The Tax Publishers2020 TaxPub(DT) 0022 (Mum-Trib)

INCOME TAX ACT, 1961

Section 68

Practice of conversion on unaccounted money through clock of share capital/premium must be subjected to careful scrutiny and this would be particularly so in the case of private placement of shares, where higher onus is required to be placed on the assessee, since information is within personal knowledge of assessee further proving genuineness of transaction is one of the ingredients of section 68. In the instant case, there were deposit and withdrawal of same amounts, leaving meagre balance in the account of Prime Properties (P) Ltd. and no balance in accounts of assessee-company. Therefore, genuineness of transactions required verification and matter was referred back to AO to make an order afresh, after giving reasonable opportunity of being heard to assessee.

Income from undisclosed sources - Addition under section 68 - Receipt of share premium under private placement - Genuineness of transaction not proved

Assessee-company received share premium of Rs. 35 crores from Prime Properties (P) Ltd. from bank statements of Prime Properties (P) Ltd. filed by assessee, AO noticed that there were certain credits which were followed by equivalent debits in bank statements on the same date leaving a meagre balance at the end of year. Accordingly, AO took the view that genuineness of the transaction was not proved, and made an addition of Rs. 35 crores under section 68.Held: Practice of conversion on unaccounted money through clock of share capital/premium must be subjected to careful scrutiny and this would be particularly so in the case of private placement of shares, where higher onus is required to be placed on the assessee, since information is within personal knowledge of assessee further proving genuineness of transaction is one of the ingredients of section 68. In the instant case, there were deposit and withdrawal of same amounts, leaving meagre balance in the account of Prime Properties (P) Ltd. and no balance in accounts of assessee-company. Therefore, genuineness of transactions required verification and matter was referred back to AO to make an order afresh, after giving reasonable opportunity of being heard to assessee.

Relied:Pr. CIT (Central) v. NRA Iron & Steel Pvt. Ltd. (2019)103 Taxmann.com 48 (SC) : 2019 TaxPub(DT) 1628 (SC).

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2012-13

IN THE ITAT, MUMBAI BENCH

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