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Is non submission of Transaction and Bank Account Details enough reason to doubt the creditworthiness of a transaction?

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Court :
ITAT Mumbai

Brief :
"On the facts and circumstances of case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.20,90,19,879/- being the amount received on account of Share Premium, without appreciating the fact that assessee, as recorded in the assessment order was unable to prove before the A. O. that the transaction in its books were true, genuine and justified."

Citation :
I.T.A. No. 4314/Mum/2017

THE INCOME TAX APPELLATE TRIBUNAL
“D” Bench, Mumbai

 Shri Shamim Yahya (AM) & Shri Pavankumar Gadale (JM)

 I.T.A. No. 4314/Mum/2017 (Assessment Year 2012-13)

ACIT, Circle-6(2)(2)
Room No. 563
5th Floor
Aayakar Bhavan
M.K. Road
Mumbai-400 020.
PAN : AACCD1338F
(Appellant) 

Vs.

M/s. Diligent Media
Corporation Ltd.
11th Floor, Tower 3
India Bulls Finance
Centre, Senapati Bapat
Marg, Elphinston Road
(W), Mumbai-400 013.
(Respondent)

Assessee by Shri Dalpat Shah
Department by Shri Ajit Kumar Shrivastava

Date of Hearing 07.04.2021
Date of Pronouncement 03.06.2021

 O R D E R

Per Shamim Yahya (AM) :-

 This is an appeal by the Revenue and pertains to assessment year 2012-

2. The grounds of appeal read as under :-

1. "On the facts and circumstances of case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.20,90,19,879/- u/s 68 of the Act, on account of unexplained Share Premium."

2. "On the facts and circumstances of case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.20,90,19,879/- being the amount received on account of Share Premium, without appreciating the fact that assessee, as recorded in the assessment order was unable to prove before the A. O. that the transaction in its books were true, genuine and justified."

3. The Appellant prays that the order of the CIT (Appeals) on the above grounds be set aside and that of the AO be restored."

4. "The Appellant craves leave to amend or alter any ground or to submit additional new ground, which may be necessary."

3. Brief facts of the case are that in this case assessee is engaged in the business of publishing and printing of newspapers. The Assessing Officer noted that from the balance sheet he has found that assessee has received share premium the tune of Rs. 20,90,19,879/-. That M/s. Media Vest India P. Ltd. was a major shareholder. That the assessee company has incurred a loss of Rs. 1,80,56,17,027/-. That assessee company has consecutively incurred loss for the last six years. The Assessing Officer queried regarding the basis of computation of share premium. The assessee submitted that the same was based upon assessee's projections. The assessing officer wanted a comparison of the projections with actuals. The details were not furnished. Furthermore, apart from questioning the basis of share premium the assessing officer clearly noted that the creditworthiness of the investors has not been established. That the same was in question, and the assessee has not filed the transaction details and relevant bank account also. He noted that assessee has stated that the details referred shall be furnished shortly. But till the date of order they were not supplied. Hence the assessing officer proceeded to hold the transaction to be non-genuine and in view of assessee’s evasive replies he considered the transaction to be a sham transaction. Hence he added o the same as unexplained under section 68 of the I.T. Act.

4. Against the above order assessee appealed before the ITAT.

5. Learned CIT(A) passed a very short order as under :

“It is seen that the A.O. has erred in making addition of Rs. 20,90/19,8797-u/s. 68 being the share premium on issue of Equity Shares of 30,98,009 at Rs. 10/- each fully paid on a premium of Rs. 67.46 per share to its holding company, that is, Media Vest India P. Ltd. . It is seen that the appellant has established the identity, capacity and creditworthiness of the subscriber as well as the genuineness of the said transaction. It is seen that the appellant has furnished all details along with confirmation, PAN details and bank statements. It is also seen that the A.O. has not considered that the First Proviso to Section 68 has been introduced from 1,4.2013 as per Finance Act 2012 and the appeal in this case relates to F.Y. 2011-12 relevant to A.Y. 2012-13. 

To know more in details find the attachment file
 

 

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on 09 June 2021
Published in Income Tax
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