.K. Sons Fine Jewels Pvt. Ltd. Vs ITO (ITAT Mumbai)
ITAT Deletes Section 68 Addition Because Assessee Furnished Complete Share Capital Evidence; ITAT Quashes Rs.3 Crore Addition Because Revenue Relied Only on Suspicion and Investigation Inputs; Section 68 Addition Deleted Because Non-Compliance of Summons Alone Was Held Insufficient; ITAT Holds High Share Premium Cannot Be Taxed for AY 2012-13 Without Specific Statutory Provision.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeal filed by the assessee for AY 2012-13 and deleted the addition of Rs.3,00,00,000 made under Section 68 of the Income Tax Act in respect of share capital and share premium received from five investor companies.
The assessee had originally filed its return declaring income of Rs.27,550, which was processed under Section 143(1). Subsequently, based on information received from the Investigation Wing regarding search proceedings in the case of Shri Vipul Vidur Bhatt, alleged to be engaged in providing accommodation entries through various entities, the assessment was reopened under Section 147 after approval under Section 151.
During reassessment proceedings, the Assessing Officer (AO) noted that the assessee company, incorporated on 12.01.2012, had received share capital and share premium aggregating to Rs.3 crore from five private limited companies. Shares with face value of Rs.10 were issued at a premium of Rs.190 per share. The AO relied upon information from the Investigation Wing and the statement of Shri Vipul Vidur Bhatt recorded under Section 132(4), forming the view that the investor companies were accommodation entry providers controlled by him.
