The mere non-production of directors does not justify the addition of unexplained income when the assessee has provided substantial evidence indicating the legality of share premium received.

ORDER / आदेश

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 19.05.2023 for the AY 2012-13.

2. The only issue raised by the assessee is against the confirmation of addition of Rs. 1,98,00,000/- by the Ld. CIT(A) as made by the AO u/s 68 of the Act by treating the share capital/share premium received as unexplained.

3. Facts in brief are that the case of the assessee was selected for scrutiny in order to examine large share premium received during the year. Accordingly statutory notices were duly issued and served to the assessee. In response to the various notices, the assessee appeared before the AO and also furnished certain details/information before the AO as stated at page no. 2 of the assessment order. The assessee issued during the financial year 9900 equity shares at face value of Rs. 10/- each at premium of Rs. 1990/- per equity share. The details/information filed before the AO comprised copies of audited financial statements, ITR, PAN, ledger accounts and bank statements of the assessee besides filing copies of balance sheets, bank statements, audited accounts/ reports, certificates of incorporation, share application forms, share allotment letters, copies of share certificate, assessment orders u/s 143(3) of the Act(of five subscribers) , source of source certificates (of five subscribers)of the subscribers vide letter dated 15.01.2015. The AO issued summons u/s 131 of the Act directing the Assessee to produce the directors of the subscribing companies. The said notice was duly complied with by the directors of the assessee company submitting all the documents as called for but the directors of the subscribing companies did not attend personally. Pertinent to state that the AO has not issued any summons u/s 131 or notices u/s 133(6) of the Act to individual subscribers. Finally the AO, rejecting the contentions of the assessee, added the entire share capital/share premium amounting to Rs. 1,98,00,000/- to the income of the assessee u/s 68 of the Act as unexplained cash credit in the assessment framed u/s 143(3) of the Act dated 13.03.2015.

4. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee on the ground that though the assessee has filed documents before the AO as well as before the Ld. CIT(A) however there were certain transactions which appeared to be not genuine as the premium was to the tune of Rs. 1,990/- each and thus dismissed the appeal.

5. After hearing the rival contentions and perusing the material on record including the written submissions dated 12.03.2024 filed by the ld. DR , we find that the case of the assessee was selected for scrutiny for share capital/large share premium received by the assessee during the instant financial year. The AO during the course of assessment proceedings called upon the assessee to furnish the evidences relating to identity, creditworthiness of the investors and genuineness of the transactions. Besides the AO issued summon u/s 131 of the Act to the directors of the assessee directing to produce all the directors with certain information comprising proof of identity, voter card, passport, driving license, PAN, list of entities/ subscribers or director of the share holders, ITR, audited accounts, bank statement, source of funds etc. The assessee filed before the AO the share allotment chart, details of share applicants and share application, copies of its audited financial statement, ledger accounts, bank statement as well as all the evidences in respect of subscribers