The taxpayer can contest an addition under Section 68 by providing sufficient evidence of the identity and creditworthiness of subscribers, despite procedural defects in summons.

ORDER

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Patna(hereinafter referred to as the “Ld. CIT(A)”] dated 05.03.2024 for the AY 2012-13.

02. The issue raised by the assessee in ground no.1 is against the confirmation of addition of ₹5.00 crores by the ld. CIT (A) as made by the ld. AO u/s 68 of the Act in respect of share capital/ share premium received by the assessee company during the year. The ground no.2,3 and 5 are in support of ground no.1.

03. The facts in brief are that the assessee filed the return of income on29.09.2012, declaring total income at ₹nil. Subsequently, the case of the assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) on account of large share premium received by the assessee. Accordingly, notice u/s 143(2) and 142(1) of the Act were issued along with questionnaire which were duly served upon the assessee. The assessee filed detailed submissions along with necessary evidences and documents vide letter dated 05.10.2014. The ld. AO in order to independently verify the transactions of issue of shares and receipt of money received by the assessee issued u/s 133(6) of the Act to all the subscribers which were duly replied by them by filing the necessary information/ documents. The ld. AO noted that during the year the assessee company has issued share capital/ share premium of ₹5.00 crores comprising share capital of ₹5 lacs + share premium of ₹4,95,00,000/-. The assessee issued equity share at a face value of ₹10 each at a premium of ₹990/- aggregating to 50,000 equity shares to four parties namely; (i)M/s Vibhakar Trading Pvt. Ltd., (ii) M/s Vrajesh Marketing Pvt. Ltd., (iii) M/s Briravi Commercial Pvt. ltd. (iv) M/s Ganesh Stockist Pvt. ltd. The ld. AO issued summons u/s 131 of the Act to the directors of the assessee company for in person deposition and producing the documents, which were duly produced. Besides, the ld. AO directed the director of the assessee company to produce the directors of the investor’s companies along with their identity proof, copy of bank statement from 01.04.2011 to 30.03.2012, with complete narration and sources of funds. The assessee complied with the said summons vide written submission dated 25.02.2015 and enclosing all the documents as called for by the ld. AO but no personal appearance was made in terms of summon issued u/s 131 of the Act. Thereafter, the ld. AO relied on the decision of Commissioner of Income-tax vs. Durga Prasad More [1971] 82 ITR 540 (SC)[26-08-1971] and Sumati Dayal vs. Commissioner of Income-tax [1995] 80 Taxman 89 (SC)/[1995] 214 ITR 801 (SC)/[1995] 125 CTR 124 (SC)[28-03-1995] and observed that surrounding circumstances to be taken into account to determine the true nature of these transactions and finally, held that the assessee has introduced his own money in the grub of share subscription. Consequently , the amount of share capital/share premium was added to the income of the assessee as unexplained cash credit u/s 68 of the Act.

04. In the appellate proceedings, the ld. CIT (A) after taking into account the arguments/ submissions of the assessee dismissed the appeal by simply affirming the order of the ld. Assessing Officer

05. After hearing the rival contentions and perusing the materials available on record, we find that the undisputed facts are that the assessment in this case was framed u/s 143(3) of the Act vide order dated 21.03.2015, wherein the addition of ₹5.00 crores was made u/s 68 of the Act as unexplained cash credit. The said order was challenged before the ld. CIT (A) and the ld. CIT (A) disposed off the appeal vide order dated 05.03.2024, confirming the addition and the said order of ld. CIT (A) is under challenge before us. We further note that during the pendency of the appeal before the ld. CIT (A) on 20.09.2015 a search action u/s 132 of the Act was conducted upon the assessee and proceedings u/s 153A of the Ac