Jai Maa Kali Udyog Ltd. v. DCIT

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The Tax Publishers2021 TaxPub(DT) 0074 (Ranchi-Trib)

INCOME TAX ACT, 1961

Section 68

Assessee company had been earning profit since a long and had goodwill in the market. All the requisitioned documents such as PAN details, bank acount statements, audited financial statements and income-tax acknowledgments of investor were placed on record. Accordingly, assessee had discharged its onus to prove identity and creditworthiness of share applicant and genuineness of impugned transaction and, therefore, AO was not justified in making addition under section 68 merely based on conjectures and surmises.

Income from undisclosed sources - Addition under section 68 - Receipt of share capital along with premium - Assessee doubted premium amount on account of non-declaration of dividend--Assessee proved identity, creditworthiness and genuineness

Assessee company received share application money from M/s. Rohan Finance & Securities Ltd. Total number of shares issued was 90,000 at face value of Rs. 1 per share with a premium of Rs. 49 per share. AO took the view that on account of assessee company not having ever issued and even, portfolio and financial strength of company not warrant such a huge premium. Introduction of share application money with such a huge premium had a tell-tale sign of arrangement reached between assessee company and its so-called investors to give legal sanctity to unexplained cash credit brought into the company in form of share application money with huge premium. Therefore, AO made addition of amount involved under section 68. Held: Assessee company had been earning profit since a long and had goodwill in the market. All the requisitioned documents such as PAN details, bank acount statements, audited financial statements and income-tax acknowledgments of investor were placed on record. Accordingly, assessee had discharged its onus to prove identity and creditworthiness of share applicant and genuineness of impugned transaction and, therefore, AO was not justified in making addition under section 68 merely based on conjectures and surmises.

Supported by:Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (Guj) : (2003) 127 Taxman 523 (Guj) : 2002 TaxPub(DT) 0305 (Guj-HC), CIT v. Jalan Hard Coke Ltd. (2018) 95 Taxmann.com 330 (Raj) : 2018 TaxPub(DT) 4687 (Raj-HC), CIT v. S. Kamaljeet Singh (2005) 147 Taxman 18 (All.) : 2005 TaxPub(DT) 1275 (All-HC), CIT v. Dataware Pvt. Ltd. (ITAT No. 263 of 2011, dated 21-9-2011) : 2013 TaxPub(DT) 1384 (Cal-HC), Lovely Exports as has been reported as judgment delivered by the CTR at (2009) 216 CTR 295 (SC) : 2009 TaxPub(DT) 261 (SC), CIT, Kolkata-IV v. Roseberry Mercantile (P) Ltd. ITAT No. 241 of 2010, dated 10-1-2011, CIT v. Nishan Indo Commerce Ltd. ITA No. 52 of 2011, dated 2-12-2013 : 2014 TaxPub(DT) 1934 (Cal-HC) and CIT v. Anshika Consultants Pvt. Ltd. (2015) 62 Taxmann.com 192 (Del) : 2015 TaxPub(DT) 2171 (Del-HC).