|CORAM:||B. R. Baskaran (AM), Pavan Kumar Gadale (JM)|
|CATCH WORDS:||bogus share capital, bogus share premium|
|COUNSEL:||C. P. Ramaswamy, P.J. Pardiwalla|
|DATE:||August 2, 2019 (Date of pronouncement)|
|DATE:||August 10, 2019 (Date of publication)|
|FILE:||Click here to view full post with file download link|
|S. 68 Bogus Share Capital Premium: The test of human probabilities cannot be applied to business transactions. Share premium is collected as per the understanding between the parties. The AO cannot treat the share premium as unexplained cash credit only because the same is not commensurate with the income and financial strength of the assessee. The AO cannot reach this conclusion without further investigation and bringing material on record (All imp judgements referred)|
The share premium has been collected as per the understanding reached between both the parties. We notice that the AO has not mentioned in the assessment order that the assessee has failed to satisfy the three main ingredients in the context of sec.68 of the Act. His only case was that the assessee did not substantiate the quantum of share premium collected. We have noticed that the assessee has furnished a valuation report in order to justify the share premium, even though the same has been rejected by the AO. However, the important point is that the doubt of the assessing officer on the quantum of share premium cannot be a ground for making addition u/s 68 of the Act.