DCIT, CENTRAL CIRCLE - 4(2), KOLKATA, AAYAKAR BHAWAN POORVA vs. UMA VINIMAY PRIVATE LIMITED, MIDDLETON STREET

Per Rajesh Kumar, AM:

This is an appeal preferred by the Revenue against the order of the Ld. Commissioner of Income-tax (Appeals) – 27, Kolkata
[hereinafter referred to as the ‘Ld.CIT(A)’] dated 15.02.2024 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) for AY 2014-15. 02. The first ground of the Revenue is against the deletion of addition of ₹9,86,95,750/- by the ld. CIT(A) which was made by the AO on account of share capital/ share premium by treating the same as unexplained cash credit.
03. The facts in brief are that the assessee is the core investment company of the Rika Group holding interests in shares & securities of Uma Vinimay Pvt. Ltd; A.Y. 2014-15

the operating companies belonging to their group. The assessee filed the return of income on 22.09.2014 declaring nil income. The return was selected for scrutiny through CASS and notice u/s 143(2) dated
18.09.2015 was issued and served upon the assessee. During the assessment proceedings, the AO noted that the assessee had received share capital of Rs.9,85,95,750/- from nineteen (19) share subscribers.
With a view to verify the identity of the shareholders, genuineness of the transactions and their creditworthiness, the AO issued notices u/s 133(6) to all the parties. In response, all the parties filed their replies.
The AO noted that in six (6) cases, though the names of the share subscribers had underwent change but the share application forms contained their erstwhile names and therefore in AO’s view the identity of these six share subscribers was in doubt. The AO further observed that the creditworthiness of the remaining shareholders remained unestablished. Summarizing his observations, the AO noted that, the shares were issued at a premium of Rs.540/- which was unusually high and that the share subscribers did not comply the summons issued to them. The AO further observed that, though the share subscribers had filed their details but their financials revealed that they had NIL or nominal income. With these observations and after citing several decisions, the AO treated the share subscription monies of Rs.9,86,95,750/- received by the assessee during the year by way of unexplained cash credit u/s 68 of the Act.
04. In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee after taking into consideration, the contentions and submissions of the assessee and the evidences filed by the assessee by observing and holding as under:
“6.2.1. I have perused the assessment record as well as the submission of the assessee.
It is observed that, the AO had made addition amounting to Rs. 9,85,95,750/- to the income of the assessee as Undisclosed income u/s 68 of the Act. The appellant company
Uma Vinimay Pvt. Ltd; A.Y. 2014-15

has furnished the details of the transaction, proceeds being received from issue of Share
Capital including premium amounting Rs. 9,85,95,750/-. The same was alleged by the AO in his order stating the 19 companies were non-existent at the time of application and allotment of shares. However, it may be noted that the Appellant has furnished the details of all the shareholders to whom the shares were allotted along with their Name,
PAN, registered address, copy of bank statement evidencing the payment of money for share application. Furthermore, from the records of Ministry of Corporate Affairs, these shareholders Company has been regular in filing the forms, annual return and audited financials with the