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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 31.07.2023 for the AY 2012-13.
The only issue raised by the assessee in the various grounds of appeal is against the order of ld. CIT(A) confirming the addition as med by the AO in respect of share CapitaLand share premium.
The facts in brief are that assessee filed its Return of Income for the Assessment Year 2012-13 on 30.11.2012 declaring total income of Rs. 6,730/-. Return was duly processed u/s 143(1) of the I.T. Act,
Aggrieved assessee preferred an appeal before the ld. CIT (A). The ld. CIT (A) dismissed the appeal of the assessee after taking into consideration the arguments and written submissions filed during the course of assessment proceedings. The ld. CIT (A) extracted the written submission of the assessee from para 5.2 page 7 to 25 of the appellate order. However, the ld. CIT(A) in the operative part wrongly mentioned the facts in relation to the unsecured loans raised by the assessee which is totally wrong and factually incorrect because the issue involved is as regards share capital/share premium. The written submission of the assessee are as under: - “5.2. SUBMISSION: -During the appellate proceedings, the appellant has furnished following written submission through e-filing portal dated 15.12.2022.
It is submitted that the assessee has duly discharged its onus of proof of cash credit; the onus was shifted on the department by prima facie proving that the money has flown from the share applicants, they are identifiable, duly assessed to tax and in their assessment the aforesaid share capital contribution was accepted. On the issue there are number of judgments. The facts of the case are similar to the recently decided cases namely CIT Vs. Gangeshwari Metal Pvt. Ltd. reported in 361 ITR Page 10, (Delhi). It was held that where the Assessee in support of transaction of receipt of share application money brought on record various documents such as name and addresses of the share applicants, their confirmatory letters, PAN No. etc., the said transaction is to be considered as genuine as the assessee has furnished all the documents to prove the identity of the shareholders and also the genuineness of the transaction by showing the entries in the books through account payee cheques addition cannot be made. (wherein Nova Promoters on behalf of the department was also cited) Lalpura Construction (P) Ltd. Rajasthan High Court ((2014 Tax Pub (DT) 393) decided on 25.2.2013, Nipuan Auto P Ltd., reported in 361 ITR 155 Matrix Export Holdings P Ltd., 2014 (Tax Pub (DT) 3169. The appellant also refers to the following judgments: - In the case of CIT v. Divine Leasing and Finance Ltd. 299 ITR 268 it washeld that since the entire gamut of case law as on that date was visited, we may initiate our discussion by taking note of this case. In this case, the Court highlighted the menace of conversion of unaccounted money through the masquerade or such channels of investment in the share capital of a company and thus stressed upon the duty of the Revenue to firmly curb the same. It was also observed that, in 6.1 On the first issue in question, AO has made disallowance u/s 14A of the Act,even though no exempt income is earned during the year under consideration. Recently, Hon'ble Delhi High Court has given decision on this issue in the case of Pr. CIT (Central)-2 Vs. M/s Era Infrastructure (India) Ltd.
&CM APPL.31445/2022 Dated 20.07.2022 giving relief to assessee; relevant portion of which is reproduced as under: "4. Learned counsel for the petitioner also submits that in view of theamendment made by the Finance Act, 2022 to Section 14A of the Act byinserting a non obstante clause and an explanation after the proviso, achange in law has been brought about and consequently, the judgmentsrelied upon by the authorities below including PCIT vs. IL&FS Energy Development Company Ltd (supra) are no longer good law. The amendmentto Section 14A of the Act is reproduced hereinbelow:- "Amendment of section 14A. In section 14A of the Income-tax Act, (i) CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); (ii) CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom); (iii) Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol); (iv) ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012) and (v) Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020.
After hearing the rival contentions and perusing the materials available on record, we find that during the year the assessee has issued shares to 17 share applicants consisting of six individuals/ HUFs and 11 bodies corporates. The shares were issued at a face value of 10 each at a premium of ₹990/-. The assessee raised by way of share capital/ share premium by issuing 2,52,390 equity shares comprising of ₹25,23,900/- as share capital and ₹24,98,66,100/- by way of share premium. In all, the assessee issue 2,52,390/-equity shares thereby realizing ₹25,23,90,000/- from subscription of equity shares. The ld. AO during the course of assessment proceedings required the assessee to furnish the evidences/ documents qua the share subscribers proving identity, creditworthiness of the creditors and genuineness of the transactions, which were accordingly furnished by the assessee comprising the names, addresses, ITRs ,certificates of
We have perused the appellate order and find that the ld. CIT (A) in para no.5.2 from page no.7 to 25 where the ld CIT(A) extracted the submissions of the assessee noting in the appellate order the facts qua the each and every subscribers from para no.6.3 till 6.11. We note that the ld. CIT (A) from para no.6.3 at page no.30 to para no.6.11 at page no.41, passed a detailed order dismissing the appeal of the assessee but to our great surprise the ld. CIT (A) in Para no.6.5 discussed the 11 parties which are different from the share
On the next date of hearing, the case was heard from both the sides at length and all the evidences placed on record were examined minutely. We find that in this case the assessee has file all the evidences qua the share subscribers as stated hereinabove before the authorities below and the ld. AO has not pointed out any defect or deficiency in the same except the fact that the subscribers did not attend the office of the ld. AO personally in compliance to summons issued u/s 131 of the Act and therefore, the identity, genuineness of the transactions could not be verified. In our opinion, the order passed by the ld. AO making the addition merely for the ground that the summons was not complied with is not sufficient ground to make addition especially when the assessee as well as subscribers furnished all the evidences and no enquiry was carried out by the AO nor defect in the documents furnished were pointed out. Therefore, the addition made cannot be sustained.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 11.11.2025.