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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI RAM LAL NEGI, JM
O R D E R Per Shamim Yahya, A. M.: This appeal by the Revenue and cross objection by the assessee is directed against the order by the learned Commissioner of Income Tax (Appeals)-2, Mumbai (‘ld.CIT(A) for short) dated 08.06.2016 and pertains to the assessment year (A.Y.)
2009-10.
The grounds of appeal
raised in the Revenue’s appeal read as under: 1. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.1,52,14,260/- u/s 68 on account of Share Premium.
2. "On the facts & the circumstances of the case & in law, the Ld. CIT(A) while deleting the addition of Rs.1,52,14,260/- u/s 68 of the Act vide ground of appeal no. 3 has grossly erred in also allowing ground of appeal no. 4&5 of the assessee being alternate claim of the assessee that even if any addition is warranted u/s 68, the disallowance should be Rs.66,25,740/- & thus while dealing with these grounds of appeal ought to have upheld addition to the extent of Rs.66,25,740/-."
The grounds of appeal raised in the assessee’s cross objection read as under:
1. On the facts and circumstances of the case, the Deputy Commissioner of Income Tax -6(3)(1) [hereinafter referred to as "learned AO"] has erred in reassessing the income u/s 147 of the Income Tax Act, 1961 [hereinafter referred as "Act'].
2. Without prejudice to ground no 1, on the facts and circumstances of the case and in law, the learned AO has erred in holding that the provisions introduced vide section 56(2)(viib) of the Act, are clarificatory in nature and hence can be applied retrospectively.
In this case, the Assessing Officer (A.O.) observed that on verification of case records, seen that the during the F.Y.2008-09 relevant to A.Y.2009-10 assessee has receipt of huge share premium amounting to Rs. 1,52,14,260/-, whereas the assessee has shown nil income. He further noted that as there was no scrutiny assessment done for this year, so called share premium having been received by the assessee was not examined.
That the assessee is an unlisted company and the nature of the share application received the intrinsic value of the shares in comparison to the excess premium received is not substantiated. That at the same time filling of return of income, the assessee not filed complete details showing the nature of this share premium (Justification for the excess premium received in comparison to the intrinsic value of the share).
That in view of the above facts, there is reason to believe that income, in the grab of share application money received in this case has escaped assessment in term of provisions of section 147 of the I.T. Income Tax Act, 1961.
Therefore there is reason that shares application and premium money received an amount of Rs.1,52,14,260/- chargeable to tax has escaped assessment. Accordingly, after duly recording the reasons for re-opening the assessment, a notice u/s.148 of the I.T.Act, 1961 dated 27/03/2014 was issued and served on 27/03/2014 to the assessee.
The A.O. further noted that the assessee did not provide for any detail of the share application money received. His observations in this regard are as under:
During the Financial Year 2008-09 (A.Y 2009-10), the company has issued certain shares at a price which was over the above the nominal value. In this regard, the assesses was asked to provide the details of the said transactions along with the basis and justification for the premium so fixed in the documents as listed under: a. Offer details, with relevant documents indicating therein number of shares offered for subscription, Face Value and Issue Price with Premium and number of shares allotted, b. Returns filed before ROC in Form 2 & Annual Return of the relevant period c. Share Valuation report. d. Details of share applications received, allotted, issued and paid up capital. Sr. Name & PAN No of Number Consideration Total payment No address of the shares of shares received in Received in applicant applied for allotted cash or land Rs. As assessee did not provided details explanation called.
Thereafter the A.O. also examined the issue of non justification of share premium.
He further concluded by adding that the entire share application including plan money received of Rs.15,21,426/- as taxable income of the assessee.
Upon the assessee’s appeal, the ld. CIT(A) noted the assessee’s argument that all the information regarding the share applicants was already furnished. He referred to the ITAT decision in the case of Green Infra Ltd. vs. ITO [2014] 159 TTJ 728 (Mum), as under:
“Therefore, considering the entire issue in the light of the material evidence brought on record, in our considerate view, the Revenue authorities have erred in treating the share premium as income of the assessee u/s. 56(1) of the Act. In our considerate view, for the reasons discussed hereinabove, we do not find it necessary to apply the provisions of Sec. 68 of the Act. We, therefore, direct the AO to delete the addition of Rs. 47,97,10,000/-. Ground No. 2 & 3 are accordingly allowed.”
Referring to the above, he held that in his opinion addition u/s. 68 is not possible.
The issue of reopening was not adjudicated by the ld. CIT(A). Further, the ld. CIT(A) held that section 56(2)(viib) was not applicable to nonresident.
Against this order, the Revenue is in appeal before us and the assessee has filed cross objection.
We have heard both the counsel and perused the records. We find that in this case, the assessee has not produced any detail of the share applicants as called by the A.O. This is duly reflected by the A.O.’s order as reproduced above.
The ld. CIT(A) has accepted the assessee’s submission that all the details are on record, without any examination or remand from the A.O. In the paper book submitted before us also documents have been certified to have been submitted before the ld. CIT(A) only. This corroborate the A.O.’s observation in his order that no detail was submitted before him. Hence, it is clear that the ld. CIT(A) deleted the addition without any examination of share applicant detail in this case. It is settled law that power of the ld. CIT(A) are co-terminus with that of the A.O. The ld. CIT(A) should have given his finding on the examination of documents submitted by the assessee. Hence, the deletion of addition u/s. 68 without any examination is not sustainable. This non applicability of section 56(2)(viib) can by no stretch of imagination take the issue out of the ambit of section 68. Further, we note that the ld. CIT(A) has not adjudicated the issue of reopening despite the issue being raised before him.
Hence, in the interest of justice, we remit both the issue of reopening as well as merits of the addition u/s. 68 to the file of the ld. CIT(A). The ld. CIT(A) shall give a speaking order after considering and examining all the necessary details. Needless to add, the assessee should be given adequate opportunity of being heard.
In the result, the Revenue’s appeal and the assessee’s cross objection are allowed for statistical purpose.
Order pronounced in the open court on 22.10.2018