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Judgment
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 14.12.2025, for Assessment Year 2017-18.
Shri Dishant Sethi, appearing on behalf of the assessee submits that the Assessing Officer (AO), during the course of assessment proceedings made addition of Rs.45,00,000/- u/s. 68 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by raising doubt over the share capital/share premium received by the assessee from two investors, namely:
| Name of Person | No. of Shares | Nominal Value per Share (Rs.) | Premium per share (Rs.) | Share capital | Amount of premium (Rs.) | Total amount paid including premium (Rs.) |
| Siyaram Contractors (P). Ltd. | 70,000 | 10 | 40 | 7,00,000/- | 28,00,0000/- | 35,00,000/- |
| 20,000 | 10 | 40 | 2,00,0000/- | 8,00,000/- | 10,00,000/- | |
| Total | 90,000 | 9,00,000/- | 36,00,000/- | 45,00,000/- |
The ld. Counsel submits that during assessment proceedings, the assessee furnished complete documentary evidences including return of allotment filed with Registrar of Companies (ROC) and Form SH-7 evidencing increase in authorized share capital. Referring to the Balance Sheet as on 31.03.2017, the ld. Counsel pointed out that there was corresponding increase in share capital as compared to the Financial Year ending 31.03.2016.
Per contra, Shri Manoj Kumar representing the department vehemently defending the impugned order prayed for dismissing appeal of the assessee. The premium charged.
Both sides heard, orders of the authorities below examined. A perusal of the assessment order shows that the addition has been made u/s.68 of the Act by the AO, treating share capital/share premium received by the assessee as unexplained. However, no adverse finding has been recorded by the AO with respect to the identity and creditworthiness of the investors, or genuineness of the transactions. The contention of the ld. DR regarding absence of valuation report is misplaced, as the AO has not made addition on valuation of share premium. The Hon’ble Apex Court in the case of CIT vs. Lovely Exports (P) Ltd. has held that where share application money is received from alleged bogus shareholders, the addition, if any, can be made in the hands of such investors, in accordance with law and not in the hands of the assessee company. In the present case, the assessee has furnished documentary evidences to substantiate allotment of shares in lieu of share application money and share premium. The share application money has been received through banking channels and shares have been duly allotted. In light of above factual findings, I find no reason to sustain the addition, hence, the addition is directed to be deleted.
In the result, appeal of the assessee is allowed.