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Facts
The Revenue appealed against the deletion of an addition of Rs. 11,35,40,000/- made under section 68 of the Income-tax Act, 1961, for share premium money received by the assessee. The Assessing Officer had made the addition after the assessee company issued equity shares at a premium, which were subscribed by KDP Buildwell Pvt Ltd, a company under search proceedings. The CIT(A) deleted the addition, noting that the same addition was already made in the hands of the investor company.
Held
The Tribunal upheld the CIT(A)'s decision to delete the addition under section 68, finding no reason to interfere with the finding that the amount became an available source in the investor's hands once added there. Consequently, the Tribunal also confirmed the deletion of the penalty levied under section 271(1)(c), as the quantum addition was not sustained.
Key Issues
Whether the deletion of addition for share premium under Section 68 by CIT(A) was correct, and whether penalty under Section 271(1)(c) is maintainable after the deletion of quantum addition.
Sections Cited
Section 68, Section 153C, Section 143(3), Section 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI KUL BHARAT
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
The above captioned two separate appeals by the Revenue are preferred against two separate orders of the CIT(A)-4, Kanpur dated 31.03.2017 pertaining to A.Y. 2012-13.
Both these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity.
None appeared on behalf of the assessee inspite of several notices.
We heard the ld. DR at length and have carefully perused the orders of the authorities below. addition of Rs. 11,35,40,000/- made u/s 68 of the Income-tax Act, 1961 [the Act, for short] on account of share premium money.
While scrutinizing the return of income, the Assessing Officer noticed that the assessee company has issued 22,70,800 equity shares of Rs. 10/- each at a premium of Rs. 40/- per share and collected Rs. 2,27,08,000/- as face value of shares and Rs. 9,08,32,000/- on account of share premium, aggregating to Rs. 11,35,40,000/-.
The Assessing Officer found that the entire shares have been applied by KDP Buildwell Pvt Ltd, a company of KDP Group which group was covered under search and seizure proceedings. The assessee was asked to justify the share transaction in light of provisions of section 68 of the Act and on receiving no plausible reply, the Assessing Officer made addition of Rs. 11,35,40,000/-.
Addition was challenged before the ld. CIT(A) and before the ld. CIT(A), additional evidences in the nature of confirmation of account by investor, share certificate issued, copy of ITR and computation of income of investor, audit report, balance sheet, profit and loss account of investor and bank statements of investor.
The ld. CIT(A) called a remand report from the Assessing Officer who did not object for the admission of additional evidence.
On the contrary, in the remand report, the Assessing Officer mentioned that the addition u/s 68 of the Act has been made in the case of KDP Buildwell Pvt Ltd., therefore, no addition is to be made on this ground in the case of the assessee u/s 153C /143(3) of the Act.
The ld. CIT(A) was of the opinion that since the addition has been made in the hands of the investor company KDP Buildwell Pvt Ltd, the same becomes available source in the hands of the investor to invest in the appellant company. Therefore, no addition is called for.
After giving thoughtful consideration to the afore-stated findings of the ld. CIT(A), which is based upon the remand report and proper appreciation of facts, we do not find any reason to interfere with it.
Appeal of the Revenue is dismissed.
Since the quantum has been deleted, penalty levied u/s 271(1)(c) of the Act has no legs to stand. The findings of the ld. CIT(A) cannot be faulted with.
In the result, the appeals of the Revenue in and 3797/DEL/2023 are dismissed.
The order is pronounced in the open court on 13.02.2024.