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11-06-2019, Citymaker Builder, Section 68, 133(6), Tribunal Mumbai

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3 months 6 days ago #9733 by amit
Section - 68, 133(6)
Order Date - 11-06-2019
Favouring - Revenue allowed for statistical purposes
Court - Tribunal Mumbai
Appellant - ITO
Respondent - Citymaker Builder Pvt. Ltd.
Justice - Ravish Sood JM & N.K.Pradhan AM
Citation - 619Taxpundit149
Appeal No. - ITA No.4589/Mum/2017
Asstt. Year - 2012-13

Order

PER : RAVISH SOOD

The present appeal filed by the revenue is directed against the order passed by the CIT(A)-4, Mumbai, dated 09.03.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short „I.T. Act‟) dated 27.03.2015 for AY. 2012-13. The revenue assailing the order of the CIT(A) has raised before us the following grounds of appeal :

“1 . On the f acts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.1,35,00,000/- made u/s 68 of the Act, without appreciating the fact that the genuineness of the transactions and the credit worthiness of these parties have not been proved.

2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) also erred in deleting the addition without appreciating the fact that the parties have only conf irmed the investment in shares of company but have not explained as to why share were purchased with premium.

3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in appreciating the facts that out of four investors, two investors namely M/s Duke Business Pvt. Ltd. And M/s Atharva Business Pvt. Ltd. are the companies involved in Hawal a Entry Operations which were admitted as such by Shri Pravin Kumar Jain in his statement.

4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition without appreciating the fact that the assessee had failed to prove its claim that it has received the said amount from the parties on account of share premium as the onus to prove the identity, creditworthiness & genuineness is upon assessee as a pre-condition of section 68 of the I.T Act.

5. For these and other grounds that may he urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the AO restored.”

2. Briefly stated, the assessee company which is engaged in the business of building and development of real estate had e-filed its return of income for A.Y. 2012-13 on 31 07.2013, declaring total income at Rs. 29,348/-. The return of income filed by the assessee was processed as such under Sec 143(1) of the I.T Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2).

3. During the course of the assessment proceedings it was observed by the A.O that the assessee company had accepted share application money of Rs 1,75,00,000/- during the year. As per the details furnished by the assessee, it was observed by the A.O that the assessee had accepted fresh share application money for 43,750 shares @ Rs.400 per share viz. (i). Face value of Rs.10/- per share; and (ii) Share premium of Rs.390/- per share. Further, it was noticed by him that the share application money received by the assessee company included an amount of Rs.40 lac that was received from its promoter director i.e Mr. Aziz-ur-Rahman who had subscribed for 10,000 shares. Apart there from, the balance amount of Rs. 1,35,00,000/- was received by the assessee company from sixcompanies which had subscribed for 33,750 shares. The A.O observed that as a result of accepting of share application money for 43,750 shares (which included 10,000 shares that were subscribed by the promoter director), nearly 63% of the share holding of the assessee company would be given out to the external parties, and the share holding of the existing shareholders would be reduced to 37%. On the basis of the aforesaid facts, the A.O was of the view that the assessee company by accepting share application money of Rs.1,35,00,000/- from outside parties was effectively handing over the control of its affairs to them.

4. In the backdrop of the aforesaid facts, the A.O not inspired with the genuineness of the transaction of receipt of share application money, thus, in order to make necessary verification issued notices under Sec. 133(6) to the applicant companies. On a perusal of the replies filed by the applicant companies, it was observed by the A.O that complete information was not furnished by them. It was noticed by the A.O that though the share applicants had confirmed to have invested in the shares of the assessee company, however, despite specific query they had not came forth with any explanation as to why the shares were purchased at a substantial premium of Rs. 390/- per share. Apart there from, it was observed by the A.O that two of the share applicants viz. (i) M/s Duke Business Pvt. Ltd. (JPK Trading I.P Ltd.): Rs.20,00,000/-; and (ii) M/s Atharva Business Pvt. Ltd.: Rs. 25,00,000/-, as per the information received from the office of the DGIT (Inv.), Mumbai, were the entities which were controlled by Shri. Praveen Kumar Jain, an infamous accommodation entry provider. In the backdrop of the incomplete information provided by the share applicants, the A.O called upon the assessee to furnish replies to certain queries. The assessee in order to impress upon the A.O that it was in receipt of genuine share application money, therein tried to fortify the authenticity of the transaction of receipt of share

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