IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)

AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER)

Assessment Year: 2008-09 Asst. Commissioner Of Income-Tax, M/s. Apollo Design Apparel Circle-6(1)(1),Mumbai Parks Limited

504, 5^th Floor, Aayakar Bhavan, Vs. 382,N.M.Joshi Marg, M K Road, Mumbai-400020. Chincpokli, Mumbai-400011 PAN NO. AAHCA 0613 R Appellant Respondent Assessee by : Ms. Dinkle Hariya Revenue by : DR. K. R. Subhash , Sr. DR Date of Hearing : 11/03/2025 Date of pronouncement : 25/04/2025

ORDER

PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated

30.09.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short „the Ld.

CIT(A)‟] for assessment year 2008-09, raising following grounds:

1. “Whether on the facts and circumstance of the case and in law the Ld. CIT(A) erred in directing the Assessing Officer to delete the addition of Rs. 16,25,00,000/- made u/s. 68 of the I.T. Act, 1961, without appreciating the facts that assessee company failed to justify the transaction entered into by it and thereby issues its shares to the parties accepting Share premium along with share application money?

2. The Appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.

3. The Appellant craves leave to amend, or alter any grounds or add a new ground, which may be necessary.”

2. Briefly stated facts of the case are that the assessee company was created as a special purpose vehicle (SPV) by the Union Ministry of Textile for revival of the textile mills under the ownership of National Textile Corporation Limited. Under the said revival scheme, 51% of the shares of the assessee company were held by the National Textile Corporation Limited (NTC) and balanced 49% were subscribed at premium to 3 parties namely M/S Future Retail (I) Ltd. (39%), M/s. SBPL infrastructure Ltd (9%) and Shri. NavDurga Textile Processor Pvt. Ltd. (1%).

3. For the year under consideration the assessee filed its return of income on 30.09.2008 declaring total income at Rs. 1,47,37,930/-. Subsequently, in view of the share premium of Rs. 15.55 Cr received from the share subscribers, the Assessing Officer recorded reasons to believe that nature and source of said share premium was not examined, therefore, income was escaped the assessment, accordingly, he issued notice u/s 148 of the Act on 24.03.2015. In responses, the assessee submitted that the original return of income filed on 30.09.2008 might be treated as return filed in response to notice u/s 148 of the Act. Thereafter, objections to reopening filed by the assessee were disposed off. During the course of reassessment proceedings, the AO rejected the contention of the assessee regarding justification of nature and source of share premium. It was submitted on behalf of the assessee company that entire process of revival of the textile mills was carried out under the guidance of the group of ministers constituted by the then cabinet as well as the ministry of textiles, therefore, the quantum of share premium was not questionable. It was submitted that the existing shareholders apart from the NTC participated in the company through process of winning bid in auction giving their proposal for revival and rehabilitation of the mills and then final documents were signed before the NTC and other shareholders of the assessee company. It was submitted that the entire process of bidding as well as the amount of share premium charged was devised by the government of India, thus, there was no point in looking on the transaction entered in a suspicious manner. But the Ld. AO rejected the contention of the assessee. The Ld. AO referred to the return of income, balance sheet and profit and loss A/c. filed in respect of the 3 share subscribers and observed that though identity of the share subscribers was established, but the creditworth