Case Law Details
Flagship Housing Development Pvt. Ltd. Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that non-response to notice u/s. 133(6) of the Income Tax Act by some parties that does not prove that the entire transactions are bogus especially when all other documents to prove the identity and creditworthiness of the parties have been submitted
Facts- During the year under consideration, assessee had issued 8,90,000 optionally convertible non-cumulative preference shares at Rs.10/- at a premium of Rs.90/- to 15 parties which included 14 companies. Matter was reopened mainly that, out of 15 parties, 8 of the companies to whom shares were issued were controlled / managed by Shri Praveen Kumar Jain, who was engaged in providing accommodation entries. Thus, the reason to belief was entertained that amount of Rs.2 Crores from such parties were subscribed optionally convertible non-cumulative preference shares had escaped assessment.
AO in order to verify the genuineness of these parties had issued notice u/s. 133(6), however, notices from seven parties returned back and out of which three parties related to Shri Praveenn Kumar Jain. Thereafter, AO based on the information and that the parties have not responded to the notice u/s. 133(6) had added the sum of Rs.2 Crores from the preference shares allotted to companies belonging to Shri Praveen Kumar Jain u/s. 68. Apart from that he has also added further sum of Rs. 2,25,00,000/- received from other companies. Thus, total addition made u/s.68 was Rs.4,75,00,000/-.
CIT(A) held that in so far as share premium is concerned, same is not taxable in view of the judgment of the Hon’ble High Court in the case of Vodafone India Services Pvt. Ltd reported in [2014] 368 ITR 1 (Bombay) and held that the premium received is a capital receipt which is not taxable as income.
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